What Is a Student Checking Account and Do I Need One?

Listen up!  If you’re a student who cares about getting a handle on this money stuff, you’re going to need a checking account. I always recommend getting one as soon as possible. Why? Because it’s more than just a safe place to park your cash or buy things with a debit card—even though I do love those benefits.

Here’s what I really love about a checking account. It’s a great way to learn about smart budgeting and saving. And a student checking account? That’s even better. Let’s see why.

What Is a Student Checking Account?

A student checking account is an account that offers you basic check-writing and debit card services, with a few extras aimed at the 16–25 crowd. If you’re in that age bracket and have a Social Security number or driver’s license, the only other thing you need is proof of your student status. Then just go online or head to a bank branch to open an account.

A lot of banks will offer you an account with fewer restrictions than you’d find trying to open an ordinary account. Like I said, student checking accounts typically have some features that could help you as you’re starting up college or trade school. Let’s break it down:

• No service fees: They might offer you this. If so, that’s a huge plus. Or if not, you might see lower-than-normal fees, or the chance to avoid fees by either keeping a certain minimum balance or setting up a direct deposit. (That just means having your employer send your paycheck directly to your account—something I recommend.)
   
• Debit card: I love debit cards! Don’t get it twisted here—I’m not talking about credit cards. I do not want any of those in your hands. The only credit I’m a fan of is extra credit on your assignments. Credit cards are for people who want to do fake rich things. Debit cards are for people who want a safe and easy way to manage the real money they already earned. Simple! And here’s a tip: When you go to open a student checking account, chances are the bank is going to end up pitching you a student credit card along with it. Don’t fall for the sales pitch. Debt? Where we’re going, we don’t need debt.
   
• Savings account: You may have the option to link up with a savings account that you can use for sinking funds. And a lot of times this is a free service! Just be sure the savings account does not require you to sign up for overdraft protection. I don’t recommend it because of the fees involved when you use it. You’re better off just becoming a great budgeter and avoiding overdrafts completely. Problem solved.
   
• Mobile banking: One of the smartest ways to use your smart phone is to manage your money. I check my accounts about once a day just to be sure everything’s running smoothly. This kind of app is essential when we get into the saving and budgeting discussion below.
   
• Text alerts: Most student accounts offer text or email notifications to let you know when your balance is getting low, or if there’s account activity happening. Believe me, you’ll appreciate those updates if someone steals your card and starts shopping on Amazon. Rude. I don’t want anyone spending your money except you. If you want another layer of safety, you can even get ID theft protection. I have it, and it gives me sweet peace of mind.
   
• Safe keeping: The money you deposit in a checking account will be insured by the Federal Deposit Insurance Corporation (FDIC). Basically, if your bank went out of business for some reason, you’d still get your money back thanks to the FDIC’s protection.

Do I Need a Student Checking Account?

Yep. As you can see, there are a lot of benefits. And I always like seeing students lay an early foundation of strong financial habits that will lead them to long-term success with your money. And I’m all about helping you find smart and safe ways to save your cash.

Budget every dollar, every month. Get started with EveryDollar!

With that said though, we’ve got to talk about something else first. Before you can stack real dollars in that checking account, we need to talk about your why. We need to get clear on what your purpose should be in getting a checking account, and what your bank’s goals are. Trust me, those two are not always the same!

Why Do I Need a Student Checking Account?

Basically, you need a student checking account because it’s going to make you a better budgeter. I know, I know, you may think budgeting is for spreadsheet lovers who love a good pivot table. But humor me for a minute as I make you fall in love with budgeting.

How Does a Checking Account Work With Budgeting?

I love to budget. And one of the things that helped me feel the budget love was my checking account. I’m serious! See, when money hits my account from a direct deposit, the first three words that come into my mind are, Woo, payday baby! The second three words that come into my mind are spend, save and give. As you use your checking account, I want you to use those same categories to give every dollar in your account something to do.

Using those categories, you can make something I call a zero-based budget to dedicate every dollar of your income to something important you want to do. That’s all budgeting is! The goal is to keep assigning all the money until you’ve worked down to zero so every dollar has a job. We don’t want our dollars unemployed! Now let’s look at what happens if you fail to budget that cash—and what happens when you do.

Let’s say that with my salary, side hustles and some stuff I sold at a garage sale, I have $10,000 in my checking account. I’m feeling good seeing five figures in that balance! But how long will it last?

