Checking accounts that are designed with students in mind can be very helpful financial learning tools with decreased risk. These accounts are usually set up to protect students as they learn how to manage money, balance personal budgets and build healthy records of credit. However, there are also some pitfalls to be aware of when opening them. Hidden fees and expiration dates are standard traps that parents and students should think about when managing student accounts.

Pros

• Low Fees/No Fees
  
  Student checking accounts typically don’t require a minimum balance to get started, but if they do, this amount is usually $100 or less. In addition, most accounts won’t charge maintenance fees (other than maybe ATM withdrawal fees from non-franchise machines), but always read the fine print to avoid paying for standard account services.

• Credit Cards with Low Interest Rates
  
  When you open a student checking account, banks like Bank of America and Citibank also offer reduced rates on student credit cards. Although many APRs are on the rise, student cards dropped slightly from 13.9 from 14.02 percent in early 2009.
  
  
  • Bill Pay Service
  Banks like Citibank and Wells Fargo offer students bill pay services at no-cost. You can set up manual or automatic payments among thousands of creditors, including for your credit cards, utilities and other recurring payments.
  
• Other Things to Keep in Mind
  
  In order to help monitor banking activity or to facilitate easier funds transfers, you might consider setting up a joint account. This way, both parents and students appear on checks and all correspondence and statements are received at a mutual address.

Cons

• Required Joint Account
  
  Particularly for high school students or younger children, many banks require that you have a parent or legal guardian over the age of 18 co-sign for an account. College students don’t usually have this requirement, although it can always be an option.
  
• Low Interest Rates
  
  Since balances are commonly kept low in student checking accounts, you can expect to earn little to no interest, unless your account is set to earn about a pre-set, higher balance limit.
  
• Account Expiration
  
  After a certain amount of time, most banks will transfer the status of your account from “student” to a regular checking account. While you are required to be notified of this change, many people don’t read the details closely. After the change, you will likely be subject to monthly fees, a new minimum balance requirement and stiffer penalties for overdrafts.

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