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Student Savings Accounts

Nov. 17, 2011
Loans, Student Loans
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College is awesome…and f***ing expensive. But it’s not just a time for spending money. We know you need to eat and buy textbooks (and let’s not get started on tuition and housing costs), but you need to save money too, even if it’s just a tiny bit. Plan ahead for that inevitable rainy day and rest assured, you won’t need to panic when it arrives. Oh, and did we mention you can earn extra money with the interest from a savings account? Not a lot, mind you, but who doesn’t love free money? One small problem: savings accounts generally require a few hundred dollars to open, and maybe more than that to avoid monthly fees and earn interest. You may already have to have a minimum balance in your checking account − who wants to do that for a savings account too? But don’t start stressing yet: a student checking account just might be the perfect solution.

Student savings accounts in a nutshell

First, a quick disclaimer: you can get any kind of savings account you want, and it doesn’t have to be a student-focused account. If you know you can afford at least $300 up front, you might prefer a regular savings account. However, if you’re broke (or worried you might be), student savings accounts often have lower monthly balance requirements, or none at all. They’re usually intended for college students ages 18-23, but some cater to older students and grad students too. Many banks offer student checking accounts, but student savings accounts are a lot harder to find. Don’t limit your search to big banks, because you may have better luck at your local bank or credit union.

Important questions to consider when picking a savings account

Where will you bank?

Will you be making deposits and withdrawals when you’re at home with your parents, or when you’re at school? If you’re moving to go to college, this is especially important to consider. If you need flexibility, a national bank with lots of locations will probably be a better fit. If you plan on banking in one spot, you can consider a local bank or credit union and possibly get a better deal.

Will you have to open a checking account too?

You have to at certain banks. Review the terms carefully. Some savings accounts automatically deduct a certain amount from your checking account every month. Also keep in mind that a checking account will come with its own set of requirements – make sure you can meet all of them.

Are there any additional fees or restrictions?

Most savings accounts don’t have a monthly fee if you have a certain amount of money automatically deposited each month, or keep your balance at a certain amount. Savings accounts also limit the number of times you can withdraw money. Make sure you can meet the minimum requirements, and still afford to take money out if there’s an emergency.

National Banks

National banks give you the flexibility to bank from anywhere, even if you’re moving all the way across the country to go to school. Two of your best options are US Bank and Wells Fargo. Student account interest rates vary from state but are usually around 0.05%. If you have a checking account at US Bank, you can open a Student Goal Savings account without a minimum opening balance. It automatically deducts $25 each month from your checking account to keep you on top of your saving goals. The Wells Fargo College Combo account is a checking and savings account package with a similar setup. There’s no charge for the savings account as long as you keep your checking account open. The total minimum deposit to open both accounts is $125 if you set up automatic transfers of $25 a month or more from the checking account to the savings account.

Credit Unions

We love credit unions because they often give you better deals, regardless of whether you’re a student or not. For example, Metro Credit Union in Massachusetts lets you open a SMART student account with just $5 and earn interest with $25 or more in your account. The interest rate is around three times higher than what you’d find at most national banks at 0.15%. Awesome! If you’re not sure whether you’re ready for a regular account or student account, Neighborhood Credit Union in Texas gives you a great incentive to save big for a year and work your way up. The Greener Grass Matching savings account gives you $1 back for every $25 you save per month, up to $10 per month, all of which rolls over into a regular savings account (with new restrictions) after a year. Shop around locally and see what you can find. College has a lot in common with good financial planning: it pays to do your homework!