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Guide to Student Savings Accounts

What Is a Student Savings Account?
Austin Kilham
Austin KilhamUpdated February 6, 2023
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Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
As a student, you may not have much savings. But that doesn’t mean you don’t need a savings account. Savings accounts are designed for storing any money you don’t need right away, such as earnings from your summer job, graduation checks, or deposits from student loan providers. Unlike most checking accounts, savings accounts pay interest, which means your money earns money just by sitting in the bank. Plus, you can easily access your funds when you need them.While standard savings accounts often come with off-putting balance requirements and monthly fees, there are a growing number of student-friendly options that have no minimum balance requirements and no (or minimal) fees. Here’s what you need to know to find a savings account that will serve you well as a student – and beyond.

What Are Savings Savings Accounts for Students?

A student savings account is a savings account designed specifically for teens and college students. Offered by some banks and credit unions, student savings accounts often come with more flexible terms, such as low initial deposit and minimum balance requirements, and minimal (or no) fees.While many banks don’t offer a specific savings account labeled “student savings account,” they will often waive the monthly maintenance fees for any account holder under age 25 and enrolled in a school or vocational program. So it’s always worth asking about special offerings for students whenever you sign up for an account. Some banks allow teens 13 to 17 years old to have a “kid,” “teen,” or regular savings account but must have a parent or legal guardian as a joint owner until they’re 18 years old.

How Does a Student Savings Account Work?

Student savings accounts work much like traditional savings accounts. You can typically open an account online or by applying in person at your local branch. You may need to make an initial minimum deposit, but this will likely be lower than what’s required by a traditional savings account. Like any savings account, you’ll be able to earn interest (expressed as an annual percentage yield, or APY) and link your account to other accounts you own, such as your checking account, even if the accounts are at two different institutions. You’ll also get an ATM card that you can use to access your money at ATMs, whether at home or school. Student savings accounts may offer some additional perks, like budgeting tools and educational resources.Similar to any savings account, you will likely be limited to six withdrawals or electronic transfers per month (withdrawals at an ATM or teller don’t count towards your limit). The Federal Reserve lifted the six-withdrawals-per-month rule in 2020, but many banks still enforce it and will charge you a fee if you exceed the minimum.Recommended: How Much Does the Average American Have in Savings? 

Types of Student Savings Accounts 

When looking for a student savings account, you’ll generally have two main types of account to consider.

Regular Savings Account

Some banks and credit unions will offer a savings account tailored specifically for teens and students with youth-friendly features like no fees, a low initial deposit, and savings tools. Other banks and credit unions simply offer students access to their regular savings accounts but will then waive or refund any fees charged. 

Online Savings Account

Whether specifically marketed to students or not, an online savings account can be a good student option because these accounts typically have minimal (or no) initial deposit or ongoing balance requirements, and generally don’t charge monthly fees. An online savings account works in much the same way as a savings account at a traditional brick-and-mortar bank. The main difference is that you’ll open and manage your account online and/or through a mobile app. Online banks often offer significantly higher APYs than traditional banks, while providing the same conveniences, such as access to a wide network of no-fee ATMs and the ability to transfer your money to another account online or with your mobile app.

Benefits of a Student Savings Account

Student savings accounts offer a lot of advantages. For one, they provide a safe place to store your extra cash. The Federal Deposit Insurance Corporation (FDIC) insures up to $250,000 per depositor, per bank. The National Credit Union Administration (NCUA) provides similar insurance for accounts at credit unions.Student savings accounts also pay interest, and banks will often reduce or waive fees and balance requirements for students under age 25.Some banks will offer additional services for student customers, such as education and tools to help with budgeting and financial goal-setting.

