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The definition of a U.S. Savings Bond is an investment in the federal government that helps to increase your money. By purchasing a savings bond, you are essentially lending money to the government which you will get back in the future, when the bond matures, with interest. Because these financial products are backed by the federal government, they are considered to be extremely low-risk. And, in certain situations, there can be tax advantages.

Savings Bond Definition

A savings bond is basically a loan made to the U.S. government, in exchange for which the government agrees to repay the loan at a later time, along with interest that is earned over the life of the bond.

There are two types of savings bonds available through the U.S. Treasury, the Series EE savings bond and the Series I savings bond. The Series EE bond offers a fixed-interest rate, while the Series I bond offers a combination of a fixed rate and a variable inflation rate. Both bonds are low-risk and provide interest for up to 30 years, though you may withdraw funds without penalty as long as the bond has been held for at least five years.

Investors may also invest in state or local municipal bonds that fund public projects and may be available in different term lengths.

How Do Savings Bonds Work?

Savings bonds are issued by the U.S. Treasury. You can buy one for yourself, or for someone else, even if that person is under age 18. (That’s why, when you clean out your closets, you may find a U.S. Savings Bond that was a birthday present from Grandma a long time ago.)

Basically, these savings bonds function the same way that other types of bonds work. You buy a savings bond for face value, or the principal, and the bond will then pay interest over a specific period of time.

•   You can buy savings bonds electronically from the U.S. Treasury’s website, TreasuryDirect.gov . For the most part, it’s not possible to buy paper bonds anymore but should you run across one, you can still redeem them. (See below). Unlike many other types of bonds, like some high-yield bonds, you can’t sell savings bonds or hold them in brokerage accounts.

How Much Are Your Savings Bonds Worth?

If you have a savings bond that has been tucked away for a while and you are wondering what it’s worth, here are your options:

•   If it’s a paper bond, log onto the Treasury Department’s website and use the calculator there to find out the value.

•   If it’s an electronic bond, you will need to create (if you don’t already have one) and log onto your TreasuryDirect account.

Savings Bonds Interest Payments

For U.S. Savings Bonds, interest is earned monthly. The interest is compounded semiannually. This means that every six months, the government will apply the bond’s interest rate to grow the principal. That new, larger principal then earns interest for the next six months, when the interest is again added to the principal, and so on.

3 Different Types of Savings Bonds

There are two types of U.S. Savings Bonds available for purchase — Series EE and Series I savings bonds. Here are the differences between the two.

1. Series EE Bonds

Introduced in 1980, Series EE Bonds earn interest plus a guaranteed return of double their value when held for 20 years. These bonds continue to pay interest for 30 years.

Series EE Bonds issued after May 2005 earn a fixed rate. The current Series EE interest rate for bonds issued as of November 1, 2025 is 2.50%.

2. Series I Bonds

Series I Bonds pay a combination of two rates. The first is the original fixed interest rate. The second is an inflation-adjusted interest rate, which is calculated twice a year using the consumer price index for urban consumers (CPI-U). This adjusted rate is designed to protect bond buyers from inflation eating into the value of the investment.

When you redeem a Series I Bond, you get back the face value plus the accumulated interest. You know the fixed rate when you buy the bond. But the inflation-adjusted rate will vary depending on the CPI-U during times of adjustment.

The current composite rate for Series I Savings Bonds issued as of November 1, 2025 is 4.03%.

3. Municipal Bonds

Municipal bonds are a somewhat different savings vehicle than Series I and Series EE Bonds. Municipal Bonds are issued by a state, municipality, or country to fund capital expenditures. By offering these bonds, projects like highway or school construction can be funded.

These bonds (sometimes called “munis”) are exempt from federal taxes and the majority of local taxes. The market price of bonds will vary with the market, and they typically require a larger investment of, say, $5,000. Municipal bonds are available in different terms, ranging from relatively short (about two to five years) to longer (the typical 30-year length).

How To Buy Bonds

You can buy Series EE and I Savings Bonds directly through the United States Treasury Department online account system called TreasuryDirect, as noted above. This is a little bit different than the way you might buy other types of bonds. You can open an account at TreasuryDirect just as you would a checking or savings account at your local bank.

You can buy either an EE or I Savings Bond in any amount ranging from a $25 minimum in penny increments per year. So, if the spirit moves you, go ahead and buy a bond for $49.99. The flexible increments allow investors to dollar cost average and make other types of calculated purchases.

That said, there are annual maximums on how much you may purchase in savings bonds. The electronic bond maximum is $10,000 for each type. You can buy up to $5,000 in paper Series I Bonds using a tax refund you are eligible for. Paper EE Series bonds are no longer issued.

If you are due a refund and you want to buy I Bonds, be sure to file IRS form 8888 when you file your federal tax return. On that form you’ll specify how much of your refund you want to use to buy paper Series I bonds, keeping in mind the minimum purchase amount for a paper bond is $50. The IRS will then process your return and send you the bond that you indicate you want to buy.

