There are many different types of banks and bank accounts – so it is quite possible for you to find the right one to fit your needs.
The three basic categories of banking that will be of importance to you during your college years are:
- Credit Unions
- Online banking
- Traditional banking
CREDIT UNIONS
Credit unions are a growing alternative to traditional banking. By definition, a credit union is a cooperative financial institution owned and controlled by the people who use its services. Credit unions are nonprofit organizations. They provide checking, savings, loans, and other financial services typically offered by traditional banks. They usually boast relatively high rates of return, require lower minimum balances, and charge lower service fees than most banks.
How do I join a credit union?
To join a Credit union, you must share a common bond with other credit union members. Luckily, attending the same college often counts as a "common bond." Therefore, many universities offer credit union services to attending students. In fact, some credit unions are student run, allowing you to learn, hands on, about the flow of your money.
Is it safe to keep my money with a credit union?
The National Credit Union Share Insurance Fund, administered by the National Credit Union Administration, an agency of the federal government, insures deposits of credit union members at more than 11,000 federal and state-chartered credit unions nationwide. This probably means that your credit union is insured, but you should always ask to be certain.
Credit union drawbacks
While most credit unions are well run and offer better return rates and lower fees, there are several possible drawbacks which should be considered. The most common is a lack of organization, possibly due in part to the fact that student credit unions are often run by the students themselves. Thus, bank quality customer service will not necessarily be available to you.
HerTip: Before deciding whether or not a Credit union is for you, do the research. Ask about who runs the institution, what services are offered, etc. It's a big decision to choose someone to hold your money – so be confident you're making the right one.
ONLINE BANKING
As more and more businesses have begun offering their services to customers online, the banking industry has followed suit.
- There are many advantages to online banking: - Your online bank can do just about everything your regular bank can do including, access to your account information, bill paying, customer service —and all from the comfort of your dorm room!
- Banks update your account balance daily so you can monitor your balance closely online.
- More and more people have taken to paying their bills online — it's a no-fuss alternative to mailing out checks each month. You can use this feature to automatically pay bills, including housing and telephone.
TRADITIONAL BANKING
Despite all innovations, most people still prefer "good old-fashioned" banking and in-person transactions. Traditional banks are still most people's primary choice for housing their funds— there must be a reason they have been around forever!
Whether you opt for a credit union, traditional bank, or even do all your banking online, your simplest account options will remain:
Savings Accounts
Savings accounts are an easy, no-fuss way to set cash aside and start accumulating a savings.
- Minimum balances and fees are typically low.
- Interest rates are modest when compared to other savings vehicles.
Checking Accounts
Checking accounts are extremely common and generally have the same basic function.- You are able to write checks and withdraw funds from ATM machines against the balance you hold in your account.
- Checking accounts typically do not offer high interest rates and so are best suited to basic day-to-day banking.
- If you open a checking account at the same bank as your savings, you may be offered free or discounted transfers between accounts.
- As with savings accounts, you'll receive monthly statements updating you on the status of your account.
In conjunction with checking accounts, most banks offer two conveniences that have practically revolutionized how we conduct our banking. They have simply become a way of life for many of us: ATM and debit cards.
ATM
From banks and shopping centers, to libraries and video stores, it seems that Automated Teller Machines, or ATMs, can now be found just about anywhere.
- ATMs offer round-the-clock access to cash.
- Be careful to record all ATM withdrawals you make from your checking account. Even one or two forgotten transactions can throw off your balance and ultimately spell trouble.
- Read all the signs: If you are using another bank's ATM machine to withdraw funds from your bank, you can often be charged up to $3 for each transaction (it adds up quickly).
Debit cards
Debit Cards allow you to pay for transactions with money that comes directly out of your checking account, helping you avoid large monthly credit card bills.
- As with your ATM, make sure you record all debit transactions and factor them into your checking account balance for accuracy.
- Keep in mind that when you use a debit card you are not building up a credit history.
- By opening up a credit card account in your own name, you are beginning to take the important steps in building a solid credit history. This will have monumental significance later in life.
Continue to:
Part III: Credit.
Banking