Money Matters
Money Matters

America is no longer a cash society. It is simply not safe to carry large amounts of money in your purse or wallet. Most purchases are now made using credit cards or bank issued checks.

Upon arriving in the United States, setting up a convenient way to make payments and purchases should be at the top of your list of things to do.

Tipping is commonplace throughout the United States with amounts varying depending on the situation.
U.S. Currency

The basic unit of exchange in the United States is the dollar ($), which is divided into 100 cents (¢). One dollar is commonly written as $1 or $1.00. There are four denominations of commonly used coins: 1 cent, 5 cents, 10 cents, and 25 cents. Americans usually refer to coins, not by their value in cents, but by their names. A one-cent coin is a penny, a five-cent coin is a nickel, a ten-cent coin is a dime, and a 25-cent coin is a quarter. There are also one-dollar coins and half-dollar (50-cent) coins but they are seldom found in circulation.

U.S. paper money (often called bills: for example, a "one-dollar bill") comes in single-bill denominations of one dollar ($1.00), two dollars ($2.00, but these are rare), five dollars ($5.00), ten dollars ($10.00), twenty dollars ($20.00), fifty dollars ($50.00), and one hundred dollars ($100.00). You will immediately notice that, unlike in most other countries, U.S. bills are all the same size and all the same color. They are differentiated from each other by the number value and with the portrait of a different U.S. historical figure on each denomination. At first, you may find this confusing and you will need to watch which bills you use carefully. However, you will become accustomed to the currency and will soon be able to differentiate easily between the denominations. U.S. coins also are marked with the coin's value and each denomination is a different size.

Establishing a Bank Account

One of the first things you should do after you arrive in the United States is establish a bank account. It is not a good idea to carry large sums of cash or to keep it in your room. Most banks have main offices in the center of a city or town. Smaller offices, called "branches," are usually found in other parts of a city or town and in the suburbs. Even if your bank does not have a branch nearby, you often can find automated bank machines to serve your needs. Banks generally are open Monday through Friday from 9:00 a.m. until 3:00 p.m. On Fridays, many banks stay open a few hours later. Many banks, but not all, are also open on Saturdays, often from 9:00 a.m. to 12:00 noon. Your international student adviser can suggest which banks are convenient to campus.

Remember that banks are private businesses. They are all different and each one wants to get your business. You should check with several banks to determine which bank offers the best services for your needs. When you are ready to open a bank account, go to the "New Accounts" department at the bank you have chosen. A bank officer will help you to open an account by explaining the different kinds of accounts available and the costs and services of each one. You should plan to open both a savings account and a checking (current) account at the same bank, simply because it will be more convenient for you. For example, if you have a savings account and a checking account in the same bank, you can easily transfer funds from one to the other. Interest rates on savings and checking accounts vary from bank to bank. Investigate and compare various banks and their rates of interests on checking and savings accounts before you decide where to open an account. Internet banks are an alternative option to traditional banks and are another possibility to explore. The best source of information for these will be on the Internet itself.

Checking Accounts

Checking accounts (called current accounts in many countries) are a way to keep your money safe and still allow easy access to it. Checks are an easy way to pay bills, especially by mail. Never send cash through the mail.

Automatic Tellers and 24-Hour Banking

Almost all American banks now offer banking privileges 24 hours a day through "automatic teller machines" or ATMs. When you open an account at a bank, you will be issued a bankcard and a personal identification number (PIN). You will be able to use this card in your bank's ATM to access your account and make transactions. This will enable you to do such things as withdraw and deposit money, transfer funds, and obtain your balance 24 hours a day. Generally, you can also use your bankcard in other banks' ATMs for a small service fee charged against your account, but only for cash withdrawals. Banks often impose limits on amounts that can be withdrawn from the ATM in one day, usually between $200 and $400.

It is now possible in the United States to conduct most of your monetary transactions using only your bankcard. Many stores have systems that permit you to use your bankcard instead of cash to pay for merchandise. In this way, the money is deducted directly from your bank account. Since you are not using cash when paying with your bankcard, however, you should keep track of your account to make sure you are not overspending. It is a good idea to carry a small amount of cash with you at all times anyway, since the automated banking system can break down.

Having a bankcard is very convenient, since it can be used all over the United States and even in other countries connected to the same banking system. Bankcards from other countries can also be used in the United States as long as they function on one of the banking networks used in the United States. Before leaving home, ask your bank if you can use your home country's bankcard in the United States. This is especially useful if, in case of emergency, you need to rapidly get money from home.

Most ATMs also accept credit cards. If you have a credit card but do not use it in ATMs yet, ask the bank that has issued your credit card to allocate a PIN to it. Then you will be able to use your credit card in ATMs. Note, however, that this transaction may be considered a "cash advance" and therefore your credit card company may immediately begin to charge you interest. In some cases, the interest rates for a cash advance may be higher than for credit card purchases.

Personal Checks

Checks that you write are called "personal" checks. You can use checks instead of money in most stores or businesses in the United States. Usually, you will be asked to present two pieces of identification, including at least one with a photo, before you can use a personal check to make purchases or to obtain cash.

