Details about Secured Credit Cards: Bank of America and Wells Fargo

Here are some details about secured credit cards from major banks:

Bank of America

Annual fee (as of today) $29 APR (as of today) 14.24%
Fee on Balance Transfers (as of today) 4%, Min per transaction $10
ITIN (Individual Taxpayer Identification Number) accepted online and on paper form.

Wells Fargo

Annual fee (as of today) $18 APR (as of today) 18.99%
ITIN (Individual Taxpayer Identification Number) not mentioned, maybe it will be accepted anyway.
Existing account at Wells Fargo required for online Application.
Eligibility statement: "You must be at least 18 years old, not have declared bankruptcy within the past 12 months, and not have any unsettled liens."

Cards from other banks may provide similar features and should also be considered for your purpose. Both banks mentioned here, provide branch services in major areas of the US, which makes applying much easier than going through an online application process.

Identification Requirements as defined by the Department of the Treasury

This is the Department of Treasury requirments imposed on banks to identify customers.

The document is very long, but I have found the following information, which may be useful:

For non-U.S. persons a bank must obtain one or more of the following: a taxpayer identification number; passport number and country of issuance; alien identification card number; or number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard. The basic information that banks would be required to obtain under this proposed regulation reflects the type of information that financial institutions currently obtain in the account-opening process and is similar to the identifying information currently required for each deposit or share account opened (see 31 CFR 103.34(a)(1)).

This information has been extracted from the document, which is specified as follows:

[Billing Code: 4810-02]
DEPARTMENT OF THE TREASURY
Office of the Comptroller of the Currency
12 CFR Part 21
[Docket No. 02-11]
FEDERAL RESERVE SYSTEM
12 CFR Part 208
12 CFR Part 211
[Docket No. R-1127]
FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 326
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Part 563
[No. 2002-27]
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Part 748
DEPARTMENT OF THE TREASURY
31 CFR Part 103
RIN 1506-AA31

Customer Identification Programs for Banks, Savings Associations, and Credit Unions
AGENCIES: The Financial Crimes Enforcement Network, Treasury; Office of the Comptroller
of the Currency, Treasury; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; Office of Thrift Supervision, Treasury; National Credit Union Administration.

ACTION: Joint notice of proposed rulemaking.

SUMMARY: The Department of the Treasury, through the Financial Crimes Enforcement Network (FinCEN), together with the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Board), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the National Credit Union Administration (NCUA) (collectively, the Agencies) are jointly issuing a proposed regulation to implement section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001(the Act). Section 326 requires the Secretary of the Treasury (Secretary) to jointly prescribe with each of
the Agencies, the Securities and Exchange Commission (SEC), and the Commodity Futures
Trading Commission (CFTC), a regulation that, at a minimum, requires financial institutions to
implement reasonable procedures to verify the identity of any person seeking to open an account, to the extent reasonable and practicable; maintain records of the information used to verify the person's identity; and determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency. The proposed regulation applies to banks, savings associations, and credit unions.

DATES: Written comments on the proposed rule may be submitted on or before [INSERT
DATE 45 DAYS AFTER DATE OF PUBLICATION IN THE FEDERAL REGISTER].
ADDRESSES: Because paper mail in the Washington area may be subject to delay,
commenters are encouraged to e-mail or fax comments. Comments should be sent by one method only. Financial institution commenters are encouraged to submit comments only to their Federal functional regulator. Non-financial institution commenters are encouraged to submit comments only to FinCEN. All comments will be considered by Treasury and the Agencies in formulating the final rule.

