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Managing college money

Practical advice on how to make sure you’re getting the best deal.

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Student Banking: Managing your college money

Why Is it important?

Unlike that first school ID photo, your first banking relationship could last long after you graduate. Making a smart decision now will mean fewer surprise fees that can add up later.

Key Questions
When should I get a bank account?
How do I avoid paying unexpected fees?
Do I have to get an account with the bank at my school?

Choose an account as soon as possible - you should try to find one before you start school.

Once you have a bank account, sign up for direct deposit with your school before classes start. If you are expecting money from your financial aid office, you'll often get it faster this way - it can be weeks before the school gets to writing you a paper check.

Dig deeper when accounts are marketed as "free" or "easy" - very few accounts charge no fees at all.

Does your bank charge monthly fees? Many require minimum balances or regular direct deposit to avoid monthly fees. What about out-of-network ATM fees, overdraft fees, fees to use your debit card, and fees for services like online bill-pay?

Knowing if and when fees will be charged could save you hundreds of dollars in fees each year. While half of young Americans never overdraft, the other half average approximately seven overdrafts a year. Overdrafts can cost more than $30 each; that's potentially a lot of money taken out of your pocket.

No. Schools cannot require you to use their bank, so shop around.

  • Don't feel limited to only the banks or credit unions that have ATMs on or near campus; some will automatically reimburse fees for using any ATM.
  • Consider accounts that offer services like remote check deposits, mobile apps, and online bill-pay. Signing up for a bank account now can save you headaches later, and researching accounts with the lowest fees can save you money.

Action Steps

  1. Choose an account as soon as possible.
  2. Avoid paying unexpected fees.
  3. Sign up for direct deposit as soon as possible.
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action guide
What are the options? 

Choosing a bank account

What you need to know

Shop around, and don't feel limited to only the banks or credit unions that have ATMs on or near campus; some will automatically reimburse fees for using any ATM. Consider accounts that offer services like remote check deposits, mobile apps, and online bill-pay.

Keep in mind

Dig deeper when accounts are marketed as "free" or "easy" - very few accounts charge no fees at all.

Signing up for a bank account now can save you headaches later, and researching accounts with the lowest fees can save you money.

Financial aid disbursement

What you need to know

After your school takes out the cost of tuition, fees, and any on-campus living expenses from your total financial aid award, there is often money left for you to use for other expenses, like books.

Keep in mind

You normally have several options for how you get that money, including direct deposit to a bank account, to a card that might also double as your student ID, by check, or cash.

Ask CFPB!
What is a financial aid disbursement?
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Your financial aid disbursement is the money left after your school takes out the cost of tuition, fees, and any on-campus living expenses from your total financial aid award. You normally have several options for how you get that money, including direct deposit to a bank account, to a card that might also double as your student ID, by check, or cash.

What are overdraft fees and how can I avoid them?
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When you spend more money than you have in your account, your bank will likely charge you an overdraft fee. So a $4 cup of coffee can end up costing you $35 or more. You can be charged several overdraft fees in a single day and even more in extended overdraft charges if your account remains overdrawn for a few days, so be careful - these fees add up quickly.

To avoid paying overdraft fees, monitor your accounts carefully and consider:

  • Not opting-in to services that pay for overdrafts connected to ATM or one-time debit card withdrawals
  • Linking your account to a savings account - you may still pay a fee for transferring funds from your savings account, but it is usually much lower than an overdraft fee
  • Choosing an account that does not allow overdrafts
Take action
1

Choose an account as soon as possible.

You should try to find an account before you start school.
2

Avoid paying unexpected fees.

Knowing if and when fees will be charged could save you hundreds of dollars in fees each year.
3

Sign up for direct deposit as soon as possible.

Once you have a bank account, sign up for direct deposit with your school before classes start.