Between choosing where to live to picking a major, college-bound students must navigate plenty of challenging decisions. And with so many demanding choices, it’s easy to overlook taking necessary steps to pick the right checking account. With that in mind, if you’re a college-bound student or a current student looking for ideas for better banking, consider these four expert-backed strategies.
[See: 9 Financial Tools You Should Be Using.]
1. Find a bank with minimal fees. While a user-friendly bank website is a nice feature, and it’s an added bonus if your bank boasts plenty of ATMs or excellent customer service, finding a financial institution that doesn’t impose fees is key if you’re on a tight budget. In particular, you’ll want to sidestep overdraft fees, the pesky extra charge banks impose if you’ve spent more than what’s in your bank account. In 2017, consumers paid $34.3 billion in overdraft fees, according to Moebs Services, a research firm in Lake Forest, Illinois. And the average overdraft fee in 2017 was $30, according to Moebs Services.
Fortunately, a variety of banks do not impose overdraft fees. Bank of America, U.S. Bank and SunTrust are just a sampling of the financial institutions that offer free checking accounts to college and high school students.
“Most nationally recognized banks have student accounts with little or no fees, and will want to try to retain the student as this is a potential client for life for them,” says Ryan Boggs, an investment advisor representative with FourStar Wealth Advisors LLC in Chicago.
2. Read the fine print. There are plenty of popular banks that offer free checking accounts to college students, but you’ll want to look through them to make sure there isn’t a hidden fee somewhere. For instance, U.S. Bank offers free checking accounts to students, but if you end up getting a paper statement, you’ll pay $2 a month. You won’t pay fees if you use Bank of America’s ATMs, but if you use another bank’s ATMs, you’ll pay $2.50. Just keep in mind that most banks charge ATM fees if you’re using a different bank’s ATM.
3. Decide if you want a bank that’s easily accessible in your hometown and campus. If you appreciate having an ATM nearby, or you want the opportunity to connect with a bank teller or manager to discuss money issues, you’ll want a bank that has branches where you live during the school year and when you’re on break. So, make sure to check if there are branches in both locations.
[See: 10 Things Everyone Should Know About Money.]
With that said, don’t rule out checking out your college’s official bank or credit union. Some universities partner with other banks, like the arrangement Ohio State University has with Huntington Bank, or the partnership between Arizona State University and MidFirst Bank. The top perk of partnering with these banks is that college students get a network of ATMs where they can withdraw money for free. Plus, many universities have banking systems with the branches and ATMs that go far beyond the campus.
Of course, if you prefer online banking and don’t mind not having a branch to wander into, you might want to use an online bank. Some of the better-known banking institutions are Ally Bank, Simple and Radius Bank.
4. Once you open a bank account, know how it works. Maybe you’ve had a bank account before, and you’re familiar with ways to monitor your account and leverage online tools. Still, if you’re in college for the first time, spending money on your own might be a new challenge.
“Watch out for FOMO [fear of missing out] spending,” warns Gaby Lapera, a copy editor at Credit Karma, a personal finance company headquartered in San Francisco. She cites a study conducted by Credit Karma and Qualtrics, a software company based in Utah and Washington, which surveyed 1,045 American consumers and found that nearly 40 percent of millennials have gone into debt to try and keep up with their peers.
“You might want to say yes to everything, especially at first, but keep in mind that you’ll get a lot more [spending] opportunities throughout your college experience, and you don’t need to say yes to everything at once,” Lapera says.
[See: 8 Big Budgeting Blunders — and How to Fix Them.]
Dean D’Amico, an entrepreneur in Irvine, California, who owns and runs Ledger1.com, a money management website, stresses the importance of learning how to budget with your bank account as early as possible. “The nice thing about developing good spending habits is that at some point they become so second nature that it feels like they are running on autopilot,” he says. “Suddenly, you find yourself with extra money at the end of the month that you can invest or reward yourself. Financial stability becomes a state of mind, a way of functioning. With persistence and a little luck, it will stay that way long enough for you to achieve your goals and save for a comfortable retirement.”
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The Best Banking Options for College-Bound Students originally appeared on usnews.com
