Why Students in USA Should Open An Online Savings Account

Raghuram Sukumar Personal Finance

Checking Account usually don’t pay Interest Rates. My emergency funds are at Online Savings Account. But, I do have an online savings and checking account.

Lets talk about personal finance, savings, interest rate and Online Savings Account in this post.

Ally Bank ® No Nonsense. Just People Sense.

I was chatting with couple of students and discussion about money came up and his they were managing the finances.

International Students and Banking

Student who is coming to USA for the first semester bring  fees for  2 semester and living expenses for upto one year.

  • Semester Fees – About $15,000
  • Living Expenses – About $5000

After students come to the campus, they open checking accounts with a bank near the campus.

After Orientation and course registration, they pay the first semester fees. Rest of the money will be in checking account that doesn’t pay any interest.

Majority of the students should have got the money from the Student Loan. Interest rates in India for Student loan is around 12%.

After paying the first semester fees, most of the students have about $7,500 to $10,000 balance in their Checking Account.

Checking Account don’t pay any Interest. Nothing. Nada.

Online Savings Account

Why not deposit your money in an Online Savings Account like Ally Online Saving Account or Money Market Account?

If you have $10,000, for the first month you will earn $8. Not a lot, but that will pay for 2 Starbucks coffee or 6 McChicken Sandwich in McDonalds.

Which Online Savings or Money Market Account?

My recommendation –  Ally Online Savings Account

Is My Money Safe in Online Savings?

FDIC insured banks are safe for deposit till $250,000. So, no worries about your money. Its the same case as your Checking account.

My Online Savings Account Setup

Salary comes to my Primary Checking Account.

After I pay all my bills, extra money at end of  the month will be transferred to Online Savings Account.

If you want more flexibility with withdrawing your money, you can open Money Market Account.

Online Savings and Money Market Account

The main difference is  how you access your money.

  • A money market account gives you more access because you can be issued a Debit Card and checks for these accounts.
  • An online savings account does not support the use of checks and does not come with a debit card.  I typically get the money via online account to account transfer.

I don’t recommend  investing in stock markets while you are in school.  Be conservative with your money.

You can try your luck in stock markets after you have sufficient savings.

There are several other online savings account, do check them out.

My recommendation would be Allly Bank’s Online Savings Account or Money Market Account and earn some money.

Note – I do get small referral fees if you sign-up for savings account through the above links.