There are pros and cons to everything. While student savings accounts are helpful, there are certain downsides to having this kind of an account. The article explains the benefits of savings accounts for students along with their limitations and downsides.
Benefits of savings account for students
Following are the benefits of savings accounts for students:
- The account can be used by students to store their money securely and use it to pay fees and take care of other expenses.
- They can earn interest on the account. If parents deposit money in the account, students can earn interest and use the money for various expenses.
- They can transact on the account, including paying fees. They can transact by withdrawing cash from ATMs and can use the account for making purchases.
- There is no minimum balance requirement for this account, making it beneficial for students.
- Students can understand the importance of savings when they open this account. The habit of saving will help them when they start working.
- Parents can use the same account to save money for their child’s future. It can be opened when they are in school.
- Funds are accessible and can be accessed at any time.
Downsides of savings account for students
While savings accounts are very useful for students, there are certain downsides for these accounts. This is something students should be aware of. The following are the cons or limitations of student savings account in banks:
- Since this is a student savings account, it is open only for students of a recognized school, college, or university. Students studying at other institutions are not eligible.
- There is usually an age limit, which maybe 25 years of age. Older students cannot open this account even if they are students.
- Students who study through distance learning and online learning may not be able to take advantage of this facility.
- There is a restriction on the number of transactions a student can make every month. It is usually six per month. Additional transactions would lead to an additional fee.
- Some banks even restrict the amount of money that can be deposited in the account. An upper limit is fixed on the balance. This is done to prevent parents from moving their funds to the accounts of children to hide the money.
A comparison between the benefits and downsides
- There are both benefits and downsides to bank savings accounts for students. The restrictions on transacting on the account are an obvious downside. However, if a student plans their expenses, then the restriction should not be an issue.
- Older students and those not studying in the formal system cannot take advantage of this account, which is a minor dampener.
- Compared to all the limitations, the benefits are more. There are multiple benefits of these kinds of accounts. This makes it worthwhile for students to open a savings account.
The limitations and the benefits of savings accounts for students are explained in this article. This allows students to know all about a savings bank account before they open one.
