Student checking accounts: Finding the best bank

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Ease overdraft penalties
Ease overdraft penalties © INSAGO/

Ease 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, Montanaro says.

When that happens, there's usually a fee for nonsufficient funds, or NSF, typically costing more than $30, he says.

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

To help reduce these fees, many banks allow student checking accounts to link to another savings account or line of credit as a backup, University of Mississippi's Cyree says. If the student overdraws the checking balance, a deposit from the backup account would automatically be transferred into the student checking account.

The bank may charge a fee to make a transfer, but it would likely be much smaller than an NSF charge, he says.

Using backup accounts can be helpful, but students should be careful not to let it lead to a false sense of security, Cyree 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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