The go-to money guide for cash-strapped college students – CNBC

Going back to school looks a lot different this year, but there are some things that never change: You’ll still need textbooks; you’ll likely pull an all-nighter or two preparing for mid-terms; and now is the best time in your life to start working on your finances. The sooner you learn how to manage your money and understand the best ways to use credit cards, the better financial situation you’ll be in upon graduation.

Establishing a good credit score during college is essential. It will make things so much easier when you’re ready to make many of the major life decisions that you’ll face after you graduate, from renting an apartment to applying for an auto loan to landing your first full-time job

Since you already have a lot to balance between exams and internships, CNBC Select has created this straightforward guide to what you need to do to get your finances in order during college.

How to read this guide: 

Follow along from start to finish, or use the below table of contents to find the section(s) you want to learn more about.

Back to school checklist for students

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1. Why it’s important to build good money habits in college

Whether you’re just starting your freshman year or are already a couple of years into your college career, this is an excellent time to start building good money habits. Graduating with a good credit score can help set you up for future financial success.

The higher your credit score, the better terms you’ll receive on financial products, like credit cards and loans, which can save you thousands of dollars in interest in the long-run.

Plus, if you establish good money habits now, such as regularly monitoring your accounts (checking, savings and any credit cards you have), you can stay on top of changes to your credit history. This can help you track your progress toward a good credit score and spot fraud early — which can save you time and money in the long run.

While you can (and should) regularly monitor your accounts, signing up for a credit monitoring service can make the process easier and provide you with an early notice of potential fraud. There are a lot of services to choose from, so CNBC Select ranked the best credit monitoring services, making it easier for you to understand the different choices before you sign up. Both CreditWise® from Capital One and Experian free credit monitoring are free to use and send you alerts when there are changes to your credit report.

Establishing a good credit score early will give you access to better financial products, which often come with better perks. You can save money with a grocery rewards card, take advantage of a special 0% financing offer or earn rewards and avoid foreign transaction fees with a travel rewards credit card.

Experian Free Credit Monitoring

Experian Free Credit Monitoring

On Experian’s secure site

  • Cost

  • Credit bureaus monitored

  • Credit scoring model used

  • Dark web scan

    Yes, one-time only

  • Identity insurance

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2. Creating a budget 101

Creating a budget in college can help you understand where your money goes each month, which is a good first step to take when you’re learning to manage your finances.

Through budgeting, you can work toward bigger goals, such as paying off student loan debt, traveling and saving money for future milestones like moving to a new city after college. While you may have fewer expenses during college, it’s still a good time to start tracking your money and setting the foundation for future financial success.

The budget you create in college can help you throughout your 20s and beyond. Plus, once you get the budget set up, the bulk of the work is done. You’ll only need to make small adjustments as your income and spending habits change.

You can create a budget in a variety of ways, from using a budgeting app that connects to your bank accounts to making a spreadsheet with an online template. Whichever method you choose, remember to stick to it and hold yourself accountable.

Here are five steps to create a budgeting:

  1. Calculate your net income
  2. List monthly expenses
  3. Organize your expenses into fixed and variable categories
  4. Determine average monthly costs for each expense
  5. Make adjustments

Calculate your net income

As the first step in creating your budget, you’ll want to calculate your net income, which is the amount of money you earn after taxes. If you receive a regular paycheck through your employer, regardless of whether you’re part-time or full-time, the amount deposited into your checking account is your net income.

If you’re an hourly employee and your hours vary from week to week or month to month, try to figure out an average amount that you can generally count on each month. It’s better to go with a lower number, so you don’t risk overspending.

List monthly expenses

Next, you’ll want to list all of your monthly expenses, including: school supplies (such as textbooks and electronics), rent or room and board, groceries, dining, travel, monthly streaming subscriptions and transportation. And while deposits into a savings account aren’t an expense, it can be helpful to include savings so you remember to put money aside for future goals.

Organize your expenses into fixed and variable categories

After you listed your monthly expenses, it’s time to categorize which are fixed and which are variable.

  • Fixed expenses are bills you typically can’t avoid and need to pay, including text books, rent/room and board, groceries, transportation, insurance and debt repayment.
  • Variable expenses are more flexible and often include wants, like a gym membership, travel, dining out and entertainment purchases.

Determine average monthly costs for each expense

Once you label fixed and variable expenses, list how much you spend on each expense per month. Refer to your bank and credit card statements to get the amount. Many fixed expenses you incur will typically be the same month-to-month, making it easy to put a dollar amount to the cost. However, some fixed and variable expenses don’t have preset costs.

For any categories where your spending varies from month-to-month, you’ll need to do some math to determine the average monthly cost. The calculation is pretty simple: Add up three months worth of spending for an expense and divide by three.

