Moving to the USA from India comes with a steep learning curve, and one of the first challenges I faced was setting up my banking. Back in India, banking was straightforward—one savings account, a couple of UPI apps, and I was good to go. Digital payments were seamless, and I never really thought about things like credit scores or writing checks. But in the US? Banking was an entirely different game. Here’s a breakdown of everything I learned so you don’t have to struggle like I did.
1. What Type of Bank Account Do I Need?
In India, most people use their savings account for everything, including everyday transactions. But in the US, banking works differently:
Checking Account
- This is your main transaction account. It’s used for paying bills, withdrawing cash, making debit card payments, and even writing checks.
- Most employers deposit your salary directly into this account through direct deposit.
- Many checking accounts come with a debit card, which you can use for everyday spending.
- Some banks charge monthly maintenance fees, but you can often avoid them by maintaining a minimum balance or setting up direct deposit.
- Overdraft protection is an optional feature that prevents you from spending more than you have, but it may come with fees.
- Online banks and credit unions often offer fee-free checking accounts with better perks than traditional banks.
Savings Account
- This is meant for storing money and earning interest over time.
- Unlike in India, where savings accounts are used for both saving and spending, in the US, savings accounts are primarily for emergency funds or short-term savings.
- Some savings accounts have withdrawal limits—typically six free withdrawals per month. Exceeding this limit may result in fees or restrictions.
- Interest rates on traditional savings accounts are low (often below 1%), but high-yield savings accounts (offered by online banks) provide better returns.
- Some banks require a minimum deposit to open a savings account, while others allow you to start with as little as $1.
- It’s best to link your savings account to your checking account for easy transfers, but be mindful of withdrawal restrictions.
2. Why Do I Need a Credit Score, and How Do I Build One?
If you’re moving to the U.S., one of the first things you need to understand is how important your credit score is. Unlike in India, where your CIBIL score primarily affects your ability to get loans, in the U.S., your credit score impacts almost everything—from renting an apartment to getting a car loan or even a job in some industries!
Why Is a Credit Score So Important?
Your credit score is essentially a number (ranging from 300 to 850) that tells lenders how trustworthy you are with borrowed money. Here’s why it matters:
- Renting an Apartment – Most landlords check your credit score before approving your rental application. A low or non-existent score can lead to higher security deposits or even rejection.
- Getting a Credit Card – Without a good credit history, it’s tough to qualify for most credit cards. And without a credit card, it’s hard to build credit—it’s a cycle!
- Buying a Car or a House – If you ever want an auto loan or mortgage, your credit score determines whether you get approved and what interest rate you pay. A bad score means higher interest rates (which means you’ll pay more over time).
- Even Getting a Job! – Some employers (especially in finance or tech) run credit checks before hiring you. A bad score can be a red flag.
How to Build Credit From Scratch?
As a new immigrant, you start with zero credit history in the U.S., but you can build a solid score within a few months by following these steps:
(i) Get a Secured Credit Card – This is the easiest way to start. A secured credit card requires a refundable deposit (usually $200–$500), which becomes your credit limit. Use it for small expenses (like groceries or subscriptions) and pay it off in full every month.
(ii) Use Your Credit Card Regularly – Small, consistent purchases (like gas, coffee, or streaming services) help you establish credit history. But don’t max out your card—keep your credit utilization below 30% (meaning if your limit is $500, don’t spend more than $150 at a time).
(iii) Pay on Time—ALWAYS – Payment history is the biggest factor (35%) in your credit score. A single late payment can seriously hurt your score, and missed payments stay on your report for seven years. Set up auto-pay to avoid forgetting.
(iv) Become an Authorized User – If you have a trusted family member or friend in the U.S. with good credit, they can add you as an authorized user on their credit card. This helps you build history without needing your own card.
(v) Apply for a Credit-Building Loan – Some banks and credit unions offer small loans designed to help you build credit. These loans are secured, meaning you pay in small installments, and once it’s fully paid, the money is released to you.
(vi) Don’t Apply for Too Many Cards at Once – Each time you apply for a new credit card, your score takes a small hit. Too many applications in a short time make lenders think you’re desperate for credit.
How Long Does It Take to Build a Good Score?
If you follow these steps, you can build a fair credit score (around 650) in 3–6 months. Within a year, you could have a good score (700+), which is enough to qualify for better credit cards, lower interest rates, and more financial freedom.
Bottom Line
Your credit score is your financial reputation in the U.S. Without it, life becomes much harder (and more expensive). The key is to start early, spend wisely, and always pay on time. Building credit might seem complicated at first, but once you get the hang of it, it becomes second nature—and it will open doors to better financial opportunities in the future!
