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Anonymous
Should I use my emergency savings to pay off my Study Loan (in bulk) before 1 June 2021 so that I won't be charged extra bank rates?
I've been saving incredously (around 80%) during the Covid period when the bank freezed the repayment. During this period I have accumulated enough to pay half of the loan, and if I throw my emergency savings in, I could potentially pay the whole loan. The decision is especially coming 1 June 2021 when the repayment start, I'll be subjected to 4.75% bank interest rate. Whereas, if I pay off all now, I won't incur bank rates but lose my emergency savings. What are your thoughts?
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Tan Choong Hwee
26 Apr 2021
Investor/Trader at Home
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Rachelle Lye
26 Apr 2021
Digital Marketing at Fintech
Hey there anon,
I'm a class of 2020 too! Personally, I am going to use my emergency savings to pay off the full bank loan before 1 June 2021.
This is because, I am still living with my family and I have little liabilities (e.g. no mortage, kids, car etc.). And honestly, not having emergency savings just brings me back to a year ago when I ended school where I started from almost ground zero as well. And I will continue to be working to rebuild my emergency savings as well, so fingers crossed in the meantime.
I shared my thoughts on this other question as well:
Hope this helps for perspective! And all the best to us!
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No to dumping your emergency savings to clear your loan in full.
The money which you accumulated is...
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4.75% bank interest rate is high. Unless your emergency savings can consistently yield more than that, it seems prudent to clear your debt first. You are still young and can work to build up your emergency savings again.