PERSONAL FINANCE APPS HELP MILLENNIALS PAY OFF LOANS
What if every time you ordered a spicy tuna roll or tried a new craft beer, you could set aside an extra dollar or so to put toward your student loan debt?
It’s a strategy that might work for many millennials. A new app, for example, allows Fifth Third banking customers to link their debit cards to student loans held by more than 30 major loan servicing firms.
You could agree to round up that $8.35 for lunch to $9 on your debit card and throw an extra 65 cents toward your student loans. Or round up the purchase to $9.35 and throw a dollar toward your debt.
Sure, anyone can put extra change and loose bills in a jar at night, count it up each month, take it to the bank and then write an extra check toward student loan debt. But who’s going to feel great doing that drudge work?
When it comes to banking, Fifth Third said, millennials want a product that’s “positive, approachable and celebrates their wins.”
Smart finance apps are all about offering immediate solutions that fit easily into a consumer’s lifestyle and makes the most of that mobile moment.
“It’s budget friendly,” said Nick Sky, 29, a founder of ChangEd, an app that was introduced this year to help borrowers throw their spare change at student loan debt.
Here’s a look at some of the apps and rewards for paying off student loan debt:
Fifth Third rolled out what it calls the Fifth Third Momentum app this month to help its customers round up extra payments for student loan debt.
To get started, Fifth Third bank customers can download the Android or Apple app and enter the name of the institution servicing the student loan.
Once the loan is connected to a Fifth Third debit card, customers can choose to round up their debit card purchases to the next dollar or add one dollar to every purchase.
You cannot use the app to make extra random payments, say another $30 or $40 here and there. It’s only a tool for rounding up those debit card purchases. But Fifth Third said that once $5 in payments for those student loans is accumulated, the money is automatically sent to the student loan account at the end of the week.
Fifth Third estimates customers who round up $25 a month using this app could pay off a 20-year student loan three years sooner and pay 8 percent less overall by avoiding extra interest that would have accumulated. The numbers are based on a loan amount of $37,172 with a fixed interest rate of 6.8 percent.
A loyalty program called Upromise by SallieMae offers cash-back rewards that can be used toward paying down eligible student loans.
You’d need to sign up for the free account and make purchases at specific retailers, travel sites and online stores. You’d need to register your credit card to secure some points. But if you don’t want to register your credit card, it’s possible to shop online at Upromise.com and still earn points.
Only the borrower can link Upromise and student loan accounts. Not all student loans are eligible. See Upromise.com/ loanlink for details. Upromise account balances of $10 or more will be automatically transferred on a monthly basis to the linked student loan account.
Susan Tompor is a personal finance columnist for the Detroit Free Press.