Why I Hate the Military’s Savings Deposit Program (SDP)

by Hank

The military’s Savings Deposit Program (SDP) is a financial benefit to troops stationed in a combat zone, hazardous duty area, and a few other qualifying locations around the globe.  Members of the military can deposit up to $10,000 and earn a guaranteed 10% APY that accrues quarterly.  Sounds like a great deal, right?  A guaranteed 10% interest rate in today’s economy is pretty good, but I wouldn’t (and haven’t) touched the program with a ten foot pole.  And here’s why…

  

I do not trust the military finance system.  Like most Soldiers, I have been on the receiving end of “No Pay Dues”, and it’s not a pretty sight if you do not have your 3 to 6 month emergency fund in place.  To deposit money into the system, you have to begin allotments or submit cash collection vouchers.  Then, a person (finance clerk) has to manually put your request into the military’s over bloated, ridiculously complex pay system.  I have heard of more Soldiers having pay problems through this program than any other changes they make to their paychecks, withholdings, etc.  With a quarter of the military moving and changing BAH rates for example every year, there is a huge opportunity for your paycheck to get messed up.  I absolutely hate changing anything with my paycheck for fear that I won’t get paid the next month.

 

I have so little faith in the military’s finance and pay computer system that I refuse to enter into the SDP despite the guaranteed 10% interest rate.  10% is not enough!  Investing is a trade off between risk and return.  Classic finance theory states that the riskier the investment is, the more return you should require from it.  SDP is very risky to me.  I can’t sleep at night worrying that $10,000 of my hard earned COMBAT pay is going to be tied up for months because of computer and human errors.  I would rather invest that money in a good, growth mutual fund even if it earned less interest.  Members of the military have too much to worry about in Iraq and Afghanistan than whether their investments, paycheck, and household budgets are running amuck. 

 

Another reason that I do not like the program is that it is incredibly illiquid.  You cannot withdraw the money anytime you want to.  You have to go into the finance office and manually stop the allotment and wait for the military finance office to process your request.  I recently had a Soldier who needed to stop the allotment depositing money from his paycheck into his SDP account, but the first month the finance clerk messed up the transaction in the computer, and then the second month my Soldier caught the error after the transaction closing date.  So, now he has had three months of additional money withdrawn from his paycheck and deposited into his SDP, which is already maxed out and not earning interest anywhere.  See why I love the program?

 

Another point to consider is the tax implications.  Although federal income earned in combat zone is tax-free, interest accrued on earnings deposited into the SDP is actually taxable.  Funds can be left in an SDP account indefinitely, but the account will stop accruing interest 90 days after a member returns from war.  And withdraws may only be made upon leaving the combat zone. 

 

The entire deposit $10,000 in order to earn $1,000 in interest is also almost a misnomer too.  The military has made it very hard to deposit $10,000 to earn your entire $1,000.  A service member cannot deposit an amount into the program exceed a service member’s monthly current pay and allowances.  It will take most service members months to deposit the entire amount.  You also cannot begin contributing to the program until the 31st day you have been in a combat zone.  So, you are already loosing a month of interest.  The government has to let you leave your money in the SDP after you return home just to get you 12 months of interest after all the hoops they make you jump through.

 

The military’s entire finance system needs more transparency.  Servicemembers need to know right away if there is something wrong with their paychecks, and they need to be able to correct problems right away when they are found.  I should not have to hold my breath every two weeks waiting to see if this week is the week where I once again see a “No Pay Due”.

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{ 12 comments… read them below or add one }

Patrick August 29, 2008 at 10:22 pm

I used this program when I deployed, as did my wife. We were both in a situation where we were able to put the money in and leave it there without worrying about liquidity, so that didn’t bother me. I enjoyed the 10% returns, and if given the chance, would use it again. But I’m out of the military now, so no such luck on my end!