The Pros & Cons of Investing in Savings Bonds

Here’s a look at the possible benefits and downsides of investing in savings bonds. This will help you decide if buying these bonds is the right path for you, or if you might prefer to otherwise invest your money or stash it in a high-yield bank account.

The Pros of Investing in Savings Bonds

Here are some of the upsides of investing in savings bonds:

•   Low risk. U.S. Savings Bonds are one of the lower risk investments you could make. You are guaranteed to get back the entire amount you invested, known as principal. You will also receive interest if you keep the bonds until maturity.

•   Tax advantages. Savings bond holders don’t pay state or local taxes on interest at any time. You don’t have to pay federal income tax on the interest until you cash in the bond.

•   Education exception. Eligible taxpayers may qualify for a tax break when they use U.S. Savings Bonds to pay for qualified education expenses.

•   No fees. Unlike just about every other type of security, you won’t pay a fee, markup or commission when you buy savings bonds. They’re sold at face value, directly from the Treasury, so what you pay for is what you get. If you buy a $50 bond, for example, you’ll pay $50.

•   Great gift. Unlike most securities, people under age 18 may hold U.S. Savings bonds in their own names. That’s what makes them a popular birthday and graduation gift.

•   Patriotic gesture. Buying a U.S. Savings Bond helps support the U.S. government. That’s something that was important and appealed to investors when these savings bonds were first introduced in 1935.

The Cons of Investing in Savings Bonds

Next, consider these potential downsides of investing in savings bonds:

•   Low return. The biggest disadvantage of savings bonds is their low rate of return, as noted above. A low risk investment like this often pays low returns. You may find you can invest your money elsewhere for a higher return with only slightly higher risk.

•   Purchase limit. For U.S. Savings Bonds, there’s a purchase limit per year of $10,000 in bonds for each series (meaning you can invest a total of $20,000 per year), plus a $5,000 limit for paper I bonds via tax refunds. For some individuals, this might not align with their investing goals.

•   Tax liability. It’s likely you’ll have to pay federal income tax when you cash in your savings bond, unless you’ve used the proceeds for higher education payments.

•   Penalty for early withdrawal. If you cash in your savings bond before five years have elapsed, you will have to pay the previous three months of interest as a fee. You are typically not allowed to cash in a bond before the one-year mark.

Here, a summary of the pros and cons of investing in savings bonds:

When Do Savings Bonds Mature?

You may wonder how long it takes for a savings bond to mature. The EE and I savings bonds earn interest for 30 years, until they reach their maturity date.

Recommended: Bonds or CDs: Which Is Smarter for Your Money?

How to Cash in Savings Bonds

You’ll also need to know how and when to redeem a savings bond. These bonds earn interest for 30 years, but you can cash them in penalty-free after five years.

•   If you have a paper bond, you can cash it in at your bank or credit union. Bring the bond and your ID. Or go to the Treasury’s TreasuryDirect site for details on how to cash it in.

•   For electronic bonds, log into your TreasuryDirect account, click on “confirm redemption,” and follow the instructions to deposit the amount to a linked checking or savings account. You will likely get the money within a few business days.

•   If you inherited or found an old U.S. Savings Bond, you may be able to redeem savings bonds through the TreasuryDirect portal or via Treasury Retail Securities Services.

Early Redemption of Bonds

If you cash in a U.S. Savings Bond after one year but before five years, you’ll pay a penalty that is the equivalent of the previous three months of interest. Keep in mind that for EE bonds, if you cash in before holding for 20 years, you lose the opportunity to receive the doubled value of the bond that accrues after 20 years.

The History of US Savings Bonds

America’s savings bond program began under President Franklin Delano Roosevelt in 1935, during the Great Depression, with what were known as “baby bonds.” This started the tradition of citizens participating in government financing.

The Series E Saving Bond contributed billions of dollars to financing the World War II effort, and in the post-war years, they became a popular savings vehicle. The fact that they are guaranteed by the U.S. government generally makes them a safe place to stash cash and earn interest.

The Takeaway

U.S. Savings Bonds can be one of the safest ways to invest for the future and show your patriotism. While the interest rates are typically low, for some investors, knowing that the money is being securely held for a couple of decades can really enhance their peace of mind.

Another way to help increase your peace of mind and financial well-being is finding the right banking partner for your deposit product needs.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

FAQ

What is a $50 savings bond worth?

The value of a $50 savings bond will depend on how long it has been held. You can log onto the TreasuryDirect site and use the calculator there to find out the value. As an example, a $50 Series I bond issued in 2000 would be worth more than $211 today.

How long does it take for a $50 savings bond to mature?

The full maturation date of U.S. savings bonds is 30 years.

What is a savings bond?

A savings bond is a secure way of investing in the U.S. government and earning interest. Basically, when you buy a U.S. Savings Bond, you are loaning the government money, which, upon maturity, they pay back with interest.

