Student Checking Accounts: Five Points to Consider
February 12, 2010
A checking account is a must for students going off to college, and it can be helpful for high school students with part-time jobs, giving them experience in managing a checkbook before they leave home.
Most banks market some type of free checking account for students in hopes of nabbing loyal customers. Many students will stick with their bank after they graduate because it's easier than shopping around for a better deal, even though the free terms on student checking accounts usually disappear once the student graduates.
Here are five things to consider when thinking about opening a student checking account.
1. What are the checking account perks?
Most student checking accounts are free. They have no monthly service charge and no or low minimum balance requirements. Other perks may include a free refund on an overdraft, financial incentives for doing business online, free e-mail and text alerts when the account balance is low, and free access to ATMs.
2. Read the fine print for information on fees.
The checking account is "free," but there may be fees for certain things, such as exceeding a limit on ATM transactions or checks written per month. Make sure you read all the fine print to understand the restrictions and fees for the account.
3. When will the checking account terms change?
Student checking accounts convert to regular checking accounts once you graduate from college or after you or the account reach a certain age. The bank will let you know when this is about to occur, so read the notifications carefully. A Wall Street Journal roundup of student checking accounts offered by major banks found that, in most cases, you'll have to start paying a monthly fee for checking or maintain a minimum balance to get the free checking benefit. This is a good time to consider other options--you're not bound to stay if another bank offers a better deal. Money-Rates.com offers resources that track favorable checking account deals in the marketplace at any given time, so it's a great place to start before contacting an individual bank for details.
4. Do you really need a student checking account?
Just because you're in college doesn't mean you have to opt for a student checking account. If you've got regular income while you're in school, you might be better off with a rewards checking account or a regular checking account linked to a high-yield savings account. Shop around for the best checking account deals and savings accounts rates and compare options. Another possibility is opening a joint account with a parent as the primary account holder.
5. Do your homework on checking accounts.
Some banks partner with colleges to offer checking accounts through the schools, and a lot of students go for the deals because they're easy to take. But--just like for student loans--don't go for the easily available offers before you've thoroughly checked out the terms and the fees involved and compared what else is out there. According to SmartMoney.com, the consumer advocacy US Public Interest Research Group found that many campus-partnered checking accounts offered unfavorable fees and terms to students. How much are will you be charged for ATM transactions? Is there a monthly maintenance fee? With so many banks competing for your business with free student accounts, you might be better off finding a checking account on your own.
