COLLEGE STATION — Students who started checking accounts in high school may have an advantage over other freshmen entering college this fall.
“Young people who start bank accounts before they enter college have the opportunity to develop important money management skills,” said Dr. Joyce Cavanagh, family economics specialist with the Texas Agricultural Extension Service. “One reason is that while children are at home, parents can work with them on managing their checking accounts.”
Cavanagh says helping children learn to balance bank statements before they start college is one of the most important roles parents can play because once children are several hundred miles away from home, they are on their own.
Young people do not like to balance their statements, she said. They think it’s too hard. But it forces them to keep a record of the money they have spent.
“It’s especially important to do this because if one check bounces, it could cost $50 or more in fees,” Cavanagh said. “Think of what it would cost if three or more checks bounced. It gets expensive.”
Some individuals run into major problems when using automated teller machine cards. Many forget or neglect to deduct that cash transaction from their account, she said.
According to Cavanagh, students should consider five criteria when choosing an account and financial institution:
* Cost — Students can evaluate and compare the costs of checking accounts by finding out answers to questions such as: What is the minimum balance to open an account? What do the fees or service charges cover? Is a minimum balance required to avoid a mo nthly service charge and how is it calculated? Does the account receive interest? Are canceled checks returned with monthly statement?
* Safety — For maximum safety, financial institutions should be insured by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation or the National Credit Union Share Insurance Fund.
* Convenience — Find out if the main office or at least a branch office is located nearby. Also, consider whether or not the bank has walk-up and drive-up services, convenient business hours and a nearby automated teller machine available 24-hours a day.
* Treatment of Customers — Research studies by financial institutions show that lack of courtesy is a major reason why they lose customers to competitors. Bank epresentatives should be courteous in person and over the telephone.
* Range of Services — Banks offer a variety of services for customers who open checking accounts. Find out about stop-payment orders, overdrafts and the waiting period for a check deposit to clear before checks can be written against the funds.
Another factor students need to look at is whether to open a checking account in their home towns or where their colleges are located, Cavanagh said. An advantage to having an account back home is that parents can deposit money and students do not have to wait a couple of days before it reaches the bank. However, students who work and receive a paycheck may want to consider a local institution.
Such tips can help students find the institution that best fits their needs, she said.
“Whatever choices individuals make in selecting a financial institution, opening a checking account is a wise decision,” Cavanagh said. “There’s no need to carry much cash, and it is easier and less expensive to pay bills by mailing a check rather than traveling all over town to make payments.”