Paying off your student loans may seem like an incredibly difficult feat requiring a superhuman amount of discipline and budgeting prowess. But sometimes, the small things can have a big impact on your progress.
What if you could put the power of your spare change toward your student loans to expedite your repayment in a simple, effortless way? That’s the goal behind the new app Spared.
Spared is a soon-to-be released app that puts your spare change to good use.
“The app rounds all user transactions up to the nearest dollar and pays that ‘spare change’ directly toward the user’s registered student loan of choice,” says Ryan Lockwood, the company’s cofounder.
According to their website, users save an average of $9,000 in interest and cut down their repayment time by seven years.
How does it work?
Spared uses Plaid, the same financial software used by Venmo, Wealthfront, Acorns, and more, to monitor users’ bank accounts.
Through this financial technology, the company is able to review your transactions and round them up to the nearest dollar. Using that “spare change,” you can automatically put small amounts of money toward your student loans to pay them off faster.
Spared makes it easy to put some extra money towards your loans without a lot of effort. After all, it’s unlikely you’re going to miss your spare change.
By default, the app uses the debt avalanche method, meaning your spare change is put toward your student loans with the highest interest rate. However, users can change this and select which student loans they want to focus on.
How Spared can help student loan borrowers
Paying off your student loans can seem like an uphill battle. Deep down you know you need to put more toward your student loans each month, but actually doing so can be a different story.
With so many things vying for our attention and dollars, making your student loan payments a priority is tough. Using Spared, you can effortlessly put more money toward your student loans.
“We all know how critical making more than the minimum payment is when attempting to pay off student loans,” says Lockwood. “By automating the process and paying small amounts of money over the course of the month, the pain of that one-time, larger transaction is removed.”
By taking away the decision-making required to make additional student loan payments, users can focus on other things while putting more toward their student loans.
How to use this service
Spared will launch their web application in mid-January (just in time to help you get started on those New Year’s goals!). For now, you can sign up on their waiting list and be notified as soon as they launch. As part of the process, they are giving away $1,000 to a student loan borrower who refers their friends.
“[Users] can try to work their way up our referral leaderboard for a chance at $1,000 applied to their student loans,” says Lockwood.
Though the web application is set to launch in January, the mobile app will launch some time in the first quarter of 2017.
How much does it cost?
Spared is completely free. Users simply need to link their student loans to start putting their spare change toward their debt balance. While their basic service is free, if you want to allow family members or friends to contribute to your student loan payoff, a nominal fee will be charged.
“Activating premium services will allow the user to open their account to outside contribution from family [and] loved ones, and will cost the user $1 per month,” says Lockwood.
Though it does cost a small fee, having your family, friends, and more contribute to your student loan payoff could be an easy way to pay off your student loans faster.
What you should know about Spared
Spared can help student loan borrowers make additional payments, but it’s not a replacement for making your regular student loan payments. You should still pay the minimum each month. If you’re having trouble making payments, get in touch with your loan servicer.
If you can afford to put even more toward your student loans, don’t just rely on the spare change method to pay off your debt. Making big payments can make a bigger impact.
Though Spared is a free service, they do make money by referring other products and services to you.
Put your spare change to good use
If you want to pay more toward your student loans with little to no effort, Spared is a great way to do just that. Use Spared as a supplemental tool to pay off your student loans, but not as a standalone strategy.
If you’re looking for big wins, don’t forget to pay more than the minimum. Additionally, consider making multiple payments each month to cut down on interest.
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