The American Banker highlights a create way that 5th/3rd Bank is making their debit cards more indispensable to clients by instilling a disciplined saving component each time a debit card transaction is made. Savings are used to help pay off student debt:
Fifth Third Bancorp is borrowing inspiration from the fintech world as part of its effort to woo millennial customers and compete with megabanks for consumer deposits.
The Cincinnati bank on Tuesday is scheduled to roll out a stand-alone app designed to help its customers pay student loan debt. The app, called Momentum, lets customers link Fifth Third debit cards to student loan accounts held by more than 30 servicers. Customers can have their debit card purchases rounded up to the next dollar, or have a dollar added to every purchase; the money is applied weekly to the balances on designated loans once a minimum of $5 is contributed.
Although not a new idea, Fifth Third believes that helping to solve the thorny issue of student loan debit, they may attract and keep more millennial – aged customers. The results can be impactful:
For its part, Fifth Third estimates that customers who round up only $25 a month using its app could pay off a 20-year loan three years sooner and pay 8% less in total by avoiding interest that would have accumulated.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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