In college, the learning doesn’t stop when you leave the classroom. You’ll also be tested when it comes time to find the right place to bank.
Picking the wrong bank or account can put your school year off to a rougher, and more expensive, start.
“Look at everything that’s available and choose the right account,” says Peter Gwaltney, president and CEO at the North Carolina Bankers Association, who has sent six children to college. “It’s just a tool. And you need to have the right tool for what you want to do and who you are.”
Here are three tips to help you choose where to bank while at school.
1. Find a bank that fits your needs
Find a bank that’s going to make your life easier. Look for a bank that offers convenience and either doesn’t charge fees or makes them easily avoidable.
Your options include:
- A bank in your college town.
- A bank that’s in your hometown and at college.
- An online bank.
- Your school’s credit union.
Look for a bank that won’t charge you for going below a certain balance. Also, know your bank’s ATM fee policy before opening an account and decide whether you can decline debit overdraft coverage to avoid fees. But if you do, make sure you have a backup plan.
Also consider common transactions you’ll be making, such as receiving money from your parents and sending money to a roommate or friend. See how you’d be able to conduct those transactions before opening the account. Some banks offer Zelle for person-to-person payments, for instance. A money transfer service such as Venmo may also help you send and receive money.
It should be easy to find an ATM when you need cash, but make sure your bank reimburses some or all ATM fees. If not, find a bank that has an ATM nearby. Otherwise, a $20 withdrawal can cost $6, if your bank charges $3 and the ATM charges another $3. You shouldn’t pay to access your own money when banks offer alternatives.
Another way to avoid fees to access cash is at the store, Gwaltney says. Many grocery stores, convenience stores and pharmacies let you receive a limited amount of money from your account if you use your debit card. The withdrawal will be added to the items you purchase.
2. Look beyond student accounts
As a college student, you’re likely not going to keep large balances at your bank. That’s why some banks offer students accounts without a minimum balance requirement.
Many traditional banks offer student checking accounts, which generally don’t have maintenance fees and are typically available for students under 24 years old. You may need to prove that you’re a student to get one of these accounts.
Even though student checking accounts usually don’t have fees and balance requirements, be sure to read the account’s terms and conditions. Also, make sure you understand when the account will convert into a standard checking account.
“I think that folks should be looking at the fine print just to understand, ‘How does this work?’ And parents should be looking at it with their students,” says David Principe, a certified financial planner and wealth manager at SageBroadview Financial Planning, who has two children in college.
While these can be great for students, don’t only focus on banks or credit unions with ATMs or branches near campus. If your bank waives some or all ATM fees, it doesn’t matter what ATM you use. Mobile check deposit also makes bank location irrelevant.
In some cases, a student account may have all the features you’re looking for. But it’s smart to research other options with low balance requirements and ATM accessibility.
3. Understand the account features
Before you open an account, make sure you fully understand the terms and conditions. Minimum balance requirements and overdraft policies are two of the most important things to note.
Here are a couple more important questions to ask the bank:
- What happens if you overdraft your account?
- Is savings overdraft protection an option?
Overdraft services are a double-edged sword. If used correctly, they can help if your balance goes negative because of a mistake or an emergency. If used to fund purchases you can’t afford, overdraft fees can be costly. Decline overdraft services if you have a proper backup plan in place and ask about what happens when a transaction is declined. A credit card can cover you in an emergency, though it’s important to be careful with credit card use.
“That’s a great use of a credit type of account,” says Jenifer Waller, chief operating officer at the Colorado Bankers Association, “although kids need to be careful with credit because we often see them get into trouble with that first credit card.”
Savings overdraft protection, which transfers money from your savings account to backup your checking account, may have a lower fee than standard overdraft.