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  • Apinya Kamon
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Best Selections for College Students

2015-06-05 12:26:36

Most college students I know tend to emulate their parents when it comes to finances. However, some parents have committed a lot of mistakes in handling their money. And not all financial institutions can offer the smartest options for college students.



This article has outlined the top financial picks for college students, the financial products with the lowest fees and smallest minimum balances.



Savings Accounts



Nothing beats the classics. A savings account, even though you have a limited budget, will help you save regularly and generate an additional income when placed in an interest-yielding account. Flagstar Direct and HSBC has no monthly fees, 1.5% interest rates, and require only $1 to open an account. Although Flagstar has higher rate, HSBC may be the better option for most students because the institution allows account holders to deposit at any of its ATMs.



Checking Accounts



Various banks will show you their numerous services during orientation week. Their eagerness might convince you to sign up, but you should bear in mind that such institutions charge huge fees for using their services, such as withdrawing money from a competitor’s ATM or overdrawing a checking account. On that note, the best choice is to look for a credit union or non-profit institutions. They are operating like commercial banks, but they give back profits to members through lower charges and better loan rates. Some of them will even waive overdraft charges if a student-holder will attend a financial education seminar. However, these banks have few branches and not as convenient as for-profit banks. After you graduate, you can keep your account open since majority of credit unions are part of linked networks of ATMs, meaning you can still deposit and/or withdraw money if you transfer to another city.



Credit Cards



Credit unions are frequently the best choice for credit cards with low rates. Based on a Pew Charitable Trust study, on an average, banks levy clients rates which are 20% greater than credit unions and also higher late payment fees.



Student Loans



Go with federal loans. If you decide to do so, use the Free Application for Federal Student Aid. The US government, through FAFSA, enables you to base monthly payments on a maximum percentage of your salary, unlike private lenders. It also has more lenient options regarding deferrals and forbearance in the event you lose a job or become disabled.



Investment Accounts



If you can invest as early as you can, why not? Exchange-traded funds are good investment instruments, but the commissions normally charged by a brokerage for buying and selling can discourage you from investing. But you can get away with this dilemma by maximizing the Charles Schwab line of ETFs, which require no commission to purchase or sell. With rock-bottom expenses, these funds track wide market indexes. All you need to do is to deposit a minimum of $1,000 or to pay at least $100 a month. Another alternative is a low-cost index mutual fund offered by Fidelity Investments, Schwab, or Vanguard Group.



A piece of advice: Before anything else, read a lot of books or online resources about personal finance and investment. Do your own diligence so that while you prepare yourself for the real world, you master the fine art of dealing with your finances.