Banking know how

Beyond plastic: what you need to know about banking

Adulting. It’s hard—and there’s a lot you have to learn to be a successful adult (we’re still working on it). But banking is an easy and essential skill that you can master right now.

Start by getting yourself a checking account. Really.

A recent report called Money Matters on Campus noted that students who had checking accounts were more likely to buy only things they needed, follow a budget, and pay their credit card balance in full each month.

All good things, right?

That’s because a checkbook helps keep you in “check” (pun intended). It’s a tool that keeps income and expenditures front and center—so you’re less likely to blow money you don’t have.

The Money Matters report also revealed that students with checking accounts had less financial stress and as graduates were much better at paying student loans on time.

And that’s the future we want for you.

So, how do you pick a good bank?

It’s not as easy as doing a Google search—although the Internet can help you sort through your choices.

The most important thing you need to look at is the fee structure. Those are the services and features that banks nickel and dime you for.

Common bank fees

Low balance fees—If your account falls beneath your bank’s minimum balance requirements, you get charged. You can often get around this one by having your paycheck automatically deposited (if you have a job).
ATM Fees—If you use an ATM that doesn’t belong to your bank, you’ll get charged between $2 and $5. Heck, you might even get charged for using your bank’s ATMs. Check before you use them.
Bounced check fees—If you write a check for more than you have in your account, your bank will charge you a pretty penny—up to $35. And since merchants also charge fees for bounced checks, you could end up paying $70. So don’t do it.
Overdraft protection—If you accidentally overspend, this service makes sure you’re covered. But it’ll cost you.
Debit card fees—If you don’t look carefully, you could end up at a bank that charges you for the mere privilege of having a debit card. Or one that charges you for using yours.

An important note about making a deposit

You’d think when you put money in the bank it would be immediately available to you. But that’s not true, unless it’s a direct deposit.

When you deposit a paper check, your bank will probably hold it for two to three days before it’s available to spend. That’s because they want to make sure the check won’t bounce before they give you the cash.

So don’t go on a spending spree right after you make a deposit. You don’t want to end up in overdraft land.

Debit cards are your friend

Unlike ATM cards, debit cards can be used to buy anything anywhere credit cards are accepted. They’re linked to your checking account, so every time you use one to buy something, it comes out of your available funds.

Remember to make an entry in your checkbook every time you take out your debit card—it’s easy to lose track of how much you’ve spent when you’re using plastic.

Credit cards are not

To make you feel special, your bank may have also issued you a credit card.

While using a credit card might feel like being given free money, it’s not. You’ll pay interest on every penny you spend if you don’t pay it off right away. And that can add up.

Whatever you do, don’t use your credit card at the ATM. Securing cash from your credit card is the same as getting a bank loan—even if it’s only $20. You will be charged a fee for a cash advance and often the interest rate on the cash is higher than other purchases on the card.

The only time to use a credit card for cash is when you absolutely have to pay for something and don’t have the money in your checking account (insufficient funds fee = $35).

Look for checking accounts designed for college students

Most banks have special deals for college students, such as no fee checking accounts.

Remember, banks want loyal customers. And if they hook you early and treat you well, chances are you won’t leave them.

So shop around—and don’t be afraid to negotiate in order to get a good deal.