A savings account is a type of bank account in which you can deposit money and earn a small percentage of interest. This type of account differs from a checking account as you will not use it to make withdrawals for daily expenses. Holding a bank account is something most people think of only as working-adults, but there are many advantages for students who have their own accounts.
Let’s take a look at the benefits of savings accounts for students:
1. Earn interest on savings
You get money even as a student. Whether it is from your parents, as cash gifts from family members on your birthday, or even your earnings from your part-time job. This money may also be used for expenses, but there is often a surplus. If you leave that lying in your wallet or a box at home, the chances of it getting spent frivolously increase. So, it is better to open a savings account and deposit the money so that you can earn a little interest on it. The interest might not be much, but it is still better than leaving it lying around. Also, you get your first lessons in banking and finance.
2. Access to emergency funds
If you live away from family, you would know the importance of saving for a rainy day. While you would have a source of regular income, it does not hurt to have a bit of extra cash saved up on the side. Just putting aside $20 a week can multiply into around $1,000 a year. Imagine having those surplus funds to reach into when you need a bit of help. Having your own funds that are easily accessible is one of the major benefits of savings accounts for students. It is definitely an easier way to get money in an emergency than having to send a message to parents or anyone else who might be miles away.
3. Federal Deposit Insurance Corporation (FDIC) insured
A fact that most people do not know is that most banks are FDIC insured. This makes savings accounts very safe and low risk. FDIC insured means that your money is secure even in case of bank failure due to any reason, and there is no better way to start your savings and investments safely and reliably. You can always dabble in stocks later on when you start working full-time. If you are not sure whether your bank is insured, you can visit FDIC Bank Find for more information.
4. Financial learning
One of the benefits of savings accounts for students is that you can use these accounts to get your first foray into the world of finance and banking. For instance, you can learn how your savings can earn interest through this type of account, and you can also use your savings accounts to set up BillPay and other banking facilities. These act like education for when you will deal with bigger accounts and larger sums of money later on in life.