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CommonBond now offers a high-yield cash account.
- CommonBond, a company that helps student loan borrowers save money by refinancing, has debuted a high-yield account.
- Anyone who refinances their loans through CommonBond is eligible to open a SmartSave account and start earning 1.70% APY on their cash.
- The account has no monthly fees, transfer limits, or balance minimums, and is FDIC insured up to $2 million.
- Learn more about getting or refinancing a student loan with CommonBond »
You can save tons of money by refinancing your student loans to a lower interest rate.
Since 2013, CommonBond, an online student lender, has helped tens of thousands of borrowers do just that. Now the company wants you to sweep that savings into its new cash account, SmartSave.
The high-yield account currently earns a competitive 1.70% APY, has no monthly fees or transfer limits, and is FDIC insured up to $2 million. It's operated in partnership with Flourish Cash, a subsidiary of Stone Ridge Securities, a brokerage firm. SmartSave is not a high-yield savings account, technically, but serves the same function of helping you keep your savings safe from market risk and growing at least on pace with inflation.
"We know that student-loan refinancing can help people save money, but then what?" CommonBond CEO David Klein told Business Insider. "A lot of people are making a choice between savings and student loan payments. We thought, what if we could build something that not only lowered their monthly payment, but did something with that savings?"
Courtesy of CommonBond
A CommonBond refinancing application.
It's no secret millennials are delaying various life events, from homebuying to travel, because they're overwhelmed with student loans. The typical borrower is repaying a five-figure balance, often spread across multiple lenders. Refinancing your loans can leave you with a single, lower monthly payment, reducing the total amount of interest you pay over time.
CommonBond has attractive options for refinancing private and federal student loans and Parent PLUS loans over five, seven, 10, 15, and 20-year terms. Here are its current refinancing rates (all include a 0.25% discount for setting up auto-pay):
- Fixed-rate loans range from 3.21% to 6.45% APR
- Variable-rate loans range from 1.81% to 6.29% APR
- Hybrid loans - a 10-year loan with a fixed rate for the first five years and a variable rate for the next five years - range from 4.35% to 6.17% APR
CommonBond also offers undergraduate, graduate, MBA, dental, and medical school loans, but those customers are not eligible to open a SmartSave account.
The process for stashing away the extra savings from refinancing into a SmartSave account isn't totally seamless - borrowers still need to set up contributions from an outside bank - but the value may be more psychological than anything.
Many people intend to save more money, especially if their monthly expenses - like payments to a student lender - suddenly go down, but the task often gets lost in translation. When you refinance with CommonBond, the lender will suggest a savings amount based on the difference between your old monthly payment and your new one. You can decide whether you want to set up auto-deposits from your bank for that amount or tailor it.
CommonBond is a worthy competitor in the space
CommonBond isn't the first student lender to move into quasi-banking. SoFi, another online lender geared toward millennials and Gen Z, offers refinancing as well as SoFi Money, a high-yield cash management account. You don't have to refinance your student loans - or even have a loan to begin with - to use SoFi Money, which comes with unlimited ATM fee reimbursement for its debit card.
Like SoFi, CommonBond doesn't charge any origination fees for refinancing or prepayment penalties. CommonBond also allows up to 24 months of forbearance over the life of the loan - a more generous allotment than SoFi and other competitors - in cases of financial hardship and deferment if you go back to school.
CommonBond is certainly worth considering if you're looking to refinance, but you'll still want to get quotes from a few other lenders, including SoFi and Earnest, to find the best deal based on your income, credit score, and loan balances.
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