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College credit unions vs. banks: Where should students put their money

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It’s not easy for college students to find a place to park their money. After all, the mantra “broke college student” exists for a reason. You have to have money before you need a place to put it.

Luckily, there are a few different places that you can put your money as a college student. Which type of financial institution is best for you depends on how much money you have and the benefits you can get from different institutions.

Credit unions

Colleges may have their own credit unions available to students as a perk of attending that school.


  • In-person access to a banking institution geared toward one demographic.
  • Low to no fees, since credit unions are nonprofit organizations that pass savings along to their members. You may not need a balance minimum to open or maintain your account.
  • Can offer a variety of services, including checking accounts, savings accounts, loans and ATM cards and credit cards.
  • Convenience of having an on-campus banking location.


  • Restricted access means you only get to use the credit union when you’re on campus. This could be inconvenient if you live off-campus or travel home for the summer.
  • Interest rates vary between institutions, meaning your on-campus branch may not have the best annual percentage yield, or APY, on savings accounts compared to other locations.
  • Requires a membership to join.

If your school offers a credit union that you can’t use anywhere else aside from on-campus, you may want to look into other banking options.


Brick-and-mortar banks tend to offer a wider array of services compared to other financial institutions.


  • Many locations, which means you can use their services wherever you are.
  • Big-name banks place a great emphasis on account security. You may find the added security measures to be tedious but they’re in place to protect your money (and your identity).
  • Ability to have a full menu of banking services and many types of accounts in one place, like a checking account, savings account and credit card.
  • Mobile apps tend to be helpful when checking your account, paying bills or depositing checks.


  • Popular banks have fees in place that can hurt your money-saving plans. Many banks, for example, require a minimum balance or a direct deposit to waive fees, which can hurt people who don’t have a lot of money or a job that offers those benefits.
  • You may have to leave campus to visit your branch. So, if you don’t have a car or have trouble leaving, this might not be the best option for you.
  • Regular savings accounts at banks have account minimums and service fees. Many also have low APYs — around 0.10 percent — which means you may end up losing money more than building it up if you pass up higher interest rate elsewhere.

The convenience of having a physical bank with secure online capabilities is enticing, but beware of fees. They can add up and cost you more money than the convenience is worth.

Online banks

Having a digital savings or checking account that travels with you means you will have the flexibility to check your account when and where you want.


  • Online banks don’t have as many fees as regular banks.
  • More likely to offer high-yield savings accounts. Paired with low fees, that means you get the most return on your investment.
  • Low to no-minimum account balance is required.
  • Most online banks offer free ATM access at nearby branches or reimburse you for using ATMs at other competing banks.
  • Big security features.
  • Security is usually one of the most important benefits of an online bank.
  • Friendly, easy-to-use banking apps and websites, as that is how most customers transact business these days.


  • No physical branch, which can be a turn-off, especially for people who need to deposit cash. Not all online banks are able to collect cash deposits, so this digital alternative may not work for you.
  • Lack of in-person assistance means your only option is to call or chat with someone online. If you believe you have a major problem, and prefer in-person communication, those options may not feel comfortable for you.

The bottom-line: If you’re just starting your banking journey and don’t have a lot of cash, an online bank may be a great fit. They tend to have the best options for high-yield savings accounts. But if you prefer to visit your bank in person or have some issues that can’t be tackled over the phone, an online bank won’t be helpful for you.

How should you save your money?

Choosing the right institution to put your money into can be a hard choice. Location is nice, but for many it may not be the deciding factor.

Look for banks or credit unions that have low to no fees and minimum account balances, as well as ones that give you a high percentage yield through savings or investment options. The less money you have to pay to maintain an account, the more money you can save in the long run.

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Written by
Dori Zinn
Contributing writer
Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy.
Edited by
Megan Harney
Audience development editor