Yahoo Finance I’m a Financial Expert: 3 Things Every Student Needs To Know About Choosing a Checking Account
It’s that time of year again. According to Louann Millar, consumer banking product management director at Wells Fargo, summer is one of the most popular times for teens and college students to open checking accounts.
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“Teens are getting jobs and looking for accounts to deposit their paychecks in, which are also easy to understand and use,” she said. “College students are seeking convenience, as they may be leaving home, and inexpensive ways to manage their money.”
A checking account can be a valuable tool, but if you’ve never opened and used one, it can be confusing as to which one you should choose. Here’s what you need to know, including whether you should choose a student checking account over a traditional one.
Look for Free Options
“When looking for a student account, the first thing to look for is to make sure it is free, meaning no monthly fees and no balance requirements,” said Lori Gravitt, assistant vice president and branch manager with Addition Financial Credit Union.
“If the account is not free, it is best for students to stay away. Students are already likely limited with their income, and it is very possible that this is the first financial account they have ever had and that this is an all-new experience.”
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Make Sure It Offers Convenience
Gravitt also said that, to start, students should find a checking account with a bank or credit union that is convenient to their home or school.
“Then, I recommend students deep dive into what is important to them,” she said. “Many students who bank with our credit union appreciate same-day debit cards. Same-day debit cards are a very convenient perk and can be a time and stress saver if an account holder runs into fraud or loses their card.
“Along those lines, students should ensure the bank or credit union offers an electronic wallet option with that debit card. That way you don’t have to carry your card and it’s more secure to tap and pay.
“Lastly, students should make sure the financial institution’s website and platform have everything they are looking for as far as convenience and options. Many sites offer virtual tours of what their online experiences look like.”
Millar suggested making sure the bank has an app that makes it easy to monitor spending and balances, and to get help when you need it.
It Should Allow You To Opt-Out of Overdraft Fees
Gravitt said she always encourages students to look at ways to avoid overdraft fees.
“There should be an option to opt-out,” she said, “where the student has declined overdraft coverage for the ATM transactions and debit card transactions when they don’t have the funds available. The last thing a student wants or needs is to get stuck in the overdraft hamster wheel.”
Traditional Checking Accounts vs. Student Checking Accounts
According to Gravitt, traditional checking accounts are best for anyone looking for an account for their everyday spending or household bills.
“They normally come with an option to write checks, use bill pay, get a debit card and possibly earn interest,” she explained. “These might have fees, direct deposit requirements or minimum balance requirements.”
Gravitt said that student accounts sometimes come with an age requirement or proof they are enrolled in school.
“These student accounts may not have fees or other requirements, which makes them great for a student learning to manage their money and use a debit card,” she said. “These accounts do come with limitations, but those limitations might be in the student’s best interest when learning to manage their money on their own. Plus, I see many times students will have a parent on the account to help them stay in line.”
Should Students Always Choose a Student Checking Account?
“Banks recognize students are often still learning to manage their money and want to help them on their journey,” said Millar.
But whether a student should always opt for a student checking account depends on the student.
“The student should look closely at their financial situation and their ability to manage their account when deciding if a student account is right for them,” Gravitt suggested. “If they have extra funds saved, direct deposit — and if they can manage overdraft situations — they might want to look at a traditional checking account that might offer more perks.”
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This article originally appeared on GOBankingRates.com: I’m a Financial Expert: 3 Things Every Student Needs To Know About Choosing a Checking Account
