I have 3 seniors who will be attending college in 2024. They have begun working and prefer to establish their own bank account.
I’m guessing my name will be there as a holdover because they’re minors and it’ll be regarded as their assets .
What are the advantages and disadvantages of having your own bank account?
Does it have an impact on financial aid? ( we ll be chasing CSS profile schools too ) if they have around $100 in bank ?
We’ll have 3 at college at the same time, which is why we’re very concerned with finance part
Any advice will be greatly appreciated
They can and should have their own bank accounts and actually credit cards to build credit now. You will be on their accounts. I think they can have something like up to $6,000/year without it counting in their name but others with more knowledge will chime in.
They will get very low credit card amounts. But paying it back monthly and letting them buy small things all helps. I know your not asking this specifically but we never had to cosign for anything like apartments while they were in college or after. Building that credit now really goes a long way. 3 in college the same year… That’s a lot. Good luck on that. Lol.
Whether they have their money in a bank account or under their mattress is irrelevant. All assets and income must be reported. That said, teaching kids how to bank is a great idea - and getting them a credit card for emergency use away from home can be wise. Neither in and of themselves affects aid.
Check your local credit union. They usually have “student” accounts for those 16 and over with no fees, no minimums, ATM card. Often there is out of network ATM withdrawl reimbursement and a few other perks.
Our kids had their own bank accounts and credit cards (through the bank) when they were 17. We were not listed as hold overs on their accounts.
We helped them set it up so that the credit card was autopay from their checking account and set up overdraft protection for their checking from their savings.
Our kids have accounts that are linked to ours. This gives them higher minimum balances and other benefits including ease to transfer money from me to them so they can pay rent/etc. For our college kid the credit card he got once he turned 18 was from the same bank so all bills could be paid easily. He (and now my younger one) are authorized users on my credit card both for emergencies and to build credit.
My children have child savings accounts at a local bank. When s24 got his first paycheck we asked if he could have an ATM card. Answer was only if parent opened a joint checking account. Son would be eligible to open his own checking account at age 18. We checked several other local banks, all said joint accounts until age 18. Son decided to wait for an ATM card.
Both children have credit card accounts linked to one of dh’s cards. The cards have low limits and dh is notified every time they are used. Dh says that he can unlink the cards after the child turns 18.
Our kids opened checking accounts in their name the summer before starting college (they were over 18). We found banks that either had an ATM on their college’s campus or which did not charge fees for withdrawals from other bank’s ATM machines. A very small checking account should not impact financial aid - but be sure there are no bank fees for accounts with such a low balance.
Also consider getting a Discover card in their name while in college (assuming kids are fiscally responsible) as it helps establish a credit rating.
You can open an account at any bank. We just picked the local bank that we parents used. It’s really not that complicated. Go in with your kids and say you want to open an account. If they are under 18 you will have to be on the account too.
Our kids both have bank accounts at a bank with branches all over the country. Both opened these accounts as college freshmen. During orientation there were tables set up by banks near their colleges. We politely asked that they open accounts at banks which also had branches near where we lived…for ease of making deposits. This was all pre Zelle and Venmo…but it did make it easy.
Also, they got some perks for being college students.
Up to $7600 of student earnings are not considered in FAFSA EFC this year. However, a student’s assets still go in at a much higher rate than parents. So, it is best that they have low bank balances if they are not full pay.
Chase has College checking accounts that can be opened at 17, have no fees during college, and pay $100 after 10 transactions.
My kids have had credit union accounts since they were ~10. The accounts are of little use for college expenses due to the lack of nearby affiliate ATMs. They did give my DS a scholarship though.
I don’t think my kids have ever used an ATM. They rarely use cash. Everything is paid by credit card, Venmo or Zelle. One year, my oldest needed to send a check in for rent. All other housing had options for electronic payments.
You should open student checking accounts, one for each of them. They will be custodial accounts until they turn 18 (this is a fairly new banking rule at regular banks; I don’t know about credit unions so can’t comment on that now), at which point they will be turned over to the student.
This is important so that your kids can learn basic money management. If they can’t handle managing cash flow at 17 or 18, it will only get more complicated when they are 23 or 25 and having larger incomes and more expenses.
Don’t worry about financial aid eligibility. Think about helping them learn to be responsible adults, and then let them grow up when they do.
My kids have had accounts at the credit union since they were 6 months old. I’m listed as co-owner but they can take me off whenever they want (now both over 21). When they were about 15, they got ‘checking’ accounts (not called that). They have ATM cards and can make deposits and withdrawal online or at ATMs or by writing checks. One hasn’t lived in Denver for years and still uses the credit union as her main account, having both her TA checks from the university and her Starbucks paychecks direct deposited into her account. She gets checks printed out by the CU for free and uses one per month to pay her rent.
One of the benefits is that the CU is nice. If she screws something up, they fix it for her (late payments, a fraud on her ATM card, printing checks at the last minute). My other daughter moved back to the area a few years ago and still uses her account as her main account. One year the IRS took the money out of her savings account rather than her checking (as we’d indicated on her return) and the bank paid it and waived the fee for the overdraft. Try getting BofA to do that!
Every year, the local banks near our kids’ high school had big banners on their buildings, advertising FREE Checking and Savings accounts for college-bound Seniors.
They required a minimum deposit ($200) and they also required the high school transcript (Informal) that showed the last trimester of classes. The rep would sign off that the student had shown the transcript. They could always confirm with the school, if the student and/or parents gave permission to have the transcript electronically sent. The parents could be on the account if the students were 17. Then at 18, the student would be the only one on the accounts.
Our children also have had their accounts since ~3 months of age at our bank. When they reached the age 16, the bank transitioned them to “regular” accounts, offered ATM cards, and also offered the option of checking accounts. Our children all transitioned their accounts but did not want to go to ATM’s yet. They were able to directly deposit their part-time job/wages to those accounts. At 18, they got Discover cards and their ATM cards.
They rarely use cash. Everything is paid by credit card, Venmo or Zelle. One year, my oldest needed to send a check in for rent. All other housing had options for electronic payments.