But, I do agree with your views on it – if you don’t have an emergency fund in place and may need access to the money, I don’t recommend using this program. Too many things can go wrong and it is a hassle to deal with.

mike February 2, 2011 at 9:13 am

This is my first deployment in a long time and was thinking about using the Savings Deposit Program. However, I had a pay problem that started in June 2010 and just finally got resolved in January 2011. It had to do with recieving and keeping BAS while on flight orders. After 6 months of total aggravation going to S-1, it was finally resolved. I won’t let the Army do anything more with my money than is absolutely neccessary.

Scott May 16, 2011 at 8:32 pm

My wife and I have used SDP several times. Here are some pointers based on our experiences:
– Assume that finance will screw things up
– Don’t believe what your local finance personnel tell you about SDP, read the documents on the program. Most finance personnel don’t know what they’re talking about, but they’ll act like they do
– Keep all receipts – on several occasions we have needed them to prove deposits that finance lost
- You can now check the status of your acount on-line and by phone. Do so after every deposit to make sure that it posts
- Make sure your family knows about your SDP so that if you don’t make it home they know you put the funds in there
- Only put in funds that you can afford to be without for at least a few weeks, in case things get screwed up when you go to take it out
- If things get screwed up go to your 1st sgt or commander for help sooner rather than later

Jessica July 24, 2011 at 1:26 pm

I have used this program twice and have been satisfied both times. However, I did have issues with deposits and had to prove that I made deposits that the finance office never made. This happened more than once but it was worth the hassle as I have made my money work for me and would recommend this program to deployed Soldiers who know the risks.

ALEXANDER July 3, 2012 at 8:21 am

I have to say that I find the initial article and most of the comments quite amusing. I’ve not only used the SDP program 3 times with success, I also work in the Army Finance. So allow me to educate you somewhat about the SDP program. First, don’t put any money into ANY program if you don’t have the money to afford it, especially allotments. Allotments take about a month or two to start and by doing so you loose track of when it suppose to begin. Furthermore, when it comes to SDP program, two months is money lost; so with the SDP program ALWAYS do the voucher. Second, the moment you go into the Finance office and give them your money for the SDP program and they give you a voucher (with a voucher number on it), you are now imprevious to the inneptitude of the Finance office that you all seem to dislike, because other than taking your money in, the Finance office has NOTHING to do with the SDP program. As long as you have your voucher the SDP program will honor your deposit, they will calculate your money’s interest and send you your money + interest in about 2 weeks, actually 1, but you guys seem to judge quite harshly, so I wanted to give the SDP program a chance to respond.

Tom Anderson February 7, 2013 at 8:47 am

As I read through this article I did not understand was your gripe with the SDP program or the fact that you did not like military Finance. You always refered to the $1,000 for an investment of $10,000. While that is the max the program provides a 10% return on the money you invest, depending on how long you keep it in nthe program up to as you said 90 days after deployment. So even if you have to wait until the 31st day of deployment you still receive the full year benefit. I do not know what happened to you and Finance but in my experience if someone is getting a No Pay Do it is because they did something to effect their pay. Not Finance doing something. If you close your bank account and move to a new bank and do not tell Finance and your money goes to the old back who’s fault is that. If you get an Article 15 and you get busted from E4 to E2 and your PAC doesn’t get the paper work to Finance for 2 months, they have to reduce you the day of the Article 15. My question to you would be if you knew you had been busted and still received the E4 pay why did you not go to Finance and tell them you were over paid. The problems who have or have had with Finance are your own doing stop spreading wrong propaganda about a good program you loser!!!!!

Val February 23, 2013 at 5:38 am

I can see how you have been burned by the program and there is validity to your claims, but I’ve used the program twice with no problems and it’s a great way for people to make a little extra income if they don’t know anything else about investing.
If you want to learn how to get the max out of the SDP and pretty much any other deployment investment opportunity, check out this guide.
http://www.militaryinvesting101.com/free-report
It’s totally free and has a lot of great deployment investing tips.

