Student Guide to Checking Accounts

There’s more to a checking account than just writing checks. Photo: Rikkis Refuge Other

If you’re in college, the idea of maintaining a checking account could be brand new to you. After all, this may be the first time you’ve been responsible for paying your own cell phone bill, rent, or utilities. Whether you’re just getting started or have been researching your options, here’s what you should know when you’re getting ready to open a student checking account.

Benefits of a Checking Account

For starters, there’s more to a checking account than just being able to write checks. Here are a handful of other benefits to opening a checking account:

• Electronic deposits: You may be able to get your tax refund or student loan refund directly deposited into your account — instantly — instead of waiting for a check in the mail. Your employer can also deposit your pay directly into your checking account, saving you a trip to the bank.
• Debit cards: Most checking accounts come with a debit card, which is accepted like a credit card but draws from the money in your account. This is especially beneficial if you can’t qualify for an actual credit card yet, or if you’re still working on financial responsibility and are afraid you’ll charge more than you’re able to pay with a credit card. You can also use your debit card to take out cash or make deposits at your bank’s ATMs. To learn more about debit cards, see Personal Finance 101: What is a Debit Card?
• Automatic online bill pay: Setting up online auto-pay for your bills can help you avoid late fees and make paying bills easier. In some cases, you may even get a percentage off your bill or some other incentive. For example, I received a 0.25% discount on my student loan interest rate for setting up automatic payments.
• Mobile banking: Many banks have apps that let you do a lot of your banking from your phone: Pay bills, track your purchases, transfer money to or from a savings account, send or receive money from a parent or friend, or even take a picture of a check to deposit it without a trip to the bank.
• Unlimited transactions: If you just have a savings account, did you know certain kinds of withdrawals are capped at six per month? When you go over that, your bank may stick you with a fee each time — or eventually close your account. With a checking account, you won’t have to worry about hitting this limit.
• It keeps your money safe: Your checking account deposits will likely be insured by the Federal Deposit Insurance Corporation, or FDIC. The FDIC makes sure you don’t lose a penny, even if your bank suddenly closes. That’s a big advantage over stashing cash under your mattress or in your sock drawer. It’s also safer to pay bills via check or online transfers, both of which cut down on the risk of stolen cash and provide proof that your money got to its recipient.

How to Choose the Right Checking Account

Once you decide to open a checking account, where do you begin? Before you choose, here are some factors to consider:

• Linked savings account: Are you planning to keep a savings account? If so, you might want to have it at the same bank as your checking account. This can help you easily transfer money between accounts, making it easier to build up an emergency fund or even lessen the impact of overdraft fees, which we’ll discuss later.
• Fees: Checking accounts can have various fees depending on the type of account, which we’ll cover in depth below. As a budget-conscious college student, you’ll probably want an account with no monthly maintenance fees, though such accounts often come only with basic features. You may also be able to get a more fully featured account and avoid paying a monthly fee by maintaining a certain minimum balance or linking up a steady direct deposit.
• Perks: What perks are important to you in a checking account? You might want a bank that sends text alerts to your phone or allows you to pay your bills online or deposit checks through a mobile app. Some banks, such as Wells Fargo and Bank of America, have automatic savings programs that deposit a small amount in a savings account for you each time you use your debit card.
• Location: Many banks will charge you a fee for withdrawing cash from another bank’s ATM — in fact, you may even get charged twice: once by your bank and once by the bank that operates the ATM. So you’ll want to pick a bank with ATMs readily available in your area — near your home, your school, or your work. If you’re planning to make regular deposits, you may want a bank with a branch nearby, but don’t discount online-only banks. Some online banks such as Ally Bank have large ATM networks or reimburse a certain amount of ATM fees each month.

Checking Account Fees

Even if you find a checking account without a monthly maintenance fee, it doesn’t mean you won’t be hit with any fees at all. When you’re choosing your bank, find out what services are complimentary and which require a fee.

For example, you might be subjected to a fee if you have insufficient funds or need to stop payment on a check. Opting for paper statements instead of online statements can even cost you a couple dollars a month. There could also be fees for using non-bank ATMs, using overdraft protection, getting a replacement for a lost ATM card, getting a copy of checks, or getting checks in the first place.

To give you an idea of how fees can add up, here are some recent numbers on common checking fees from MoneyRates.com and MyBankTracker.com, two websites that track average bank fees around the country:

Type of Fee	Average Amount
Monthly maintenance	$13.09*
ATM fee for non-customers who use bank’s machines	$2.71*
ATM fee for bank customers who use out-of-network machines	$1.61*
Overdraft/non-sufficient funds	$32.44*
Stop payment	$32.40**
Wire transfer (outgoing/incoming)	$27.40/$15.50**
Cashier’s check	$9.10**

* Source: MoneyRates.com
**Source: MyBankTracker.com

All those numbers may seem abstract, but consider a 2015 study by Wallethub.com on how much checking accounts can really cost certain customers under typical usage. The study created profiles for five types of customers, including “young” and “cash-strapped” customers (likely the closest two profiles for a typical college student).