OCC: Please direct your comments to: Office of the Comptroller of the Currency, 250 E Street, SW., Public Information Room, Mailstop 1-5, Washington, DC 20219, Attention; Docket No. 02-11; FAX number (202) 874-4448; or Internet address: regs.comments@occ.treas.gov. Comments may be inspected and photocopied at the OCC's Public Reference Room, 250 E Street, SW., Washington, DC. You can make an appointment to inspect comments by calling
(202) 874-5043. Board: Comments should refer to Docket No. R-1127 and may be mailed to Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW, Washington, DC 20551; sent by FAX to (202) 452-3819 or (202) 452-3102; or sent by e-mail to regs.comments@federalreserve.gov. Members of the public may inspect comments in Room MP-500 between 9:00 a.m. and 5:00 p.m. on weekdays pursuant to section 261.12 (except as provided in section 261.14) of the Board's Rules Regarding Availability of Information, 12 CFR 261.12 and 261.14.
FDIC: Comments should be directed to: Executive Secretary, Attention: Comments/OES, Federal Deposit Insurance Corporation, 550 17th Street, N.W., Washington, DC 20429. Comments may be hand-delivered to the guard station at the rear of the 550 17th Street Building (located on F Street), on business days between 7 a.m. and 5 p.m. In addition, comments may be sent by fax to (202) 898-3838, or by electronic mail to comments@FDIC.gov.
Comments may be inspected and photocopied in the FDIC Public Information Center, Room
100, 801 17th Street, NW, Washington, D.C., between 9 a.m. and 4:30 p.m., on business days.
OTS: Comments may be mailed to Regulation Comments, Chief Counsel’s Office, Office of Thrift Supervision, 1700 G Street, NW, Washington, DC 20552, Attention: No. 2002-
27; FAX number (202) 906-6518, Attention: No. 2002-27; or Internet address regs.comments@ots.treas.gov, Attention: No. 2002-27 and include your name and telephone number. Comments may also be hand delivered to the Guard’s Desk, East Lobby Entrance, 1700 G Street, NW., from 9:00 a.m. to 4:00 p.m. on business days, Attention: Regulation Comments, Chief Counsel’s Office, No. 2002-27. OTS will post comments and the related index on the OTS Internet Site at www.ots.treas.gov. In addition, you may inspect comments at the Public Reading Room, 1700 G St. NW, by appointment. To make an appointment for access, you may call (202) 906-5922, send an e-mail to public.info@ots.treas.gov, or send a facsimile transmission to (202) 906-7755. (Please identify the materials you would like to inspect to assist us in serving you.) We schedule appointments on business days between 10:00 a.m. and 4:00 p.m. In most cases, appointments will be available the business day after the date we receive a request.
NCUA: Direct comments to the Secretary of the Board. Mail or hand-deliver comments
to: National Credit Union Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428.
You may fax comments to (703) 518-6319, or e-mail comments to regcomments@NCUA.gov.
To inspect comments, please contact the Office of General Counsel, (703) 518-6540; or the
Office of Examination and Insurance, (703) 518-6360. FinCEN: Comments may be mailed to FinCEN, Section 326 Bank Rule Comments, P.O. Box 39, Vienna, VA 22183, or sent to Internet address regcomments@fincen.treas.gov with the caption “Attention: Section 326 Bank Rule Comments” in the body of the text. Comments may be inspected at FinCEN between 10 a.m. and 4 p.m. in the FinCEN Reading Room in Washington, D.C. Persons wishing to inspect the comments submitted must request an appointment by telephoning (202) 354-6400 (not a toll-free number).
FOR FURTHER INFORMATION CONTACT:
OCC: Office of the Chief Counsel (202) 874-3295.
Board: Enforcement and Special Investigations Sections: (202) 452-5235; (202) 728-
5829; or (202) 452-2961.
FDIC: Special Activities Section, Division of Supervision, and Legal Division at
(202) 898-3671.
OTS: Office of the Chief Counsel, (202) 906-6012.
NCUA: Office of General Counsel, (703) 518-6540; or Office of Examination and
Insurance, (703) 518-6360.
Treasury: Office of the Chief Counsel (FinCEN), (703) 905-3590; Office of the
Assistant General Counsel for Enforcement (Treasury), (202) 622-1927; or the Office of the
Assistant General Counsel for Banking & Finance (Treasury), (202) 622-0480.

Legal Requirements: Sec. 326 of the PATRIOT ACT

As stated before, requirements about identification are defined within the PARTIOT ACT (H.R. 3162).

The PATRIOT Act sets a framework for identification requirements imposed on banks. The PARTRIOT Act does not impose individual requirements.

Individual requirements are to be implemented by appropriate rule making of the Department of Treasury.

SEC. 326. VERIFICATION OF IDENTIFICATION.

(a) IN GENERAL- Section 5318 of title 31, United States Code, as amended by this title, is amended by adding at the end the following:

`(l) IDENTIFICATION AND VERIFICATION OF ACCOUNTHOLDERS-

`(1) IN GENERAL- Subject to the requirements of this subsection, the Secretary of the Treasury shall prescribe regulations setting forth the minimum standards for financial institutions and their customers regarding the identity of the customer that shall apply in connection with the opening of an account at a financial institution.

`(2) MINIMUM REQUIREMENTS- The regulations shall, at a minimum, require financial institutions to implement, and customers (after being given adequate notice) to comply with, reasonable procedures for--

`(A) verifying the identity of any person seeking to open an account to the extent reasonable and practicable;

`(B) maintaining records of the information used to verify a person's identity, including name, address, and other identifying information; and

`(C) consulting lists of known or suspected terrorists or terrorist organizations provided to the financial institution by any government agency to determine whether a person seeking to open an account appears on any such list.

`(3) FACTORS TO BE CONSIDERED- In prescribing regulations under this subsection, the Secretary shall take into consideration the various types of accounts maintained by various types of financial institutions, the various methods of opening accounts, and the various types of identifying information available.

