The average college senior this year will graduate with almost $20,000 in debt. Thanks to Maryland Gov. Robert Ehrlich’s budget cuts, tuition costs at the university have risen 40 percent during the past few years, so the problem of student debt is only getting worse. While I can’t help with skyrocketing tuition or the interest on your student loans, I can share a few simple financial tips for undergraduates.
1. Don’t bank exclusively at the campus Chevy Chase Bank location. Yes, I know it’s convenient and there are ATMs all over the campus, but I’m beginning to think that buying the naming rights to Byrd Stadium field used up all of Chevy Chase’s money. When I was a freshman, the bank would hand out $10 University Book Center gift certificates, T-shirts, giant foam fingers and all sorts of other cool promotional items to encourage us to open student checking accounts. Earlier this year, I walked past the Chevy Chase Bank tent during the First Look Fair and was told there were no more gift certificates, but they did have free T-shirts. Yay.
Competing institutions such as Citibank and Bank of America have ongoing promotions that actually pay you to bank with them. I made $325 this year by opening checking and savings accounts online, without having to set foot in either bank. Speaking of online, many “Internet banks” such as ING Direct or Netbank offer generous promotions and great interest rates because they don’t have to pay for brick and mortar locations and staffing, so they pass the savings on to you.
2. Don’t use a debit card. Many college students are told that debit cards are safer than credit cards because debit cards don’t charge interest, and you can never spend more money than you have in your account. While that might have been true once, this is dangerous advice now that many banks have started to offer “overdraft protection,” charging additional fees and interest to cover charges that would overdraw your account. In many cases, these additional fees actually cost you more than credit card interest would.
In addition, debit cards offer none of the protections credit cards do. If you use a credit card to purchase items that are never delivered, defective or misrepresented, you can dispute the charges. Because a debit card removes money directly from your account, you don’t have that same safety. In addition, if your credit card is ever lost or stolen, you aren’t held liable for fraudulent charges. However, if your debit card is lost or stolen, you could potentially be held liable for $500 or even all fraudulent charges.
3. Use a credit card that gives you rewards – and I don’t mean the free T-shirts that credit card recruiters give out on the campus, either. My MBNA Fidelity 529 Card deposits 2 percent cash back on all purchases into my Fidelity 529 college savings plan. Two percent might not seem like a lot of money, but did you know that the university bursar lets you pay your tuition with a credit card? By using my Fidelity 529 Card to pay my tuition, I earn almost $130 a year for the next year’s tuition. My Citi Mtv-U Card gives me 5 percent bonus points on all restaurant and bookstore purchases – helping me save money every time I eat at Chipotle or shop at Amazon.com. Many credit cards will even give you bonus points or rewards just for applying, not to mention that by using a credit card instead of a debit card, you’re wisely building up a credit history that can help you get better rates on mortgages and car loans after you graduate.
While keeping your eyes open for better banking opportunities or chances to earn credit card rewards won’t save you thousands of dollars a year, a few hundred dollars in savings can easily cover some student fees, ever-increasing textbook costs and even a few bar tabs.
Cyrus Hadadi is a senior electrical engineering, history and mathematics major. He can be reached at chadadi@yahoo.com.
