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Understanding American Banks
Assume you know nothing - that is the best policy. Ask friends and colleagues for advice.
Big or small: FDIC insured
It's a really odd concept, but there are thousands of banks in America. They range from the large ones like Citibank (compare to ABSA or Nedbank) to a single branch Lakewood Community Bank.
You may feel very worried banking with a bank that has a small number of employees in one office - and that's the entire bank!!
However as long as your bank is FDIC insured (insured by the government), you are covered for amounts up to $100,000 if the bank went under.
Your small local bank may provide you with better service than a larger bank.
America does not have truly national banks, and for those people working in the financial services IT field will be frustrated to find how nearly non-existent the interconnections between banks are.
APR and APY
APR is a term you'll always see in connection with credit. It stands for Annual Percentage Rate.
APY relates to deposits that you earn interest on and stands for Annual Percentage Yield.
Both forms are really the effective compounded interest rate for a
year. You may for example see something on your bank statement:
0.05315% daily periodic rate. This would yield a 19.4% APR.
If you leave $1,000 on deposit for a year and the APY is 4% then you'll have $1,040 at the end of the year.
Bank odds and ends
Always ask about terminology and make sure you understand how things work - don't assume. Ask.
E.g. a "Money Market Account" is not quite the same as in South Africa. And nobody would understand you if you talked about "bond payments" - everyone calls it "mortgage".
They don't have anything similar to an Access Bond or Revolving Credit facility. You pay your monthly installments and if you pay more it comes off the capital, but you won't be able to easily withdraw any additional money.
My bank manager here laughed when I innocently asked on my credit card: "so I presume this is a 55 day credit line?" It's 30 days.
Beware of additional services that you could be signing up for unknowing. Before you know it you'll have "Privacy Guards", "Credit Protector" and "Check Credit Services" on your account for which you'll be paying extra money. Know what you're signing up for.
Lastly, you can have your own cheque (always written "check" here) book designed, or print your own from your home computer. "Out of State" checks - thus if you are traveling outside of your home state - are often not accepted. If you deposit an out of state check in your account it may take very long to clear.
Check fraud is relatively high so be careful!
Please e-mail me if you have any other tips or suggestions: