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How banking works in the U.S.

If you're new to banking in the U.S., terms like checking account, APY, bill pay and social security may seem foreign to you.

Getting your head around the common financial terms and services in the U.S. will help you make the most of your money and avoid mistakes.

Keeping your money secure

Many banks in the U.S. are insured by the FDIC (Federal Deposit Insurance Corporation). This means if those banks fail, the FDIC will compensate customers applicable limits, per customer, per insured bank.

Banking services

Most U.S. banks will offer a range of services including:

  • Checking accounts:

    a day-to-day account with a debit card, which you can use to buy things or withdraw cash from an ATM. You can have your salary paid into your checking account and use it to transfer money to people and pay bills.

    Explore: HSBC checking accounts

  • Credit cards:

    a way of borrowing money up to a certain limit where you make regular repayments on any money you owe. You'll be charged interest on the money you owe if you carry a debt from month to month.

    Explore: HSBC credit cards

  • Savings accounts:

    a safe place to store your money and accrue interest – which is calculated as APY or Annual Percentage Yield.

    Explore: HSBC savings accounts

  • Mortgages:

    a long-term loan where you borrow a lump sum to buy a property and make regular repayments, paying interest on the amount owed. US mortgages are secured with your property as collateral – this provides the bank protection that you will repay the outstanding balance.

    Explore: HSBC mortgages

There are various ways to access your HSBC U.S. accounts, including:

Acronyms and other key terms

Beyond the different banking products, it's useful to get familiar with some of these names and labels you'll likely come across:

  • Account number:
    a unique number given to your bank account.
  • APR:
    the annual percentage rate (APR) shows the potential cost of borrowing money over a year on credit cards and loans. It takes into account charges – such as an annual fee – as well as account interest. This is standardized across banks to help you compare the cost of products from different lenders.
  • APY:
    the annual percentage yield (APY) is the way banks show the potential interest earnings on a savings account or investment product over the course of a year.
  • ATM:
    automated teller machines (ATMs), or cash machines, allow you to withdraw cash from your checking account and check your balance.
  • Bill pay:
    this lets you pay bills or other people from your bank account online, removing the need to write checks or pay in cash.
  • IBAN:
    stands for International Bank Account Number. It identifies accounts from any bank in any country or region. If you want to send or receive automated foreign currency payments, you may need this.
  • Social security:
    a federal program that provides retirement income to those who paid into the program during their working years, as well as their spouses and children.
  • SWIFT code:
    a number that identifies your bank and is needed if you want to send or receive automated international payments.
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Disclaimer

For clients located outside of the U.S. - Our products and services are not specifically directed at individuals located in the European Union. Our U.S. representatives, as well as our public website, us.hsbc.com, provide products and services governed by U.S. laws and regulations. Our products and services, as well as their specific terms and conditions, are subject to change and may not be available in all territories or to all customers. If your product requires a contract, application, disclosure, or other document to be signed, such document(s) will be deemed executed in the U.S. and only acted upon after you have signed them and they have been received by HSBC in the U.S. If you are not located in the U.S., the laws and regulations of your country of residence could affect the offering, negotiation, discussion, provision, and/or use of HSBC U.S. products and services. If you are not a U.S. resident, please read the specific cross-border product and service disclaimers, which are available on the Cross Border Disclosure page of our public website at us.hsbc.com/crossborder.