How the U.S. Banking System Works: Key Differences Compared to Brazil
For many Brazilians and other immigrants, moving to the United States involves not only a cultural adjustment but also a financial one. The American banking system operates differently from Brazil’s in several key ways — from how accounts are opened to how credit is built.
While both countries share the same fundamental purpose — helping people save, borrow, and transact — the structure, regulation, and consumer behavior around banking in the U.S. are unique.
This article breaks down how the American banking system works, what makes it different from Brazil’s, and what newcomers should understand to manage money successfully in the U.S.
1. Structure of the Banking System
The U.S. banking system is highly decentralized. Instead of one central authority overseeing all banks, it operates under a dual banking system:
- Federal banks, regulated by the Office of the Comptroller of the Currency (OCC).
- State-chartered banks, regulated by individual state banking departments.
In addition, the Federal Reserve (Fed) acts as the central bank, setting monetary policy, managing inflation, and overseeing the stability of the system — similar to Brazil’s Banco Central (BACEN).
However, unlike Brazil, where the major banks (Itaú, Bradesco, Banco do Brasil) dominate the market, the U.S. has thousands of financial institutions, including community banks, credit unions, and fintechs, offering diverse services and competition.
2. Federal Deposit Insurance (FDIC)
One of the strongest safety features in the U.S. is the Federal Deposit Insurance Corporation (FDIC).
This independent agency insures deposits up to $250,000 per depositor, per bank. That means if a bank fails, your money remains safe up to that limit.
In Brazil, the equivalent protection is offered by the Fundo Garantidor de Créditos (FGC), but the U.S. limit is much higher and applies per account category (checking, savings, etc.), giving broader protection.
3. Variety of Banks
The United States offers a wide range of banking options:
- National Banks: Chase, Bank of America, Wells Fargo.
- Regional Banks: PNC, TD Bank, and U.S. Bank.
- Community Banks: Smaller institutions that focus on local customers.
- Credit Unions: Nonprofits owned by their members, often with lower fees.
- Online Banks and Fintechs: Chime, SoFi, Revolut — offering fast and low-cost services.
In Brazil, most banking is concentrated among a few large institutions, whereas in the U.S., competition encourages better rates, personalized products, and innovative technology.
4. Checking vs. Savings Accounts
In the U.S., most people hold at least two accounts:
- Checking Account (Conta Corrente): Used for daily spending, bills, and direct deposits.
- Savings Account (Conta Poupança): Used for saving and earning interest.
These two types are distinct — in Brazil, both functions are often combined in a single account.
Moreover, U.S. checking accounts frequently include debit cards, mobile payment integrations, and digital banking apps that simplify everyday transactions.
5. Credit Is Central to the System
One of the biggest cultural differences between Brazil and the United States is the importance of credit.
In the U.S., your credit score determines access to nearly every financial opportunity — loans, credit cards, mortgages, even renting an apartment.
Credit activity is tracked through credit bureaus such as Experian, Equifax, and TransUnion. A score above 700 is considered good, while below 650 may limit options.
In Brazil, credit evaluation is growing in influence (with systems like Serasa and Boa Vista), but it’s not as deeply integrated into everyday financial life as in the U.S.
6. Fees and Charges
Brazilian banks are known for high fees, but the U.S. system also has its share — though with more flexibility to avoid them.
Common U.S. banking fees include:
- Monthly maintenance fee: Often waived with direct deposit or minimum balance.
- Overdraft fee: Charged when your account goes negative.
- ATM fees: For using out-of-network machines.
In contrast, many digital banks in the U.S. (like Chime and Capital One 360) offer zero-fee accounts, something still uncommon in Brazil’s traditional banking structure.
7. Payments and Transfers
In Brazil, Pix has revolutionized instant payments. The U.S. doesn’t yet have an equivalent system with such universal adoption, but several alternatives exist:
- Zelle: Instant transfers between participating banks.
- Venmo and Cash App: Peer-to-peer payment apps popular among younger users.
