Banking tips for students will enable you to enjoy free services, avoid ATM fees when you travel, and start building wealth. The first step is to do your homework. Before you get to campus, you have to research which banks offer the best deal for your student needs. It might turn out not to be the bank that promotes itself during orientation and the first weeks of school.
What you want to find is the bank that provides a free checking account with special features such as notifying you when the balance declines to a certain limit. That prevents expensive overdraft fees. Better yet if it provides interest. Often that is available at online-only banks. That is because it can afford to since it does not have the burden of brick-and-mortar’s expenses for real estate and live tellers. Since you are a “digital native,” you will find the online-only bank within your comfort zone. You prefer to conduct business online and through mobile devices than by phone or in-person. Also, the online-only bank is a disruptor in technology.
Online-only banks also tend to provide savings accounts with higher than average interest rates and the least constraints such as a high initial deposit and minimum monthly balance. The advantage for you of a savings account is that you can link it to your checking account. That is yet another way of preventing overdrafts. Until you are 18, by federal law, you only open a custodial savings account. That entails the oversight of an adult but that adult has no access to your funds. Only you can make withdrawals.
As a student, you likely travel a lot, both in the U.S. and abroad. You need a bank that has a wide network of ATM outlets or reimburses the expenses when you use out of network ones. Usually withdrawing cash is a better approach to making purchases than applying for a credit card. A study of student credit card users published in the International Journal of Business and Social Sciences found that 90 percent wound up carrying balances month to month.
Another option for purchases is the prepaid debit card. But for that you will also have to do your homework. Some banks charge high fees to load the card. That is called “pay to play.” You need low fees.
If you plan to have a part-time job, find out what banks offer Roth Individual Retirement Accounts (IRA), which is tax-advantaged. You can put part of your earnings in that IRA and begin a habit of not only saving but also investing.
It is in your financial self-interest, once you choose a bank, to transact all your financial affairs there. That is the way the financial services industry operates. There could be additional discounts, higher interest rates, and loyalty rewards for being a customer with multiple accounts.
Partnering with the bank that’s right for your student needs and following these banking tips for students can be your first steps on the road to a lucrative financial future.