Student Banking Services
Some banks offer special discounted accounts to students enrolled in a Canadian full-time post-secondary school program.
Looking into these could save you as much as 50% on the monthly fee. Contact your financial institution to find out about student accounts.
You'll find an Automated Teller Machine nearly everywhere there are people. They offer access to cash from your bank account at any time. But this easy access can be dangerous. Record all of your withdrawals or you could find yourself broke before you can say "ATM."
If the ATM belongs to your bank, your ATM withdrawal might be free (you typically get a certain number of free transactions a month, depending on your plan). But if the ATM belongs to another bank, you may be charged $1.50 and up -- plus your bank's ATM fee -- per transaction. If you find yourself being charged frequently, try to anticipate your spending and take out enough cash to cover all your expenses at one time. Or better yet, plan a weekly trip to your bank's own ATM to withdraw the money you will need for the week.
A debit card offers the convenience of using a credit card while allowing you to spend only what you have in your account. It's a great way to avoid racking up debt. But, like your ATM transactions, you should keep a record of these transactions and be sure you have the money available in your account before you make a purchase.
Keep in mind that a debit card IS NOT a credit card. If you spend more than you have in your account, it's the same as bouncing a cheque. And since you are only spending what you have and are not using credit, a debit card will not help you build a credit history.
A credit union is owned and controlled by the people who use its services. So if you use a credit union, you are a part owner of it and will be treated to lower-than-average service fees and minimum account balances.
Not everyone can join a credit union, however. Credit unions are formed by members with a common bond. For example, some credit unions are formed by students attending a particular university. If you happen to be attending that university, you are eligible to join that credit union.
Don't immediately join any credit union for which you are eligible. While most are quality financial institutions, some are not and may not have the organization and efficiency to offer good customer service and favourable interest rates. Do some comparative research into interest rates, fees and customer-service ratings before signing on with a credit union.
If you have Internet access, online banking can be an easy way to manage your finances. You can check your transactions and balances online as well as pay bills - all without even having to get dressed. The downside to online banking can be the lack of personal customer service. If you find a traditional bank in your area that also offers online banking, you've got the best of both worlds. Just be aware of extra fees a bank may charge to let you complete transactions online.
Selecting a Credit Card
A credit card can be a valuable financial tool for a university student. These tips should help you choose the card that's right for you.
- Are you looking to build good credit?
You build a good credit history by using a credit card wisely. Make purchases and then pay your credit card bill in full every month. If you are confident that you won't carry a monthly balance, look for a card with no annual fee. High interest rates won't matter since you won't be paying interest anyway. Your card should have a 20-to 30-day grace period so that interest won't be charged if you pay the balance in full every month.
- Are you looking for convenience?
Having a credit card is much easier and safer than carrying large amounts of cash with you. If you plan to pay the balance in full every month, look for a card with no annual fee and a 20-to 30-day grace period. Mind you, a bank debit card will be just as convenient. It won't allow you to build credit, but it won't let you stockpile debt either.
- Are you looking for the freebies?
Some cards allow you to accumulate points with every purchase towards free merchandise or airline miles. Be aware that these cards usually have a large annual fee and a high interest rate. You might be better off buying whatever freebie you're trying to earn.
- Are you likely to carry a balance?
It's not a good idea to carry a balance on a credit card. But if it's too late and you're already carrying one, seek out a card with a low interest rate. Then find out how much they'll charge you to transfer your balance (and ask about the annual fee while you're at it). Also find out if the interest rate is permanent, or is only an introductory rate, which usually lasts for about six months. The Cost of Credit Calculator will help you determine how much the switch will help you save in interest. If you can save more in interest than you pay in fees, it's a good deal. If not, keep looking. In any event, the most important thing is to pay off your credit card balance as soon as you can -- even if you have to live on KD for two months.