If I just ride around town with a debit card in my pocket and no plan for my money, guess what’s going to happen? A little game called Swipe! Swipe for a lunch with my friends. Swipe for a date night. Swipe for some new clothes. It’s basically a game where there’s no rules and only losers (you!). Kind of like when you’re four hours into a game of Monopoly, and you get testy and flip the board because your buddy now owns Boardwalk and Park Place.

Next thing I know, my game of Swipe has wiped out that balance (and I don’t collect $200 for passing Go). Maybe I won’t notice what’s happened to my checking account until that moment I try to swipe for groceries . . . and get declined! If you’ve been there, you know it’s a terrible feeling. You’re spending money on things that don’t really matter at the expense of things that do.

That’s not something you want. And I don’t want it for you either. How can you avoid it? Simple. Budget the bucks before you blow through them. Think spend, save and give.

Spend

Get a pen and piece of paper. Start by putting your checking account balance at the top. You could also use an app or your laptop. I don’t care which format you choose. The only rule is that you have to give every dollar a name, until you’ve taken the original amount down to zero. You’ll start by listing all the stuff you spend money on. Then fill in how much money you need for each item and subtract the amount from your account balance on each line until you’ve covered everything. (If you’ve got a lot left over, nice! Check out Save and Give below.)

In my example, we’ll start with $10,000. (Work hard, you guys. You’ll get there!) First, list the Four Walls of essential needs everyone has, and the amounts you owe or expect you’ll need:

• Food (basic groceries or eating out)
• Utilities (internet, phone, water and electricity bills)
• Shelter (your apartment or house)
• Transportation (car expenses like gas, insurance and maintenance)

As long as you’re taking care of those four, you’re in a really good place. Be sure those are covered before moving along to the categories below. And if you’re at an age where your parents are covering most of your Four Walls, great! You can focus on saving and giving.

Save

Once the Four Walls are covered, your next step is having a starter emergency fund. I recommend students always have $500 saved up to cover problems that come up like a cracked laptop or a car repair. You can’t just leave something like that alone. You’ll want cash available that’s set aside for nothing but those kinds of emergencies. Without an emergency fund, you’ll be tempted to pay for them with loans and credit cards—and remember: debt = bad, cash = good.

No Debt

If you’re already in some kind of debt today, I want to encourage you. I’ve personally talked with thousands of people who have paid off their debts and never looked back. I’m one of those people! Anyone can live debt-free and build wealth. The key is this: Don’t go into any more debt, pay off the debts you do have in order from smallest to largest, and pay everything off as soon as possible. And here’s a pro tip: Pay off all nonmortgage debt right away before getting into any type of investing.

Give

This one is huge. Do not miss out on something I believe is the most fun you can have with money: simply giving it away. No one is so far down that they can’t lift someone else up. That’ll preach. And you know what? Giving money to someone who really needs it can make you less selfish and serve as a reminder of the true purpose of money—to help other people.

Here’s the bottom line with budgeting. Your money has a way of moving! And if you don’t tell it where to go and what to do, you could lose it all in a game of Swipe! (Remember, you lose that game every time.)

Work With a Bank You Trust

As you launch into college or trade school, you might not have much money. But banks know at some point you’re going to start having more. And they would love a piece of that pie. Banks aren’t evil, but they’re in the business to make money, and therefore have a plan to get at your money for their benefit.

That explains why they almost all offer some kind of student checking account with benefits to appeal to your age group. That’s also why you need to be sure you’ve got a solid plan of your own—and a counterattack you can use that will help you stack cash to your advantage.

Hear me on this. I’m not mad at the marketers—as long as they’re looking to truly serve you, the customer. But as a smart spender, you have to make sure you only sign up for things that will help you succeed. Here are a few things to watch out for:

• Credit card offers: These banks aren’t just giving you all these benefits to be nice. They have a plan to make money. One of their favorite ways is by luring you into credit card debt. Don’t do this! The perks are a trap.
   
• Fees: “No fees” doesn’t always mean no fees. (I’m serious.) So you need to be sure you ask what’s really free, and what’s going to get you a charge to your account. For example, banks charge fees to checking accounts for things like maintenance, getting a cashier’s check, wire transfers, using your debit card in out-of-network ATM machines, or for overdrafts. But since there are banks who don’t charge these fees, it only makes sense to find one that lets you keep your money.
   
• Expired benefits: You’re not going to be a student forever—except maybe a student of life. And some of the benefits you enjoy with a student checking account could expire once you graduate or leave school for any reason. Be sure you know your bank’s conditions for student status and fees.

If you keep all that in mind, you’ll open the right kind of checking account—which is a smart move for students. It gives you access to a debit card, usually without fees. And it’s a good way to get the hang of budgeting, saving and spending.