Do You Need A Student Bank Account?
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This article speaks to the 14-year-old you and the 18-year-old you. We will discuss saving for college and what type of banking account you need when you actually go off to school. We will start with what type of bank you actually need while in college because that’s most likely why you clicked on this article.
What are you actually going to use your bank account for in school? Well, obviously you will want to pay bills, but there might be other things you have not considered. For example, most universities are going to want you to use direct deposit for student refunds. You don’t want them mailing you checks for your refunds, trust me! This means you want to have a checking account, not just a PayPal style banking account. Yes, ApplePay will work with a lot of checking accounts, don’t worry. So, let's look at some recommended banks.
Below is a list of recommended banks for students (Investopedia)
• Chase Bank College Checking Account: Best Overall
• Capital One 360 MONEY Account: Best For High School Students
• Bank of America Advantage Banking: Best For Encouraging Saving
• Discover Cashback Debit Account: Best Fee-Free Account
• PNC Virtual Wallet Student Account: Best For Creating a Budget
• BB&T Student Checking Account: Best Mobile App
• U.S. Bank Student Checking Account: Best On-Campus Banking
Breaking it all down
We looked several of these banks and two stood out to us. U.S. Bank has branches on many campuses. Make sure to check with your school’s campus to see which banks are on site before you sign up. If you're OK with online banking, then we suggest you check out Discover Bank. Discover has no fees and excellent customer service. They even give you free checks. They have a large network of ATM’s as well. Discover’s debit checking account is technically not a student account, but it has so much to offer for free it is a great choice in my opinion. Oh, and it is one of the banks that works with ApplePay.
Why do this?
What do you need a bank account for:
- Paying rent with a check
- Receiving direct deposits from your school
- Receiving direct deposits from your employer
- Paying your student bill online with echeck
- Establishing a credit history
Yes, ApplePay will work with a lot of checking accounts, don’t worry.
Now let’s talk about saving for college. This is the part of the article for the 14 year old you. College is expensive and many states as well as the feds realize this. That is why they have created a bunch of ways for you to save. There are several types of plans we can discuss here. They are 529 plans, IRA’s, and ROTH IRA’s.
IRA Wait a minute, aren’t IRA’s for old people? Well, no. The feds made a great rule that lets you take out money for college and avoid paying the 10% tax penalty for doing so before retirement age (Finaid). Yeah, technically IRA’s and ROTH IRA’s are retirement accounts, but they have some advantages over a regular savings account when it comes to saving for college. What is a ROTH? It is an IRA that lets you pay taxes when you're putting money into the account rather than paying taxes when you are taking money out of the account. Like a traditional IRA, a ROTH will allow you to invest in the stock market and buy mutual funds that normally grow your money at a much faster rate than a normal savings account. A ROTH IRA can be started outside of an employment situation. Traditional IRA’s are usually set up through an employer to pull pretax money out of your paycheck. So, if you are going to use an IRA for college you might want to go with a ROTH. Minors will need an adult to be on the account until the student turns 18 (Investopedia).
529 Plan So, aren't 529 plans what you are supposed to use when saving for college? They are meant for college savings but there are many different types of 529 plans, and they are run by the states, so each state has different options. You can go to college in any state with most of these plans but some of the plans are prepaid plans that require you to go to school in your state. Basically 529 plans can be right for you if you have a goal in mind and know exactly what you are doing.
In summary, you probably do need a checking account while in school and you might want to start saving early with one of the above tax saving options. Make sure to do your research and not just jump into something headfirst. Also, if you are wanting to learn more about college finance you should check out our article on Five Ways To Save Money In College.
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