Banking on campus can be a treacherous new territory for students to navigate. Banks take advantage of the fact that every fall, thousands of students leave the security of their parents’ homes and make their own financial decisions for the first time, according to www.nerdwallet.com.
It is important to be proactive in preparing yourself for your newfound financial responsibilities. We hope that you are here because you have decided to get an early start on making knowledgeable on-campus banking decisions. Check out the tips below and start taking steps towards becoming a financially smart college student!
Know what makes each financial institution different
Most students only look at major banking establishments when considering where to keep their money safe. The advantage to bigger banks is that their branches and Automated Teller Machines tend to be more conveniently located. The drawback to big banks is that their accounts generally come with low interest rates and multifarious hidden fees that can eat up your money quicker.
There is no need to fret; you have other options. The important thing is to know the differences between each type of financial institution, so you can make an early, informed decision about what works best for your lifestyle. Things you will want to research and compare include fees, interest rates, online or mobile monitoring options, branch proximity and ATM locations.
Know how to bank without a branch
Nowadays, you don’t have to be dependent on brick-and-mortar branches to handle your finances. Online and mobile banking services give you the freedom to go with the bank or credit union that offers you the most bangs for your buck. Most big banks offer services (like online bill payment or text banking) that help you make transactions and keep close tabs on your money from your computer or phone. Before committing to a bank, consider the different online options they offer.
Know what fees you can anticipate
Did you know many banks charge you for using their ATMs if you are not their customer? While this might be common sense for some, it might come as a surprise when your bank also charges you for using another bank’s ATM. Those two charges combined can add up to the price of a well-budgeted lunch.
Your current account might also be costing you minimum balance fees or fees for not making regular deposits. To avoid incurring such fees, compare college current accounts before choosing one and keep a close eye on your balances. Also, keep in mind that similar fees may apply to savings accounts, with the added limitation that you may only withdraw or transfer part of your savings a number of times per month.
If you like the convenience of paying your bills online, make sure you are not being charged for that too. Also, make sure that automatic payments (for bills or otherwise) don’t exceed your ability to pay for them. If you spend your funds (automatically or otherwise), but don’t have the cash to cover your purchase, you will be charged non-sufficient funds or overdraft fees.
Know what you need
You should only borrow what you absolutely need. If you must borrow, make your financial aid office and loan servicers your new best friends. Check in early and often about disbursement and repayment dates, and terms and conditions.
Depending on the amount of money you borrow, and how quickly you pay off the loan or credit card, your interest can accumulate quickly and seriously contribute to your total debt.
If given the option, you should always take a government loan over a private loan or credit card because they offer better interests rates and more flexible repayment plans. Avoid getting a credit card if you have had trouble budgeting in the past. It can be a great way to establish good credit, but recovering from bad credit is not easy, and neither is repayment due to high interest rates.
Know how to keep your money for yourself
Be cautious about getting your financial aid through your school Identity Document. Of course, we encourage you to learn about the debit options your particular school offers and compare your school’s accounts to those of different banks. If you choose to get a current account that is separate from your school ID, we highly suggest getting a direct deposit set up to receive your financial aid (including work-study). Some schools charge to send you paper cheques, but direct deposit is generally a free or cheaper alternative and ensures your money will get to you faster.