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Educate Your Student About Debt DangerErica Sandberg
In recent years, the biggest challenges facing college students and their parents were the rising cost of tuition and the increasing burden of student loan debt. But now, families with college students face an entirely new challenge.
The majority of American colleges and universities cancelled in-person classes this spring due to the spread of the coronavirus. Students transitioned to remote learning, and many will continue with online classes or hybrid campus experiences in the fall.
These uncertain times make it even more important to focus on making smart saving and spending decisions.
One of the easiest places to start is by making better decisions about where to bank. Listed below are four tips to help college students make better banking decisions:
When it comes to choosing a bank, many students will choose the financial service their college recommends. It’s also common for teens and young adults to bank at the same place as their parents.
And while convenience will certainly be a factor in their decision, it shouldn’t be the only factor. One of the best ways to help your student develop good money management habits is by teaching them to consider all their options.
Have them make a list of several different banks and see which offers them the best deal. One of the most important considerations should be the fees that banks charge.
It can take some digging — this information can be hard to find. Watch out for banks that charge ATM fees, minimal account balance fees, or overdraft fees.
Before signing up for an account, it’s a good idea to consider all of the features offered. For instance, if you regularly send your student money, you’ll want this to be as easy and inexpensive as possible.
Look for a bank that doesn’t charge fees for wire transfers. Or, if you and your student bank at different locations, you can look into inexpensive money transferring options like Zelle or Venmo.
It’s also essential to find a bank with convenient ATM access. Look for one that provides access to a vast network of no-fee ATMs. If a bank doesn’t offer easy ATM access, find out if they offer partial reimbursement for these fees.
Finally, look for banks that offer rewards for opening an account with them. For instance, some banks offer a small cashback bonus for spending money on a debit card every month.
The best way for college students to avoid expensive overdraft fees is by carefully managing a budget and tracking their spending each month.
Look for a bank that offers free budgeting features, account alerts so you know when your balance is getting low, and online bill pay. These types of banking features make it much easier to manage a budget and avoid unnecessary fees.
Online banks are managed entirely through a computer or mobile device, and are one of the best options for college students.
You can deposit money, transfer funds between accounts, and pay your bills all without ever setting foot in a branch location. And with many states enacting stay-at-home orders, online banking makes more sense than ever.
One of the biggest advantages of choosing an online bank is that it can grow with your student beyond college life. They won’t have to worry about switching over their accounts after graduation, because it doesn’t matter whether you live within driving distance of your bank.
And online banks are often more flexible and offer features that brick-and-mortar banks don’t necessarily provide. For instance, many online banks charge little to no fees since they don’t have to spend money managing branch locations.
Online banks also tend to offer more competitive interest rates on savings accounts and CDs. According to the FDIC, the average interest rate on a savings account is 0.07%. In comparison, online savings accounts offer interest rates as high as 1.80% APY.
When it comes to choosing a bank, college students have more options than ever. Choosing the right bank will help cut down on fees, increase the amount of interest earned and make money management easier and more straightforward.
Encourage your student to consider all their options and look for a bank with low fees and convenient online banking features. Online banks are a good option for most college students because you can manage your accounts entirely online — a convenience now and all through college to graduation and beyond.
College move-in is approaching! Help your student prepare by making sure they have everything they need for a successful freshman year.