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Navigating College Finances: How to Choose the Right Bank Account

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Learn how to choose the right bank account for college and avoid costly fees. Discover factors to consider, security measures, and options beyond checking accounts.

Questions Answered in this Article

  1. Q: How much did students pay in bank account costs during a year? A: Over 668,000 students paid nearly $15.5 million in bank account costs in a year, averaging around $26 per person. (Source: Consumer Financial Protection Bureau)
  2. Q: Should I assume that a bank partnered with my college offers a good deal? A: No, it is not safe to assume that. According to Aaron Klein from the Brookings Institution, just because your college partners with a bank doesn’t mean it offers a good deal. It’s essential to do your research and compare options.
  3. Q: What factors should I consider when choosing a college checking account? A: You should consider factors like branch availability, mobile app ratings, account fees, and perks like early direct deposit. Additionally, consider whether you need joint accounts or loan options from the same bank.
  4. Q: How can I avoid fees associated with a college checking account? A: To avoid fees, you can maintain a certain minimum balance, set up direct deposits, or choose a checking account without monthly fees. Be mindful of ATM usage fees and overdraft charges as well.
  5. Q: How can I ensure the security of my college checking account? A: Look for banks with multifactor authentication in their mobile apps. Also, check if the bank provides monthly statements and spending alerts for monitoring transactions. Federal deposit insurance protects your money in case of bank failure, but be aware that newer fintech firms may have more complex insurance arrangements.

Navigating College Finances: How to Choose the Right Bank Account

Heading to college can be an exciting time, but it can also strain your finances. One area where you need to be cautious is your bank account, as it can come with costs and fees that add up over time. A shocking report by the Consumer Financial Protection Bureau revealed that more than 668,000 students paid nearly $15.5 million in bank account costs in just one year, averaging around $26 per person. Even worse is that some colleges endorse expensive bank accounts as part of their partnerships with banks.

Factors to Consider When Choosing a College Checking Account

Before you embark on your college journey, it’s crucial to consider what features you need in a college checking account. While checking accounts may work similarly across banks, there are variations in certain features and services, such as the availability of branches, highly rated mobile apps, specific account fees, and perks like early direct deposit.

You should establish your requirements early on, such as whether you need a bank that offers joint accounts for shared finances with a parent or anticipate needing credit cards or other loan options from the same institution. Don’t limit yourself to funds marketed as “college checking,” as you might miss out on essential banking features you’ll need.

Avoiding Costly Bank Accounts in College: A Guide to Making the Right Choice

It’s worth noting that the larger, well-known banks often have extensive branch networks and robust mobile apps, but they may also come with higher account fees. On the other hand, regional banks and credit unions, which are not-for-profit institutions, tend to have lower fees and a stronger community focus. Still, they may lack technological advancements and branch availability. Online banks are another option, offering minimal costs and high-quality apps, but they may not have a physical branch network, and cash deposits may not always be guaranteed. While credit unions and online banks usually provide nationwide ATM access through shared networks, they might not be as prominently displayed as the ATMs of central banks.

Watch Out for Fees: Managing Your Finances Wisely

When exploring different account options, being vigilant about potential fees is crucial. Keep an eye out for monthly maintenance fees, ATM usage fees, and overdraft charges. Many banks waive the monthly fee if you maintain a minimum balance or have regular direct deposits, and some checking accounts don’t have monthly payments at all. Withdrawing cash from an ATM outside your bank’s network can result in fees from your bank and the ATM operator. Additionally, overdraft or nonsufficient funds fees can be pretty steep, often exceeding $30 per transaction, and can occur if a payment causes your account balance to drop below zero.

For a more financially inclusive option, consider looking into Bank On certified accounts, which do not charge overdraft or nonsufficient funds fees. Instead, if a transaction brings the account balance below zero, it declines. These accounts often have inclusive screening practices, making them accessible to individuals with limited banking history. Remember that some services, such as ordering a checkbook, may incur additional fees. While not every account will be completely free, choosing one that aligns with your financial needs is essential.