`(4) CERTAIN FINANCIAL INSTITUTIONS- In the case of any financial institution the business of which is engaging in financial activities described in section 4(k) of the Bank Holding Company Act of 1956 (including financial activities subject to the jurisdiction of the Commodity Futures Trading Commission), the regulations prescribed by the Secretary under paragraph (1) shall be prescribed jointly with each Federal functional regulator (as defined in section 509 of the Gramm-Leach-Bliley Act, including the Commodity Futures Trading Commission) appropriate for such financial institution.

`(5) EXEMPTIONS- The Secretary (and, in the case of any financial institution described in paragraph (4), any Federal agency described in such paragraph) may, by regulation or order, exempt any financial institution or type of account from the requirements of any regulation prescribed under this subsection in accordance with such standards and procedures as the Secretary may prescribe.

`(6) EFFECTIVE DATE- Final regulations prescribed under this subsection shall take effect before the end of the 1-year period beginning on the date of enactment of the International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001.'.

(b) STUDY AND REPORT REQUIRED- Within 6 months after the date of enactment of this Act, the Secretary, in consultation with the Federal functional regulators (as defined in section 509 of the Gramm-Leach-Bliley Act) and other appropriate Government agencies, shall submit a report to the Congress containing recommendations for--

(1) determining the most timely and effective way to require foreign nationals to provide domestic financial institutions and agencies with appropriate and accurate information, comparable to that which is required of United States nationals, concerning the identity, address, and other related information about such foreign nationals necessary to enable such institutions and agencies to comply with the requirements of this section;

(2) requiring foreign nationals to apply for and obtain, before opening an account with a domestic financial institution, an identification number which would function similarly to a Social Security number or tax identification number; and

(3) establishing a system for domestic financial institutions and agencies to review information maintained by relevant Government agencies for purposes of verifying the identities of foreign nationals seeking to open accounts at those institutions and agencies.

Secured Credit Cards

Secured credit cards offer credit to persons with poor or even no credit.

• Poor credit means that a person has had some negative issues in it's credit history. Most likely payments were no made in full or not made at all, or that a person may have even filed bankruptcy to clear all credit obligations.
• No credit means that a person has absolutely no credit relevant information at any of the existing credit bureaus. Therefore a bank may not easily evaluate the credit offer a person, as no information is available.

A secured credit card is a type of credit card, which is secured by a deposit account (e.g. special savings account) by the cardholder. The cardholder deposits between 100% and 200% of the total amount of the desired credit amount.

If a cardholder deposits $2000, he may get a line of credit between $1000 and $2000.

If such an deposit is put into a special account of the bank, even lower deposits may be required.

There is no difference in the payment of secured credit cards vs. non-secured cards. The security is not meant to be used a regular payment of purchases made on the card, but rather a backup, if the cardholder defaults. Therefore the overall risk for the bank is nearly nonexistent.

The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus. This allows for building of positive credit history.

Secured credit cards are available with both Visa and MasterCard logos.

Offers of secured credit cards by major banks:

• Bank of America
  
• Wells Fargo
  

Available Cards in the US Banking System

The US banking system has different kind of cards, which may not be available in all countries.

These are:

• Credit Cards offer a line of credit at a certain interest rate called APR (Annual Percentage Rate). The APR is usually rather hight in the more than 10% rate. Some banks may even charge more than 20%. Besides this fee, banks may also charge annual fees for the card, and certain fees for late payment or even over the limit fees. A minimum amount must be paid back every month. Smart customer's usuallu do not need any credit at all, but like all the existing other features of US credit cards. :-)
  
• Charge Cards offer card payments, which will be charged once a month as an aggregate from an existing checking account. Usually there is no way to get any credit on these kind of cards. The debt must be paid in full any month.
  
• Debit Cards offer the least functionalities among all kind of cards. Payments with these cards will be directly debited to an existing checking account.

Starting Online Banking

Most banks require you to enter a SSN or another TIN to enable their online services. This makes it almost impossible for persons that have no SSN or ITIN to use online banking.

As a remedy of this problem, it is usually also possible to enable online banking by calling designated phone numbers. There you will be asked personal information, that is on the bank's record to identify yourself and have the online banking enabled this way.

It should be obvious that online banking may also be enabled while opening the bank account at your branch. But most astonishingly not all banks offer this.

Opening an account online?

Today the Internet is the way to do business. This applies especially to the US, as they have invented the Internet.

It is possible to open a bank account, credit card, loan, or other financial services online. Identification by the customer is mainly provided by presenting a SSN along with a state ID number, which is most usually a state driver's license.

Being a NRA (Non Resident Alien) means that you usually do not have either one. Therefore opening a bank account online will not work. You need to find a local branch of your desired bank an apply there in person.