The main differences between the two: A young customer uses direct deposit frequently, while a cash-strapped one never does; a young customer banks online frequently while a cash-strapped one does so only occasionally; a young customer never writes paper checks while a cash-strapped one does so occasionally; and a young customer lets his or her balance fall below $0 occasionally while a cash-strapped one does so frequently.

The findings: With typical usage, a young customer could be paying as much as $504 per year to use his or her checking account, while a cash-strapped one could be paying a whopping $800. That just goes to show that it’s not only important to know about what fees your bank will charge so you can avoid them whenever possible.

What About Overdraft Protection?

When you open a checking account, you’ll probably be asked whether you want overdraft protection. This means that when you try to make a withdrawal or payment from your checking account but don’t have enough money, your bank will cover you so that the transaction won’t be denied. This can ensure your rent check doesn’t bounce when you’re a few dollars short in your account.

Nice, right? Well, kinda. There are pros and cons to overdraft protection that you’ll want to know so you can make an informed choice about opting in. The major pro, of course, is that your transaction will go through. After all, how embarrassing would it be if you finally got to take your crush from Econ out to dinner, only to be told that your debit card was declined? Similarly, if you’re in a bind or an emergency situation and lack other resources to draw from, you won’t be left hanging.

On the flip side, overdraft protection can be a very expensive convenience. As you saw in the table above, you could pay an average of more than $32 every time your overdraft protection kicks in, depending on the bank. Then you could rack up more charges if you don’t add money to your account to cover the transaction within a certain time period. If you aren’t paying close attention to your checking account balance, you may not realize you’re in the red until getting charged with hundreds of dollars in fees. That’s a pricey way to save yourself some embarrassment.

Bottom line: Make an informed choice about overdraft protection. If your bank allows you to hook up your checking account to a credit card, savings account, or other line of credit for an overdraft transfer, the bank can draw from this source to cover your overdraft. Fees aren’t quite as steep for these transfers (roughly $10 to $12 is average) so it could be a good middle ground.

Opening a Checking Account

Once you choose your bank, you’ll want to find out what they require to open an account. Here is a basic list:

• An initial deposit: For most student checking accounts, this usually ranges from $25 to $50, but double-check with your bank.
• Two forms of identification, such as a driver’s license and student ID.
• Mail with your address on it to confirm your home address.
• Basic information such as your Social Security number, mailing address, phone number, and e-mail address.
• Beneficiary: Who would receive the money in your account should you pass away?

Using Your Checking Account

Congrats: You’ve opened your account! And … now what? Here are a few ways to be a responsible checking customer.

Keep track of account activity.

First, you’ll absolutely want to check your balance daily, or at least get text alerts about your account. This is going to help you avoid overdraft or insufficient funds fees, know how much money you have, and double-check for any errors or fraudulent activity. Set up account alerts (for instance, for transactions over a certain amount) so you know as soon as possible if anything fishy is going on.

It’s also an especially good idea to keep track of your account activity on your own. Even though seeing your balance will probably be as simple as opening an app on your phone, most students don’t necessarily have a big cushion of cash. Sometimes transactions take longer than you’d expect to go through, so if you’re not keeping track, you might think you have more money in your account than you actually do.

What’s the best way to track, or balance, your checking account? You can use a spreadsheet, the register booklet that came with your checks, or a simple pencil and paper. If you want to keep everything on the phone, there are several apps that can help you out. Then, simply account for each and every transaction. Did you spend $5 on a latte? Write it down, and subtract it from your balance. Did you get paid $100 for house-sitting for a neighbor? Write it down, and add it to your balance. Do it as soon as possible after the transaction to keep your records accurate.

When you get your monthly account statement, you can then compare it to your own records to make sure nothing is amiss. (Note that your most recent transactions may not yet be on your statement.) According to Bankrate, you have 60 days to report any discrepancies or errors to your bank so they can conduct an investigation.

Know how to write a check.

You opened a checking account, and you have your first checkbook. You might not need to touch it for awhile, but one day the time will come when you’re required to write a check. How do you do it?

1. What’s the date? There’s a spot in the upper right-hand corner to write it.
2. Who are you paying? Write their name where it says, “Pay to the order of.” Be sure you have the correct name of the person or company; if you’re unsure, ask whom to make the check out to.
3. How much do you owe? In the box at the right, write how much the check is for in figures: $120.50, for instance. Then, on the line beneath the name of the person you’re paying, write out how much the check is for in words: “One hundred twenty dollars and 50/100.” (That weird little fraction represents cents.) Now draw a horizontal line through any remaining space on that line so no one is tempted to alter the amount.
4. What is it for? On the “memo” line, write what the check is for. For instance: “July rafting trip” or “custom silver necklace.” Often, this is optional, but if you’re paying a bill, be sure to write your account number for faster and more accurate processing.
5. Sign it. The line in the lower right-hand corner is for your signature; the check is no good until you’ve signed right there. Don’t sign the back — that’s where the recipient will sign.

