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Should College Students Have a Checking and Savings Account?

Making the transition from high school to college involves many decisions: which school to attend, where to live, and what type of bank accounts you’ll need. While having both a savings account and a checking account during college isn’t essential, it can make managing your money easier. Here’s what you should know.

Checking Accounts

Think of a checking account like your wallet, used for everyday transactions such as paying bills, making purchases, and withdrawing cash from ATMs. Checking accounts typically allow for unlimited withdrawals and transfers. Your employer can deposit your paycheck directly into your checking account, and you can pay bills online or link your account to payment apps like Venmo or PayPal. Most checking accounts don’t earn interest.

Savings Accounts

A savings account is a safe place to stash cash for future goals or emergencies. Unlike checking accounts, you can’t use savings accounts to pay bills or make purchases directly; you need to transfer money into your checking account first. Savings accounts usually earn interest and often limit the number of withdrawals or transfers you can make per month without incurring fees.

Pros of Having Both a Checking and Savings Account

• Compartmentalizes your finances, making it easier to manage your money.
• Provides a psychological barrier against frivolous spending.
• Interest-bearing savings accounts can grow your savings.
• Some checking accounts offer overdraft protection by transferring money from your savings account.

Cons of Having Both a Checking and Savings Account

• You may need to maintain a minimum balance in your savings account to avoid fees.
• You’ll have to keep track of each account’s balance and associated fees.
• Monitoring two accounts is more complicated than just one.

How Do You Choose a Bank?

When selecting the best bank as a college student, consider traditional banks, credit unions, and online-only banks. Compare features such as fees, minimum balances, ATM availability, locations, interest rates, online/mobile banking features, and protection. Some banks offer student checking accounts with no monthly maintenance fees, no minimum balance requirements, and other perks.

How Do You Open a Bank Account?

Opening a checking or savings account usually requires filling out an application and providing valid government-issued ID, Social Security number, birth date, contact information, an initial deposit, and proof of student enrollment if opening a student checking account.

Should You Open a Credit Card Account?

If you’re financially disciplined, a credit card can help you start building credit, making it easier to rent an apartment or get a car loan after graduation. Making small purchases and paying the bill in full every month demonstrates responsibility and helps build a positive credit history. Credit cards can also help you handle financial emergencies, earn rewards, and make online purchases more securely than using debit cards.

The Bottom Line

Just like the lessons you learn in class, the money management lessons you absorb in college can set you on the path to future success. Take the time to research different savings and checking account options before deciding which accounts fit your needs. While you’re at it, check your credit report and credit score and set up free credit monitoring to keep tabs on your credit no matter how busy college gets.

For any mortgage-related needs, call O1ne Mortgage at 213-732-3074. We’re here to help you navigate your financial journey with confidence.

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