For deployed military personnel who would like to save money during their service, there is the Savings Deposit Program. This is a special savings program available only to military men and women who are fulfilling their duties in a combat zone or another dangerous area as designated by the Department of Defense.
With the Savings Deposit Program, servicepersons can place their money in a DOD savings account. They can save up to $10,000 and receive an interest rate of 10 percent. The interest earned is taxable income, despite the fact that the deposit itself is not. In terms of withdrawal, military men and women can take out $5 at a time.
The brilliant program began during the Vietnam War. It allowed troops to earn money during their deployments in Asia. The Savings Deposit Program became available again to those serving in Desert Storm and eventually Bosnia. Now, the program is available to most of the troops serving overseas, whether in Iraq, Afghanistan or other areas deemed to be hostile.
Deposits in the savings program can begin on their 31st day of service in the area in which they are serving. They can be in the form of cash, check or money order. The amount of the deposit must be made in multiples of five, similar to how much can be withdrawn. For example, $5, $10 or $1,000 would be able to be deposited. However, $5.50 would not be deposited because such an amount is not a multiple of five. Additionally, the deposit must not exceed what the military person is earning each month. The number of deposits that can be made is limited to just one per month.
If a soldier is in a situation where they cannot make a deposit, they can have someone else on their behalf, (known as an agent), make the deposit for them. In order for this to occur, the agent must have power of attorney. The only limitation the agent faces is not being able to deposit personal checks. Otherwise, they can deposit as much as desired, just as long as it fits the other requirements that have been set forth for deposits.
The soldier will be allowed to use the Savings Deposit Program until their tour of duty ends. At this time they can withdraw all of their principal and any accrued interest. If they want to continue saving money at least through the military, they will have to switch to a Thrift Savings Plan. The Thrift Savings Plan doesn’t offer the benefits as the Savings Deposit Program, as it is designed for retirement purposes, but it is still better than what one could get in the civilian world.
All in all the Savings Deposit Program can be a great way for soldiers to on their feet financially. This is especially the case with younger soldiers who may not have the same type of financial obligations that their older counterparts may have. With the money earned soldiers can put themselves in a better position to make bigger purchases such as houses or cars.