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4 Bank Accounts That Can Help College Students Save Money

This post is from a student, parent, or professional contributor. The opinions expressed by the author are their own and do not necessarily reflect the positions, viewpoints, or policies of Niche.

A blue sign that says "Personal Banking" in white letters.

In 2021, 73% of Americans ranked finance as the biggest source of stress in their lives.

This statistic shows how financial stress affects the majority of people, and college graduates face the added stress of having to finance their education against rising tuition rates.

If you want to ensure the safety of your financial and mental health, it’s time to study the different accounts in which you can invest and grow your money.

One way to maximize your earnings and keep your finances safe is to invest in the right kind of bank account. Bank accounts can help protect your money in different ways.

Traditional savings accounts can help to keep your money in a safe place while balancing the risk of inflation, while other accounts have the added benefit of growing your money through the accumulation of interest. Here are the types of savings accounts and the different advantages they offer.

For Your First Savings: Traditional Savings Accounts

Traditional savings accounts have low minimum balance requirements, so they’re ideal for people who are just starting to save.

Savings accounts have higher interest rates than checking accounts, and while the low Annual Percentage Yields (APYs) make it difficult to generate profit, they’re high enough to lessen any risk associated with inflation.

Savings accounts don’t usually come with debit cards, so you cannot use them for direct transactions. Federal law also limits transactions to six withdrawals or transfers per month.

If you consider yourself financially irresponsible, having these imposed accessibility limits can help you curb your spending.

For Higher Returns: High-Yield Savings Accounts

To compete with regular brick-and-mortar banks and gain the trust of investors, internet-only banks had to set their savings rates much higher than the national average, creating a new type of account: the high-yield savings account (HYSA).

Interest rates on these high yield savings accounts can be 20-25 times higher than rates offered in traditional accounts, making them good alternatives for people who lack the starting balance to open a money market account.

A high-yield savings account will provide a savings interest calculator to illustrate the difference in profit between HYSAs and traditional savings accounts. Input your initial deposit, and, if possible, a fixed amount that you deposit on a regular basis, and it will compute the interest you could earn in different banks.

For example, this shows that an initial deposit without a recurring deposit can earn 25 dollars in interest in a high yield savings account that offers an APY of 0.5%.

On the other hand, putting the same amount in a traditional account with the national average APY of 0.09% will only yield 5 dollars.

HYSAs are usually available with online banks, most of which do not have physical locations. If not being able to do your banking transactions face-to-face is of little consequence to you, consider investing in a high-yield savings account.

How To Open Up Your First Bank Account

For Emergency Funds: Money Market Accounts

If you’ve already saved a substantial amount of earnings, a money market account might take your money even further.

At the cost of requiring a high starting balance, money market accounts have interest rates that are higher than traditional savings accounts and similar to high yield savings accounts. They also provide more accessibility options, such as debit cards and check writing privileges.

Money market accounts are a low-risk way of providing slow growth opportunities for large amounts of money. In addition, because funds in a money market account are easy to access, this can be a good place to store your emergency funds.

For Limited-Time Savings: Certificates of Deposit

Certificates of deposit (CDs) are another cost-effective alternative to money market accounts. They offer the highest interest rates but have the lowest flexibility.

A CD lets you set aside money for a fixed term. You will only be allowed to withdraw your funds once the term reaches its maturity date. Taking money prematurely will cost you an early withdrawal penalty fee.

When putting money in a CD, only invest if you’re sure you won’t need to use it in the near future. Don’t put your emergency fund in a CD, as you wouldn’t be able to access your funds quickly enough to address an unexpected crisis.

Like with savings accounts, the limited accessibility on certificates of deposit can help with financial discipline. If you have money you don’t currently need, putting it through a CD can help it grow while keeping you from spending it on anything unnecessary.


College is a crucial time to start building healthy financial habits. These four options for savings accounts can help you achieve both short-term and long-term goals, so consider which one is best for you. And, if you want to keep building your savings and work your way to financial independence, consider part-time employment.

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