Whether you’re going off to college in another city or state or whether you’ll be a commuter student that lives at home, this new stage of life brings a whole new set of responsibilities. Part of the responsibility of being a college student involves being financially responsible for expenses such as tuition, books and materials, dorm or apartment rental, utilities, cell phone bills, etc. You may be lucky enough to have help from your parents, but it’s not too early to start learning about banking. If you know how to use them properly, bank services can be very beneficial to you. The guide below will go over some of the banking basics that are important for students.
The most basic type of account that you will need is a checking account. This is, in essence, a place to store the money that you will need access to on a regular basis. You will be issued and will be able to write checks against the funds that you keep in the checking account. It is very likely that you will also be issued a debit or ATM card to use at retail for debit payments or at ATM machines to make cash withdrawals of up to $300.
Most banks offer some free type of checking account, especially to students. A free checking account simply means that the bank does not charge monthly service charges on that account. Make sure to read all the terms and conditions of your bank’s free checking account, as the free status may depend of factors such as minimum daily balance or direct deposit transfers. Also, make sure you review the list of fees associated with actions such as stop payments or overdrafts. If your bank offers it, it is a great idea to set yourself up for overdraft protection. That way, if you lose track of expenses and use more money than what is in your account, you can be protected from expensive fees.
It is important that you balance your checkbook regularly. Track each and every expense (whether it is a check you have written, a debit purchase or cash withdrawn from the ATM) and deduct the amounts from your checking account balance. Doing this will help you avoid nasty surprises. Another great way to keep track of what’s going on with your money is online banking. Most banks offer you a way to log in from anywhere and see how much money is in your account as well as the most recent transactions.
Even if you have very limited income (from a part time job, from student loans or from parents) it is a good idea to set aside some savings. You can start a savings account at many banks for as little as $25. Consider opening an online savings account with a bank that will allow you to earn interest on your savings. Try to save up enough money to cover a couple of months worth of expenses. This will ensure a smooth transition should you lose your source of income.
One of the most dangerous financial endeavors that students can engage in is credit card debt. Because interest rates on credit cards can be so high, it is advisable to stay away from them altogether. There are, however, some benefits to using credit cards judiciously. First off, credit cards can help you start to establish credit. Secondly, they can help you cover short-term expenses in a pinch. The trick to using credit cards is to pay off the full balance (the total amount that you spent on the card) before the grace period is up.