College students in a classroom

As first-year students head to college campuses this year, many of them will get their own bank account for the first time. It’s a crucial step, because they will need banking access to manage their day-to-day cash flow, receive financial aid deposits, and get cash for pizza and other incidentals.

Granted, your student may not need an individual checking account right away. You may be able to add him or her to your own checking account, or you can simply direct money via a payment app.

But a college bank account could be more convenient and help your child learn to become financially independent. 

If you decide to open an account, you'll want to lend a hand with this process, especially because there's a risk that your son or daughter may be steered toward a high-fee account.

Many colleges enter marketing deals with banks to push account options that may carry risky or costly features, according to a recent study by the Consumer Financial Protection Bureau. That may lead students to pay hundreds of dollars in unnecessary costs per year, including overdraft charges and out-of-network ATM fees.

"Students shouldn't assume that the campus-sponsored account is necessarily the best account to meet their needs," says Suzanne Martindale, a staff attorney at Consumer Reports. She found many of the same practices a few years ago when she led a Consumer Reports investigation into college banking products.

Although federal rules require banks to offer low-cost student options and provide consumer safeguards, the CFPB found that some colleges continue to market products that have costly account fees and make it difficult to find out the true costs.

More On Fees

Unfair practices like these are why Consumers Reports is launching a program called "What the Fee?!" The goal is to highlight surprise fees—and help consumers fight back. (You can find out more about our efforts at WhatTheFee.com.)

For now, though, it's up to parents and students to make sure your college banking option doesn't have hidden fees. 

"You will want to really look around and do some research," says Kimberly Palmer, a banking expert at NerdWallet. "But the good news is there are plenty of free or low-cost options."

Here are five rules for helping your student end up with the right bank account: 

Focus on Free Checking

You may be pitched a particular bank in the college orientation packet, but don't jump at it.

“The college-affiliated bank may not be the best low-fee option,” Palmer says.

At a minimum, the bank you pick should waive maintenance fees on student checking accounts without requiring hefty balances, and offer a free debit card, free check writing, and free ATM usage within its network. But get a complete list of fees, including overdraft protection and out-of-network ATM charges (more on those below).

Another option is to seek out a nearby credit union.

“Many colleges and universities are affiliated with credit unions, which tend to have lower fees as well as locations and ATMs on or close to campus,” says Greg McBride, senior vice president and chief financial analyst at Bankrate.com. Check our advice on finding the best bank or credit union.

Depending on your confidence in your kid’s money management skills, you may want to open a joint account with your son or daughter. That may make it easier to avoid fees because you'll have more assets to deposit.

You'll also have an easier time keeping tabs on your kid’s balances and spending, says Simon Zhen, a research analyst at MyBankTracker.com. 

Beware of Overdraft Protection

When signing up at a bank, your student will probably be offered overdraft protection. It’s best to opt out because he or she would be at risk of incurring hefty fees.

A recent study by NerdWallet found that the median bank overdraft charge was $35, and the average college student overdrew his or her account 2.2 times per year, compared with 2.07 times for the average American.

Even if your student opts out of overdraft coverage, there's still a risk of being charged a fee for "nonsufficient funds," if a check or bill payment exceeds the account balance.

To avoid this problem, set up a savings account and link it to your checking account, McBride says. That way, the bank will automatically pull money from the savings account if the checking balance falls short. There may be a nominal fee for this service, perhaps $10, but it would be much less than an overdraft charge.

Check Out ATM Access

Be sure to find out whether the bank near the school provides fee-free ATMs outside of that region. After all, when your kid is home over break or working as an intern in another city for a semester, he or she will want access to cash.

Large banks offer a wide number of branches across the country, and credit unions typically provide free access to a national network of ATMs. But regional and community banks may not have ATMs in your area, which might result in out-of-network fees—on average $4.69 per withdrawal, according to Bankrate.com, which includes charges both from your own bank and the ATM owner.

Consider Online Banks

If the options for walk-in banks are limited, look at online banks. Most offer checking accounts with no maintenance fees, though some may require a minimum balance or monthly direct deposits.

With many online banks, you're usually reimbursed ATM fees, and you can make deposits by simply scanning or snapping a picture of a check.

Check out online saving accounts too, because they tend to pay a higher interest rate than traditional banks. If your student has a job, you may want to direct that income into one. 

Check Student Eligibility Rules

Most banks set eligibility limits for student checking accounts, Zhen says. Some may permit student checking for only four years or cut off eligibility by age; others may end student checking after the graduation date.

At that point, your student may receive a 30-day notice that the account will convert to a different fee schedule, which will probably mean minimum balance fees or other charges. So make sure your new grad has opted for a better alternative before that happens.