How to Borrow Against Your Savings

By: D. Laverne O'Neal

Passbook savings loans, also known as secured personal loans and savings secured loans, present a way for you to borrow money from your own savings account. The chief advantage of this type of loan is that interest rates are far lower than credit card or unsecured loan rates, typically in the 2 percent to 10 percent range. In many cases, you can borrow up to 100 percent of your savings account balance. Passbook savings loans are an excellent way to establish or rebuild credit. Moreover, your savings balance continues to earn interest during the life of the loan.

Step 1

Contact a loan officer at your financial institution. You may be able to speak with a loan officer about passbook savings by phone or in person. Because the loan is secured by your savings account, you can usually sidestep filling out an application. At many banks, you can get approved immediately.

Step 2

Discuss loan terms and payments. You may be able to secure a term of as little as 36 months to as many as five years. Of course, the longer the term, the lower your monthly payment.

Step 3

Look over the promissory note carefully. Although you reviewed the terms with the loan officer, you want to be doubly sure that what was discussed is reflected in the loan document.

Step 4

Make your payments timely. This is especially critical if you are trying to re-establish credit.


  • If your intent is to re-establish credit, make sure the bank reports your payment history to all three major credit bureaus.
  • Some institutions have a secured savings loan minimum of $3,000 to $5,000.


  • During the term of the loan, your savings account withdrawals cannot exceed what remains if you deduct your loan balance from the savings account total. For example, if you borrow $10,000 from a savings account that holds $12,000, you can withdraw just $2,000 from the account until you make your first loan payment.

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About the Author

D. Laverne O'Neal, an Ivy League graduate, published her first article in 1997. A former theater, dance and music critic for such publications as the "Oakland Tribune" and Gannett Newspapers, she started her Web-writing career during the dot-com heyday. O'Neal also translates and edits French and Spanish. Her strongest interests are the performing arts, design, food, health, personal finance and personal growth.

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