For many people, becoming a college student is the first step into the “real world”. This phase of life can be pretty awkward in many aspects, including financial. Though they may be living by themselves, college students typically still have financial backing from their parents at home. In fact, the University of Michigan conducted a study that found over 60% of young adults ages 19 to 22 are still receiving an average of $7,500 in aid from their parents annually.
When you look at all the costs a college student faces, from tuition to transportation, to housing, it is obvious why financial aid is needed. The distance between students and their parents, however, can make sending money a bit difficult. There are quite a few great ways for parents to be able to transfer funds to their children who may be hundreds, or even thousands of miles away.
American Express Bluebird Card
American Express offers a prepaid debit card that can be found inside a Walmart store. You can either set up an account online for free or pay a $5 activation fee at the register if you need to use the card immediately. Using the Bluebird card is very easy. Parents preload the card with money for their student and then the student can use the card at stores and online.
Money can be added to the card online by transferring it from a bank account or by using cash or card at a Walmart checkout. To make things even more convenient, American Express has created an app that allows for transfers to be made regardless of where you are.
One great feature that the Bluebird card has is its money requests. Students can send a request to their parents for a specific amount of money. They can even state what they need the money for so their parents will know why they need it. Another unique feature is the card’s Walmart Bucks option. If these are added to the card, the card owner can only spend them at a Walmart store. This feature will prevent irresponsible use of the funds put on the card.
The best part of the Bluebird card is its lack of fees. There is no monthly or annual service fee as well as no overdraft fees. To withdraw cash from the account, you can use any ATM, but out of network ATMs will cost you $2.50 as well as any fees that the bank that owns the ATM charges.
Ally Bank has many interesting aspects that make it convenient for college students and their parents. If you link an Ally Savings account to an Ally Checking account, it is completely protected from any overdraft fees. If there is insufficient funds in the savings account, however, there is a $25 fee that will be applied. Unlike most banks, Ally Bank can only charge the fee to you a maximum of once a day. Many banks charge $30, if not more, per transaction and have a high maximum of 5 or 6 times a day.
If you need to withdraw cash, Ally has over 43,000 ATMs in their network. Ally also offers up to $10 a month in reimbursement if you have to use an out of network ATM. Ally has no monthly maintenance fees and offers free standard as well as cashiers checks. If your balance falls to zero, there is no fee associated either. There is no charge for incoming wire transfers whether they are foreign or domestic.
Charles Schwab High Yield Checking Account
If you are interested in travelling outside of the country to study abroad, a Charles Schwab High Yield Checking Account is a great option. The account offers reimbursement for all ATM fees, including those overseas.
Even if you are not planning to study abroad, this sort of account is good for any travelling that you may be doing. There are no monthly fees on Charles Schwab accounts, so they are very affordable. Charles Schwab also offers great overdraft protection. There are no fees associated with it, and all you have to do is link a Charles Schwab savings or brokerage account to the checking account. If the linked account has insufficient funds, however, there is a $25 fee that can be added up to 4 times a day.
Physical Location Options
Parents may not love the idea of banking online. In this case, finding a good bank that has both physical locations and online accessibility is necessary. There are many banks out there that offer good benefits with little to no fees. Big banks that have many locations nationally tend to have high fees, so check with local credit unions before you commit to an account there.
Credit unions will often have the better ‘bang for your buck”. When searching for a physical location, make sure to ask about overdraft protection and fees, if there is a minimum account balance, and if there are any monthly service fees.
The downside to using a physical location is accessibility. Depending on the bank, it may be difficult for either the student or parent to make withdrawals or deposits on the account. Banks and many credit unions do tend to have online options making this interaction a bit easier.
Big banks may have larger fees, but they are very accessible since they have locations almost everywhere. Trying to find a bank near both the parents and the student away at school may be difficult, but it is doable.
Keep an Open Mind
Keeping a student in a solid financial situation is important when they go off to school. The last thing they should be worried about when in college is not having enough money for food and clothing.
A Prepaid debit card, such as the American Express Bluebird, is a great option and is very easy to use. Online banks such as Ally offer great services and are simple to access anywhere since it’s an online bank. Physical banks that are located near both the student and the parents is also a great idea. When choosing which option will work best for the situation, keep in mind all fees that will (or can) be applied to the account.