Ensuring Account Security: Tips for Peace of Mind

Account security is another crucial aspect to consider. Although bank failures are rare, ensuring your money is protected is essential. Federal deposit insurance covers up to $250,000 of your money in case of a bank failure. Banks are insured through the Federal Deposit Insurance Corporation (FDIC), while credit unions receive equivalent protection from the National Credit Union Administration. However, the situation is more complex regarding newer financial tech firms like Chime and Current and debit cards from companies like Cash App and Venmo. These firms typically partner with banks to offer “pass-through” FDIC insurance, but retrieving your money in the event of their failure may not be as straightforward as with a traditional bank. This uncertainty is one reason why accounts from these


  • Attending college can be costly, so avoiding additional expenses from your bank account is essential.
  • Many students paid a significant amount in bank account costs, totaling nearly $15.5 million annually.
  • Some colleges endorse expensive bank accounts as part of their partnerships with banks, so don’t assume they offer the best deals.
  • When choosing a college checking account, factors include branch availability, mobile app quality, account fees, and perks like early direct deposit.
  • It’s essential to watch out for fees, such as monthly maintenance fees, ATM usage fees, and overdraft charges.
  • Bank On certified accounts is recommended for those seeking more inclusive options without overdraft or nonsufficient funds fees.
  • Account security is crucial, and federal deposit insurance protects up to $250,000 in case of bank failure.
  • Newer financial tech firms may have more complex insurance arrangements, so it’s essential to understand the level of protection for your money.
  • Look for banks with multifactor authentication, monthly statements, and spending alerts to enhance account security.
  • Consider expanding beyond just a checking account for college and explore options like savings accounts, secured credit cards, and credit builder loans to establish a credit history.

Definition of Terms

  1. Bank Account Costs: The fees associated with maintaining a bank account, including monthly maintenance fees, ATM usage fees, and overdraft charges.
  2. Bank Partnership: A collaborative agreement between a college or university and a financial institution (bank) to endorse and offer specific bank accounts to students.
  3. College Checking Account: A type of bank account specifically designed for college students, offering features such as low or no monthly fees, ATM access, and digital banking services.
  4. Branch Network: The physical locations or branches of a bank where customers can visit for in-person banking services and assistance.
  5. Mobile App: A software application designed for smartphones or tablets allows users to access and manage their bank accounts, make transactions, and access various banking services.
  6. Account Fees: Charges imposed by the bank for maintaining a bank account, such as monthly maintenance fees, ATM usage fees, checkbook fees, and overdraft fees.
  7. Direct Deposit: An electronic transfer of funds from an employer or other payers directly into an individual’s bank account, often providing the benefit of early access to funds.
  8. Credit Union: A financial institution that is member-owned and not-for-profit, offering similar services to banks but with a focus on serving a specific community or group of individuals.
  9. Online Bank: A financial institution that operates solely online, without physical branches, and provides banking services through digital platforms and mobile apps.
  10. FDIC Insurance: The Federal Deposit Insurance Corporation provides insurance coverage for bank deposits up to $250,000 per depositor per bank in case of bank failure.
  11. Overdraft: A bank account balance goes below zero due to a payment or withdrawal exceeding the available funds. The bank charges overdraft fees to cover the negative balance.
  12. Multifactor Authentication: A security measure that requires multiple verification forms, such as passwords, PINs, or biometrics, to access and authenticate a bank account.
  13. Savings Account: A type of bank account designed for storing money and earning interest, typically used for funds not immediately needed for daily expenses.
  14. Secured Credit Card: A credit card that requires a cash deposit as collateral, typically equal to the credit limit, providing an opportunity for individuals to build or rebuild their credit history.
  15. Credit Builder Loan: A type of loan where the borrower makes payments over a specific period, and once the loan is fully repaid, they receive the full loan amount. It helps individuals establish or improve their credit history.
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