3. Why Are Banks Charging Me Fees?
One of the biggest annoyances when banking in the U.S. is the number of fees banks charge for everyday transactions. Unlike in India, where many banks offer zero-balance accounts and minimal charges, U.S. banks often have hidden fees that can quickly add up if you’re not careful.
Common Bank Fees & How to Avoid Them
1. Monthly Maintenance Fees
Some banks charge $5 to $25 per month just for keeping your account open.
How to avoid it?
- Choose a fee-free bank (online banks like Chime, Capital One, and Ally usually don’t charge monthly fees).
- Maintain the required minimum balance (some banks waive the fee if you keep $500–$1,500 in your account).
- Set up direct deposit (many banks remove fees if you receive your paycheck directly into the account).
2. Overdraft Fees
If you spend more money than you have in your account, the bank covers the transaction but charges you a hefty overdraft fee (usually $30–$35 per transaction!).
How to avoid it?
- Sign up for overdraft protection, which links your savings account or credit card to cover shortfalls.
- Choose a bank that doesn’t charge overdraft fees (like Chime or Capital One).
- Keep track of your balance and set up alerts to avoid spending more than you have.
3. ATM Fees
If you withdraw cash from an out-of-network ATM, you’ll be charged a fee by both your bank and the ATM operator—totaling $3 to $5 per withdrawal!
How to avoid it?
- Use your bank’s ATM network (big banks like Chase, Bank of America, and Wells Fargo have thousands of ATMs nationwide).
- Choose a bank that reimburses ATM fees (like Charles Schwab or Ally).
- Use cash sparingly and rely on card payments (since most places accept cards in the U.S.).
4. Wire Transfer Fees
If you send money domestically via wire transfer, banks charge $15–$30 per transaction. For international transfers, the fee can be $35 or more!
How to avoid it?
- Use cheaper alternatives like Wise, Revolut, or Remitly for international transfers.
- For domestic transfers, use Zelle (free with most U.S. banks) or Venmo/Cash App for small transactions.
5. Foreign Transaction Fees
If you use your debit or credit card abroad (or for international online purchases), banks often charge a 3% foreign transaction fee.
How to avoid it?
- Get a no-foreign-transaction-fee credit card (Capital One and Chase offer good options).
- Use multi-currency apps like Wise or Revolut for international spending.
6. Paper Statement Fees
Some banks charge $2–$5 per month if you receive printed account statements by mail.
How to avoid it?
- Opt for paperless statements in your online banking settings.
How to Choose a Fee-Free Bank?
If you’re moving to the U.S., it’s best to open an account with a bank that charges little to no fees. Here’s what to look for:
- No monthly fees
- No overdraft fees or easy overdraft protectio
- Large ATM network or ATM fee reimbursement
- No foreign transaction fees (if you travel often)
Best Banks with Fewer Fees
- Chime – No monthly, overdraft, or foreign transaction fees.
- Ally Bank – No monthly fees & reimburses ATM fees.
- Charles Schwab – No foreign transaction fees & reimburses all ATM fees.
- Capital One 360 – No monthly fees & offers a large ATM network.
Final Tip: Always Read the Fine Print!
Before opening an account, check the bank’s fee structure carefully. Some banks lure customers in with “free checking,” only to sneak in hidden fees later. By choosing a low-fee or no-fee bank, you can save hundreds of dollars per year and avoid unnecessary headaches.
4. Why Do Money Transfers Take So Long?
If you’re used to instant UPI transfers in India, the U.S. banking system will feel frustratingly slow. While UPI transactions happen in seconds, money transfers in the U.S. can take days—and that’s considered normal! Here’s why:
1. ACH Transfers (1–3 Business Days)
- ACH (Automated Clearing House) is the system banks use for transactions like direct deposits, bill payments, and bank-to-bank transfers.
- Transactions are processed in batches and only during business hours. If you send money on a Friday evening, it may not arrive until Monday or Tuesday!
Why so slow?
- Banks wait before completing transactions to prevent fraud and ensure funds are available.
- The system still relies on legacy infrastructure that doesn’t operate 24/7.
Faster Alternative: Some banks now offer same-day ACH transfers, but they may charge a fee for it.
2. Wire Transfers (Same-Day or 1–5 Days, But Expensive!)
- Wire transfers are used for high-value or international transfers, and they can be faster than ACH—but at a cost.
- Domestic wire transfers typically arrive the same day but can cost $15–$30 per transfer.
