Perks, freebies abound as banks,
credit unions woo college students
Second in a five-part series about college life and money
By Michelle Samaad • Bankrate.com

Whether they're moving away from home for the first time or returning to college this fall, students need not worry about finding an affordable checking account.

An array of banking perks is available for students, including offers with no minimum deposit or balance required to open or maintain an account, and no monthly service charges.

Today's students: future customers
Banks as well as credit unions treat attracting student customers as the tilling of fertile financial ground that may reap continued business after graduation.

The kicker is this, however: Depending on where you're attending college, the names and the fees may vary.

Why not offer the same checking account for the same price to all? Some banks say the size of the school and even the surrounding community often play a role in the make-up and fee structure of a checking account. Big schools may see higher fees than smaller colleges in small towns. The bottom line: ask for a listing of fees.

Still, schools with strong community ties, such as Louisiana State University, recognize the importance of hometown banks, says Kyle Waters, regional president of Hibernia Bank in Baton Rouge.

The bank's major marketing megaphone is sponsoring fraternity and sorority events during pledge week. Each fall, Hibernia provides food and entertainment for the weeklong activities.

Offering the basics
Hibernia branches there dote on LSU's students each year with the Student Thrifty Account. For $2 a month, students get the bare bones: five free checks per month (each check after that is 35 cents), an automated teller machine card and no fees charged during June, July and August, when students typically move back home for the summer. The bank also has an ATM on campus and a branch two miles from the school gates.

"We used to send out material before school started, but we've found that just being visible gets the word out," Waters says.

His own son is enrolled at LSU and relies heavily on the ATM/debit card. "I think in the past year, he wrote maybe one check," Waters says. The downside, he adds, is that his son relies on an ATM or bank statement to tell him what the balance is in his account.

"Moving away from home and on to college is a major life event," Waters says. "We've found that students want something inexpensive and readily accessible; parents want to be able to get money to their child quickly."

Some financial centers try to get a jump on the fall rush and start promoting their wares during early orientation in July, with an additional push during the first two weeks of school.

A random coast-to-coast sampling of banks found that many are tailoring checking accounts based on student feedback.

A package of services
First Union's College Express checking offers a complete package for the busy student. The account requires no minimum balance and offers free online banking and no monthly fee if direct deposit is used (it's a mere $2 each month if direct deposit isn't an option). Since the account is geared toward those who use the ATM or online banking, an $8 monthly fee is charged for in-branch transactions such as deposits or withdrawals.

Chris Lee, team leader for First Union's college life event team, says that in the past, First Union has given away free laptop computers during the first week of school to lucky account openers.

"College is a jumping off point -- it's when most students get their first taste of money management," Lee says.

In college-rich Boston, students have to be 19 years old to open a BankBoston Student Value Package account, which offers unlimited ATM transactions but requires $6 each month for eight checks.

Coast-to-coast megabank NationsBank -- the outcome of the merger between NationsBank and Bank of America -- also offers an express checking account that features unlimited check writing but requires $25 to open and a $500 balance to avoid the monthly maintenance fee. Depending on the state, the fee varies between $2 and $5. And, soon, students will notice the trademark red and blue NationsBank signs removed and replaced with Bank of America logos.

T-shirts and newspaper subscriptions
Free is the operative word when it comes to students, says Lisa Rossi at Wells Fargo Bank.

At the University of California at Berkeley and the University of Oregon, Wells Fargo branches try to meet the needs of these large student communities. They use incentives to attract student customers, from T-shirts, cups and key chains to free subscriptions to the San Francisco Chronicle.

Wells Fargo's student checking account features unlimited checks, free online banking, overdraft protection when linked to other savings accounts or credit cards, and the option to request the return of three checks each month. The monthly maintenance fee varies between $2 and $5.

Credit unions make their move
Not to be outdone, credit unions are also hoping to woo college students through freebies and no-fee checking accounts.

"The alternative (with credit unions) is lower fees, money that goes back to the members and having a say in how profits are spent," said Alex Hultgren, executive director of the Campus Credit Union Council, a Washington group that conducts marketing seminars to get credit unions to address the financial needs of college students. The council says membership in a credit union generally means maintaining $5 in a savings account and paying a one-time $5 fee to join.

One disadvantage most credit unions face is having a limited ATM network and charging a fee for transactions at other financial centers. Hultgren says credit unions are addressing this need by providing students with a list of ATMs that don't charge a fee for non-customer use.

Still, credit unions are gaining in student membership. Tower Federal Credit Union in Laurel, Md., has student members from the neighboring University of Baltimore and University of Maryland. It offers a free checking account with no minimum balance requirement, a MasterCard and an ATM.

While Tower hasn't aggressively gone after the college market, admits Karen Maguire, marketing assistant, that "may change in the next few years" due to the passage of the Credit Union Membership Act, which allows multiple groups of members to be served at one credit union.

Friendly to students
Free checking is the main draw to the Kent State University Student Credit Union in Ohio, said Matt Farrington, member services representative.

Freshmen are courted during orientation week to join the 850-member credit union. The nonprofit financial center keeps itself visible year-round through bookstore flyers and weekly ads in the university's student newspaper.

Despite larger banks in the area, such as Huntington Bank and Bank One, Farrington says, "We're hearing from students banks are not amicable to them. Their maintenance fees are too high and, overall, it costs too much money to bank with them."

Whether they're trying to decide to bank at a bank or a credit union, students should get a listing of fees before signing up for that spiffy checking account. The best deals are those that don't require a minimum deposit or balance and allow unlimited checks each month.

Because most college students have access to the Internet, online banking and bill payment are just as important as no fees. The free T-shirt doesn't hurt, either.

-- Posted: Aug. 13, 1999