When it comes to exploding college tuition costs, the old-fashioned savings account never looked so good — to bankers or anxious parents.

The financial crisis created a mutual interest: Many families' investments within their 529 college savings plans tanked last year, and banking companies are on the hunt for core deposits.

Now a number of banks report success pitching traditional savings accounts as a more conservative alternative, or a complement, to investment options.

"A lot of 529 users experienced a depreciation in assets within their accounts, so a lot of them are now more risk-averse," said Bridget Bearden, a research analyst for Financial Research Corp. "Having a bank product available is going to be important, as people now want a variety of conservative options, including fixed-income funds, money market accounts and certificates of deposit."

Citizens Bank in Providence, R.I., launched its CollegeSaver savings account in April with a special promotion: families receive $1,000 if they deposit $25 each month into the account until their child reaches 18. The bonus is paid at that time as further incentive to save, said Martin Bischoff, who runs consumer and business banking for the $153 billion-asset Citizens Financial Group Inc., the U.S. banking unit of Royal Bank of Scotland Group.

The program has been so well received that Citizens is now averaging 750 new CollegeSaver accounts a week, Bischoff said. "People have been impacted by recent events, so they are now wanting a level of certainty."

He emphasized that the bank's CollegeSaver account is not meant to replace families' 529 plans, but to augment them as a way to diversify their portfolio. Still, some customers are opting for Citizens' savings account instead of investing because they remain leery of the stock market, Bischoff said.

Meanwhile, the banking units of companies such as Zions, Union Bankshares Corp., Fifth Third Bancorp and BB&T Corp. are offering savings accounts as part of state 529 programs. The states they are working with are Utah, Ohio and Virginia, which offer families tax incentives for opening federally insured savings products through their bank vendors, similar to the incentives they offer for 529 investment plans.

Fifth Third also offers CDs through Ohio's 529 plan, and an Internet specialty bank, College Savings Bank in Princeton, N.J., offers CDs within Arizona's and Montana's 529 plans.

All the bank officials interviewed said they saw an opportunity now to use the products to increase low-cost core deposits and boost margins, as well as to attract new customers who could potentially buy additional products and services.

"We know right out of the chute that they're interested in saving, so this is a great entree to have that conversation," said Leeanne Linderman, executive vice president of retail banking at Zions First National Bank, a unit of the $53.6 billion-asset Zions Bancorp.

After the Zions account was introduced as an option of the Utah Education Savings Plan in February, 34% of the investment option changes by participants in the state's plan moved to Zions' new account, said Lynne Ward, executive director of the state's 529 program. In March, 41% of the switches were into that account, but the stock market has recovered somewhat since then and some people have returned to other investment options.

Still, deposits in Zions' savings accounts within the plan continue to grow, both through new account openings and automatic reallocations within existing plans, Ward said. Overall, users of Utah's program have deposited $143 million in such accounts at Zions.

Consumer interest is not expected to wane soon.

Given the wariness of the stock market, Financial Research in September surveyed 713 families nationwide that had 529 accounts. Seventy percent of them said they were more conservative than they were in June 2008, before the financial crisis rocked many investment portfolios, Bearden said.

Consequently, 69% said that it was either "extremely important" or "very important" to have a savings account insured by the Federal Deposit Insurance Corp. or stable value option within their portfolios.

There may be additional reasons why families will opt for a savings account instead of an investment account, said Mary G. Morris, the executive director of the Virginia College Savings Plan. Families may not have a lot of income to invest; their child may be older and they do not have as much time to reap investment returns; or their child is already in college and they may want to switch out of high-yielding, but riskier investment accounts into savings accounts to preserve wealth.

In 2007, Virginia launched an alternative plan that features an FDIC-insured savings account, called CollegeWealth Account, with Union Bank and Trust, a unit of the $2.6 billion-asset Union Bankshares of Bowling Green, Va. Interest in the program picked up "significantly" last spring after 529 investment plans dived in value, Morris said, and as of Sept. 30 there were $6 million in deposits within the plan's accounts.

On Sunday the banking unit of the $165.3 billion-asset BB&T also became a participant in Virginia's program. Morris said the addition of the larger bank substantially increases its marketing exposure.

Teresa Summerlin, a BB&T product manager in charge of the accounts, said that participating in the Virginia's 529 program not only gives the bank an opportunity to deepen existing customer relationships within that state, it also helps it attract more customers outside its Southeast territory. People living outside Virginia can participate in the state's 529 program and still receive federal tax incentives.

Lee Chalk, a BB&T deposit marketing specialist, said the bank hopes to capitalize on the fact that few state 529 programs currently offer the FDIC-insured savings option.

"This makes this an ideal opportunity to reach new customers across the country," Chalk said.

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