Need to pay down student loans and sign up for a checking account? Looks like you might be able to kill two birds with one stone.
This week Simple Tuition, a student-loan comparison site, introduced an interesting new checking product called SmarterBank.
SmarterBank is similar in many ways to those offered by online reward checking provider PerkStreet; it's a free checking account that allows for free ATM access and pays out rewards when you make debit card purchases. The main difference is, instead of those rewards going back into your account as cash, they're used to pay down your student loan debt.
From AnnaMaria Andriotis at SmartMoney:
Here's how the card works: Cardholders get 0.5 percent rewards for signature-based purchases of up to $100 and 1 percent on anything over that amount. (Regular debit-card programs offer 0.5 percent on average in rewards, according to Bankrate.com.) To earn enough rewards to make a dent in their student loan balance, cardholders will need to spend -- a lot. Someone who swipes for $1,000 in purchases per month can get up to $10 in monthly rewards. The company says those rewards can lead to real savings: If applied to a 10-year loan of $8,500 at 6.8 percent interest, it could help a borrower repay that debt 16 months faster and save up to $1,500. But for the roughly two-thirds of students who graduate college with loans, which are projected to average $28,700 this year, earning $10 a month in rewards will shave just five months off their repayment period.
As Andriotis notes, that $10 a month isn't going to make a huge difference by itself, saving you just around $500 in interest charges over the course of that $28,700, 10-year loan example according to Bankrate's Student Loan Calculator.
But given that the SmarterBank checking account has a pretty reasonable fee structure, including no monthly maintenance fee, if you're going to use a debit card as your main tool for making transactions anyway, the student loan interest you'll save seems like a little bit of icing on the cake. Plus, keeping your student loans on your radar may help you remember to make an extra lump-sum payment every once in a while to get those student loans taken care of even earlier.
What do you think? Would paying off your student loans early be a good perk for you, or are there other perks you'd want more?
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