- International wire transfers take 2–5 business days and cost $35+, plus additional conversion fees.
- Banks also use SWIFT (Society for Worldwide Interbank Financial Telecommunication), which routes transactions through multiple banks, causing delays.
Faster Alternative: Use services like Wise (formerly TransferWise), Revolut, or Remitly for cheaper and faster international transfers.
3. Check Payments (2–5 Business Days)
- Believe it or not, paper checks are still widely used in the U.S.—especially for rent payments, salaries (for some companies), and bills.
- When you deposit a check, banks hold the funds for a few days to ensure it doesn’t bounce.
- If it’s a check from another bank, it may take even longer to clear.
Faster Alternative: If you receive a check, use mobile check deposit (offered by most banking apps) to speed up the process.
4. Debit Card Transfers (Instant, but Costly for Businesses)
- Unlike UPI, which is free and instant, debit card payments in the U.S. go through Visa or Mastercard networks.
- Transactions clear instantly for customers, but businesses may wait 1–3 days to receive the funds because banks process payments in batches.
- This delay is why small businesses sometimes prefer cash over cards.
Faster Alternative: Businesses can pay extra for instant settlement, but many avoid it due to high fees.
How to Make Transfers Faster in the U.S.?
If you’re tired of waiting, here are some faster alternatives for domestic transfers:-
- Zelle – Instant and free bank-to-bank transfers (linked directly to bank accounts).
- Venmo – Fast peer-to-peer transfers, but you may need to pay a fee for instant withdrawals.
- Cash App – Works like Venmo, with optional instant transfer fees.
- PayPal – Good for sending money, but withdrawals take 1–3 days unless you pay a fee for instant access.
Why Doesn’t the U.S. Have an Instant System Like UPI?
The U.S. banking system is older and slower to adopt real-time payments compared to India’s government-backed UPI. However, things are changing:
- FedNow (Launched in 2023) – A new real-time payment system by the U.S. Federal Reserve that allows instant bank transfers (similar to UPI). Adoption is still slow, but it’s a step in the right direction.
- More banks are adopting instant payments, but it will take time for widespread use.
Bottom Line
If you’re used to instant, free transfers in India, adjusting to the U.S. system can be frustrating. But with the right tools (Zelle, Wise, Venmo, etc.), you can avoid long waits and unnecessary fees. Always check transfer times and costs before sending money to avoid surprises!
5. How Can I Send Money Back to India?
If you’re living in the U.S. and need to send money to India, you have plenty of options—but some are much cheaper and faster than others. Many first-time senders make the mistake of using their bank’s wire transfer service, only to find out later that they paid high fees and got a terrible exchange rate.
Best Ways to Send Money to India
1. Wise (formerly TransferWise) – Best for Low Fees & Mid-Market Exchange Rates
- Wise offers the real mid-market exchange rate (the rate you see on Google) with low, transparent fees.
- Transfers usually arrive in a few hours to a day.
- No hidden charges—what you see is what your recipient gets.
- Best for people who want the best exchange rate and lowest fees.
2. Remitly – Fast Transfers, Multiple Speed Options
- Offers two speed options:
- Express: Money arrives in minutes, but you pay a higher fee.
- Economy: Takes 3–5 days but has lower fees.
- Regular promotions and better rates for first-time users.
- Can deposit directly into an Indian bank account or allow cash pickup.
- Best for those who need flexible transfer speeds.
3. Xoom (by PayPal) – Quick, Reliable, but Higher Fees
- Transfers are fast (minutes to a few hours).
- Supports bank deposits, cash pickup, and even bill payments in India.
- Since it’s owned by PayPal, it’s trusted and secure.
- Best for fast transfers, but compare fees with other services first.
4. Western Union – Cash Pickup & Global Reach
- Allows both bank deposits and cash pickup at locations across India.
- Can be useful if your recipient doesn’t have a bank account.
- Fees vary, but sometimes higher than Wise or Remitly.
- Best for sending cash to someone in India who needs physical pickup.
How to Choose the Best Service?
Before sending money, always check:
- Exchange Rate – Some services mark up rates, so compare with Google’s mid-market rate.
- Transfer Fee – Lower isn’t always better; check total cost.
- Transfer Speed – Need it in minutes, or can you wait a few days?
- Delivery Options – Does your recipient want a bank deposit or cash pickup?
Pro Tip: Use A Comparison Tool – Websites like Monito.com or Exiap.com compare real-time exchange rates and fees for different providers, helping you get the best deal.