Make adjustments

The last step in your budgeting process is to compare all the information you gathered and make sure the numbers work out. Look at your net income compared to your monthly expenses and see if you have enough money coming in each month to cover all your costs.

If you can’t afford your lifestyle, it’s time to make adjustments. While you can consider ways to make more money, like picking up more hours at work, you should also think about ways you can cut costs.

Learn more about how to create a budget while in college.

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3. What to consider when opening a checking and savings account

For many in-coming freshman, setting up a life on a new campus includes opening a checking and savings account at a local bank. But with so many online options available, it’s good to do your research before you commit.

Checking accounts allow you to easily deposit and withdraw money for daily transactions. This may include depositing a check you receive, taking out cash with your debit card or setting up direct deposit for your paychecks.

When it comes to building an emergency fund or saving money for a large expense, putting your money in a high-yield savings account, like Marcus by Goldman Sachs High Yield Online Savings, can help you reach your goals faster. Interest rates on high-yield savings accounts are more than 10X the national average APY of 0.06%, according to the Federal Deposit Insurance Corporation (FDIC).

Choosing a checking account or savings account requires some research to determine what account best meets your needs. Before you open a checking or savings account, consider the following factors:

  • Fees
  • Minimum balance requirements
  • ATM network
  • Interest rates
  • Mobile app features
  • Insurance


Like many financial products, checking and savings accounts charge various fees to access your money. Some common fees include: monthly service/maintenance fee, overdraft fee, non-sufficient (NSF) fee and ATM fee. These fees can range from a couple dollars to $35, which can add up quickly.

Thankfully, many of the common bank account fees can be avoided if you responsibly manage your account and always maintain a positive balance (one more reason it’s important to get into the habit of checking your accounts regularly). However, you should also consider accounts that have minimal fees so you don’t need to keep track of too many requirements. Consider no-fee checking accounts that never charge monthly service fees, like the Discover Cashback Debit Account.

Discover Cashback Debit Account

Discover Cashback Debit Account

Information about the Discover Cashback Debit Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Discover is a Member FDIC.

  • Monthly maintenance fee

  • Minimum deposit to open

  • Minimum balance

  • Rewards

    1% cash back on up to $3,000 in debit card purchases each month

  • Free ATM network

    60,000+ Allpoint® and MoneyPass® ATMs

  • ATM fee reimbursement

  • Overdraft fee

  • Mobile check deposit


  • Top-rated mobile app
  • No minimum deposit to open an account
  • 1% cash back on up to $3,000 in debit card purchases each month
  • Opt-in to free overdraft protection
  • No overdraft fees


  • No reimbursement for out-of-network ATM fees

Minimum balance requirements

Chase College Checking℠

Chase College Checking℠

Information about the Chase College Checking℠ Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Chase is a Member FDIC.

  • Monthly maintenance fee

    $0 for college students 17 to 24

  • Minimum deposit to open

  • Minimum balance

  • Annual Percentage Yield (APY)

  • Free ATM network

    16,000 Chase ATMs

  • ATM fee reimbursement

  • Overdraft fee

  • Mobile check deposit


  • Top-rated mobile app
  • No minimum deposit to open an account
  • New account holders can earn a $100 bonus, valid until 10/08/2020
  • No. 2 on J.D. Power’s 2019 U.S. National Banking Satisfaction Study


  • $34 overdraft fee
  • No APY
  • No reimbursement for out-of-network ATM fees

ATM network

If you often pay with cash, you’ll need to use an ATM and/or visit a branch location to withdraw money. Thankfully, checking accounts provide access to thousands of free ATMs.

If you stick to your bank or credit union’s ATM network, you won’t incur any ATM fees. Using an ATM from an out-of-network provider may come with fees from both your bank/credit union and the ATM operator. However, some of the best checking accounts provide reimbursements. The Alliant Credit Union High-Rate Checking account offers up to $20 per month.

Alliant Credit Union High-Rate Checking

Alliant Credit Union High-Rate Checking

Information about the Alliant Credit Union High-Rate Checking Account has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Alliant Credit Union is a Member NCUA.

  • Monthly maintenance fee

  • Minimum deposit to open

  • Minimum balance

  • Annual Percentage Yield (APY)

    0.25% with paperless and recurring monthly electronic deposit

  • Free ATM network

    80,000+ Alliant network ATMs

  • ATM fee reimbursement

    Up to $20 per month

  • Overdraft fee

  • Mobile check deposit


  • Top-rated mobile app
  • No minimum deposit to open an account
  • ATM fee reimbursement up to $20 per month
  • 0.25% APY


  • $25 overdraft fee
  • Must opt-in to paperless statements and have a recurring monthly electronic deposit to earn APY


Ally Bank Online Savings Account

Ally Bank Online Savings Account

On Ally Bank’s secure site

  • Annual Percentage Yield (APY)

  • Minimum balance

  • Monthly fee

  • Maximum transactions

    Up to 6 free withdrawals or transfers per statement cycle

  • Excessive transactions fee

    $10 per transaction

  • Overdraft fees

  • Offer checking account?

