Do students really benefit by having a student savings account compared to the standard online savings accounts? RateCity investigates.
March 7, 2010
These days there are more banks offering students savings accounts designed specifically for them. These accounts are marketed directly to students as the simple and better way to save but is this always the case?
Many tertiary students support themselves, are renting, have a part-time or casual job (or two) with limited savings. A majority of their money is spent on their social lives, food and living expenses. Most live week to week and are on tight budgets. Any money they can save is important to them so having the option of depositing this into an online savings account and receiving interest would be extremely beneficial.
Student V standard savings accounts
Besides the funky names for student accounts, the major difference between student accounts and standard online savings accounts is the interest rate. Standard savings accounts usually offer higher interest rates than student accounts. For example ING Direct Savings Maximiser account currently offers a rate of 5.85 percent p.a. compared to one of the highest rate student accounts which is Commonwealth Bank’s NetBank Saver at 5.25 percent.
A majority of student savings accounts have introductory rates that expire after a limited time, so the interest rate will convert back to a much lower base rate.
Student accounts also usually have age restrictions and conditions, ranging from ‘under 21 years old’ or ‘you must be a full-time tertiary student’. Standard savings accounts usually don’t have any age restrictions but sometimes waive additional fees if you can prove you are a full-time tertiary student.
Financial Comparison websites such as RateCity.com.au are a good place to compare savings accounts to find a deal to suit your needs. When doing your research, make sure you read the full terms and conditions when applying.
How to get the most of your savings account
- Opt for a financial institution that offers a high interest rate
- Many online savings accounts offer intro rates for a limited time, so keep an eye out for these
- Look for fee-free accounts that don’t charge any monthly or annual fees
- Choose one that offers unlimited transactions and withdrawals
- See how you can access your funds. Some online savings accounts are restricted to online access and may take one-four business days to transfer funds, whereas some may be linked to a debit card for instant access
- For convenience, some accounts have phone, branch and/or online access so think about how you use your accounts and start saving!