Hazards of banking

“I’m a student, and this is my first checking account.”

Upon speaking these magical words, dollar signs glisten in a personal banker’s eyes. Relishing your apparent inexperience, the banker quickly sets up your account, shooing you out the door with a 50-page booklet of terms and conditions that will likely soon be buried beneath a stack of textbooks. Working for a major bank’s call center, I have outlined the most common suggestions that would save several students money.

Banks are a convenient way to store your money as long as you know how to avoid their fees. Shop around at banks and credit unions to find which financial institution best suits your needs. Credit unions are often more forgiving of fees and have better interest rates, but are surpassed by banks’ online, branch, phone and ATM resources.

Regardless of your preference, a student or free checking account should cover your needs. Student checking accounts are typically free, with a few added bonuses. Ask the banker for a timeline of when a student checking account will morph into a regular account, and how the terms will change. Also, even if it’s called a free checking account, some banks charge for checks, debit cards, counter checks, money orders, ATM withdrawals and other extra services. Some debit cards have reward programs for purchases. Make sure that these reward programs don’t have any monthly or annual fees.

Once you’ve chosen a financial institution, chose your branch wisely. General banking can be done at any branch, online or over the phone, but if there are ever any problems with your account you may be directed to the branch where you opened it. This branch maintains your account, so it’s important that it’s in a convenient location and has competent, friendly employees.

One thing that may have to be dealt with at the original branch is a courtesy refund for an overdraft fee. An overdraft fee is assessed when purchases post to the account and there are not enough available funds to cover them. Major banks charge $20 to $35 per item that either overdraws the account or is returned unpaid due to insufficient funds, easily snowballing into $200 to $300 total fees on a single statement. Always ask for a courtesy refund, but don’t count on it.

To avoid incurring overdraft fees, document all deposits and withdrawals using a free check register from the bank so that you always know exactly how much money you have. Keep extra money in your account as a cushion in case you forget to write something down. An easy way to do this is to round up for withdrawals and down for deposits, like a digital piggy bank. If you are anticipating a deposit into the bank, always double check with the bank that it has been received before spending it. Retain all receipts from deposits, as well as proof of purchases, in case of a discrepancy.

Utilize phone and online services often to ensure there aren’t any fraudulent charges or other unauthorized purchases on your account. Be careful to whom you give your account information. If you sign up for online subscriptions in order to win a free iPhone or Coach purse, make sure that you either cancel the subscriptions or deduct them from your register. The bank allows you to dispute check card transactions but it can be weeks before the purchase and any subsequent fees might be credited back to your account.

In my experience, most people overdraw their account by less than $20 and having overdraft protection attached to their checking account can save hundreds of dollars. Skip a few trips to 7-Eleven or Starbucks and use the $25 to open a savings account to protect your checking account.

If you absolutely have no money to add to a savings account, a student credit card is another option. Although debit cards have a Visa or MasterCard logo printed on them does, it does not mean there is a line of credit on your account. Any credit products must be applied and approved for. Student credit cards typically have low credit requirements and high interest rates. Make sure you only use the card for emergencies and pay it off as soon as possible.

Don’t wait until the due date for your tuition payment to ask if there’s a daily spending limit on your cards. As outdated as checks are, they still do come in handy for rent, tuition and other large purchases.

Lastly, keep shopping around for the best deals. It’s your hard-earned money and you deserve to make the most out of it.