Keep your account secure.

• Choose a secure debit PIN. Your four-digit PIN (personal identification number) will allow you to use your debit card when making a purchase or withdrawing money from an ATM. Be sure to choose a PIN others won’t be able to guess (don’t use “1234,” for instance), but one that’s easy for you to remember.
• Know your bank’s policy on debit card fraud.Typically, your debit card doesn’t offer quite as much fraud protection as a credit card. Wait more than a couple of days to report something suspicious, and you could be on the hook for up to $500 in losses. Wait more than a couple of months, and you may not get your money back at all.
• Keep and access your account information in a safe place. This goes for your debit card, checkbook, statements, and any other account info. Don’t leave it lying around your shared apartment or dorm room. If you’re studying abroad or taking a trip overseas, make a copy of the front and back of your debit card so you can make a proper report should it get lost or stolen. Also, avoid doing your online banking on a public computer, like at the library or a school computer lab. The next person may still be able to see some of your information, or data thieves may be able to siphon your information remotely without you ever knowing.
• Use two-step authentication. If your bank offers two-step or two-factor authentication online and via its mobile app, take advantage. This means you need something more than your average username and password to sign into your account. It might seem like a hassle, but this is an easy way to keep your information safer.

Five Great Student Checking Accounts

These national banks offer low- or no-fee checking accounts geared to students, but it’s worth checking to see what banks offer in your area. Some smaller banks on or near college campuses will cater to students with similar or even more enticing options.

Chase College Checking

• Fees: Chase waives the monthly service fee for up to five years while you’re in school. After graduation, you can still get that fee waived by enrolling in some kind of direct deposit or maintaining a $5,000 monthly average balance in the account.
• Requirements: You need to be a college student between 17 and 24 with a student ID; minimum $25 deposit to open the account.
• App and online features: Deposit a check directly in the app, and pay your bills online.
• Why it’s good for students: Chase boasts 15,500 ATMs nationally, so you can probably avoid those pesky ATM fees. Plus, Chase Quick Pay makes it a little easier for you to split the tab at a restaurant with friends or chip in your share of the rent.

U.S. Bank Student Checking Account

• Fees: None
• Requirements: You’ll need to be enrolled in high school, college, technical school or trade school.
• App and online features: Send money to friends and family, deposit checks remotely, use mobile bill pay, and check your balance via text message.
• Why it’s good for students: You get four free non-U.S. Bank ATM transactions per month, and your first order of checks is free.

Bank of America Core Checking for Students

• Fees: Waived for students under 23. If you’re 23 or older, you’ll pay a $12 monthly maintenance fee unless you have one qualifying direct deposit per month of at least $250 (so if you’re working and your employer offers direct deposit), maintain an average daily balance of at least $1,500, or you are a Bank of America Preferred Rewards client.
• Requirements: You’ll need to be a student under the age of 23 enrolled in high school or college.
• App and online features: You can get payment reminders and customizable alerts along with the ability to transfer funds, pay bills, and deposit checks with your smartphone.
• Why it’s good for students: For the student who wants to save, this checking account allows you to enroll in Bank of America’s “Keep the Change” savings program: Your debit-card purchases get rounded up to the nearest dollar, and the difference gets deposited into a Bank of America savings account.

Wells Fargo Everyday Checking Account

• Fees: You’ll pay a monthly service fee of $10 unless you can link your checking account to a Wells Fargo Campus ATM or Campus Debit Card. The fee will be waived if you make 10 debit-card purchases in the month, have direct deposits of at least $500, or maintain a minimum $1,500 balance. If none of that is an option, you may still qualify for a $5 reduction in the fee if you’re between 17 and 24.
• Requirements: Minimum of $50 to open the account.
• App and online features: You can get account alerts to your phone or e-mail. Manage your account in the app by checking your balance, paying bills, and transferring money.
• Why it’s good for students: Similar to Bank of America’s Keep the Change saving feature, Wells Fargo has a Save as You Go feature that allows you to contribute $1 to your linked savings account every time you make a debit-card purchase.

Fifth Third Essential Checking for Students

• Fees: None
• Requirements: You must be 16 or older and be a student.
• App and online features: Deposit checks right from your phone, and receive account alerts or balance information on your phone.
• Why it’s good for students: The bank offers five free non-Fifth Third ATM transactions each month, so you can avoid those extra charges.

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