  • Offer ATM card?

    Yes, if have an Ally checking account


  • Strong annual percentage yield on all balance tiers
  • No minimum balance
  • No monthly fees
  • Up to 6 free withdrawals or transfers per statement cycle
  • Option to add a checking account
  • ATM access if you have a checking account


  • $10 fee per transaction if you make more than 6 in a statement cycle
  • $25 overdraft fee

Mobile app features

Choosing the right bank account is about more than just rates and fees. You should also consider what mobile features are offered. Look for mobile check deposit and integration with peer-to-peer payment apps, such as Zelle. You may also want to consider if there’s the option to “lock” or “freeze” your debit card to prevent anyone else from using it.

Another way to tell if the app is user-friendly is to check out reviews on the app store. Top-rated apps rank close to 5/5 stars and have good consumer comments.


You should verify that the bank or credit union where you open an account provides insurance from either the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA).

Both the FDIC and NCUA provide a standard insurance amount of $250,000 per depositor, per bank or credit union. This insurance protects and reimburses you up to your balance and the legal limit in the event your bank or credit union fails.

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4. Why you should open a credit card in college

Opening a college student credit card is a smart way to start building credit early while also taking advantage of rewards and special financing offers.

There are numerous college student cards available, each providing unique benefits for different types of students — from travelers and foodies to commuters and international students.

Plus some cards are lenient with credit history requirements, which means you may qualify with no credit history at all. The Deserve® EDU Mastercard for Students, for example, doesn’t require a credit history or a social security number, making it perfect for credit newbies and international students. You do have to be 18 to apply for a credit card and need to have a steady source of income.

Most card issuers require you to be enrolled full-time or part-time in a two- or four-year college in order to qualify for a student card. However, there is one exception to the rule that you have to be a student to get a student card: The Journey® Student Rewards from Capital One® doesn’t require proof of college enrollment to qualify.

Once you graduate from college, you can consider opening another credit card that fits with your new spending habits. Check out CNBC Select’s round up of the best credit cards for college graduates.

Deserve® EDU Mastercard for Students

Deserve® EDU Mastercard for Students

On Deserve’s secure site

  • Rewards

    1% cash back on all purchases

  • Welcome bonus

  • Annual fee

  • Intro APR

  • Regular APR

    18.74% variable

  • Balance transfer fee

    N/A, balance transfers are not available

  • Foreign transaction fee

  • Credit needed


  • One year of Amazon Prime Student after spending $500 in the first three billing cycles (valued up to $59)
  • No social security number needed to apply, perfect for international students
  • No credit history required, great for credit newbies
  • No foreign transaction fees


  • No special financing offers
  • No welcome bonus

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5. How to responsibly use your credit card

A credit card is a great asset, but when you use it incorrectly it can get unnecessarily expensive. Carry a balance, and you’ll end up paying high interest rate charges. Miss a payment, and you’ll incur a late fee. Close a credit card, and you’ll ding your credit score. The costs add up quickly.

But it’s not hard to get into the habit of using your credit card responsibly. And as a result, you can save money while building credit and maybe even take advantage of some sweet perks along the way.

Here’s how to responsibly use your credit card:

  • Make on-time bill payments
  • Don’t carry a balance
  • Pay attention to how much you spend

Make on-time bill payments

Your payment history is the most important factor determining your credit score. To ensure you pay your credit card balances (or other bills like student loans) on time, automate your monthly bills so that the money is withdrawn from your bank and you never pay late or miss a payment.

It can be a good idea to set up autopay for at least the minimum payment each month to keep your account current and avoid late fees. After all, missing payments can add up to be quite costly in both late fees (which increased to $40 this year) and a potential penalty APR, as well as cause a dip in your credit score.

Don’t carry a balance

While you should always make at least your minimum payment, only paying the minimum can cost you thousands of dollars in interest charges. Carrying a balance not only results in added fees, but it can also hurt your credit score. As a result, we recommend paying your bill in full every month.

If you carry a balance from month-to-month, try to figure out some areas where you can cut back your spending so you can prioritize paying off your debt. That may include canceling your gym membership or reducing how many streaming service subscriptions you pay for. This can leave you with extra money to pay off your balance and save you a lot of money in the long run.

Pay attention to how much you spend

The amount of money you spend on your credit cards is a key factor used to determine your credit score. The more you spend, the higher your credit utilization rate (which is your total credit card balance divided by your total available credit).

