Education Savings Accounts
How to save for college or private secondary education
As seen by the custom of giving savings bonds to celebrate the birth of a child, the importance of saving for a child's education is embedded in the fabric of American culture. Most parents are aware of the need to save for their children's college education. However, if you are thinking of sending your children to private secondary schools you may want to consider opening an education savings account to cover the cost of tuition there as well. It is a good idea to begin saving when you have your first child, so that you're ready for any secondary school expenses and have more time to save up for college.
Unlike saving for a car, a vacation or other consumer luxury item, saving for college is more than an expense; it's an investment in your child's future. Start an education savings plan for your children to help cover the cost of college with as little long-term debt as possible.
It's never too early to consider education savings plans
The operative idea in any savings plan, including saving for your child's education, is to begin early. Compound interest is a powerful tool, and when you begin saving for college early in a child's life (or ideally, before they are born), you can put that tool to work for you. Calculate how much you need to save for college and create a plan that will help you save up until your child is ready to go off to school.
By starting early and utilizing an education savings plan, you can save more and slowly accumulate a nest egg for your children's education. Sign up for a direct deposit program so you can continue to save without even thinking about it. This will help you diversify your savings portfolio with bonds and high-yield interest accounts.
Start saving for college with a diversified savings portfolio
There are options for education savings account available, including some that offer tax deductions, interest or even a bonus right before your child goes to school. Consider the following options when saving for your child's education:
- 529 accounts: These tax-deferred education savings plans are a favorite method for individuals saving for college. At Citizens Bank, we offer greater financial guidance with these accounts and can help answer any questions you have about these education savings account options. Keep in mind if you withdraw the money for education it remains tax free, but if you choose to withdraw it for other spending purposes you are subject to state and federal taxes.
- CollegeSaver℠ account: For an easy, manageable education savings plan, open a CollegeSaver℠ account before your child's 12th birthday. If you make the required monthly contributions until the day they turn 18, they could receive a bonus plus interest. Using Steady Save® to make direct deposits each month makes saving for college even easier.
- Certificates of deposit: These FDIC-insured savings accounts offer higher interest rates for savers who agree to leave the funds untouched for a specified period of time. Citizens Bank's Breakable CDs also offer the flexibility of a penalty-free withdrawal during the term of the CD, though they carry higher initial minimums.
- Money market accounts: More liquid than CDs, money market accounts also have a higher interest rate and offer savers higher yields than other forms of savings. However, you can access the funds in a money market account more frequently than funds saved in a CD.
- Traditional savings accounts: Some savers just like to get started regularly setting aside money, and they correctly figure that a simple savings account at their bank is a good way to get started in the savings habit. After all, you can always move the money elsewhere later.
Start saving for your child's education with Citizens Bank
Citizens Bank has a number of convenient and secure education savings accounts to help you start saving for college early. Speak with a Citizens Bank representative at 1-877-360-2472 for information on how to save for college, or to determine the best education savings plan for your children.Open an account online today and start saving for your child's education.