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First-year college students and their families are facing a lot of uncertainty this new school year. Already, there are reports of new clusters of coronavirus cases on college campuses.
Will college students be able to remain on campus or will they have to switch to remote learning? Whatever happens, you’ll need to have a bank account.
No matter what your post-high school plans are, if you are a young adult who is looking to start a banking relationship for the first time, there are several key points to keep in mind.
Think About What You Need From a Bank
As you start shopping for a bank, give some thought to:
- How you’ll be using your bank account
- Your sources of income
- How you’ll move money in and out of your account
- How you’ll be managing and spending money
- The types of banking products or services you need
- The features you expect from your bank
Different situations and needs call for various types of accounts. For example, if you are a college student who will be focusing on your studies full-time, or working part-time while in school, you may only need a simple checking account with a debit card.
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If you expect to receive money transfers from your parents, consider a bank account that makes it easy to send money back and forth with no fees.
You may want a more elaborate banking relationship—with a checking account, savings account and credit card—if you’ll be a part-time college student while working at a full-time job.
Talk with your parents about any concerns and questions you may have about managing a bank account of your own.
If you’re worried about overdrawing your checking account, for example, look for an account that offers automatic overdraft protection, and set up a linked savings account along with your checking account.
If you need easy access to cash, look for a bank that provides fee-free ATM withdrawals and an extensive ATM network.
Some banks offer special student checking accounts with low minimum balances and low fees that are well suited to college students’ needs. If you need simple banking services that let you control your own money and everyday spending, this could be an excellent place to start.
Consider Starting With an Online Bank
Today, many young people have a healthy comfort level with online tools and mobile technologies, and the same is true for banking. Don’t assume that you have to open a bank account at a brick-and-mortar bank branch, and don’t feel like you’re limited only to banks that have a local footprint in the state or city where you live.
Instead, you may want to consider opening an account with an online bank, even if it does not have brick-and-mortar branches.
Some online banks offer limited products, such as high-yield online savings accounts. But more online banks now offer a full range of banking services and products, including checking accounts, savings accounts, money market accounts, CDs, credit cards and mortgages.
Make sure to shop around at the best online banks to see which may be the best fit for your banking needs as a college student.
Choose a Bank With a Great Mobile App
Whether they’re brick-and-mortar or online banks, many banks are offering more advanced features via their mobile apps. Before you choose a bank, spend some time reviewing the bank’s mobile apps’ ratings on the App Store or Google Play. Read about the features of the app to see what you can do via your mobile device.
For example, the Discover Online Banking mobile app is rated 4.8 out of 5 stars in the App Store. It lets you deposit checks via mobile device by snapping photos with your phone, log in via touch ID or face ID and see a Quick View of your account balances without logging in.
The quality of mobile apps varies by bank. Some banks don’t offer as many features on their mobile apps as others, or you may find that one bank’s mobile app user experience isn’t as seamless as another’s.
Mobile apps are an essential way to interact with your bank, manage your bank account and deposit money, so spend some time exploring which bank offers the best mobile app for your needs.
Look for Perks and Rewards
Some banks offer certain special benefits or bonus perks for having an account with them. For example:
- Cash bonus for signing up. The Chase College Checking account offers a $100 cash reward for opening a new account with qualifying activities.
- Round-up savings programs. The Bank of America Advantage Banking account offers flexible features for students, including the bank’s Keep the Change savings program, which automatically rounds up your debit card purchases to the nearest dollar and deposits that extra cash into a savings account, helping you save money with everyday purchases.
- Cash back. The Discover Online Banking checking account offers 1% cash back on up to $3,000 of debit card purchases per month.
- No overdraft fees. Some banks, like Chime, do not charge overdraft fees or offer the option to avoid overdraft fees with special account features and tools.
Banks are getting more creative with features and tools to help people make the most of their money. Think about what special perks or bonuses you might like to get from your bank, beyond the basics.
Consider Getting a Student Credit Card
As a new college student managing your bank account, keep in mind that you don’t have to get a credit card. You may instead want to stick with a basic checking account and debit card. However, getting a credit card is an opportunity to start building a credit history. Just remember to manage your credit responsibly and avoid racking up a lot of high-interest credit card debt.
Students under the age of 21 are not allowed to get their own credit card unless they can provide proof of independent income or get a cosigner. But if you’re ready for a credit card and want to start building credit under your name, start by browsing the best student credit cards for ideas and finding out which cards may be best for your interests and goals.
For example, you may want a student credit card that offers exclusive cash back rewards on everyday spending. If you’re studying abroad, you may benefit more from a card with no foreign transaction fees.
If you have a cosigner, can pay your bills on time and won’t run up a high balance on your card, getting a college credit card can be a great way to start building your credit history and creating a foundation for your financial future.
Review This Final Checklist
Before you sign up for a bank account, ask yourself these questions:
- Is the bank FDIC insured? Most banks will advertise their FDIC membership prominently on their websites. The FDIC is the Federal Deposit Insurance Corporation. When you deposit money into an FDIC-insured bank, your money is protected by the federal government up to $250,000 per depositor, per ownership category, in the event the bank fails.
- What are the fees? Many of the best online bank accounts do not charge monthly fees. Keep an eye out for banks that charge monthly account maintenance fees. Those fees can often be waived by maintaining multiple accounts with the bank, meeting a minimum balance requirement or by making direct deposits into the account each month. Make sure you understand the fees so you can avoid unwelcome surprises.
- What happens if you overdraw the account? Overdraft fees can be expensive and stressful. Make sure you understand how to prevent overdrafts, such as by signing up for overdraft protection. Some banks offer automatic overdraft protection with linked savings accounts.
- Are there brick-and-mortar branches where you live, or close to campus? Many college students may feel comfortable using an online-only bank, but, now and then, you still might need to go to a bank branch location. Think about which banking services you could need from a brick-and-mortar bank.
- Is there easy access to ATMs? Find out how many ATMs the bank has, or how large an ATM network the bank can offer. Make sure you understand the details about ATM fees. Different banks may have different rules and fees.
- Can your parents send you money? Many college students rely on their parents to send money each month, whether it’s to help pay for tuition or to cover extra spending. Many banks offer easy tools like Zelle that let you transfer money to friends and loved ones with no fees. Or if your parents want to send you a check, see if your bank will allow you to deposit the check via mobile app or at a nearby ATM.
Developing financial independence and managing daily money decisions is one of the most rewarding aspects of starting life as a college student—whether you’re doing so on campus or remotely. Start today by building a banking relationship that helps you keep track of your money and work toward your most important financial goals.