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When most students graduate high school, they start to think about their freshman year of college and how it will go.
They think about making new friends, the classes to take, and parties to attend.
There’s one thing that gets lost in the excitement of going to college—saving money. It’s important for college students to start saving and setting themselves up for when they graduate.
This article will cover the importance of saving, what to look for in a savings account, and 10 of the best savings accounts for college students.
Why save in college?
While saving money might be the last thing on your mind as you enter college, it can be one of the most important things that you do. Here are a few reasons why you should have a savings account as a college student.
Pay off student loans faster
The average student loan debt in the United States is $30,000, according to US News.
And while you won’t save that much money while you’re in school, the average college student saves at least $1,000.
As you keep saving money throughout your college career, you can designate some income toward paying off your student loans. Having this money available to start paying immediately will help you pay off your loans faster than if you wait to save.
Create good financial habits
Say you save up a few thousand dollars while you’re in college. Not only will you have savings to help pay off student loans or other debts, but you’ll also be creating a good financial habit that will last you a lifetime.
Research suggests that it takes 66 days to build a new habit. This means that if you intentionally put a bit of money into a savings account each week, by the end of your college career, you will have developed the habit of saving money.
Make money work for you
Having money in a savings account is one of the easiest ways to make your money work for you. When you deposit into a savings account, you earn an annual interest on that money, called the Annual Percentage Yield (APY).
This is how your money works for you. Your account at the end of the year can total more than what you initially deposited thanks to compound interest. Of course, you’ll have to find a savings account that offers a decent APY. And in this case, they still tend to be very small percentage rates. So don’t expect huge returns.
However, in this article, we’re going to cover ten savings accounts and their APYs so you can find the account with the best possible return while you’re saving money in college.
How do you find the right savings account for college students?
There are quite a few options for opening a savings account, and in this article we’re going to shortlist 10 of the best savings accounts available to college students based on three primary credentials.
First, we’re going to look at security. You want to be sure that your money can’t be touched by hackers or people who don’t belong in your account.
Second, we’re going to look at APY. This number represents how much your money is going to work for you while sitting in the savings account.
And finally, we’re going to look at the minimum deposit. As a college student, you might not have a lot of money to put away at first, so we want to make sure the opening fees are affordable to you.
The top 10 best savings accounts for college students
So, now that you’re aware of three important factors to consider when setting up a savings account, let’s take a look at some of the best options out there.
1. Bank of America
Pros:
- Available everywhere
- Super secure
Cons:
- Low APY of only 0.01% – 0.05%
- $100 minimum deposit
Bank of America’s “Advantage saving account” is an excellent option for those of you who are concerned about your money’s safety.
On top of its amazing security, there are a lot of ATMs for you to easily access your money.
A minimum deposit of $100 may not seem like much, but you need to be prepared to give that money up entirely for the time being (i.e., keep it in your savings).
With a lower APY range (0.01% – 0.05%), this type of savings account would not be considered the most profitable option.
This is a great option if you’re looking for something secure and convenient. However, you will have to put down a significant deposit, and you probably won’t see much return from the APY.
2. Capital One Financial Corp
Pros:
- No minimum deposit
- Flexible age requirement
- Paper-free
Cons:
- Low APY of 0.1%
Capital One is one of the front runners in online banking. With great online infrastructure, this bank claims to be paper-free.
It’s important to save from a young age, and the Capital One Money account helps you do just that. You can open this account at the age of 8 without making a considerable deposit and keep it after you turn 18.
The downside of this savings account is its low APY of 0.1%. However, compared to Bank of America, this rate isn’t all that bad.
This account is great if you don’t have much money for an initial deposit or you want to get started saving early.
3. HSBC
Pros:
- Easy to use
- $1 minimum deposit
Cons:
- Low APY of 0.15%
Are you starting to see a trend? Bigger banks don’t always care about smaller clients, so the APY is never really all that impressive. That said, HSBC’s rate is much more palpable at 0.15%.
So, what does HSBC Direct Saving do to make up for this low APY? Well, you don’t need a high minimum deposit to get started. With just $1, you can open your own savings account.