Drawbacks of Student Savings Accounts

While there are numerous benefits to student savings accounts, there are some drawbacks to consider. One is that the money in a savings account generally isn’t as accessible as the money in a checking account. Since these accounts aren’t designed for everyday spending, they typically don’t come with a debit card. And, often, a bank will limit you to six withdrawals or electronic transfers per month.Also keep in mind that if your savings and checking are at two different institutions, there may be a day or two delay between transferring money into your checking account and being able to access it.Though savings accounts pay interest, even high yield savings accounts at online banks may not pay enough to keep up with inflation. If you’re saving for a long-term goal, like a future graduate degree or a downpayment on a home, and can accept some risk, you may want to consider investing through a brokerage account.
Pros of Student Savings AccountsCons of Student Savings Accounts
You can’t lose your money (up to $250,000), even if the bank goes out of businessOften limited to six withdrawals or electronic transfers per month
Allows you to earn interest on your moneyIf savings and checking are at two different banks, it may take a day or two for a transfer to clear
Offers student-friendly features, like no fees and like saving/budgeting toolsInterest rates can be low 

Factors to Consider When Choosing Your Student Savings Account

As you compare savings accounts, you may want to consider the following: 
  • APY This tells you how much you’ll earn on your savings in one year and includes compound interest (when the interest you earn also earns interest). High-yield savings accounts at online banks tend to offer the highest APYs.
  • Initial deposit Student accounts generally allow you to start off with a low (or even no) initial deposit, but you’ll want to check and make sure that you have enough cash to meet any opening minimum.
  • Minimum balance requirements A balance requirement is the lowest amount of money you must have in the account to avoid fees, typically assessed daily. If you drop below that amount, you may trigger fees. As a student, you’ll want to choose an account that won’t punish you for dropping below a certain minimum.
  • Account fees It’s a good idea to find out if there are monthly service fees, accounts maintenance fees, and/or ATM fees, or if these will be waived since you are a student. 
  • Convenience You’ll want to choose a savings account that comes with a user-friendly mobile app, as well as access to fee-free ATMs that are convenient to both home and school. 

Student Savings Account vs. Student Checking Account

Both student checking and student savings accounts are safe and convenient places to store your funds. Designed with students in mind, both come with low fees and minimums. And, both make it easy to access your cash – either at a branch, by visiting an ATM, going to your online account, or via a mobile app.The main difference between a checking vs. a savings account is that checking accounts are designed for everyday spending, whereas savings accounts are designed for stashing money for later use. As a result, checking accounts tend to be better for regular transactions such as purchases, bill payments, and ATM withdrawals. They generally come equipped with debit cards, paper checks, overdraft protection, and other services for spending. The funds typically earn little to no interest.Savings accounts, on the other hand, are better for storing money for short-term needs, such as emergency savings and expenses that are a few months or more off, and generally pay higher interest than checking accounts. Some student savings accounts even offer tools to help you reach savings goals. Unlike checking accounts, savings accounts often impose a monthly limit on how often you can withdraw money without paying a fee. 

Opening a Student Account

You can generally open a student savings account in person or online. Application requirements will vary depending on the institution but you'll typically need the following documents:
  • Identification This could be a valid driver’s license, birth certificate, passport, or Social Security Card, or government issued photo ID
  • Proof of address It must show your name and address of your residence. This could be a current and valid lease, utility bill, or a bank or credit card statement.
  • Opening deposit If your bank requires a minimum opening deposit, you’ll need to make it with cash, a debit card, or via electronic payment. 
  • Application You will also likely need to complete an application for approval.

What to Look for With Interest Rates on Student Savings Accounts

To find a student savings account with the highest interest rate, you may want to look not only at accounts that are called “student savings” or “youth savings” but any savings account that doesn’t charge a monthly fee or have a minimum monthly balance requirement. To compare interest rates apples to apples, you’ll want to look at the savings account’s APY, which tells you how much you will earn on your money per year after compounding is taken into account.

The Takeaway

A student savings account can be a good place to stash money you don’t need immediately. These accounts often come with no, or low, fees and may require a low,  or no, initial opening deposit. If you’re age 18 or over, however, you can open any type of savings account. Whether it’s labeled “student” or not, the best student savings account will come with low fees and a competitive APY to help you grow your money while you focus on school.If you’re interested in finding the best rate for your savings, Lantern by SoFi can help. With our online banking marketplace, it’s easy to compare high-yield savings accounts based on APY, fees, and balance minimums.Lantern can help you compare online savings accounts and find today’s best rate.

Frequently Asked Questions

What are the differences between a student savings account and a regular account?
Can I withdraw money from a student savings account?
Can I open a student savings account online?
Photo credit: iStock/AntonioSolano

About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
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