Bank Offerings for College Students

If you are a college student, banks and credit unions want your business. Financial institutions hope that after you graduate and begin your career, you will be a lifelong customer, so while you're in school, they will try to lure you with low fees, low minimums and convenience options.

As a college student, you can take advantage of these special incentives by comparing student banking plans, and choosing the bank or credit union that best meets your needs. For starters, we recommend opening a checking and savings account as a way to establish your financial record. You may also consider signing up for a debit card that's linked to your checking account for convenience.

The following bank features are typically offered to college students. To qualify for a college package, many institutions require you to provide the name and location of your college, and your graduation date. Even if a bank provides a benefit, it may not be offered in every state, so ask which options are personally available to you before opening a new account.

1. Lower account minimums
Ideally, students should look for checking accounts that have no minimum balance requirements and no monthly fees. Not every college banking plan provides this option, but the minimum account balance requirement may be lower than the amounts for their standard accounts.

Typical minimum deposits for college students to open an account are about $25, though some banks require as much as $100 to open a student account. Many branches advertise no monthly fees for their student banking accounts. However, if you drop below the minimum balance, you may be charged a fee as a penalty.

2. Reduced-fee overdraft protection
As college students learn to manage their personal finances, they may miscalculate their spending and overdraw their checking accounts. Many college banking packages have a "forgiveness" option for these circumstances. With this feature, the fee associated with the overdrawn account can be refunded once, upon request. (To see if you're at risk for overspending, take our quiz on spending styles.)

To help prevent overdrafts, banks may allow their customers to link their savings account to their checking account for overdraft protection. If the student's checking balance falls below zero, money can be automatically transferred from savings, bringing the checking account above zero.

By using this automatic transfer option, the student may avoid non-sufficient fund (NSF) fees from both the bank and the merchant. However, even if larger NSF fees are eliminated, banks could still charge a smaller overdraft fee each time they transfer funds on behalf of their customer.

Some college banking plans give students the option of linking a credit card or line of credit account as overdraft protection, if they meet qualification requirements. Before accepting any loan offer, read our article on a student's first experience with credit.

3. Convenience
Many colleges partner with banks to offer prime access to their ATMs on campus. Some schools take their partnerships further by allowing their students' ID cards to be linked to an account with that bank. They can provide a higher level of convenience to students who already have a relationship with that institution.

If you've chosen another bank to do business with, be careful not to incur unnecessary fees by withdrawing money from the ATM where you're not a customer. Make an honest assessment about whether or not you'll end up using the ATM that's more conveniently located on campus.

4. Free or low-cost ATM withdrawals
Student checking account plans generally include the use of a debit card, with a number of free withdrawals for in-network machines. If you get a debit card, keep it in a safe place and make sure it offers protection in the event that your card is stolen.

It's better to use an actual card that can fit into your wallet or billfold, instead of a mini-card that attaches to a keychain. That's because if you lose your keys, someone else has access to your entire checking account. For more information on what to do when a card is stolen, read our article on identity theft.

5. Online banking and alerts
Nearly all financial institutions offer online banking for college students, so they can check balances and pay bills. Many banks also offer their college customers personalized email, text and/or voice alerts when their balance drops below a predetermined amount.

The fine print
Banks may offer special incentives for college students, but these incentives can also have drawbacks, such as hidden fees. Read all of your enrollment paperwork carefully before opening an account to make sure you aren't surprised later. Common fees include:

• Out-of-network ATM withdrawal fees. You could be charged a standard fee (usually about $2 to $3) each time you withdraw money from an ATM that's not a part of the bank's network. This fee may be in addition to any fee that the hosting ATM would charge.
• Balance inquiry and transfer fees. If you make a balance inquiry, or transfer funds using a non-network ATM, your bank may charge you a fee for this service, even if you don't withdraw money.
• Foreign exchange fees. If you plan to travel abroad for an internship or study program, understand what foreign transaction fees would apply if you use your debit or credit card out of the country.

Credit Card Warning

It's important to establish a financial history, but don't fall into the trap of signing up for credit cards, which so often cause people to get into debt. If you must have one, make sure that it has a small limit and is used for emergencies only.

The Credit Card Act of 2009 mandates changes in how creditors market to consumers, so hopefully fewer people will get into credit trouble. Here are some of the major changes that affect students:

• Consumers younger than age 21 must show proof of income to repay card loans, or they'll need to have an adult co-sign or be authorized on their parents' accounts before they can receive a card.
• Credit card companies can not offer free gifts (such as t-shirts) to students who sign up for cards on campus.
• Colleges and universities must disclose the details of any marketing agreements they have with credit card companies.

In summary, take advantage of the checking and savings offerings that banks and credit unions provide for college students, if they meet your needs. The institution will gain a loyal customer, and you will be able to establish a strong foundation for your personal finance future.

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