Students, Shop Around for Better Bank Accounts

As students head to campus this fall, many will be offered checking accounts or prepaid debit cards from financial institutions that pay the schools to promote their products.

About 40% of students attend colleges that have such arrangements, according to the Government Accountability Office. Although the GAO found that fees were generally in line with those of standard bank products, the accounts may not be the best deals for students. Check the fine print for monthly fees, overdraft charges, ATM surcharges, minimum balance requirements and the number of local in-network ATMs. The ideal is a free, no-strings-attached account.

Community banks and credit unions—both local and national—often offer free checking accounts that don’t impose harsh penalties for using out-of-network ATMs or overdrawing your account (see Credit Unions Anyone Can Join).

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Some national banks also cut students a break. The U.S. Bank Student Checking account charges no monthly fee, includes four free monthly withdrawals from out-of-network ATMs and provides the first box of checks free. Capital One 360 Checking, an online account, is well suited for students, says Nico Leyva, of personal finance Web site NerdWallet. The free account provides access to 40,000 fee-free ATMs, comes with a free box of checks, charges no overdraft fees (but you pay interest on a line of credit if you dip below your account balance) and pays interest of 0.2% to 0.9%. Among prepaid debit cards, the Bluebird card from American Express and Walmart is a solid choice; it charges few fees, comes with checks and has a mobile app for managing the account and depositing checks.