5 smart banking tips for college students

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Whether it's done by slapping a bank's logo on your student ID card or by other means, colleges have many ways to push their students toward the school's preferred financial institution. 

However, while the bank your college endorses may be convenient, experts say you're better off thinking about what you really want from a banking service before you sign your name on the dotted line.

"Regardless of who your college chooses, you should exercise your right to have [your financial aid] transferred to your own bank account and choose the best one for you," says Mark Kantrowitz, publisher of Finaid.org and Fastweb.com .

Looking for a better way to bank? Here are five expert tips for smarter banking:

1. Don't settle.
Financial services that your college chooses "are not necessarily going to have the lowest fees available," says Kantrowitz. So go online or to some local banks and credit unions and ask what they offer.

"College is a great time to establish really strong money habits and really No. 1 -- and what most people don't do -- is shop around," says Karen Carlson, director of education and creative programs for the InCharge Education Foundation. "The best thing is you don't have to do it physically," she adds. "You can do it online in an hour."

2. Read the fine print.
"This is a case where failing to read the fine print can cost you," says Kantrowitz. "And sometimes it can be very difficult to find the fees."

Instead of just signing up for the first debit card or checking account that looks good, take the time to sit down and really read through an account's agreement from top to bottom.

"The information is there," says Nessa Feddis, vice president and senior counsel for the American Banking Association. You just need to "take a little bit of time to go ahead and look," she says. Feddis compares it to buying a car or cell phone. "[It] takes time to understand the costs and features of those types of products and financial products aren't any different. It takes a little bit of time, not a lot."

3. Beware of cards that make you pay to play.  
If you have to pay to access your own money, walk away, says Carlson. Some prepaid debit cards require that you pay up to $5 to load money on to the card, and Carlson says that's a bad deal. "To me, it's like the bottled water of money," she adds. "We're becoming alarmingly at ease with the idea that you should pay to access your own money."

Instead, look for cards that you can load cash onto for free. "The ideal debit card is ... one that has no fees," says Carlson. "Most big banks have no-fee checking accounts or low-fee" accounts for students. And, "do not opt into overdraft protection," adds Carlson. "Save yourself the fines."

4. Track your spending.
"The key is that you need to track your spending," says Kantrowitz. "You need to get receipts and you need to be careful about things that make it easier to spend money, like pieces of plastic." Kantrowitz says debit and credit cards are especially dangerous because you're less aware of the money you spend when you use them. "When you use a piece of plastic to buy something, it feels the same whether you're spending $5 or $500," he adds. "It's very easy to get overextended."

Kantrowitz recommends that you create a "descriptive budget" while you're in school, write down everything you spend in a notebook and categorize it so you know how much you're spending and on what.

Or, use cash instead. Withdraw a certain amount of cash every week and when it's gone, it's gone. Studies have shown that you tend to spend less with cash than with plastic. "I feel like for teens and young people, it's like cash is not cool," adds Carlson. But "it's OK to use cash," she says. "There are no fees when you use cash."  

"Live like a student while you're at school, so you don't have to live like a student after you graduate," adds Kantrowitz.  

5. Do the math.
"If you're eating out and buying a pizza once a week, that's $10 a week conservatively," says Kantrowitz. If you keep that up, by the time you graduate, that can equal $2,000.

However, if you're using student loan money to buy that pizza, you've also got to factor in the interest you're paying on that loan. "Every dollar you spend in student loan money, it's going to cost you about $2 by the time you pay back the debt," says Kantrowitz. "So that $2,000 will be $4,000. A good rule of thumb is before you use student loan money to buy anything, double the price because, realistically, that's how much it's going to cost you." 

See related: Q&A with Zac Bissonnette, author of 'Debt-Free U' , 10 ways students can build good credit , 6 college money myths

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