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For the vast majority of consumers, a bank account is one of the basic tools for financial security. Five percent of U.S. households are unbanked, or have no bank account, according to Federal Reserve data from 2020.
Non-U.S. citizens face a range of serious difficulties in managing their finances, including figuring out how to keep their money safe and how to avoid high fees for check-cashing services.
“Without a bank account, new Americans will have less access to their funds, have to pay fees to cash their checks and do without so many of the conveniences available through a checking or savings account,” says Rebecca Morris Hoeft, chief brand officer at St. Paul, Minnesota-based Sunrise Banks.
The good news for non-U.S. citizens is they can open a checking account or savings account to avoid some of those high fees, plus they’ll have the security of Federal Deposit Insurance Corp. coverage. Opening an account requires a bit more legwork and documentation than for U.S. citizens, but it’s well worth it for the financial benefits.
To open an account, a bank or credit union needs to know it’s really you. It’s part of the U.S. government’s customer identification program, which sets the standards for how financial institutions should confirm their customers’ identities.
Verifying your identity will be different depending on the bank or credit union, but it typically involves providing the following:
- Photo ID: Eligible documents to prove your name and birth date include an unexpired passport, an alien registration card and a foreign driver’s license.
- A utility bill: An electric or gas bill with your current address.
- Initial deposit: Not all banks or credit unions require an initial deposit, but many do. Wells Fargo, for example, requires a $25 minimum deposit to open an Everyday Checking account.
- Individual Taxpayer Identification Number: Many bank accounts pay interest, which is taxable income. Banks require an ITIN for nonresidents in order to supply information to the IRS for tax-reporting purposes.
Many consumers are accustomed to doing many tasks online, including opening a bank account, but non-U.S. citizens will likely find that’s not possible.
“Online account opening systems do not work well with individuals without (a Social Security number), due to the nature of identifying questions,” Hoeft says.
Alternative identification options
For a nonresident or noncitizen without a Social Security number, there are other options including a passport number and country of issuance, an alien identification number or a number and country of issuance of any other unexpired government-issued document that shows nationality or residence with a photograph.
Non-U.S. citizens can apply for an ITIN, which is one of the most commonly used alternative forms of identification. An ITIN can be obtained by applying through the IRS. With one of these numbers, noncitizens are able to file their taxes. An ITIN doesn’t authorize someone to work in the U.S. and are used solely for tax reporting purposes. Getting an ITIN requires completion of Form W-7.
Mail the completed Form W-7 to the IRS, along with proof of identity and foreign status documents to:
Internal Revenue Service
Austin Service Center
P.O. Box 149342
Austin, TX 78714-9342
If you prefer not to mail the forms, you can take the form to an IRS-authorized certifying acceptance agent.
The IRS issues ITINs through the mail, but it’s not a speedy process. Approval typically takes about seven weeks or more.
The benefits of opening a bank account
Filling out forms, going to an agent’s office and waiting for nearly two months may sound like a hassle, but the benefits of a bank account outweigh those troubles.
Some ways that bank accounts help consumers manage their money include:
- Lower fees: Without a checking account, cashing checks has to be done through check-cashing services or prepaid debit cards, which often charge high fees.
- Extra protection: Storing money in a bank account is much safer than keeping it in a drawer. Banks and credit unions offer deposit insurance up to $250,000.
- Saving for the future: With a high-yield savings account, consumers can practice good habits for building up their wealth over time and staying prepared for emergencies. Savings accounts usually only allow for six withdrawals each month.
- Credit-building opportunities: Establishing a good banking history can provide a gateway to larger life goals such as buying a car or owning a home. Some banks have made it a mission to help non-U.S. citizens on the path toward homeownership. In addition to helping non-U.S. citizens open checking and savings accounts, Hoeft says that Sunrise is “one of a handful of banks in the nation that offers home mortgages to new Americans without a Social Security number by using their ITIN instead.”
Banks and credit unions that accept alternative IDs
At first glance, many bank websites would seem to indicate that none of them accept alternative IDs. Though many of the biggest banks list a Social Security number as a requirement on their websites, it may only be necessary for opening an account online.
In some cases, banks will assist if you are missing a piece of information. Appointments can be scheduled with many big banks that accept an ITIN instead of a Social Security Number online, including:
- Bank of America – Online Appointments
- PNC Bank – Online Appointments
- Chase – Online Appointments
- Citibank – Online Appointments
Some credit unions also accept alternative IDs. DC Credit Union, Washington, for example, offers a SAFE Checking Account, specifically for non-U.S. citizens. Because the account earns no interest, it doesn’t require a tax ID number — only a foreign ID.
Another option for non-U.S. citizens to consider is a Bank On account, offered as part of the banking industry’s push to welcome unbanked customers. In addition to having low fees and no overdraft fees, Bank On standards recommend banks and credit unions in the program accept alternative IDs.
But the acceptance of an ITIN or foreign ID to open an account isn’t the only point that matters for non-U.S. citizens. It’s also important to compare fees and minimum balance requirements attached to those accounts. Read Bankrate’s guide to avoiding bank fees to avoid paying too much money to stash and manage your cash.
The banking industry’s traditional identification requirements may seem like a barrier to non-U.S. citizens when trying to open a bank account, but numerous banks and credit unions accept alternative forms of ID to make it easier. Though obtaining an ITIN does mean some extra work, the ability to open a checking account and savings account — and in some cases, apply for a home loan — can make a meaningful difference in achieving financial security.
–Freelance writer David McMillin contributed to a previous version of this article.