- ACH Transfers: Electronic payments for salaries or bills.
- Wire Transfers: Used for large or international transactions.
Although U.S. systems can seem slower compared to Pix, they are gradually improving through the FedNow service, launched to modernize instant payments nationwide.
8. Account Opening Requirements
In Brazil, opening a bank account usually requires a CPF, proof of residence, and ID.
In the U.S., requirements vary by institution, but most banks request:
- Passport or government-issued ID
- Proof of address (lease, utility bill)
- SSN or ITIN (for tax reporting)
- Initial deposit (usually $25–$100)
For foreigners, many banks now allow account opening with only a passport and ITIN, especially among credit unions and fintechs.
9. Security and Consumer Protection
The U.S. financial system emphasizes transparency and consumer rights. Agencies such as the Consumer Financial Protection Bureau (CFPB) oversee banks to prevent abusive practices.
Moreover, both debit and credit cards are protected by zero-liability policies, ensuring that unauthorized charges are refunded.
While Brazil has strong consumer protection laws (Código de Defesa do Consumidor), the U.S. banking system provides faster digital dispute mechanisms and automated fraud detection systems.
10. Credit Unions: A Distinctive Feature
Credit unions are one of the most unique aspects of American banking.
They are member-owned institutions that operate as nonprofits. Instead of maximizing profits, they reinvest in the community, offering:
- Lower fees and interest rates
- Higher savings yields
- More personalized service
For immigrants, credit unions are particularly welcoming because they often accept ITINs and foreign IDs, making them ideal for those without full documentation.
11. Technology and Fintech Integration
Both Brazil and the U.S. are innovators in digital banking, but in different ways.
In Brazil, Pix and digital banks like Nubank have set global standards for simplicity and user experience.
In the U.S., fintechs such as Chime, SoFi, and Revolut have driven modernization through early access to paychecks, budgeting tools, and AI-driven financial coaching.
The U.S. market also encourages partnerships between traditional banks and fintechs, creating a hybrid financial ecosystem that combines reliability with innovation.
12. Loans and Interest Rates
Loans in the U.S. are generally more accessible, but interest rates vary depending on credit score. For example:
- Mortgage loans: 5–8% annually (in 2025)
- Auto loans: 6–12%
- Personal loans: 8–20%
In Brazil, rates are often much higher due to inflation and credit risk. However, Brazilians benefit from more centralized information through government programs and stricter lending rules.
The U.S. system rewards consistent credit behavior with lower rates, emphasizing long-term financial trust.
13. Financial Culture and Education
American culture encourages financial independence and early exposure to credit. It’s common for teenagers to open student accounts or secured credit cards.
In Brazil, people often rely on debit or cash longer, entering the credit market later in life.
This difference explains why financial literacy programs in the U.S. focus heavily on credit management, savings, and retirement planning, whereas Brazil emphasizes debt reduction and budgeting.
14. Key Differences Summary
| Aspect | United States | Brazil |
|---|---|---|
| System Type | Decentralized (federal and state banks) | Centralized (BACEN) |
| Deposit Protection | FDIC – up to $250,000 | FGC – up to R$250,000 |
| Payment Speed | Slower (Zelle, ACH) | Instant (Pix) |
| Credit Importance | Central to financial life | Secondary role |
| Banking Options | Thousands of banks | Concentrated in a few |
| Digital Adoption | Rapidly growing | Highly advanced |
| Account Access for Foreigners | Broad (ITIN accepted) | Limited for non-residents |
Conclusion
Understanding how the U.S. banking system works is essential for Brazilians and other immigrants starting a new life in America. The system is vast, diverse, and credit-driven, emphasizing responsibility and trust over time.
While Brazil leads in payment technology, the U.S. stands out for its strong consumer protections, variety of banking options, and opportunities to build credit — the foundation of financial success in the country.
By adapting to this structure and learning its rules, newcomers can manage their finances confidently and thrive within one of the world’s most dynamic financial ecosystems.
