Finance Basics for College Students

You just moved away from home and you're starting to get bombarded with credit card offers, bank offers, loan consolidation, bill planning services, and you also have midterms coming up. How do you make sense of it all?

Checking and Debit Cards

The first thing to do is to sign up with a bank or credit union that's both accessible around your university and at home. Examples of such banks are Bank of America, Wells Fargo, Wachovia, and the like. The key is to be sure to have access to lots of ATMs from your specific bank so you don't get charged extra every time you make a withdrawal. Prepaid debit cards, like this prepaid Visa Card are great ways to also keep your spending in check.

If you are already with a bank, you can keep some money in that bank for home and transfer the rest to your school bank. It never hurts to diversify, but make sure to remember your account.

Next, sign up for an account, making sure get both a debit and savings account. When you sign, read for any fine print and make sure there are no extra fees associated with you joining. Banks love to nickel and dime you, the unsuspecting, uninformed student, so read carefully!

Once you sign up, you should get checks and a debit card, and usually an online account. The online account makes things that much simpler for you, because you can either link it to an online automatic bill management system that tracks your spending, or just check it on a regular basis without having to go to the bank. The debit card links directly to your checking account and acts as a credit card, but does not offer you a limit. It's more like a gift card in that you can only take out the money that's there.

Using the debit card is your best bet, because it doesn't let you charge three cases of Miller Lite and be regretting both the money and the headache in the morning.

Credit Cards

This brings us to, credit cards. You should get one. Normally, this isn't the advice given by most financial sites, but you do need to build up your credit history. But, use it wisely. Pay it off without carrying a balance onto the next month, because you will get behind extremely quickly. As always, read all of the fine print before you sign and make sure that the terms don't change two to three months into your card-holding period. And, pick a card that gives you rewards you can use, such as free Amazon points, prepaid cards. You don't need an MTV card that gives you one free Paula Abdul Workout Video for every $1000 you spend.

The key thing is to check your credit card and pay it off promptly, just as promptly as (we hope) you would turn in any assignment. Only the penalty for late payments isn't just a D-, but damage to your financial reputation that will follow you your entire life.

Other Accounts

There are many other types of accounts you can choose from, but as a college students, debit and credit should be your main concern. As time goes on, you may get a steady stream of income, such as a part-time job or stipend, or scholarship. This will enable you to open a high-yield online savings account such as HSBC or ING, which offers higher interest rates. But save all of that for the real world. Enjoy college while you can, but be financially savvy doing it.