Understanding student banking (part one)

A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain. − Robert Frost

This quote couldn’t be more applicable to last year when the bottom fell out of the markets and banks were scrambling to pick up the pieces.

I had a reader e-mail me asking about the best financial institute to bank with. As a post-secondary student, you are probably out on your own for the first time, away from your family, paying your own bills, and doing your own banking.

Banks are eager to get new clients and will offer incentives to get you early on. This is why they offer student banking. For one, it’s helpful to you as a student, and secondly, they might have you as a client to build a portfolio with down the road. It’s no surprise that every major bank in Canada offers student banking services.

The question still remains: How do I choose a bank account that’s right for me? Part of good money management is gaining understanding your financial institution and your financial needs.

Choosing a bank account is like going shopping for clothes. On the rack, they all look the same; it’s not until you take a closer look that you find what’s right for you.

Shop around for one that best suits your needs. Each bank will offer different services and charge different fees; finding a balance of services and fees is what you need to do. Choosing the right service plan can provide added convenience and save you time and money.

The first thing to consider is the kind of banking you do. Do you use your debit card? Do you write lots of cheques? Do you bank online? Once you understand what you are looking for, it will be easier for you to choose the right bank.

Now, we’ll take a look at the five major banks that we have become accustomed to: Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC), Scotiabank, TD, and the Royal Bank of Canada (RBC).

First, we’ll take a look at BMO: It offers free banking while you are in school as well as a free year after graduation while you get on your feet. The features with a BMO account are: Interac E-mail Money Transfer, re-order cheques (including traveler’s cheques), the ability to open a savings account, and get a consolidate statement that shows all your activity with the bank. However, if you are under the age of 21 or if you are a student over the age of 21, you can open the Plus Plan account for free (a savings of $8.50 per month). If you do an average of one transaction per day this may be a good bet.

Choosing a bank account is like going shopping for clothes. On the rack, they all look the same; it’s not until you take a closer look that you find what’s right for you.

It’s a bit more comprehensive and offers many additional features like Overdraft Transfer Service and a Personal Credit Reserve (to qualified clients and with prevailing interest rates).

The student account with CIBC is known as the CIBC Advantage for Students. It offers free transactions and no monthly fees on a CIBC Everyday Chequing Account. The key benefit of this account is that there are no transaction fees or no monthly fees, 24-hour access to your account and free record keeping of your choice (bankbook, statements, or online).

These are the key benefits. What you need to watch out for is that monthly statements with a cheque image are an extra $2.50 per month and any statements in the interim are $4.50 each. If you use your debit card at a non-CIBC machine there are additional fees (as with most banks), and they’ll also need to see verification that you are attending school in order to be able to open this account.

The account is open for 12 months, and you’ll need to reapply with them every year you are in school to enjoy the benefits of this account.

That’s it for this week’s column; next week we’ll examine the student accounts offered by the other major banks. Please keep your questions coming!

Penney-wise is a weekly column. Please sent your finance questions to leslie@aplusmortgage.ca

Share