Brock January 18, 2014 at 12:18 pm

The SDP is way too risky. I am currently deployed and they lost my 2nd SDP deposit. 5 months now and no luck. Unfortunately, the finance office did not give me an SDP voucher. I tried to write a check but was told they only took Eagle Cash. Last deployment I had to use my check stubs from Camp Phoenix as they lost those deposits as well. I got an Eagle Cash Card, loaded the money and immediately deposited to Kandahar finance. I’ve only ever used the Eagle Cash card twice and both to deposit to SDP. I forwarded DFAS SDP my deposit records and eagle cash receipts. Still no luck. Earn 10% interest….what a joke! I am missing thousands with a current ROI of negative 46 percent! (4% earned so far on deposit that did go through). Thanks a lot SDP. If you want to risk loosing big…choose SDP. 10% upside with a risk of losing 100% of investment. Worst program in the military by a long shot. Hazard Duty Pay, IDP, who cares when the SDP program steals your money with ineptitude. One piece of advice: SDP=Stay Away!

Brock January 18, 2014 at 12:18 pm

The SDP is way too risky. I am currently deployed and they lost my 2nd SDP deposit. 5 months now and no luck. Unfortunately, the finance office did not give me an SDP voucher. I tried to write a check but was told they only took Eagle Cash. Last deployment I had to use my check stubs from Camp Phoenix as they lost those deposits as well. I got an Eagle Cash Card, loaded the money and immediately deposited to Kandahar finance. I’ve only ever used the Eagle Cash card twice and both to deposit to SDP. I forwarded DFAS SDP my deposit records and eagle cash receipts. Still no luck. Earn 10% interest….what a joke! I am missing thousands with a current ROI of negative 46 percent! (4% earned so far on deposit that did go through). Thanks a lot SDP. If you want to risk losing big…choose SDP. 10% upside with a risk of losing 100% of investment. Worst program in the military by a long shot. Hazard Duty Pay, IDP, who cares when the SDP program steals your money with ineptitude. One piece of advice: SDP=Stay Away!

Spencer February 28, 2014 at 12:02 am

Interesting that lots of people here have had poor experiences with the SDP. Personally, I’ve found it to be a great investment that has paid 10% as promised month to month. I deploy quite frequently, so I’ve managed to get the full $10,000 invested. To withdraw money, the myPay system is actually quite user friendly and I’ve never had any issues accessing my money.

While I agree the military pay system is beyond complicated and inept, I don’t think you should let that deter you from achieving a 10% guaranteed return. As with anything in the military, keep your receipts and paperwork so you don’t get screwed. For those of you that did have deposits lost, you need to take that up with legal, your 1st Sgt, commander, or finance and don’t stop pursuing it. They can’t just “lose” your money and leave you high and dry. You have other options to pursue to get your money back.

For the young sailor, soldier, marine, or airmen out there thinking about investing in the SDP…DO IT! Don’t let other people’s bad experience deter you from achieving your financial goals.

Yoda June 19, 2014 at 2:18 am

Whoever wrote the inital response is a complete moron. I used the program the is 10%-2.5%quarterly. It is stupid people like you that embarrass the military. You can pull your money out at anytime on mypay. #stupididiot

Timothy October 10, 2014 at 8:29 pm

I don’t know what this guy is talking about. I’ve only had good luck with the SDP. No problem with deposits. Pretty much maxed it out in 2 months. If your not deploying for a long time it will be hard to get to 12 months. Kept all my paperwork. MyPay updates like every week so you can track it. People respond to your emails when you have questions. They warned me about starting an allotment when I was there. Eagle Cash was very easy, I don’t know why some people didn’t get receipts with their transactions, that’s fishy… First deposit was a check, still no problem and I got a receipt. Regardless of whether or not you max it out quick your still earning 10% on the balance.

“Yoda June 19, 2014 at 2:18 am

Whoever wrote the inital response is a complete moron. I used the program the is 10%-2.5%quarterly. It is stupid people like you that embarrass the military. You can pull your money out at anytime on mypay. #stupididiot”

“Note that myPay will allow you to make a request to which you may not be entitled. The validity of requests will be determined when received at DFAS Cleveland.”
You can’t pull out the money at anytime, but you can try.
If any of your accounts make enough interest it will be taxable at the end of the year anyway.

Brock why would you walk away with no record of a deposit?

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