Two-party Checks

Checks written by someone else in payment to you are called "two-party" checks. To cash or deposit such a check, you must first endorse (sign) it. Only endorse the check when you are ready to use it since it becomes negotiable — that is, it can be redeemed for cash — as soon as it is signed. To endorse a check, turn it over and, on the back across the narrow width, write your name exactly as it is written on the check. This is the bank's or merchant's way of making sure that you really are the person to whom the check was written and the person who should receive the money, either in cash or deposited to your bank account.

Cashier's Checks

A cashier's check is a check written for you by your bank. You give the bank the money (or it is taken from your account), and the clerk prepares a cashier's check. Your bank will probably charge a small fee for this service. Usually, cashier's checks are written for large amounts to transfer money from one place to another. A cashier's check is easier to cash than a personal check, and it is safer than carrying a large amount of cash. You do not have to cash a cashier's check at a branch of your bank; it can be cashed at any bank or business that will accept it.


When you write a check for more money than you have in the bank, you create an "overdraft." For each overdrawn check, the bank will charge you a fine of $10 to $25 or more. The bank will also return your check, unpaid, to the person or business to which you wrote the check. If the payee is a store or business, that payee may also charge you $5 to $20 for the trouble the bad check has caused — and they may not accept your checks again. It can be very expensive if you fail to keep an accurate, check-by-check record of your account. It is also illegal to issue a "bad" check (a check for which there is not sufficient money in the checking account) on purpose.

Savings Accounts

If you plan on bringing enough money with you for the entire school year, or even most of the money you will need, you should consider opening a savings account. A savings account usually offers a higher rate of interest than an interest-bearing checking account and allows you to make withdrawals to cover your living expenses. You can withdraw the money in cash or, especially for large amounts, in the form of a "certified" (bank) check. Compare rates offered by several banks to find the best terms and benefits for the type of account you will hold.

Safety Deposit Boxes

Most banks maintain small locked boxes that may be rented by the month or by the year. The contents of the box are known only to the person who holds the key; the bank does not have access, except in case of death. A safety deposit box is a good place to keep valuables such as passports, jewelry, foreign currency you do not want to exchange, and legal papers.

Credit Cards and "Buying on Credit"

The use of credit cards is widespread in the United States. Banks, credit card companies, gas companies, department stores, and other organizations issue credit cards, which can be used to make purchases. Statements are mailed to credit card holders once a month. If the amount due is not paid within a specified number of days, a "finance charge" is added to the bill. Applications for credit cards are available in many banks and stores. Information requested includes the applicant's source and amount of income, length of residence at the present address, and bank information. Many companies that issue credit cards require applicants to have a specific minimum income.

As a student, you may find it difficult at first to obtain a credit card. However, many credit card companies also offer special student credit cards, subject to certain conditions. Not having a credit card can make daily life somewhat more difficult. For example, if you are on a trip and need cash, you can obtain a cash advance from any bank that honors the specific type of credit card you hold. Finance charges, however, often begin from the day you receive the cash advance.

Whether you use a credit card or sign a contract to purchase something on credit, be careful not to build up too much debt. Credit buying is often necessary — for example, for the purchase of a car — but be sure you understand the terms of the loan agreement. You may have to pay high interest rates, sometimes as much as 21 percent.

One way to avoid building up too much debt is to delay obtaining a credit card or making large purchases involving long-term debt for the first few months you are in the United States. Instead, make your initial purchases by cash or by check. At the same time, keep careful records of your expenditures. Do this the first two or three months you are in the United States. By doing so, you will know exactly how much it costs to live and study in your city. You will then be in a good position to know when to use or not to use a credit card and how much debt you can actually support. Every four or five months thereafter, you should monitor your expenditures again to make sure that you are not spending too much or building up too much debt.


In the United States, tips (gratuities) are not automatically added to bills, as is customary in some other countries. Even if tipping remains a personal choice, it is usually expected when certain services are provided. You should be aware that the people who commonly receive tips are paid a wage that is lower than those who do not receive tips. They depend upon tips for a significant part, sometimes the majority, of their income. The average tip is usually 15 percent, but it can vary depending on the extent and the quality of the service provided.

Eating Out

The expected tip in a restaurant is 15 or 20 percent in a good restaurant with excellent service. You should leave your tip on the table for the waiter or waitress as you leave. If you pay with a credit card, you can add the tip to the credit card charges before you total the bill. The restaurant then gives that amount in cash to your server. If you sit at a counter in a restaurant, the tip is usually smaller; 10 to 15 percent is sufficient. In a fast-food restaurant, the bill is paid when the food is ordered and no tip is expected. In a cafeteria or a self-service restaurant, you pay the cashier after having chosen your meal and, again, no tip is expected.

Taxi Drivers

It is customary to give 10 to 15 percent of the total fare.

Airport and Hotel Porters

It is customary to give $1.00 for each bag.

Barbers, Hairdressers, and Beauticians

They usually are tipped 10 to 15 percent of the bill.

Valet Parking

The attendant should usually receive $1.00 to $2.00.

NEVER OFFER A TIP to public officials, police officers, or government employees. This is against the law in the United States. There is no need to tip hotel desk clerks, bus drivers, theater ushers, salespeople, flight attendants, or gas station attendants.
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