For students attending college or university, opening a bank account is an important step towards economic independence. It is also an important tool for managing one’s finances while studying.
Being a student is actually an exciting time, and if you are starting, you might be wondering about things like how to manage money. This is one of the benefits of a student bank account.
Think of it like a financial toolbox specifically designed for students. It can help you save for that upcoming trip, keep your money organized, and maybe avoid some necessary fees.
In this article, we will talk about everything you need to know about the benefits of having a student bank account.
Table of contents
What Is A Student Bank Account?
A student bank account is a type of bank account specifically designed for students who are pursuing higher education. Banks and financial institutions typically offer these accounts as a way to cater to the unique financial needs and circumstances of students.
Students need bank accounts to make payments and receive money from parents or bank loans. The facility offers various benefits and discounts to help students manage their money easily and conveniently.
SEE ALSO: What Is Student ID Number, And How Do You Get It?
Who Is Eligible For A Student Bank Account?
Eligibility requirements for a student bank account can vary depending on the bank and the country you’re applying to.
However, most banks limit student bank accounts to customers in a specific age group, such as 13 to 24 or 17 to 25. Minor customers must usually open a joint account with a parent, guardian, or adult.
You must be a full-time student at a recognized educational institution, such as a university, college, vocational school, or other post-secondary program. Part-time students might also be eligible sometimes, but full-time status is often preferred.
Benefits of a Student Bank Account?
A student bank account can offer several benefits tailored to students’ unique financial needs and circumstances. Some of the key benefits include:
1. Lower Fees
Many student bank accounts come with reduced or waived fees for services such as monthly account maintenance, ATM withdrawals, and online banking. This can help students save money on routine banking transactions.
2. Overdraft Options
Some student accounts provide overdraft protection or lower overdraft fees, which can benefit students who might occasionally need to spend more money than they have in their accounts.
3. Higher Interest Rates
Certain student accounts offer higher interest rates on savings balances than regular ones. While interest rates are generally low, this can help your savings grow.
4. Debit Cards
Student bank accounts usually come with debit cards, allowing you to purchase and withdraw cash from ATMs. This provides a convenient way to manage your money.
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5. Student Discounts and Perks
Some banks partner with retailers or service providers to offer student-specific discounts, cashback rewards, or other perks. These can include discounts on shopping, dining, entertainment, and more.
6. Financial Education
Many banks offer financial literacy resources, workshops, and tools to help students learn about budgeting, saving, and managing their finances effectively.
7. Online and Mobile Banking
Student accounts often come with access to online and mobile banking platforms, making it easy to check balances, pay bills, transfer money, and manage your finances.
8. Transition Period After Graduation
Some student accounts provide a grace period after graduation before converting into a regular account. This can give you time to adjust to your post-graduation financial situation without immediate changes to your banking arrangements.
9. Simplified Account Opening
Student bank accounts are designed with simpler eligibility criteria, making it easier to open an account without extensive documentation or requirements.
Also, read: When Are You Allowed to Apply for Student Finance in UK?
Are There Disadvantages of Having A Student Bank Account?
Here are a few demerits of opening a student bank account:
1. You need to visit the bank
Some banks don’t allow students under a certain age (such as 17 or 18) to open an account online. Instead, the account must be opened at a branch.
2. Low or no interest rates
Student checking accounts don’t give interest on your deposits, as you generally don’t earn interest on a standard checking account. If a checking account does pay interest, the rate usually is lower than it is for a savings account.
3. Co-owner may be required
In some cases, mainly if you are under 18, you will need a parent or a guardian to own the account with you or co-sign for you. They must be over 18; you may have to open this joint account in person.
4. You lose account benefits after graduation:
Once a student graduates or turns a certain age, their student account may be converted to a regular account. When this happens, you may lose some account benefits, such as no monthly maintenance fee.
How Can I Open A Student Bank Account?
Opening a student bank account is a common and straightforward process. Here’s a step-by-step guide to help you navigate the process:
Step 1: Research your options
Start by researching different banks and their offerings for student bank accounts. Look for features such as low fees, overdraft protection, online banking, mobile apps, and any student-specific benefits. Compare these features to find the account that suits your needs.
Step 2: Choose the bank
Once you’ve researched, choose a bank offering a student bank account with appealing features. Consider factors like the bank’s reputation, accessibility of branches and ATMs, and any additional perks they offer.
Step 3: Gather relevant documents
Banks typically require certain documents and information to open a student bank account. Commonly needed documents include your identification (such as a driver’s license or passport), proof of student status (like an acceptance letter or student ID), and your Social Security number.
Related Post: Does A Student Loan Count As Income In The UK?
Step 4: Visit any branch or apply online
Depending on the bank, you can open the account in person at a local branch or apply online through the bank’s website. Online applications often require you to upload scanned copies or photos of your identification and other documents.
Step 5: Provide proof of enrollment in school
If enrollment is required, supply proof of enrollment in a school. For example, this might be a school transcript, report card, acceptance letter, or student ID.
Step 6: Choose Account Type
Select the type of student account you want to open. Banks might offer various account options, such as savings, checking, or combined accounts.
SEE ALSO: What To Do When Student Loan Account Is Closed Due To Transfer
Step 7: Complete Application
Fill out the application form accurately and provide all the required information. If you’re applying online, follow the prompts on the bank’s website.
Step 8: Submit Documents
If applying in person, present your identification and other required documents to the bank representative. If applying online, upload the necessary documents per the bank’s instructions.
Step 9: Receive Account Details
After your application is approved, the bank will provide your account details, including your account number, routing number (for electronic transfers), and any debit or credit card information.
Step 10: Activate Your Account
If you’ve been issued a debit card, activate it according to the bank’s instructions. Set up any online or mobile banking services provided by the bank.
What Happens To The Student Account If I Graduate?
After you graduate, the bank might convert your student account into a regular or standard account. This could mean that the account’s terms and fees change, so reviewing the new terms is important to understand how they might affect you.
Now, you will have to pay all the regular interest and fees. It is also important to note that by the end of your graduation, you should try to pay off all your credit card debts so that you start afresh. Talk to your bank for the best rates they could offer for your account and other financial products.
FAQs On Benefits of a Student Bank Account
A student bank account is a specialized type of bank account designed specifically for students pursuing higher education. These accounts often come with features and benefits tailored to students’ needs, such as lower fees, higher interest rates, and discounts on various services.
Typically, you must be a full-time student enrolled in a recognized educational institution to be eligible for a student bank account. Some banks may offer these accounts to part-time students or those in vocational or professional training programs.
Yes, there’s usually a limit on the amount of overdraft you can have, which varies from bank to bank. The limit might also increase over the years as you progress your studies.
Depending on the financial institution, you can typically keep a student bank account until you reach a certain age or graduate. After that, the student account usually converts to a regular account.
Conclusion
A student bank account is a crucial financial instrument designed specifically to suit the demands of students pursuing higher education. These accounts make it easier for students to manage their finances by responding to their unique spending habits, from little everyday purchases to more significant educational obligations.
Notably, these accounts come with perks such as reduced fees, robust overdraft protection, and digital banking facilities.
References
- investopedia.com – What Is a Student Bank Account?
- financestrategists.com – Benefits of a Student Bank Account
- smartasset.com – Everything You Need to Know About Student Bank Accounts
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