Freshman Finances : Getting the best student checking account

This post is part of the freshman finances series, a series of articles that are related to student finances. Read all parts of the series here.

A checking account will be the first and the most frequently used account for a student. One of the first things you will do upon arriving on the college campus is to set up a checking account. A lot of us make the mistake of choosing the first bank that we see on campus that is giving out free T-shirts or the bank that our parents used back home. Doing so might cost you some big bucks. On a student budget, the monthly fee or any other fees that the bank charges can be put to some other good use. Why pay the banks when you don’t have to? These days you can get a free checking account easily. You have to make sure that it is really free though. The following tips will help you with that.

Action items for this part of the series

1. Learn how checking accounts work (if you don’t know already)
2. Use the comparison checklist to select the best account for you

How checking accounts work?

This has been written about extensively, so I am not going to repeat it. If you need a good primer check this article on Using a checking account.

What to look for in a best student checking account?

The main thing you should look for is – it should be FREE. At the very least

1. It should not charge any maintenance fees
2. It should not have a minimum balance requirement
3. It should not have a fee for online bill pay
4. It should not have a fee for online account access (and accessing your account via finance aggregation services like Mint; more on that later)
5. It should have plenty of ATMs in and around campus and should not have a fee to take cash from those ATMs.
6. It should not have a fee for writing checks and direct deposits.
7. You should get a debit card (mostly Visa or Master card) and it should be free.

So when you go to a bank to give them your business, use this checklist to see if you are getting a good deal. If you are not, don’t hesitate to just leave. There are plenty of banks that will have your business and treat you well.

How to choose the best student checking account?

Choose the bank that is best suited for YOUR needs. Not because they are giving a free t-shirt, not because your friend has it, not because the bank looks “cool”…

Download this table as an excel or pdf file. Order the factors based on your priorities and make a wise decision!

How NOT to lose money on student checking accounts?

• Know your account : Understand what your fees and charges are. If there is a fee for a certain item and there is a way to avoid it (like depositing a check using the ATM instead of using the teller services) use the cheaper alternative.
• Know your balance : Always keep a tab on the checks you are writing and the ATM withdrawals. Bouncing a check (if you don’t know what this means – check here) can cost you a pretty penny.
• Don’t overdraft : This goes along with the previous bullet point. Don’t give checks for the amount you are “expecting” to get. If you don’t have the money right now, don’t write checks.
• Consider Credit Unions over big banks : A lot of times, the little guys (Credit unions) will offer better value than the big banks, like providing free checks or free use of other Credit Union’s ATMs.
• Consider Online banks : If you won’t be getting a lot of paper checks, consider skipping the brick and mortar banks and go online. Banks like ING Orange Checking or Ally Checking or my favorite Schwab investor checking, provide a lot of services for free (see below).
• Don’t buy checks from the bank : If the bank doesn’t offer free checks, don’t buy it from the bank, you can get it for much cheaper at Walmart or Costco.
• Use your ATM wisely : Use your bank’s ATM whenever you are taking cash, if the other ATMs are not free. You will be paying the other bank (Owner fee) AND your bank for this little convenience. If there are not enough ATMs around your campus you shouldn’t be using this bank for your checking needs. If you are in a place where you need cash but your bank ATM is not around, try getting cash back. You can find a grocery store or a drug store around the corner, buy a pack of gum and get cash back. The price for the pack of guy is much cheaper than the fees you will pay to the bank.

What banks do you recommend?

If you want to get an account with one of big banks : First check which bank has the best presence in and around your campus. The student checking with USAA beats others hands down if you won’t be depositing a lot of cash/checks and mainly withdrawing. (for qualifying members; check if you qualify) You don’t even need to find a USAA bank around your college, along with their Deposit @ Home service and refunds of ATM fee charged by other banks all your checking account needs can be done without a branch close by. If you will have a lot of checks and cash to deposit USAA might not be for you. My second choice will be Bank of America or Citibank (based on which one has the most number of ATMs near your school) as they have a lot of ATMs and also allow transfers between accounts with the same bank (BoA to BoA and Citibank to Citibank) for free.

If you don’t mind online banks : This will be the case if you don’t see yourself depositing too many paper checks. Depositing the checks will be the only hassle with these banks (you will have to mail it in using the prepaid envelopes) as they refund ATM fees charged by other banks. My personal favorite in this category is Schwab investor checking [Note: For opening a Schwab checking you have to open a brokerage account as well, but you can have $0 in the brokerage, so it is just some extra paperwork]

Open an Interest Checking Account from Ally Bank today!

What banks/checking account do you think is a best student checking account?

Tagged as: freshman finances