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Student Savings Account: A Concise and Precise Guide

February 25,2013 by: Dallas Browne

Student Saving account is held at a financial institution, principally with characteristics of security and interest rate up to a modest level. Students, in daily life, face expenses for purchase of books, spend their pocket money on trips, dinners, fun time and miscellaneous. Students have a very handy amount of money, so obviously they are unable to afford high account fee and surcharges. On the other hand if they have a piggy bank, they will be tempted to take out the cash given a chance. Further, money saved in piggy banks do not give any interest hence, even if saved, there is no profit realized. Hence, a student saving account facilitates students the same, on some profit and also withdrawn in case of emergency or rainy days.

How money is saved?

Student saving account works on a simple principle. Students deposit funds in bank and the amount is utilized by the bank for providing financial aids like loans or investments. In turn, the bank pays an interest in the account holder. When bank earns a profit, the saving account holder gets a fixed amount of interest proportion, against the account balance. This in no way means that the account holder cannot draw any cash because; it is not a fixed deposit. However, the interest rate for savings account is less when compared to fixed deposits. In case, the student savings account holder signs up for a certificate of deposits agreeing that no cash will be withdrawn for a certain amount of period, the interest rate will be higher. Precisely, longer the term of money in bank; higher the interest rate.
Charms of Student Savings Account

A student saving account has many advantages over other bank accounts. The major benefits include that students are facilitated with competitive interest rate without any monthly fee and lowest threshold of minimum balance. Usually no fee is charged over overdraft; simply the nature of account is changed. Moreover, students can also enjoy the facility of online banking. Some banks also provide easy transfers from Parent’s account to student account.

Account Limitations:

Student account is limited to fixed number of transactions due to the Federal limitations with in the country. In general six transactions can be made in the accounts in a month. However, ATM withdrawals are not taken into account under the 6 transaction limits. For example, according to Bank of America, the student account should hold a minimum balance of 300 USD at any given point of time. In case the balance is not maintained, a non-maintenance fee will be charged or the account type will be changed after intimation.

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