Fifth Third Bank's round-up app has helped student loan borrowers pay off $1 million in student loan debt.
Everyone makes little purchases throughout the week without giving it much thought – such as a cup of coffee or a trip to the grocery store. Thanks to an app that launched last year, those little purchases could help borrowers pay off their student loan debt more quickly.
Fifth Third Momentum is an app that rounds up customer purchases and applies the extra savings to a designated student loan account. Customers can either round up their debit card purchases to the next dollar or add a dollar to every purchase.
Payments are made every Friday as long as the minimum amount of $5 is reached. Since its inception, the app has helped its customers pay off $1 million in student loan debt.
Greg Carmichael, CEO of Fifth Third Bank, said in a press release that he’s been encouraged by the positive response to the app and how it’s impacted the lives of their customers.
The average student loan debt per borrower is $27,975. And, according to the bank’s estimates, Fifth Third Momentum users who contribute $25 a month toward their student loans could pay down a 20-year loan three years sooner. And by avoiding those three years of additional interest payments, they’ll pay 8 percent less overall.
The app was designed with recent graduates in mind but it appeals to users of all ages. And family members can sign up with their own debit cards and contribute to a loved one’s student loans every month.
Student loan debt is a serious subject but the app makes paying down debt fun by sending users badges when they hit certain milestones. According to Fifth Third, one customer said, "It’s such a great surprise when I go to make my loan payment and see that I’ve chipped away at my principal.”
Round-up apps have grown in popularity as customers recognize the value in automatically saving even a couple extra dollars each week. The amount is so small that most people don’t notice it, but the savings add up over time. And although a recent study showed that most people who pay off their student loan debt do so in a big, lump sum payment, taking the round-up approach can help people get there faster.
Fifth Third Momentum isn’t the only app that helps its customers pay down their student loan debt. ChangeEd is another round-up app that automatically makes payments to the user’s student loan debt. However, these payments are made once the balance reaches $100, and there is a monthly fee of $1.