Opening a bank account is the first most important step to personal finance for immigrants. Here are the top 3 reasons why immigrants should open bank accounts in the U.S.
Before we get into why it makes sense for immigrants to open bank accounts, let\’s cover the common question: What groups of immigrants can open bank accounts in the U.S.?
This is sort of a trick question because actually anyone, regardless of their immigration status, can open a bank account in the U.S. There\’s a lot of misinformation about this a lot of people think that they might not be able to for example if they\’re undocumented or if they don\’t have a certain type of status. But banks should not be asking you what your immigration status is in the U.S. It\’s just that sometimes it can be more difficult to open a bank account if you do not have legal status because it can be more difficult to prove your identification. However, there are still ways for undocumented immigrants to open a bank account. Check out our post \”How Immigrants Can Open Bank Accounts\” for more details.
3 TOP REASONS why WHY immigrants SHOULD OPEN open bank accounts in the U.S.
One of the reasons we started Immigrant Finance is because when my husband immigrated to the U.S. about six years ago it was really really scary for us trying to figure out whether he could do basic personal finance things like open a bank account. It was really overwhelming for us. There really wasn\’t anywhere out there on the internet in one easy place to figure out how immigrants could learn about personal finance that specific to the immigrant experience.
When we had to figure out everything on our own, opening a bank account was the first and most important step. We couldn\’t do anything else really until that step was done. There are three main reasons why opening a bank account can make such a difference for an immigrant.
A BANK ACCOUNT HELPS YOU Build stability
Perhaps the most important part of having a bank account is that it gives you stability when you\’re moving to a new place. When you are just starting off in a new country, opening a bank account is the first step to get started. Only once you have a bank account can you start to save money in a safe place.
A lot of people in the immigrant community use only cash and don\’t have bank accounts. Although a cash-only lifestyle is super common for a lot of people and in a lot of other countries it is not the safest thing. Having all your money in cash puts you in a very risky situation. For example, if you lose the money, get robbed, or get taken advantage of in some situation all your money could be gone just like that. But if your money is in a bank account, that\’s a lot harder to lose.
In a lot of other countries, like the country where my husband comes from, there\’s a lot of mistrust of the banks for a good reason. My husband actually grew up when the bankers in his country literally stole all of the people\’s money and left the country. There was no insurance or anything. A lot of people lost all their life savings.
Nothing is ever fully guaranteed but the U.S. is one of the safest places in the world to use a bank to store your money if you use a bank that is what\’s called \”FDIC\” insured. FDIC stands for the Federal Deposit Insurance Corporation. If the bank says it\’s FDIC insured that means that up to $250,000 of money that you put into that bank account in a single account will be insured by the federal government. That means that if for example the economy crashes or there\’s a huge Great Depression or something like that and the bank can\’t actually give you your money back, the federal government will give you back up to $250,000. So that gives some assurance that makes having a bank out in the U.S. very unique compared to other countries and a lot safer.
It is at least much safer to have your money in a bank account than to have your money under a mattress. If you have your money under your mattress or hidden somewhere in your house or a freezer or whatever, someone can rob you and take it or someone who knows where that is to take advantage of you if you\’re in a vulnerable situation and all your money can be lost. Having a bank account gives you that stability to know that you have your money in a safe place. You know exactly where to find it. Only you, or only anyone you give permission to, can access that money.
Knowing that your money is relatively safe can help you build peace of mind. You can spend less time worrying about your money getting stolen or lost, and instead focus on other important personal finance steps like budgeting, saving, and investing.
You are More Prepared for Immigration Matters When You Have a Bank Account
It also is really important to have a bank account for immigration law reasons. The process can help you build a record of the dates you\’ve lived in the U.S. and pay taxes, which can be helpful for an immigration case.
Establishing a Paper Trail
Having a bank account can show the amount of time you have been living in the U.S. That can be extremely helpful evidence for example if you ever have an immigration problem in the future and have to go to immigration court or if you are applying for an immigration benefit like a green card. You can go and pull up your bank records and show use that to show all the dates you\’ve been here.
Proving you qualify for any future immigration reform
Also, we don\’t know it what will ever happen in the future and it\’s looking pretty not hopeful at the moment but there could be immigration reform at some point in the future. In the past immigration reform has looked into the dates that people have been living here and required people to establish that they\’ve been here by a certain date. So having a bank account with records of deposits you\’ve been making and the date you opened a bank account will help show those really important dates. It will give you an official record that you would be able to use to perhaps show you qualify for any potential immigration reform in the future.
If you are undocumented, you likely need to pay taxes in order to have a bank account. That is because in most cases you can only open a bank account as an undocumented immigrant if you get a certain number called an ITIN number. You can only get an ITIN number by paying taxes to the federal government.
That means that you will be paying taxes regularly. That helps you because you will have a record of you paying taxes for years in the U.S. If you ever have to go to immigration court, it will be very helpful to show an immigration judge that you have been paying taxes. This is because having a record of paying taxes shows that you are a responsible and contributing member of society.
Immigrants Should Open Bank Accounts in the U.S. Because it Makes it Easier to Participate in the Financial System and Make More Money
For my husband when when he opened his first bank account that was the first big step to him really building his financial stability in the U.S. He had his own bank account he had his own debit card. When he was able to make money he had a place to put it. When he needed money he knew exactly where to go and get it. That gave him some footing here in the U.S. to have something that he felt like was his own. It gave him the confidence that he was building something and had a place to save to work toward his future.
That may sound simple for some people but it\’s a really profound step to even have a place where you can be putting away money and saving and not just your money in cash. If your money is in cash it\’s a lot easier to spend it. If your money is in a bank account, it\’s harder to spend because it\’s not in your hands right in front of you.
If you are able to get a job that gives you a regular salary, having a bank account will also allow you to set up a direct deposit. That will make it easier for you to get your income right away on a regular basis. Having your money go straight to your bank account will also make it easier to make transfers to other accounts, for example to send money home to family, pay bills, or invest.
Opening a bank account is important for any immigrant because it allows you to build stability, be prepared for immigration law matters, and participate in the financial system. These are some reasons why we think that opening a bank account is a really great idea for immigrants.