Final Thoughts
Banks charge high fees and offer bad exchange rates, so using specialized money transfer services like Wise, Remitly, or Xoom will save you money. Always compare rates before sending to ensure you’re getting the most rupees for your dollars!
6. What Do These Banking Terms Even Mean?
If you’re new to the U.S. banking system, some of the terms can feel confusing. Here’s a breakdown of the most common ones you’ll come across.
Routing Number vs. Account Number
- The routing number is like your bank’s address—it identifies which financial institution is handling the transaction.
- The account number is unique to you and identifies your personal bank account.
- When setting up direct deposit, paying bills online, or sending money, you’ll need both numbers.
Think of it this way: If your bank were an apartment complex, the routing number is the building’s address, and the account number is your specific apartment number inside it.
Direct Deposit
- This is the fastest and most convenient way to receive payments.
- Instead of giving you a paper check, your employer transfers your salary directly into your bank account.
- Many banks waive monthly fees if you set up direct deposit.
Why it’s useful:
- Money arrives instantly or within one business day.
- No risk of losing a physical check.
- Required for some benefits, like tax refunds and Social Security payments.
Overdraft Protection
- If you try to spend more money than you have in your account, the bank covers the difference instead of declining the transaction.
- This can prevent embarrassing card declines, but banks often charge a fee (typically $35 per overdraft).
- Some banks offer free overdraft protection, where they transfer money from your savings account instead of charging a fee.
How to avoid fees:
- Opt out of overdraft protection if you don’t want to risk fees.
- Set up low balance alerts on your banking app.
FDIC Insurance
- The Federal Deposit Insurance Corporation (FDIC) protects your money in case your bank fails.
- Covers up to $250,000 per depositor, per bank.
- If your bank suddenly shuts down, the government guarantees you’ll get your money back (up to the limit).
Why it matters:
- U.S. banks are generally stable, but FDIC insurance adds extra security.
- Always check if your bank is FDIC-insured before opening an account.
Final Thoughts
The U.S. banking system has a lot of unfamiliar terms, but once you understand them, managing your money becomes easier. Knowing the difference between routing and account numbers, setting up direct deposit, and avoiding overdraft fees can save you time and money. Always check the fine print before signing up for banking services!
7. How Do I Choose the Right Bank?
Picking the right bank in the U.S. isn’t just about where your money goes—it affects how easily you can access it, how much you’ll pay in fees, and how good the customer service is. Your choice should depend on your lifestyle, banking habits, and priorities. Here’s a breakdown of the main options.
Big Banks (Chase, Bank of America, Wells Fargo, Citibank)
- These banks have thousands of branches and ATMs across the country, making it easy to visit a location if you need in-person banking.
- They offer a wide range of services, including credit cards, loans, and investment accounts.
- Downsides? Higher fees, including monthly maintenance fees, overdraft fees, and ATM fees if you withdraw from an out-of-network ATM.
- Best for people who prefer in-person banking and need a large ATM network.
Online Banks (Ally, Chime, SoFi, Discover)
- Online-only banks usually have no monthly fees, no overdraft fees, and higher interest rates on savings.
- Many offer early direct deposit, meaning you could get your paycheck up to two days earlier than traditional banks.
- Since they don’t have physical branches, customer service is handled online or over the phone. Cash deposits can also be tricky since they don’t have in-person locations.
- Best for people who want low fees, better savings rates, and don’t need branch access.
Credit Unions (Navy Federal, Alliant, Local Credit Unions)
- Credit unions are member-owned and generally offer lower fees, better interest rates on savings accounts, and more personalized customer service.
- They often have fewer branches and may require you to meet eligibility requirements (like living in a certain area or working for a certain employer).
- Some credit unions partner with larger ATM networks to give customers access to nationwide ATMs without fees.
- Best for people who want lower fees, better service, and don’t mind a smaller network.
How to Choose the Right Bank for You?
- If you travel often or want in-person service, go with a big bank for its branch network.
- If you want to avoid fees and earn better interest on savings, an online bank is your best bet.
- If you prefer a community-focused bank with lower fees and better customer service, a credit union might be the way to go.
Before opening an account, compare monthly fees, ATM access, digital banking features, and customer service reviews to find the best fit for your needs.
Final Thoughts: Getting Comfortable with the US Banking System
It took me a few months to fully grasp how banking works here, but once I got the basics down, it became much easier to manage. If you’re new to the US, start by opening a checking and savings account with a bank that offers low fees, set up a credit card to build your score, and use money transfer apps wisely.
Banking in the US may not be as seamless as it is in India, but once you understand the system, you’ll be handling your finances like a pro!
