For fresh college graduates, preparing their finances are usually the last thing on their mind. However, this is one of the most important aspects when starting college as this will be the center of a student’s financial life.
Here are seven things to consider when choosing a student bank account.
Banks want more students
Banks are likely to target students more than any other groups in the population. And there’s a good reason! Students and their families are learning to invest in themselves as they prepare for a higher salary once they graduate. While you may be borrowing from the bank to help pay for your education, banks will gladly do so in hopes of maintaining your account with them once you start earning.
Keep in mind that you can always switch banks if you need to. While it might sound like too much work, switching will pay dividends for many students.
Be aware of the “freebies.”
While banks have plenty to offer students, don’t be sold on their so-called “freebies.” These are often the short-term offers that include free products, cash back rewards, insurance, and other things that may sound rewarding to the fresh student. Choose a large interest-free overdraft for three years over an MP3 download worth $20.
Choose the largest student overdraft
Even if you’re not entirely sold on the full overdraft, take the opportunity to apply for it to help increase your savings account. You will actually make money by earning interest on borrowed money. While this doesn’t mean you will gain thousands, you won’t have a bad return.
Understand that the 0% interest period will not last forever. In fact, this will only last more than a few years after you graduate before the charges begin to set in. Be just sure never to go over the overdraft limit, or you will suffer from charges.
Ask if the overdraft is guaranteed or have a limit
One of the most common ways of borrowing money from the bank is an arranged overdraft. This is the time to take advantage of your 0% interest rate to your student account. Having an overdraft free of interest means, you will only have to pay back what you owe and nothing more.
It’s also worth noting that the student overdraft limit is usually the highest amount you can get. This is usually available until your final year in college and only to students with a decent credit rating.
Understand the repayment conditions
During a survey, more than 65% of students mentioned that they didn’t know when they would have to repay their student overdraft. While you are not expected to pay it until after graduation, the cost of late charges can reach as high as $3,000.
Most banks usually turn student accounts into a grad account after they leave university. This means the account will deal with how you will repay your overdraft during a certain time. Be sure to inquire and take a better look at how the student account turns into the graduate account. Understanding the process will give you a better look at any hidden fees and how much you will have to pay back.
Know your credit rating
Take the time to understand your credit rating. This is an important aspect it will lead to any future loans, housing, and major purchases you plan to make in the future. The bank will award you with the amount of overdraft, depending on your credit score.
You can always check your credit rating online and gain access to a credit report for yourself.
Learn about online and mobile banking
When it comes to online banking, it’s no surprise that students are the most receptive consumers. This means that online and mobile banking is in high demand for student accounts.
Another thing to consider is the location of the bank. While this shouldn’t be your primary concern, having a local bank will benefit you when you need to make a deposit. Choose an accessible bank where you can withdraw without the need of paying fees from other ATMs.