Presented by Transferwise
Moving to the U.S. can present a host of challenges in managing finances, from establishing a bank account, to renting an apartment, to sending money internationally. Here’s our cheat sheet to make sure you have the best info and resources.
1. Don’t get stung by currency conversion costs when you’re sending money internationally
Sending money through a bank or traditional provider can often be an expensive (and slow) process. If you’re transferring money when you’re moving to the U.S. or still receiving a salary from overseas, currency conversion can take out a hefty chunk of your money.
The reason for this is that on top of the wire fee that’s generally charged by banks and services like PayPal or brokers, there’s often a hefty exchange rate mark-up. It’s usually pretty hard to know exactly how much this will cost you, but it can be as much as 3 to 5 percent depending on where you’re sending money. That’s a hefty chunk of your money to lose when you’re moving your money across borders.
TransferWise is a lower-cost alternative. It typically charges between 0.35 and 1.5 percent depending on the amount you’re sending and which currencies you’re converting.
Crucially, however, the company always uses the real exchange rate — that means you don’t lose any money on currency conversion, like you do with traditional providers. The upshot is that more of your money makes it to the other side.
2. Choose the right financial institution. It might not always be your bank.
The rise in financial tech (fintech) companies in the past 10 years has seen an upsurge in the number of younger, tech-smart companies that are each developing alternatives to specific financial services.
Often, these companies are cheaper or easier to use, or help you stay on top of your finances without the hassle of going to your local branch. For example, companies such as Mint are helping improve the experience of tracking and managing your money. Then there are wealth management alternatives that are simplifying the process of investing and saving your money, such as Wealthsimple and Betterment.
3. Opening a new bank account in the U.S. — not as easy as it sounds…
If you’re already residing in the U.S., you can open a bank account either in branch or online. That said, if you’ve arrived recently, an online application may be harder.
Firstly, you may not fit into the categories that are laid out on the bank’s website. Secondly, because you’re new to the country, you’ll have a limited credit history (more on that later). This is a nice-to-have when opening an account, since it shows. However, once you’ve opened your account, you’ll be able to start working on this with your account manager.
Applying for a bank account in person can be a useful approach to start building a face-to-face relationship with your bank. Key to successfully setting up your account will be showing that you have an address in the U.S., and providing the relevant proof of residence.
One helpful trick for moving is TransferWise’s borderless account. It lets you hold over 40 currencies at a time and convert between them cheaply and effortlessly — at the mid-market exchange rate. It has also launched a card in the U.K., which lets you spend easily while you’re getting your new debit cards in the U.S. set up.
4. The U.S. tax code is tough to get your head around. Professional help is invaluable.
Tax in the U.S. can be a complicated matter, and your situation will likely be unique to your financial situation and the country you’re arriving from. For example, many countries have tax treaties with the U.S., and it’s well worth understanding if this will have an effect on how you complete your taxes.
Speaking with a qualified tax professional or financial advisor can help you sort out your tax obligations and understand what is expected of you in the process. It’s best to do this sooner, rather than later.
You can look up professionals in the Internal Revenue Service’s (IRS) directory.
5. Getting a credit score — starting from scratch
When you arrive in the U.S., you will have no credit score. This makes things tricky since you need a credit score to get a loan or a lease for a rental apartment.
There’s generally no fast-and-easy way to achieve a great score. However, it helps to think about it as a series of steps that help you build up a good score over time.
Once you’ve opened a bank account, you’ll be able to get your debit card and start saving your money in a U.S. financial institution. After building a relation with your bank, they can consider offering you a credit card. It always helps if you’re able to show your finances are in healthy order.
In the meantime, if you’re looking for a rental unit, bear in mind that landlords will often accept a guarantor or a larger deposit. It’s also worth knowing that you can apply for store credit cards to start building a credit history, although it’s crucial that you manage your credit score wisely. Good practice is to avoid opening too many cards, and always paying the amount you owe on time. There are a host of factors involved in getting and keeping a good credit score, and it’s well worth consulting with a trusted financial advisor to make sure you’re approaching your finances in the right way.
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