When you’re first learning how to manage your own money, following in the footsteps of your parents or older friends isn’t always the way to go. The savings account that’s served someone else for years doesn’t necessarily make the best student savings account for you. You need an account suitable for the spending and saving habits of a high school or college student.
Students and their parents often open student savings accounts to teach money skills — and with good reason. Three-quarters of teens consider learning how to manage their money a top priority. Despite their good intentions, their financial knowledge is steadily declining, according to Charles Schwab’s 2011 Teens and Money survey. From 2007 to 2011, the number of teens who had savings accounts dropped 13 percent, and the number of teens who understand how credit card interest and fees work fell a depressing 11 percent.
How to Choose the Best Student Savings Account
Choosing the best student savings account is a matter of priorities. But typically, a good savings account helps young people earn competitive interest rates on balances without getting hit by service fees or minimum balance requirements. Other students need help covering overdrafts on their checking accounts or keeping a steady drip of money trickling into their savings pot.
Accessibility matters to college students who might not have cars to get to the nearest bank branch. Mobile banking and online banks often make the best choices for these students, especially when their home branch is in another state. As the current generation of new adults naturally turn to their mobile devices to tackle money management, more and more banks offer apps and tools to help students make and stay on budget, pay bills on time and cover accidental overdrafts.
Top Savings Accounts for Students
This list of the best student savings accounts highlights accounts from banks and credit unions that address students’ common financial needs. The list analyzed accounts’ competitive interest rates, monthly service fees, minimum balance requirements and more. Some of the savings accounts listed also specifically target young customers by offering accessibility and money management tools.
Ally Bank: Online Savings Account
While Ally Bank’s Online Savings Account isn’t designed especially for students, it checks all the boxes when it comes to the features students need. There’s no minimum deposit to get started and no monthly maintenance fees to chew away at your balance. It’s hard to beat Ally’s 0.99% APY interest rate, which is compounded daily for faster growth.
As an online bank, Ally makes it easy to get to and move your money between Ally and non-Ally accounts. Routine services such as monthly maintenance, transfers, statements and even official/cashier’s checks are free. The $7.50 fee for returned deposit items and $9 fee for overdraft items paid or returned are some of the lowest you’ll find.
Read: Why Online Savings Account Rates Are So Much Higher Than CDs
Bank X: X Savings
Bank X is another online bank whose services fit customers, as they put it, “better than cookies.” Students will instantly appreciate the contemporary culture of Bank X’s online services, as well as the sweet 0.60% APY they’ll be earning on their balances.
The bank uses Popmoney to make sending money between accounts and friends simple. And its FinanceWorks money management tools provide all the bells and whistles to keep students on top of their game: spending alerts, payment reminders, budgeting tools and even help figuring net worth and income taxes. Bank X does require you to deposit $100 to open a savings account, but the account provides free access to online and mobile banking, mobile deposits and FinanceWorks.
Capital One: 360 Savings
Traditional banks offer smart online services, too. Capital One’s 360 Savings gives students exactly the features they need: no fees, no minimums to open or maintain an account and high-interest earnings currently sitting at a substantial 0.75% APY.
Having trouble organizing all your savings goals? The 360 Savings account lets you create up to 25 free sub-accounts, which you can nickname after a specific savings goal. Students will enjoy tracking and celebrating their savings achievements with My Savings Goals.
Related: How to Use a Sub-Savings Account to Reach Your Savings Goals
Citizens Bank: Student Savings Account
A Citizens Bank student savings account offer online banking, no monthly fees, no minimum balance and competitive interest rates. Because students on a tight budget might miss the target every now and then covering every checking transaction, this account can be linked to a Citizens Bank checking account to provide savings overdraft protection. With coverage, you’ll pay just $6 per item covered and $0 for overshooting by $5 or less.
Flagstar Bank: SimplyKids Savings
Designed specifically for kids and young adults, Flagstar Bank’s SimplyKids Savings account doesn’t require a monthly service fee. When students become ready for another type of savings account, try Flagstar’s SimplySavings account, recently ranked on GOBankingRates’ list of the “10 Best Savings Accounts of 2015.”
Mountain America Credit Union: Youth Savings and Teen Savings
At Mountain America Credit Union (MACU), it’s all about the side benefits. The Mountain Explorer Youth Savings is designed for kids 12 and under, giving them the chance to make their own deposits and withdrawals, and start learning about interest and dividends. The benefits are decidedly slanted toward the little ones: a piggy bank with each new account, prizes for designated savings milestones and a sticker with each deposit.
The Mountain Adventurer Teen Savings raises the bar for teens with benefits like quarterly drawings for iPods and other prizes, as well as access to checking accounts and debit cards (with a parent or guardian co-signer).
Navy Federal Credit Union: SaveFirst Account
Even a little bit of patience earns students better interest rates in a SaveFirst Account from Navy Federal Credit Union. These accounts are more like certificates of deposit (CDs) than traditional savings accounts. But with terms as short as three months, the next penalty-free window to withdraw money is never far away.
Start a SaveFirst account with as little as $5. Students can add to the pot at any time, although penalties do exist for early withdrawals. Terms run from three months to five years at 0.60% APY, which is compounded daily and credited monthly.
Keep reading: 7 Crucial Questions to Ask Before Opening a Savings Account
U.S. Bank: Goal Savings Account
With a structure built around monthly automatic transfers from a U.S. Bank checking account, the Goal Savings Account from U.S. Bank is designed to keep students’ savings accounts growing at a steady pace. You must make a minimum $25 transfer per statement cycle to maintain it — perfect for a student who’s determined to make that savings total grow but in need of a regular nudge to make it happen.
Goal Savings Accounts currently earn 0.01% APY, depending on your location. The accounts require no monthly maintenance fee.
Wells Fargo: Way2Save Savings
Saving money one dollar at a time sounds reasonably doable, even for a student on a tight budget. Students who need a little extra help building their savings will appreciate Wells Fargo’s Way2Save Savings.
The bank’s Save As You Go Transfers move $1 from a linked Wells Fargo checking account to a Way2Save savings account for each debit card purchase, online bill pay transaction or automatic payment from your checking account. A $25 minimum deposit will open a Wells Fargo Way2Save account, which earns 0.01% APY. Monthly service fees are only $5 and can be waived with a minimum daily balance of just $300 or with a recurring, automatic savings option.
Tips on Picking a Savings Account
Whether you end up using a savings account that’s specifically designed for young people or one that offers student-friendly features, the best student savings accounts help students hold on to money at a time in their lives when it’s probably in short supply. Not every student has the same financial needs, so don’t sign up for an account just because it says it’s for students. Before you choose a home for your precious savings, look for the features and services that make the most sense for your situation.
This article originally appeared on GOBankingRates.com: 9 Best Student Savings Accounts
This article by Lisa Poisso first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.
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