Thousands of college students may be paying unnecessary fees on the checking accounts pushed by their schools, according to a new analysis by NerdWallet.
The analysis evaluated the median overdraft fees of 20 university-affiliated checking accounts and found average overdraft fees of $34.50, making them no better than the average checking account.
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Savvier students, however, can avoid such fees by shopping around for a checking account at a local bank or credit union off campus. At 18 of the 20 schools included in the study, there was a cheaper option available within three miles of campus.
Several online banks also offer checking accounts without overdraft fees. Online accounts are particularly good options for college students who may be splitting their time between their school and their hometown, which may be far apart geographically.
College-age consumers are the most likely to incur overdraft fees, with nearly a quarter of those age 18 to 25 incurring more than three such fees per year, according to the Consumer Finance Protection Bureau.
Regardless of which bank you use, it’s not hard to avoid overdraft fees. By law, you can’t be charged an overdraft fee for debit card purchases unless you opt-in to the service, so be sure to say “no” to those offers. You can avoid further avoid overdraft fees setting up alerts when your account balance goes below a certain threshold and by linking your checking account to a savings account to cover transactions when there are insufficient funds available.
