As a student, you're often taking on debt while completing your studies. And for many students, working even part-time isn't an option. That means financial management is vital. And avoiding paying fees can go a long way toward making sure you have enough money to survive the education years. Here's what you need to know about how to effectively manage your finances as a student without paying fees.
Avoid Fees on Credit Cards
Student credit cards can be a helpful tool for college students to begin building credit. But cards that charge excessive annual, late, or foreign transaction fees can end up costing more than they're worth. So when you look at choosing a student credit card, opt for one that:
- Is free from fees: You'll certainly want to avoid a card that requires an annual fee, but also look for cards that don't have foreign transaction fees if you're planning to go abroad.
- Offers rewards you'll actually use: Credit cards can offer awesome perks for the spending you're already doing. Be sure to choose a card that offers a practical reward like cash back or a statement credit instead of earning travel points if you aren't planning any travel for the next few years.
- Reports to all 3 credit reporting bureaus: Since you're establishing credit that will impact you for years to come, you'll want to ensure that your responsible financial management is reported to all 3 of the major credit reporting bureaus: Experian, Equifax, and TransUnion.
Avoid Bank Account Fees
Opening a checking account at a bank is one of the first steps to managing your finances. And many student bank accounts offer low minimum deposits and waived fees during your college years. However, to avoid unnecessary bank account fees, it's best to:
- Choose a bank account designed for college students: Student checking accounts often offer benefits like no monthly fees or transfer fees. Plus, these accounts are a crucial part of managing finances as you can set up bill pay or direct deposit right from your checking account.
- Set up a checking and savings account with your bank: Keeping an everyday checking and savings account at the same bank allows you to quickly transfer funds from one to the other as needed to cover an expense. Plus, some banks may offer an option to set up an automatic transfer from savings to checking if you don't have sufficient funds to cover a transaction.
- Create appropriate account notifications: With online banking, you can get alerts directly to your mobile device when you've made a purchase or when your balance falls below a certain threshold. Set up alerts to give you time to transfer funds if necessary before you'd be assessed a fee.
Avoid Student Loan Fees
A staggering 56% of college seniors are graduating with student loans, according to recent data from Student Loan Hero. And while most loans don't require repayment until after graduation, there are ways to protect yourself from future fees when you sign up. The rules and fees for federal student loans are often locked and cannot be changed. But private lenders have more flexibility, and some even don't charge late fees.
When you sign up to take on student loans, be sure:
- You have a plan in place to make payments after graduation: Making on-time payments is the number one way to eliminate fees. Calculate your student loan payment ahead of time, so you'll know what to expect when you get your first job.
- You know the available repayment plan options: Especially for federal student loans, there are repayment plans available that will decrease your payments based on occupation, income, and family size. Be sure you know what support you're eligible for if you're worried about making your payments on time.
The Bottom Line
Many financial institutions make money off college students in the form of fees. But smart financial management means you can avoid fees on critical financial accounts like credit cards, bank accounts, and loans. Understanding fee structures and amounts before you open any kind of financial account means you're in the driver's seat for your financial future.
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Original Source: How to Manage Your Finances as a Student Without Paying Fees