What’s one thing that young people and the elderly have in common? Some of our more immature readers might answer “diapers,” but if the folks over at the Pew Charitable Trusts had a chance to respond, they’d probably say “bank accounts.” That’s right, certain bank accounts are specifically targeted to students and seniors, and while they’re supposedly tailored to the unique needs of these consumer demographics, a pair of recent Pew studies can help shed some light on whether they’re actually valuable or not.
Student Checking Accounts
Banks recognize the importance of wooing consumers early, so they tend to offer students better deals on financial products and services than other consumers with equally little credit standing. The many years of spending that students have ahead of them (not to mention the added earning potential that a degree represents) simply translate into a lot of business for not only everyday banking products like checking accounts, but also mortgages, financial planning services, credit cards, small business loans, retirement planning, etc.
What kinds of better deals are we talking about?
Well, after examining eight banks and six credit unions that offer checking accounts explicitly targeted to college students, high school students, and/or teenagers and comparing these accounts to the most basic general-consumer checking accounts offered by the same institutions, Pew found that young people are often able to get a better deal:
- Lower Monthly Fees: Fifty-seven percent of the financial institutions offer student checking accounts that have lower monthly fees than the basic accounts. Only 7% (one credit union) offers a student checking account with potentially higher fees than what its basic checking account charges, though it depends on what type of student account you sign up for.
- ATM Fee Waivers: Twenty-seven percent of the student checking accounts offer at least a couple of free withdrawals at out-of-network ATMs to student account holders. Though ATM owner surcharges may apply, the discount stands to save students at least a couple of bucks per month.
- Overdraft Fee Waivers: Twenty-nine percent of the major financial institutions that offer student/teenager checking accounts discount or waive typical overdraft fees for these customers. This reflects an awareness of the fact that students are typically strapped for cash and are just learning how to manage financial accounts, so they deserve somewhat of a break. It also makes for catchy marketing.
Students are, however, at a bit of a disadvantage when it comes to the fees they’re charged for viewing their monthly statements. Twenty-one percent of the financial institutions charge students a $2 – $3 paper statement fee that is not charged to non-student accountholders. When consumers are learning how to manage their finances, it’s important that they’re given the option of free paper statements, if that will help them track their transactions and better understand the fees they incur.
Checking Accounts for Seniors
While fewer banks (only five of the largest 24 banks and credit unions) offer checking accounts directly targeted at seniors, that doesn’t mean that older folks cannot score good deals. In fact, there are basically three different types of senior-oriented checking accounts available, each of which confer different benefits (and may have different drawbacks).
- Simple Senior Accounts: These accounts are essentially the same thing as standard checking accounts, though certain small fees may be waived and they tend to be slightly cheaper.
- Low Fee Accounts: Some accounts either waive monthly fees or reduce the minimum balance required to avoid a monthly fee altogether. Certain miscellaneous fees may also be waived, and according to Pew findings, this type of account can save seniors between $48 and $96 per year.
- Senior Added Benefit Accounts: Certain financial institutions offer senior accounts with extra interest and/or fee waivers in return for maintaining a higher balance than basic accounts. Failing to maintain the requisite minimum balance can result in seniors spending $156 – $300 more in monthly fees per year than they would with a standard account.
Neither student checking accounts nor checking accounts for seniors are universally better than their general-consumer counterparts. In fact, it’s possible that they can be worse if you choose the wrong one and don’t meet certain requirements. It’s therefore important that you don’t get swayed by labels or branding and instead remain strictly focused on account terms. Your best bet is and always will be to compare all of the financial products and services for which you are eligible and then pick the offer with the best terms.