Monday, 23 October 2017

Going to college is a huge step for most young adults — one requiring a whole new level of responsibility.

Typically, this includes having greater control over their personal finances.

While learning how to manage money is an essential part of becoming an adult, there are many opportunities for young people to make expensive financial mistakes, some of which can have a long-term effects.

But there are accounts and financial tools available to help newly minted money managers avoid missteps and experience financial success.

Ways to avoid fees

College students are notoriously low on money, and they certainly don't want to spend what little they have on checking account fees.

If a free account isn't available, most basic checking accounts offer easy ways to avoid paying monthly fees, such as direct deposit or a certain number of free monthly debit card transactions. It's always good to fully understand account details, particularly when it comes to fees and charges. College students typically don't need accounts with all the bells and whistles, so it doesn't make sense to pay monthly fees for features they won't use. But one feature of a checking account for students worth considering is overdraft protection. Most banks offer several overdraft protection options that can help avoid some costly financial mistakes.

Account management tools

College kids love technology, and technology has made money management easier than ever. Some common online and mobile money management tools college students can use to stay in the know on the go include: 

  • Online banking. This might seem old-school to kids these days, as they'll probably opt for mobile banking. However, online banking can help parents to keep an eye on their kid's financial activity and help them avoid missteps.
  • Mobile banking. Students can use their beloved phones to access their financial information from anywhere at any time.
  • Alerts. Want to know when the account balance falls below $100? Or when a deposit is made into the account? Alerts can keep kids in the know about their account, even if they don't look at their balance on a regular basis.
  • Electronic statements. Online statements can be more convenient and more secure than paper statements, and since they're electronic, there's an outside chance a college kid might actually look at them.

Debit and prepaid cards

Federal law requires young adults under 21 to have verifiable income before they can have their own credit card, so most full-time college students probably won't qualify. They can, however, get a credit card with a co-signer, or joint account with someone 21 or older. But managing credit can be a struggle for many adults, and may be too much for many students to handle. A debit card may be a smart alternative to a credit card.

Most checking accounts come with a debit card. Debit cards can usually be used wherever major credit cards are accepted, except the money comes out of the student's checking account.

A prepaid card is another alternative for students. With a prepaid card, parents can load a set amount of money and erase any concern about overdrafts or mounting debt. The cards are reloadable and usually have minimal fees for the convenience. 

A little saving goes a long way

Typically, college students aren't very interested in building an emergency fund. However, learning about the value of saving money as part of financial management is important. Even if a college student starts a basic savings account and tucks away only $10 a week, they're saving money. Parents might also consider matching funds to encourage saving.

See how BBVA Compass Student Banking services can save you time and money.

The content provided is for informational purposes only. Neither BBVA Compass, nor any of its affiliates, is providing legal, tax, or investment advice. You should consult your legal, tax, or financial advisor about your personal situation. Opinions expressed are those of the author(s) and do not necessarily represent the opinions of BBVA Compass or any of its affiliates.