Sorry for this very inconvenient fact. :-)

Available banking options

The following banking options are available:

• Checking Accounts offers you to deposit, withdraw, transfer and receive money. Usually those accounts to not provide any interest.
  
• Savings Accounts offers a usually low interest investment option. Most savings account have a $300 minimum to avoid any monthly fees, which would be in the range of $5. Access to the deposits may be limited by amount or a certain number of transactions per month, week.
  
• Certificate of Deposit are time investment accounts. Usually a minim amount higher than $1000 is required. The invested money will earn interest for a predefined period of time. Access to the invested money may not be possible before the maturity day. CDs are usually used as midterm investments for money, which is not immediately needed. Banks may offer premature access to funds at a fee.
  
• Debit Cards offer basically to withdraw and deposit money to any kind of account. One Card may be used to access all accounts. The ATM (Automatic Teller Machine) will ask for every transaction, which account should be used. Debit Cards may be at the same time also Credit Cards. For POS (Point of Sale) transactions the clerk will usually ask "debit or credit"? Depending on this answer a signature or a PIN (Personal Identification Number) may be needed. Debit Cards are usually issued by Visa or MasterCard.
• Online Banking offers online access to the bank account from the Interner. All or a limited number of transactions may be performed online rather than visiting a local branch. Online Banking may be an essential feature if you are not present in the US.
  

What is required by law and what not?

The legal requirements are very obvious, agreeable and certainly not to high.

The US government requires from the banks to ask customers for proper identification. It is just that simple and nothing magic.

So what is NOT needed?

• You do not need a SSN (Social Security Number). SSNs are assigned by the SSA (Social Security Administration) with it's originally defined purpose to assign a social security account numbers for pensions and other benefits paid by the SSA. The SSN is also used as a TIN (Taxpayer Identification Number) by the IRS for individuals.
• You do not need any other TIN (e.g. ITIN, EIN). ITINs (Individual Taxpayer Identification Numbers) are assigned by the IRS for persons not eligible to get a SSN. As a matter of fact ITINs are widely used by illegal immigrants to file their taxes. But they do not provide any benefits for improving their illegal immigration status in the US. But there are also legitimate and non-illegal persons, that have ITINs!!! EINs (Employer Identication Number) are TINs assigned to self-employed persons, companies, corporations, foundations, and other legal entities.
• You do not need any US ID document (e.g. US passport, US state driver license, US green card, ...)
• You do not need a special visa. Being a regular VWP (Visa Waiver Programme) visitor or a B1/B2 or any student related visa is fully sufficient.
  

So what is actually needed?

For identification purposes:

• At least one government issued ID. Non government issued IDs will not work! Most preferable is this a valid passport. Considering you are legally in the US, the passport should also have a valid I-94 (white paper form) or I-94W (green paper form) form attached to it. This form shows the bank your legal status in the US and should be convincing to them.
  
• A second form of ID may be required, which could be a national identity card or a national drivers license.

For tax purposes:

• If you may not provide the bank with a SSN or other TIN, the bank will ask you to fill out a W-8BEN form. This IRS form tells the bank that the account's beneficiary is a NRA (Non Resident Alien). If you will not be asked for this form, then your interest will be taxed and the withheld taxes will be sent to the IRS. You may reclaim any unjustified taxes by filing a tax return. Filing may be very complicated, as you will also need to apply for an ITIN.
  

Open an Account: What do you need? A bank willing to open an account!

You may find different information on the web about the requirements to open a bank account.

First of all, you need a bank, which is willing to give you an account. To provide banking services to non US citizens, non residents is not a right you may ask from a bank, but is a privilege given to you from that bank. So whatever the bank asks from you counts. Discussing about this with the bank may not be useful.

You may look for a larger bank, e.g.

• Bank of America
• JP Morgan Chase
• Wells Fargo
• Citibank

to open an account.

Some smaller and specialized banks and credit unions may also provide banking services to you, but it may be harder to get.

What is the stepping stone to get a bank account?

As as result of sloppy bank procedures before the 9/11 terror attacks, which enabled terrorist to use banking services as part of their terrorist activities, requirements have been tightened mainly by the so called PATRIOT ACT.

Besides this most banks fear legal ramifications from law enforcement and regulatory authorities, and may have their own understanding of these requirements. So banks may have even higher requirements than what is actually required by law.

Bank Account in the USA: What for?

To have a bank account in the USA can be useful for many matters, even if you are just a regular visitor to the USA.

• You may benefit from the same payment systems, that US citizens or other residents enjoy. No special handling, because you may not have a non US bank card.
  
• You may receive money by ordinary bank transfers. No Paypal charges!
• You may send money by ordinary bank transfers. No Paypal charges!
• You may keep US funds, which you may have bought at a good rate, in the USA and use it for business or private matters.
• You may earn interest on savings accounts or CDs (certificates of deposit).