Choosing a Bank or Credit Union

In this topic, we cover:

  • How banking needs can change over time - the choice you may have made years ago may not be the best choice today.
  • Potential advantages of credit unions.
  • Strategies that could save you hundreds of dollars per year: bank location, fees, and online account management options.

Most students already have a checking account, but choosing the right financial institution and account is an important decision - the right choice could result in practically free banking and the wrong choice could cost you hundreds of dollars per year. Remember, the choice you may have made years ago when opening your account may not be the best choice now.

How do you choose the best bank?

  • First of all, the best "bank" may not be a bank at all, but a credit union. Many schools have associated credit unions or there may be credit unions in your area. As non-profit organizations, credit unions can often offer extremely competitive financial services when compared with major banks.

  • Convenience. Consider choosing a bank or credit union with a branch near your home or school. At the very least, there should be conveniently located ATMs so you may avoid fees of $2 or more per withdrawal.

  • Low or no fees. If you are charged $15 or more per month for a checking account, that's $180 per year - money you could be saving or spending on something else. Please keep in mind, however, that free accounts may have restrictive transaction limits. If you exceed a certain number of ATM withdrawals or debit card charges, you may be charged per-transaction fees that could end up costing you more that a monthly fee.

  • Online Account Management Options. Managing money online saves postage, time, paper, and helps you keep on top of your account balance and spending habits. Many financial institutions also offer online bill payment and reminders as well - a great option for minimizing the chances of a missed payment. You may also download transaction records that can be imported into financial management software programs such as Quicken or even a simple spreadsheet for organizing your expenses. A sample spreadsheet is available for download in the Explore area.

When looking for a financial services institution, keep in mind that it could be a very long-term relationship, so shop around. And if you find that you are being charged excessive fees, simply asking whether there's a better account option could save you a thousand dollars (or more) during your time in school.