These are my top recommended credit cards for this month. Some have $450-550 annual fees waived exclusively for US military personnel.

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I've heard from several people that they only make the minimum payments on their student loans because they have tax advantages. Basically, the interest you pay on a student loan is tax deductible, so it lowers the amount of money you can be taxed on, therefore lowering your tax burden. Shouldn’t I just keep making the minimum payments so I can claim the interest on my taxes every year? Short answer: no. Long Answer…

Sallie Mae, a leading provider of student loans, usually requires their student loans to be repaid in 10 years. The interest rate varies for each loan, but thanks to the Servicemembers Civil Relief Act, all credit obligations incurred before entering active duty MUST be no greater than 6% per year, including credit cart debts and student loans. So let’s say for arguments sake that your interest rate is 6%.

If you just make the minimum payments on these loans, you’ll end up paying $12,000 in interest over the 10 years! Now, the first year, when you’re paying the most interest with each payment, you’ll be able to claim $2200 of interest payments. Not bad right? Well, this $2200 is an adjustment on your tax return, so it lowers your adjustment gross income, which is turn lowers your tax due.

Many servicemembers fall into the 15% bracket, so we’ll use that. A $2200 adjustment only reduces your taxes owed by $330. And this amount will decrease every year you pay off the loan, as the interest becomes less and the principle becomes a greater proportion of the payment. So over the 10 years, you’ll possibly have $1800 of taxes removed. Now, if instead of just making minimum payments you added $200 a month to your payments, you’d pay the loan off 4 years earlier and save $5000 in interest payments! And, you’ll still be able to claim the $7200 in interest, for a $1080 tax break.

Minimum Payments ($397.42) +$200 per month
Time to Loan Payoff 10 years 5 years, 10 months
Interest Paid over 10 Years -$12,690 -$7219
Tax Break at 15% over 10 years $1903 $1082
Total Paid -$10787 -$6137

 

Should you keep student loans around for the tax advantaged interest?

AMEX Platinum With NO Annual Fees for US Military

Military SCRA MLA AMEX Platinum

Military servicemembers and spouses can get the American Express Platinum with NO annual fees.  Pick up your military annual fee waived card here!

Learn more about the AMEX military fee waiver.

The AMEX Platinum offers:

  • $550 Annual Fee WAIVED for US Military (and spouses)!
  • 60,000 Membership Rewards Points welcome offer
  • $200 credit for Uber rides (or Uber Eats!) annually
  • $200 airline fee credit
  • Centurion Lounge and Priority Pass Airport Lounge Access
  • NO foreign transaction fees

These benefits make it my top recommend card.

If you already have an AMEX Platinum card, check out the other AMEX cards, Chase credit cards, and this month's top recommended credit card bonuses, most with no annual fees for US military personnel.

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