Perhaps the best part of HSBC is how easy it is to work with them. Their platform is super user-friendly, unlike a lot of bigger banking conglomerates.
4. American Express
Pros:
- Surprisingly high APY of 0.4%
- No minimum deposit
Cons:
- No other banking functions
With a whopping APY of 0.4%, American Express’s rate is more than double what the first few banks on this list offer. On top of that, there is no minimum deposit.
The downside? This is a one-trick savings account. You can’t do anything else with your account—that means no cashing checks. If you’re looking for something simple, however, we suggest checking this one out.
5. Radius Bank
Pros:
- All-in-one option
Cons:
- Low APY of 0.15%
- $100 Minimum Deposit
If you’re looking to have one bank account for both checking and saving, the Radius Rewards Checking Account is a fabulous option that is tailor-made for you.
While they don’t offer an option specifically for college students, this seems to cover all the bases. It is the perfect bundle for a checking and savings account.
Because this account is catered to checking, the APY is relatively small at 0.15%. You’ll also need to invest $100 to open your account.
6. Marcus by Goldman Sachs
Pros:
- $1 minimum deposit
- Great APY of 0.5%
Cons:
- Online only
Goldman Sachs is a premier financial institution, so it only makes sense that their APY of 0.5% is the highest you’ll be able to find. Thus, if you’re focused on the profitability factor, this account would be the way to go.
In addition to their high APY, Goldman Sachs has a low minimum deposit of $1. This account is a win-win if you don’t have much to invest but want to see a higher return than other big banking accounts.
One thing to keep in mind—this savings account is online only. If you like to bank in person, this might be an adjustment. But if you’re used to doing all your banking digitally, this might be the perfect option for you.
7. Discover Bank
Pros:
- Decent APY of 0.4%
- No minimum deposit
Cons:
- Online only
Discover Bank is a great fit for college students. There is no minimum deposit to set up a savings account, and their APY is on the higher end at 0.4%. Additionally, Discover offers several online banking benefits.
Once again, the downside to this savings account is that you can only bank online.
Truth be told, this account is very similar to Goldman Sachs. If you’re looking for the highest possible APY, go with Goldman Sachs, especially since the minimum deposit is only $1.
However, Discover is another viable option should you choose to open an account with them.
8. CIT Bank
Pros:
- Decent APY of 0.4%
- Encourages saving
Cons:
- $100 minimum deposit
CIT Bank is the perfect option for individuals who struggle to save. The APY is the same as the previous at 0.4%, but you need to deposit $100 every month to keep that rate.
Most people might consider this a downside, but it’s actually an excellent strategy to keep students invested in saving money. If you want your savings account to grow, you’ll have to keep building that habit to get the most out of your money.
If you want to get serious about saving and have the funds to do so, look into this account.
9. Ally
Pros:
- Great APY of 0.5%
- No minimum deposit
- 24/7 customer support
Cons:
- Online only
Ally High Yield Savings Account is a carbon copy of Marcus by Goldman Sachs with the same APY of 0.5% and no minimum deposit requirement.
Similarly to others on this list, Ally is online only. However, with their online banking, you have access to customer service 24/7. If you run into any problems, you will always have help.
10. Chime
Pros:
- Great APY of 0.5%
- No minimum deposit
- Easy saving
Cons:
- Checkings account required
- Online only
Last but not least is Chime. It offers the same impressive APY of 0.5% and doesn’t require you to make a sizable investment to start.
However, it is online only, and it doesn’t come with 24/7 customer support.
You can either store all your spare change from your debit card on your account or add a percentage of your income to your account. The whole process is automated, so you don’t need to go out of your way to do this.
The caveat here is that you need to open a checking account to let Chime keep better track of your finances.
Final words
Saving money in college may seem intimidating with all of the expenses and the multitude of savings accounts available. But, if you start building the habit now, you are setting yourself up for a better financial future.
Hopefully this list of the best savings accounts for college students helped you narrow down your search and determine the best option for your goals.
Once you open your savings account, be sure to map out your priorities, set up a budget, and stay on track with saving!