If you’re a college student, you’re likely juggling a lot of academic and financial demands. But we’ve got some good news: There are perks you can take advantage of to alleviate some of these pressures so you can get through school a bit more smoothly.
The first item on your agenda? Consider opening a student bank account. Not only is it a great way to establish some financial independence, but it can also help you avoid fees and save more money in the long run. Let’s look at the benefits of having a student bank account—right after we cover what one is.
What Is a Student Bank Account?
Student bank accounts are specifically tailored to younger people or college students. They typically have unique features such as lower monthly fees and minimum balance requirements than those on standard bank accounts. The goal of student bank accounts is to help college students gain better control over their finances as they navigate through school.
A student account generally comes with a:
- Checking account: Offers the basic check-writing, debit-card services
- Savings account: Offers the opportunity to save money and accrue interest on that money over time
What Are the Advantages of Having a Student Bank Account?
Opening a student bank account comes with four main benefits. Keep in mind, the criteria and features will vary across banks, so be sure to study your options carefully before you make a decision.
1) Little to No Monthly Service Fees
Normal bank accounts often charge members a monthly service fee that is automatically withdrawn from their account. With student bank accounts, you’re usually off the hook with little to no monthly service fees.
Depending on the financial institution you sign up with, you may be eligible for any of the following monthly-fee benefits with your student bank account:
- Lower-than-normal monthly fees
- Opportunities to avoid monthly fees (if you maintain a certain minimum balance or set up direct deposit.
- No service fees at all
2) Lower Minimum Balance Requirement
Student bank accounts often come with the following advantages:
- Little to no initial deposit to open your account (usually ranges from $0 to $50)
- Little to no minimum balance requirement to keep your account
These flexible requirements can help you avoid fees and comfortably maintain your bank account balance.
3) Reward Programs
A student bank account can give you access to various reward and bonus programs to help you earn and save money. For example, some banks offer:
- A bonus reward for signing up for a student account. Chase offers a $100 sign-up bonus.
- Spending and saving tools. Bank of America offers a Keep the Change program where your debit card transactions get rounded up to the nearest dollar, and the excess change goes to your savings account.
4) Low or No Overdraft Fees
An overdraft occurs when you don’t have sufficient balance in your account to make a payment. Therefore, you can either borrow money from your bank or transfer money over from another bank account, like your savings. This overdraft comes with a fee, roughly $35 per overdraft in a standard bank account.
For some student accounts, though, this overdraft fee can be reduced or waived. For example, institutions such as US Bank and Ally Bank offer free overdraft transfers. So in the event you spend more than what you have in your checking account, the bank will transfer over money from your savings account and cover the difference for free.
Keep in mind, some of these banks may have overdraft-fee limitations on the transaction amount, so be sure to read the fine print.
What Do I Need for a Student Bank Account?
Here are some basic guidelines for opening a student bank account:
- If you’re younger than 18, you will likely need a parent or guardian to open the account with you. This person will serve as the co-signer for your account.
- Many banks have an age limit for opening a student bank account. This limit usually ranges from 23 to 26.
- You will need to show your ID, such as a driver’s license or state-issued ID, to open your student account.
Some Things to Keep in Mind
Set yourself up for success by keeping these student bank account tips in mind as you’re reviewing your options and preparing for the financial road ahead:
- Some student banking accounts give you the option of opening a credit card and using your checking or savings account as collateral. Though you might receive access to perks such as credit rewards, it’s wise to carefully assess your financial situation before applying.
- The benefits/features attached to your student bank account will likely discontinue after you’ve graduated. Some banks end your student benefits after a certain amount of years (usually four to five years after opening your student account) or assess your eligibility based on your age. After this period, the bank may change your account to a standard banking account.
Learn More from Power Finance Texas
It can be challenging navigating through the nuts and bolts of finances. For more tips and information on budgeting and saving, browse through Power Finance Texas’ blog.