Paying student loans directly from high yield savings account

[PharmacistFl12]

Wonder if anyone has tried this. I'm thinking of depositing one of my paycheck directly into my Ally Savings Account yielding 1.20% compounded daily. Then set up automatic withdrawal from my student loan servicer each month. By sitting there and compounding daily for 1 month before paying towards student loans, doesn't that effectively save me 1.20% interest? For example, let's say my student loan is automatically debited on the October the 2nd (2nd day of each month). I get paid bi-weekly on the 10th and 20th of each month. If I deposit my paycheck into my savings account and let it accumulate until next auto payment (November 2nd), would that be financially beneficial?

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[awval999]

I assume your student loans are >1.2% interest.

So the most beneficial move would be to directly send the payment (or change the auto debit date) to the student loan servicer on the 21st.

 

[pezdispenser]

You should make a payment immediately after you get paid in the middle of the month, and let the autodebit on the 2nd come out of your other paycheck. Yes, you could also change the autodebit date to the 21st.

 

[BidingMyTime]

Generally speaking, if you have to ask....then it's not financially beneficial.

 

[gwarm01]

Invest in penny stocks. Hit one that goes from $0.01 to $0.1 and wipe out all interest!

 

[vinny808]

The thing with student loans or loans in general is it follows an amortization schedule. 50% of your payment is going towards interest while 50% or so goes to your principle early on (more or less). So while you're getting say $4 I interest you're paying $500 in interest early on. I'm just using hypothetical numbers.

But your idea is better to than doing it the old fashioned way of depositing money to your checking account!