This Military Savings Deposit Program Offers Chance to Earn Higher Rates

(Stock image)
(Stock image)

Are you in the military? Do you want to make 10% interest on a savings account? If so, the Savings Deposit Program (SDP) may be worth investigating.

The Savings Deposit Program is available to all military members serving in a designated combat zone, either permanently or temporarily. Currently, anyone deployed in an Operation Enduring Freedom (OEF) combat zone, or in direct support of members in an OEF combat zone, is eligible to participate in the program.

You can contribute anywhere from $5 to your entire unallotted pay and allowances to the SDP by cash, check or allotment. You can make as many deposits as you want while you are in the combat zone, as long as you don't exceed $10,000 per deployment.

Any military finance office in theater can help you establish an account and assist you in setting up the deposit method most convenient for you.

The maximum amount you can contribute and draw interest on during any deployment is $10,000. Your deposits will earn 10% interest while you are serving in the designated SDP combat zone. The interest continues to grow for 90 days after you depart the combat zone. If your deposits plus interest grow to more than $10,000, you can take the amount exceeding $10,000 out at any time.

You have to take your money out within 120 days of leaving the combat zone. If you don't close your account, the Defense Department will close it for you and add the proceeds to your paycheck.

Of course, there are limits to the program:

  • Once you put the money in, you can't take it out until you leave the SDP zone unless you have an emergency that your chain of command thinks is valid, because you need your commanding officer's approval. In fact, the Defense Finance and Accounting Service says a withdrawal must be "necessary for the health and welfare of you or your family."
  • If you put your money into the account by the 10th of the month, you get interest for that month. If you put the money in after the 10th, you don't get any interest on that deposit until the following month.
  • If you are deploying to a combat zone which qualifies you for tax-free status, the interest you earn on the SDP is still taxable.

The SDP is a safe way to make some unheard-of rates of return on your cash. If you are deploying to a combat zone, it's certainly worth looking into. Since most "high-yield" savings accounts are paying less than 2% interest these days, you should take advantage of this program and make some serious money while you can.

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