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10 percent yield, in harm’s way

By Claes Bell · Bankrate.com
Monday, December 10, 2012
Posted: 3 pm ET

With CD rates at all-time lows and still falling, many savers are having a hard time finding any place to park their money that earns a decent return. Well, there's one way to earn 10 percent on your savings -- but you may not be willing to do what it takes to get it.

Apparently, active-duty troops deployed to combat zones can deposit their savings up to $10,000 into a Department of Defense Savings Deposit Program account and earn 10 percent annually. Deposits can be made manually or via an allotment taken out of the service member's pay.

There are a few caveats, though:

  • Interest on the account stops being paid 90 days after a service member returns home or to a permanent duty station.
  • Withdrawals that would put the account under $10,000 can't be made until after the deployment ends.
  • You can't start an account until you've been deployed a minimum of 30 consecutive days or at least one day in three consecutive months, and you have to be receiving "hostile fire pay."

In some ways, the accounts are similar to CDs of yore -- they offer generous yields in exchange for a promise not to withdraw the funds before a set date. And it seems like a great program. Many military families struggle financially; according to a 2010 survey by the FINRA Investor Education Foundation, 27 percent of service members have more than $10,000 in credit card debt, and only 50 percent said they had funds set aside that were sufficient to cover three months' worth of expenses in an emergency.

Giving service members an above-market rate and an easy way to save for emergencies seems like the least we can do for our military personnel in harm's way.

What do you think? Should the government be doing more to help military families get their finances in order?

Follow me on Twitter: @ClaesBell.

(h/t to Ann Carrns of the New York Times Bucks blog)

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