A high credit utilization rate can result in a lower credit score, especially if you max out your credit card. For instance, if you have a $1,000 credit limit and a $700 balance, your credit utilization rate would be 70%. Experts typically recommend keeping your total CUR below 30% and 10% is ever better.

Beyond watching your credit utilization rate, it’s important to make sure you’re not spending beyond your means. Treat your credit card like a debit card and don’t spend beyond what you have available in your checking account, so you can feel confident in your ability to pay your bill in full each month.

Learn more: 10 common credit card mistakes you may be making and how to avoid them

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6. Common financial terms you should know

Financial products like credit cards and loans can be a great asset when used responsibly, but they’re often laden with confusing jargon. We sifted through consumer credit card and bank account agreements to find the most common terms, so you can better understand how your products work and avoid the pitfalls (and high costs) that can come when you don’t use your them properly.

Here are 15 common financial terms:

  1. Annual Percentage Rate (APR): The interest rate you’re charged if you don’t pay off your credit card balance in full each billing cycle. Many credit cards also have specific APRs depending on the actions you take, including: balance transfers, purchases and cash advances.
  2. Annual Percentage Yield (APY): The amount of interest a bank account earns in a year.
  3. Balance transfer: A balance transfer is when you take debt from one credit card and move it to a new card, often with an introductory 0% APR period ranging from six to 20 months. When you transfer debt from one credit card to another, you’ll often incur a 3% to 5% fee per transfer. Cards may also set $5 or $10 minimum fees. (Looking to make a balance transfer? Check out CNBC Select’s roundup of the best balance transfer cards.)
  4. Billing cycle: A billing cycle is the amount of time between the last statement closing date and the next. Billing cycles must be at least 21 days, according to the CARD Act.
  5. Cash advance: When you withdraw money from your credit card account, it’s known as a cash advance. Card issuers typically limit the amount of money you can withdraw to a portion of your total credit limit and charge high interest rates and fees on the withdrawal, making cash advances costly.
  6. Credit bureau: A credit bureau is an agency that aggregates information about your credit history and reports it to financial institutions and other parties, such as real estate and auto companies. The three main credit bureaus are Experian, Equifax and TransUnion.
  7. Credit limit: A credit limit is the maximum amount of money that a lender allows a borrower to use. This can be the max you can charge to a credit card or the size of a loan you receive.
  8. Credit report: A credit report is an aggregation of your credit history that includes detailed information on your credit accounts, such as payment history, balances, account opening date and more. (Learn how to access your Equifax, Experian and TransUnion credit reports for free.)
  9. Credit score: A credit score is a three-digit number that represents your creditworthiness. The most common types are FICO Scores and VantageScores, which range from 300 to 850. (Read more about how to check your credit score for free.)
  10. Credit utilization rate (CUR): Your credit utilization rate is the amount of credit you’re using compared to the amount of credit you have available. Experts recommend keeping your utilization rate below 30%, and preferably below 10%.
  11. Foreign transaction fee: If you use your credit or debit card to make purchases or withdraw money from an ATM outside of the U.S., you’ll often incur a fee that’s often 3% of the U.S. dollar amount of the transaction. (Check out the best credit card with no foreign transaction fees.)
  12. Grace period: A grace period is the amount of time between the end of a billing cycle and when your bill is due. During a grace period, you typically won’t be charged interest on your balance — as long as you pay it off by the due date. Grace periods vary by issuer, but must be a minimum of 21 days from the end of a billing cycle. Beware that grace periods don’t apply to cash advances or balance transfers.
  13. Late fee: If you pay your credit card bill late, you may incur a fee of up to $29 for first-time instances and up to $40 for subsequent violations made within six billing cycles. (Check out the best credit cards with no late fees.)
  14. Overdraft fee: If you spend more than the amount in your account, resulting in a negative balance, you may be hit with a steep overdraft fee up to $35. (Learn more about how overdraft protection can help you avoid fees.)
  15. Penalty APR: When you pay your credit card bill more than 60 days late, card issuers may penalize you with an interest rate, known as a penalty APR, that’s significantly higher than your regular APR.

Check out more common credit card terms.

Bottom line

The knowledge you gain during college isn’t limited to what you learn in the classroom and taking time to understand your finances early will give you an advantage when you graduate. You’ll save time, money and a lot of hassle if you know the basics and develop good financial habits. None of this is difficult, but it does take a little effort. You’re off to a good start, just by reading this guide. CNBC Select is a resource you can tap every step of the way.

Information about Marcus by Goldman Sachs High Yield Online Savings, Capital One® products, and Ally Interest Checking Account has been collected independently by CNBC and has not been reviewed or provided by the issuer prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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