You will likely want to open an account at a bank near the college. Whether a savings account or a checking account, you must be aware of the minor yet irritating problems that can occur.
First and foremost, you are an adult in the legal sense. This means that if you have a financial problem, you are treated as an adult and not as a child. If you sign something, it can become a binding contract.
Banks charge fees for many things… be aware of what fees you will have to pay.
• If you open a savings account, there probably will be fees collected from the account each month…unless your account is large! Think about whether or not it is worth having the account. Ask questions of the bank before you sign on.
• If you open a checking account, there will be even more fees, which might include charges for the checks you write. And if you overdraw your account by writing a check for an amount greater than what you have in the bank, then you’ll find yourself in trouble with everyone. The bank will refuse to pay the check and charge an overdraft fee, to boot. The person who gets the ‘bounced’ check will be upset because the money will not be sent. And, if you bounce checks often enough, the authorities might be called in. What you consider a minor slip will be taken seriously by everyone else.
If you deposit a check in your account, you probably won’t be able to use the funds for a few days. Your bank will make you wait until the deposited check “clears” — until then, the bank can invest this money, known as the “float”, and earn interest for itself. In effect, customers are lending money to their banks for a few days at no interest — this might seem like a trivial matter, but investing the float is a very profitable business for banks.
Your new bank will probably offer you an Automatic Teller Machine (ATM) card — this will allow you to get cash from your account at any time. You won’t be able to “overdraw” as with a check, because the ATM will never give you more than what you have in your account. Be sure to ask if there are any fees connected with your new ATM card. (Often, if you use it at another bank, there is a fee to be paid.)
Make sure you record each check you write, and balance your checkbook each month. Your bank might offer some instructions regarding the best way to do this.