Basics of student’s savings account
Student saving accounts makes it easier for students to learn the tricks of saving and managing one’s finances. The financial situation of every student varies and a single type of saving account will not be enough to meet all the needs of a young student.
Some of the basic features of a savings account that makes it efficient in all situations are-
- Minimum or low balance requirement.
- Free ATM cards and debit cards.
- Free use of ATM’s of other banks.
- Access to student’s savings account.
- Online banking facility.
Types of students savings accounts
- Basic saving’s account- The simplest and the easiest to use of all the savings account, a basic savings account has all the facilities together with easy access to money from anywhere and anytime. The only drawback of these saving accounts is that the net yield of interest is very low.
- Money market savings account-These are short term savings account. Although these saving accounts give the opportunity to earn higher interest rates but they have a number of draw backs from a student’s prospective. In these accounts the minimum balance that needs to be kept is higher than the basic saving accounts and can charge monthly maintenance fee. For a dependent student such type of saving account therefore becomes very costly to maintain.
- The money market funds are the best type of savings account for students. These saving accounts not only yield higher interest rates but also allow the students to learn the ropes of investing in stock market with minimum risk.
- Certificates of deposits- Another type of savings accounts for students that will have the highest benefits if the funds are locked for a period that coincides with the time when the student will start his higher education. These are low risk and can have a maturity period extending from six months to a year.
- Finally, in case the students are of young age then parents can also think of investing in 529 savings plan. The 529 student’s savings plans are governed by federal rules. They allow parent’s to save for their ward’s education from early on. Either the money gets deposited in a mutual fund where it is allowed to grow before being withdrawn or in the second type of 529 student’s saving plan; the parents are allowed to buy the future fees of a semester in today’s price. In both the cases the investor gets the benefit of saving tax.