Am considering signing up for a “Save Plan” offered by my bank, but I’m unsure if it’s worth it. If anyone here has experience with similar savings plans or this specific one, I’d love to hear your thoughts. What are the benefits? How does it compare to regular savings accounts or other investment options? Are there any drawbacks or hidden fees I should be aware of? Your insights and personal experiences would really help me decide if this is the right choice for my financial goals. Thank you…
Oh, dear, your savings plan depends on your money. SAVE makes perfect sense if your annual income is $30k or less. It might not be if you make more than $70,000 a year; the higher you go, the less sense it makes.
The best thing about SAVE is that it covers interest on your principal even if you make no payments at all. So, the amount of your loan will never increase. You should be able to get your $11,000 in loans erased after ten years. (The guidelines state that loans with an initial balance of less than $12,000 will be forgiven after ten years on SAVE.)
The catch, I suppose, is that your monthly payment will increase in tandem with your salary. It may exceed previous IDR setups or the standard.
Furthermore, any amount forgiven by the federal government on a loan will be considered taxable income for that tax year. Still, it’s worth it.
A “save plan” generally refers to a structured savings account offered by banks, featuring specific terms such as minimum deposits, lock-in periods, and interest rates.
Key Considerations:
Interest Rates: Compare the plan’s interest rate with those of other savings accounts.
Accessibility: Understand the conditions for withdrawing funds without penalties.
Fees: Be aware of any hidden fees or charges associated with the plan.
Goal Alignment: Ensure the plan fits your savings objectives, whether short-term, long-term, or for an emergency fund.
Alternatives to Consider:
High-Yield Savings Accounts (HYSAs): Typically offer higher interest rates than standard savings accounts.
Certificates of Deposit (CDs): Provide higher interest rates for fixed terms, though they are less flexible.
Money Market Accounts: Offer competitive interest rates and a mix of features from savings and checking accounts.