August 23, 2016 · Education

College Freshmen Face Fall Classes and Financial Independence

It’s the time of year when millions of students are heading to college for the first time, anticipating the freedom of living away from their parents’ homes.

In addition to doing their own laundry, college freshmen should consider opening their own bank accounts. While many young adults have established savings accounts in their hometowns, checking accounts closer to campuses may be more convenient. The best student checking accounts also offer lower fees than adult accounts.

Perhaps more importantly, opening an independent account is an important step toward adulthood and learning to manage day-to-day cash flow. Before opening checking accounts, though, college freshmen should be aware of some common pitfalls.

The “starving student” stereotype is, unfortunately, too often true. Most students simply do not have a lot of disposable income, so they need to be especially aware of fees charged for ATM use and infractions such as overdrafts and insufficient funds.


Parents can help college freshmen open accounts at financial institutions with no monthly maintenance fees, low (or no) minimum balance requirements, free debit cards and surcharge-free ATM usage, free online banking, free checks, and no account-to-account transfer fees.

ATM fees, for example, can add up fast. Even if they seem low, who wants to pay extra to access their own money? When researching checking account options, consider this:

  • Large national banks offer many convenient branch locations and surcharge-free ATMs, but they may charge other fees on accounts.
  • Regional or community banks may have fewer ATM fees than big banks, and may also charge for other services, such fund transfers.
  • Most credit unions offer free ATM withdrawals through a shared branching network that includes thousands of locations nationwide. Delta Community, for example, offers access to thousands of surcharge-free ATMs, nationwide.
  • Many online-only accounts also provide a number of free ATM transactions, but place limitations on the number of free transactions allowed each month.

Maintenance fees are another avoidable expense, since many credit unions and banks waive monthly maintenance fees and minimum balance requirements for customers who enroll in electronic statements, set up direct deposits, or make a certain amount of debit card purchases each month.

Students should also look for a checking account that offers free or discounted checks. Writing out a check (by hand, on paper!) may seem old-school. But it is sometimes the only acceptable payment method - for example, when they have to pay their college-apartment landlords.

Many banks automatically enroll new customers in overdraft protection programs, which cover checks written for more than what is in the accounts, but they come at a cost. The national average amount is $34 for each overdraft. Banks may also draw funds from linked savings accounts to cover overdraft checks. This may also carry overdraft transfer fees, usually of about $10.

Those who opt out of overdraft coverage may still face other fees associated with insufficient funds. A bounced check, for example, could result in a non-sufficient funds fee and a returned item fee. The best option is always to spend only the money known to be in the account.

Go Mobile

If it is important to be able to bank on the go, students should look for financial institutions that offer free mobile banking apps that can pay bills, transfer funds and deposit money by simply uploading a picture of a check. If face-to-face service is important, they should look for financial institutions that have branches near their campuses.

Those who are comfortable transferring money electronically might consider an online-only account. Just remember it may be a longer process to deposit cash (like that earned while waiting tables) in an online-only account. For students who have to deposit a lot of cash, banks or credit unions with convenient brick-and-mortar locations may be better choices.

Spread the Wealth

Checking and savings accounts do not have to be at the same bank. If one financial institution offers a higher interest rate on a savings account, and another offers no-fee checking, students should take advantage of both.

Requirements for opening a checking account vary, but accounts can usually be opened at a branch location with cash, a check or a money order. Online accounts may be funded with checks or linked debit or credit cards. Applicants will need to provide valid IDs, addresses, Social Security numbers and proof of student status, as well as any specific documents required by the financial institution.

Read the Fine Print

Students – and parents - should never assume that a checking account with a university logo is the best choice. In many cases, colleges have business relationships with banks, which provide services in exchange for access to potential customers. They should carefully compare college-sponsored accounts with others, and always read the fine print before opening any account.