Harvard College students move into dorms
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Before moving off to college, or going back to school, it’s important to prepare yourself for the year financially.

You’ll need a checking account, a debit card or ATM card to withdraw cash, hopefully a savings account and maybe even a credit card. There are many options and choices for you to make.

“Cast a wide net and then weigh all of those and see which is the best fit for your situation,” says Greg McBride, CFA, Bankrate chief financial analyst.

You’ll also need to plan what method you’ll use in case of an emergency and how you’ll get money when needed.

Follow these tips to succeed financially this school year.

1. Research your banking options before school starts

You’ll have enough distractions with class, your social life and potentially work to be thinking about opening a bank account at school once on campus. Here are some things to look at when choosing a bank:

  • Location: Is it convenient for you at school?
  • ATMs: Are there any in your ATM network nearby?
  • Minimum balance: Does the bank have a minimum balance requirement on its accounts?
  • Transfer options: Are there easy ways for people to transfer you money, or for you to send money to a roommate or friend?

Open your bank account before moving back to school, unless you are considering a credit union affiliated with your school that you won’t be near until school starts.  McBride says an account there may give you benefits such as a free checking account and possibly free ATM access.

The ideal game plan might be to open an account at a bank that is the best of both worlds: close to your hometown and close to school.

Research direct banks, which are online only and don’t have physical locations, and look for a bank that features ATM fee waivers and mobile check deposit. You might not need a physical branch if your account has these convenient features. You should be able to find a bank that won’t require you to keep a minimum balance.

Also, if you’re employed, direct deposit is a great way to make sure your money is in your account and available on payday.

Try to talk to upperclassmen already attending your school or another school. Their banking strategy may also work for you.

2. Decide whether a parent on the account is beneficial

Having one – or possibly both – of your parents on a bank account has pros and cons. It might be beneficial if you need money or need their help with the account. Depending on your relationship, a parent might be able to pass along valuable banking advice to you.

Only choose this option if you’re OK with your parents possibly questioning your spending.

Even if your parents aren’t on your account, they should be able to send you money in a pinch through platforms like Venmo and Zelle. Try a practice transfer to see how long it takes for funds to arrive in your account.

3. Set up account alerts

If your bank has an app, make sure you try and log in often to make sure all the activity is authorized and to ensure that you have the proper amount of funds in the account.

You’re going to have final exams, midterms and a busy social calendar, so it will be easy to get distracted from checking your bank accounts on a daily basis.

If your bank offers account alerts, set these up to notify you of transactions or when your balance goes below a certain level. These alerts can ping you to give you a friendly reminder to log in to your account.

4. Learn about overdrafts

Overdraft charges can make a cup of coffee, meal or any purchase more expensive.

“Don’t opt in to overdraft on debit and ATM transactions,” McBride says. “That will at least put a ring around those small-dollar transactions, so that if you don’t have sufficient money in the account, the transaction will be declined. You won’t be incurring a $35 overdraft for a $5 cup of coffee.”

5. Explore credit cards

When it comes to credit cards, each student is going to be different.

“Credit cards, whether you’re 19 or 49, they’re a lot like steak knives – either a great tool or something very dangerous in the wrong hands,” McBride says.

Students with no established credit history may have trouble getting their first credit card. Here are some strategies:

  • Explore secured credit cards: Secured credit cards are perfect for students looking to build credit. If approved, you will have to put a certain amount of money down. This deposit is kept in a savings account that can’t be touched until the card is closed, or in some cases, if you graduate to the unsecured card.
  • Look into becoming an authorized user: If a parent is fine with adding you as an authorized user on their card, this may help you establish credit – assuming this is reported to the three credit bureaus – and learn good credit habits from them. Check your credit reports after a few months to confirm you’re indeed building credit as an authorized user.
  • See if your bank has the joint credit card option: It’s not easy to find banks who have a joint credit card, but this could also be a solution. A parent or relative would likely be the best option.
  • Compare student credit cards: Research whether a student credit card is the right fit for them. These cards may have less-stringent income and credit requirements.

Here are some tips for when you get your first credit card.

Spend only what you can pay back in full when your statement balance comes due. Also, always pay your bill on time to build good credit. Using your credit card only for emergencies and infrequent, non-daily expenses can help. Paying for gas, a gym membership or a streaming service are good examples to keep your credit card minimal.

Payment history makes up for 35 percent of your FICO Score, making it the highest-scoring category.

If you think you’ll have the funds in your checking account, set up automatic monthly payments for your credit cards. Ideally, you’ll set this up to pay the statement balance. But there is no harm in setting it up to only pay the minimum payment, as long as you have the funds in your checking account and you pay the difference before the credit card starts to accrue interest. If you set up a recurring minimum payment, set it up a few days before the bill is due. That way you’ll see this activity and it will remind you to pay the difference before the due date.

Also, sign up for text or email alerts that remind your before your credit card payment is due.

There’s no rush to get a credit card if you don’t feel ready for one. Using a debit card responsibly can be a great first step. However, you won’t build credit with a debit card, and you usually don’t earn rewards or cash back.

6. Start building your savings

As a student, it might be tough to save as much as you would like.

If you’re working while in school, set up a split deposit to automatically transfer a portion of your paycheck to savings or a recurring transfer from checking to savings. You may be able to set up the latter transfer with your bank.

Search for a savings account with a low or no minimum balance requirement.

There are a number of high-yields savings accounts with a minimum balance requirement of $100 or less.

It’s also never too early to start thinking about retirement. If you are employed, you may be eligible to open and contribute to a Roth IRA. Your investments in a Roth IRA may earn interest on a compounding basis, meaning the interest earned over time will be added to the principal. This calculator can show you the power of compound interest.

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