When it comes to financial matters like selecting a bank, college students tend to be copycats and follow their parents' lead. That can be a mistake, given that the financial institutions with the best deals for well-endowed people may not offer the smartest choices for students who are just starting out. With that in mind, we've picked the best options for college students in five broad areas: checking accounts, savings accounts, credit cards, student loans and investment accounts. By best, we mean products that charge the lowest fees and require the smallest minimum balances.
Checking Accounts
During orientation week, most students are bombarded with offers from banking giants like
For many, a better solution is to find a credit union. Some 600 college campuses offer access to these member-owned non-profit institutions. Credit unions operate like banks but return profits to members in the form of lower fees and better loan rates. Students at New York University, for example, can open free checking accounts at the New York University Federal Credit Union. Members receive free checks, are not charged for using other institutions' ATMs and are not required to deposit a minimum amount or maintain a certain balance. JPMorgan Chase, meanwhile, will charge you $2 to use another bank's ATM and requires $25 to open an account. Some credit unions will even waive overdraft fees if a student agrees to attend a financial education seminar.
One knock against credit unions is that they tend to have few, if any, branches and aren't as convenient as commercial banks. Many are compensating with online banking. Some, like Arizona State Credit Union (which is open to students at the University of Arizona, Arizona State University and Northern Arizona University), offer mobile banking applications for
You can also keep your account open at a credit union after you graduate. Most credit unions are part of shared networks of ATMs, which means that you will still be able to make deposits and withdrawals if you move to another city.
If your campus doesn't have a credit union, then you may be able to qualify for membership at one that is open to all college students or is offered by a parent's or other family member's employer. (This tool from the Credit Union National Association can help you find one near you.)
Savings accounts
Even if your budget is tight, maintaining a savings account will help give you the discipline to save regularly and earn a bit of extra income by holding it in an interest-bearing account. We looked at savings accounts with high interest rates, no monthly fees and which only require $1 to open. Flagstar Direct and
Student loans
The best option is to go with federal loans, rather than with private lenders like
"Federal loans are cheaper, have fixed rates as opposed to variable interest rates and they are more available," than private student loans, says Mark Kantrowitz, publisher of FinAid, a Web site that tracks the college financial aid industry.
Unlike private lenders, Uncle Sam allows you to base monthly payments on a maximum percentage of your income and is more lenient about deferrals and forbearance if you lose your job or become disabled.
Credit cards
For credit cards with low interest rates, credit unions are often the best bet, according to a study by the Pew Charitable Trust, a nonprofit research group. Banks charge customers interest rates that, on average, are 20% higher than credit unions' as well as heftier late-payment fees.
The Pentagon Federal Credit Union, for example, offers Visa cards with an interest rate as low as 13.9%. If you want to stick with a commercial bank, Discover Financial offers a card with a 14.99% interest rate for students with limited credit histories, according to LowCards.com.
Investment Accounts
Exchange traded funds are a great way to invest, but the brokerage commissions typically charged to buy and sell them can dissuade those with a little to put away each month from using them. One way around this dilemma is to take advantage of a new
See Also:
How To Get A Better Credit Card Rate