On-Campus Banks Charge High Overdraft Fees

On-campus banks might be convenient, but they’re often no cheaper than other banks when it comes to fees, according to one analysis.

On-campus banks might be convenient, but they’re often no cheaper than other banks when it comes to fees.

A NerdWallet analysis of university-affiliated checking accounts at some of the nation’s largest colleges found that the median overdraft fee for those accounts is $34.50 — hardly any cheaper than the national median of $35 at all banks and credit unions.

That can add up, considering that Americans ages 18 to 25 overdraft their accounts more often than any other age group, an average of twice per year, according to federal government data cited by NerdWallet.

If all full-time undergraduate students used university-affiliated checking accounts and incurred overdrafts twice per year, they would collectively pay $828 million per year in penalties.

NerdWallet banking analyst Devan Goldstein notes, however that:

“… it doesn’t have to be that way. There are cheaper ways to learn how to avoid overdrawing your account.”

In the case of 16 out of the 20 university-affiliated checking accounts examined, NerdWallet found banks or credit unions within 3 miles of campus that offered checking accounts with lower overdraft fees. In a couple of those cases, the local alternative institution’s checking accounts did not charge an overdraft fee at all.

For a breakdown of the 20 university-affiliated accounts and nearby alternatives, visit NerdWallet’s website.

To ensure they don’t pay more than they have to in overdraft fees, NerdWallet suggests college students ask a bank:

  • What’s the overdraft fee?
  • Is there a limit to the number of overdraft fees that can be charged per day?
  • If I don’t opt in to overdraft protection, can I still be charged for these transactions?

Other factors to consider include:

  • Whether the account has monthly maintenance fees.
  • How broad the financial institution’s ATM network is.
  • How good the institution’s mobile and online banking platforms are.

If a college student’s existing financial institution offers online banking, mobile apps and live chat, it might be unnecessary to switch to an institution with a branch on or near campus.

Additionally, for students who don’t need in-person services, online-only banks provide another alternative to university-affiliated institutions — and often don’t charge overdraft fees at all.

What do you consider the best type of bank for college students? Share your thoughts below or on Facebook.

Stacy Johnson

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