Parents: Five Tips for Understanding Student Bank Accounts
Bank accounts are confusing for everyone — is the interest enough? Do I pay fees for debit transactions? Cash-back or bonus points? Students are bombarded with options on campus and online, and we've created a road map for parents hoping to steer their children in the right direction.
Since student accounts are typically free and void of any hidden fees or transactions, they’re a great idea for students to take part in. The one misconception, however, especially with most of the typically costly facets of personal finances inexistent, is that starting a bank account is a walk in the park, with an infinite sum of money to run away with.
The purpose of student bank accounts is less about easy-accessibility to money and more about understanding how to sufficiently manage one’s fiscals; it’s only possible to spend the amount of money that actually exists in the account, rather than a credit card, where the sums seem to be never-ending.
Basically, by checking out one’s local bank, it’s simple to meet with a financial consultant to discuss opening your own account. If your serious about building your credit score and keeping track of the money you possess, then starting a student bank account is the perfect first step towards a financially successful future.
Tip 1: Pick an easily accessible bank, with branches at home and school
As a parent, you'll probably want to add some money to your student's account at some point during the school year, so it's important that you can access the bank as easily as your student can.
Tip 2: Check the fees
Students who are interested in studying abroad at some point in their college career need to be especially careful with this one — some banks charge up to US$5 (which, depending on the exchange rate can be up to $10 in the country you're studying in) for ATM deposits, in addition to any foreign charges. You should also check wire transfers, in case you want to transfer money from your account to your student's.
Tip 3: Bill pay
Students may not pay a lot of bills now, but they probably will once they graduate. Many banks do not charge for this service and allow students to learn how to budget while planning out their bills for the month.
Tip 4: Grow Your Credit
Students need credit for all sorts of things, particularly once they enter the "real world." Help them grow credit now by linking a debit card, monthly bill or bank issued credit card with their account. Bank cards sometimes have lower fees and can help students understand the importance of growing credit throughout their time in college.
Tip 5: Stick with the Experts
Farnoosh Torabi, author of "You're So Money" and "Psych Yourself Rich," offers a variety of tips in her book. Additionally, you can find more tips on saving for study abroad in our second edition – UChic's The College Girl's Guide to Everything, on shelves now. These expert self-help books can help students understand the importance of organizing their funds now for future expenses and responsibilities.
— Erin Cunningham, George Washington University contributed to this story.
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