As a college student, it’s easy to make poor financial decisions. And it only takes a few missteps to generate credit card debt or pay hundreds of dollars in senseless bank fees. That’s why it’s…
As a college student, it’s easy to make poor financial decisions. And it only takes a few missteps to generate credit card debt or pay hundreds of dollars in senseless bank fees. That’s why it’s key to choose a bank account that offers a variety of ATM and online banking options, as well as low interest rates, limited fees and no minimum balance or transfer restrictions.
While everybody understands that banks need to make money, there’s no need to be nickel-and-dimed. “College students opening a bank account need to be mindful of the potential fees, from account maintenance fees to ATM fees,” says Anna Keisler, an Atlanta-based associate financial advisor with SG Financial Advisors, LLC.
Fortunately, it isn’t that hard to dodge banks that impose fees. “A lot of institutions offer accounts marketed to students, with lower account minimums and sometimes other ways to avoid account maintenance fees. It’s important to remember those fees do add up over time, so students should include them when comparing accounts from different institutions,” Keisler says.
“They should also shop around before deciding which bank to use and which account to open. With the number of available institutions, they have options from online banks to credit unions to banks with a physical presence,” she adds.
Some banks you might want to consider are Ally Bank, Capital One 360 and Simple — all online banks that offer access to ATMs across the country. As for fees, most banks are going to have some fees, such as overdraft fees, if you go into the negative. The trick is finding banks that either limit the fees to things like paper statement fees that you can eliminate if you get your statement through email, or finding banks that don’t offer too many overdraft fees.
Ally Bank. While Ally Bank does impose an overdraft fee, you’ll never have more than one $25 fee per day, even if you have multiple overdrafts. Plus, the checking account is interest-bearing at 0.1 percent (or 0.6 percent if you have more than $15,000 in the account).
Capital One 360. Capital One 360 does impose an overdraft fee that’s typically $35 per transaction. However, there are no fees for opening an account or maintaining an account.
Simple. Simple has no overdraft fees. What’s more, the only way you may incur a fee is if you use an ATM that isn’t in the Allpoint ATM network. While Simple won’t charge a fee, you may have to pay a fee for using an out-of-network ATM.
College students interested in studying abroad may want to consider opening a Schwab Bank High Yield Investor Checking Account. This account is part of the Charles Schwab online banking portfolio and comes with no monthly service fees, no account minimum and free overdraft protection when linked to a Charles Schwab brokerage account or savings account.
The best part for students studying abroad is the unlimited ATM reimbursement feature. Charles Schwab will reimburse all fees (both domestic and international) from ATMs that accept your Charles Schwab debit card. This makes access to cash simple and cost-effective for students living in foreign countries. Plus, there are no foreign transaction fees when you swipe your debit card abroad. However, it would be in your best interest to get a credit card with no foreign transaction fees just in case your information gets skimmed. It’s much less of a headache to deal with credit card fraud than debit card fraud because the latter gives thieves direct access to funds in your bank account.
Best Student Checking Accounts for Brick-and-Mortar Branches
“Don’t assume that you will need a new bank when you go off to college or university even if the school is a different city or state,” says Peter Kubiska, vice president of marketing at the regional bank Dollar Bank, headquartered in Pittsburgh. “In today’s world, your existing bank may still meet your needs. For example, with online banking, mobile apps, surcharge-free ATM networks and debit card usage, fewer and fewer people actually choose to go to a physical branch,” Kubiska adds.
While your kid may have conquered digital banking, you still may prefer to steer him or her to a bank with branches to help troubleshoot any customer service issues in person. And though online banking is on the rise, big-brand banks tend to have checking accounts designed for college students.
Wells Fargo Everyday Checking. For instance, Wells Fargo offers an Everyday Checking account option for 17- to 24-year-olds. There is a $10 service fee, but you can sidestep the charge if direct deposits of $500 or more go into the account every month, or there are 10 or more debit card purchases or payments. What’s more, Wells Fargo has numerous branches across the United States.
Other options. Consider opening a U.S. Bank Student Checking account, which does not impose a monthly maintenance fee. Chase, Bank of America and Discover also have checking accounts for college students. At Chase, there’s a $6 monthly fee that can be avoided by setting up a direct deposit. Bank of America has a SafeBalance Banking account option for college kids that doesn’t charge overdraft fees or allow users to overdraft. And Discover offers a Discover Cashback Debit checking account for students that earns 1 percent cash back on up to $3,000 in debit card purchases every month.
Read the Fine Print Before Opening an Account
Teaching college students healthy financial behaviors is the key to ensuring long-term success when it comes to managing money. But the reality is students need guidance. Finding the right bank account and reading all the fine print is one way to ensure they learn how to handle money without getting hit with hefty fees.
“Once you have your account selected, make sure that you use it responsibly,” Kubiska advises college students. “Monitor your balances, review your transactions and consider starting to practice the valuable habit of saving. Savings is often overlooked, but as we all know necessary to avoid running into financial problems in the long term.”