Choosing a bank can one of the most difficult first decisions of college. Managing money is a scary proposition with plenty of horror stories: students irresponsibly using their credit cards, getting robbed, and just being strapped for cash. Sometimes these situations are inevitable, so the best way to reduce pain and suffering is to pick the right place to put your money. At MIT, the most visible choices are Bank of America, Citibank, and the MIT Federal Credit Union (MITFCU). They all offer basic checking, savings, and credit cards.
For checking accounts, the products offered by Bank of America, Citibank, and MITFCU are similar. Debit cards are free at all three and ATMs are aplenty on or near campus. Since they are smaller, Citibank and MITFCU are members of networks that allow members to use tens of thousands of partner ATMs, surcharge-free, across the country. All have branches across the country — either their own or through partners — to help customers in person.
Still, customers should be aware of Bank of America’s fees — they are the highest of the three. For example, Bank of America charges a $35 insufficient funds fee if a customer can’t afford a check or debit purchase, compared to $25 at MITFCU. And depositing and withdrawing money from tellers is prohibited with a Bank of America eBanking account unless you pay a $12 monthly fee (not even the one in the MIT Student Center).
But solely using ATMs is not necessarily difficult. Bank of America is one of the largest banks in the Boston area and has numerous ATMs. Darryl M. Williams ’14 chose Bank of America for this reason. “It was convenient. I signed up at the Galleria,” he said.
Savings accounts are also similar across all three options. Interest/dividends are paid, but all three rates are low for entry-level accounts — not enough to make a big difference in the short-term. The interest or dividend rates are 0.01 percent APR for Bank of America, 0.05 percent for Citibank, and 0.10 percent for MITFCU. For MITFCU, a savings balance must exceed $100 in order to make dividends. The only savings requirement that stands out is Citibank’s $500 minimum to avoid fees. Bank of America requires a $300 minimum to avoid a $5/month cost. (MITFCU’s minimum is $5.)
In contrast to banking products, the student credit cards offered by the banks are more different. While there are additional choices online, the cards discussed here are explicitly advertised in the Student Center. Bank of America pitches their BankAmericard Cash Rewards for Students or a standard BankAmericard for Students. The trade-off between the two is a higher interest rate per month (12.99 percent–0.99 percent) and cash back (Cash Rewards), or a lower interest rate (10.99 percent–19.99 percent) but no cash back (standard BankAmericard).
Citibank offers their Forward Card for Students. It is essentially the same as Bank of America’s Cash Rewards card, except it offers rewards through a point system instead of cash back.
MITFCU offers a fixed interest rate 10.99 percent card. It has no rewards benefits, but usually comes with the most generous initial monthly credit limit of $1000 — Bank of America and Citibank’s student offerings will probably start lower. As with any credit card, credit limits can change based on a cutomer’s creditworthiness.
All four cards have no annual fee. They all require students to be 18 or older and have a student ID. Bank of America and MITFCU need proof of income or a co-signer that can guarantee payment. Generally, cash back cards are for students can pay their balance in full regularly, while fixed rate cards are for those who tend to hold a balance.
By-the-numbers comparisons can be forgotten amidst flashy advertising. Populating the first floor of the Student Center are tables with representatives of Bank of America, Citibank, and MITFCU, with each group desperately vying for business.
MITFCU likes to differentiate itself by being a credit union. Unlike national banks, credit unions only exist to serve particular groups (in this case, MIT community members). Because of this, credit unions claim they are able to offer better customer service and rates.
Indeed, for some MIT students like Melanie B. Jung G, the credit union is a symbol of local businesses, while banks represent corporate America. “I use a credit union back in Washington, so I will be using the MIT credit union. I switched out of Chase (a bank) because they’re terrible,” she remarked.
MITFCU representatives say they open accounts for roughly half of the incoming class each year. A new Bank of America employee conservatively estimated that they open about three hundred to four hundred bank accounts each year.
Some students come to college with a preferred bank or lender from home, often chosen for them by their parents.
For example, Clara J. Suh G, who uses Bank of America, told The Tech, “It was the bank I went to when I was 16 and I haven’t left yet. Back then, it was my parents and it was the only option presented to me.”
Her story is not unique. Dylan W. Joss ’15 uses a Wells Fargo account opened by his parents and the Bank of America ATMs on campus.
MITFCU, Bank of America, and Citibank are not the only financial institutions available near campus. There are smaller local banks in Kendall Square and Central Square area that will serve the typical student just fine.