Student checking accounts: How to find the best bank

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Protections against overdraft penalties
Protections against overdraft penalties © INSAGO/

Protections against overdraft penalties

A new checking account could be a student's first foray into budgeting and that could mean costly mistakes in the form of overdrafts.

When that happens, there's usually a fee for nonsufficient funds, or NSF, averaging more than $33, according to Bankrate's most recent survey.

"Overdraft and insufficient-fund charges can quickly turn a small purchase like a cup of coffee into a 4-course meal," says USAA's Montanaro.

To help reduce these fees, many banks allow student checking accounts to link to another savings account or line of credit as a backup.

The bank may charge a fee to make a transfer and avert an overdraft, but it would likely be much smaller than an NSF charge, the University of Mississippi's Cyree says.

Using backup accounts can be helpful, but students should be careful not to feel a false sense of security, he says. Otherwise, it could lead to another potential problem from young adults: the misuse of credit.

"We don't want to give our college students such a large safety net that they'll feel it's OK to continue to make the same financial mistakes," Cyree says.


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