Photo credit: iStock/AlexSecret

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CN-Q425-3236452-12

Babies can change a parent’s life in all kinds of wonderful ways. But make no mistake, raising a child doesn’t come cheap. As many new families discover, one of the biggest costs they face is diapers.

Newborns go through as many as 10-12 diaper changes per day, and parents can spend anywhere from $80 to $100 per month just on disposable diapers for one child.

It’s no wonder some parents are looking into cheaper — and potentially more environmentally friendly — alternatives, such as cloth diapers. Here’s more about both types of diapers, the cost of cloth diapers vs. disposable diapers, and what the potential savings could mean for a family’s budget.

What Are Disposable Diapers?

Soft and ultra absorbent, disposable diapers are designed to hold waste products of babies and young children. They were invented in the 1940s and widely adopted in the 1980s, when they became more practical and affordable. Today, some 95% of parents in the U.S. use disposable diapers for their infants.

The three layers of this type of diaper include a soft layer against the baby’s skin, an inner layer made of a super absorbent polymer that holds moisture, and a waterproof outer layer so the diaper doesn’t leak.

How Much Do Disposable Diapers Cost?

As the chart below shows, the cost of disposable diapers can vary widely by brand. Keep in mind that you may pay more or less for your diapers, depending on where you live and shop and whether you decide to buy in bulk.

Pros and Cons of Disposable Diapers

As you figure out which type and brand of diaper works best for you and your family, there are some general pros and cons of disposable diapers to keep in mind.

Pros

•   Convenient

•   Less laundry than cloth diapers

•   Highly absorbent

•   Caregivers may be more familiar with using a disposable diaper

Cons

•   Can be expensive

•   Contributes to waste in landfill

•   May contain adhesives, dyes, fragrances, or chemicals, which can irritate baby’s skin

Disposable Diaper Factors to Consider

Price is a big factor, yes. But if you’re thinking about starting a family, there are other considerations to think about when it comes to disposable diapers.

Health and Comfort

One of the most important factors in the disposable vs. cloth diaper debate is finding a solution that keeps you and your baby happy and healthy. If you don’t have the time for extra laundry, for instance, disposable diapers may be the way to go.

Convenience

Disposable diapers are convenient, especially when you’re on the move. Just toss the waste away in the nearest garbage can.

Price

Babies go through a lot of diapers. An infant generally requires up to 12 diaper changes a day for the first year, and a toddler needs around eight. This means parents should expect to purchase around 3,000 diapers per year.

How much of a dent could that put in the household budget? Let’s do the math: Disposable diapers typically cost between $0.22 to $0.33 each, which means new parents should plan on budgeting between $960 to $1,200 per year.

Environment

According to the EPA, disposable diapers account for more than 4.1 million tons of waste each year. Those diapers tend to end up in landfills, and the materials don’t easily degrade. If you’re uncomfortable with that thought, you may want to consider cloth versions. However, keep in mind that they require energy and water to clean.

Recommended: Common Financial Mistakes First-Time Parents Make

What Are Cloth Diapers?

Cloth diapers are made of cloth that’s absorbent, reusable, and washable. They usually have at least two layers, including a waterproof outer layer to keep the diaper from leaking and an inner absorbent layer. There are several different types:

•   Flats: Flat diapers are a flat piece of thick fabric without an absorbent middle that can be folded in a number of ways around the baby. They are secured with safety pins or snaps.

•   Prefolds: Prefolds are rectangular-shaped pieces of fabric with an absorbent middle. They’re secured with safety pins unless snaps are sewed in.

•   Fitted. Fitted diapers are an absorbent cloth diaper that’s fitted with elastic at the legs and waist but does not have a waterproof cover.

•   Pockets. Pocket diapers have a pocket on the inside of the diaper for an absorbent insert as well as an outer waterproof layer.

•   All-in-ones (AIO). AIO diapers have an outer waterproof layer and inner absorbency, but there is no removable insert. AIOs are the cloth diaper equivalent of a disposable diaper since all of the layers are built in.

•   All-in-twos. Like a combination of AIOs and pocket diapers, all-in-two diapers have an insert, but it sits directly on the baby’s skin instead of in a pocket.

•   Hybrid. A hybrid diaper has a disposable insert with a reusable cover. They create more waste and are more expensive than other types of cloth diapers.

How Much Do Cloth Diapers Cost?

There’s typically a large upfront investment in cloth diapers and accessories, such as a wet bag, pail liner, or cloth wipes. Depending on the type of cloth diapering system you use and how much you’re planning to buy, you could end up spending between $300 and $1,000. Flat cloth diapers, for instance, cost around $2 to $4 each. If you’re planning on purchasing a fitted cloth diaper, be prepared to spend more. A typical one costs around $16 to $24 each.

When you’re creating a family budget, it can help to see how much you’re spending on diapers — and everything else. A spending app can help you keep an eye on your finances.

Pros and Cons of Cloth Diapers

The diaper type you choose ultimately comes down to preference and budget. However, there are some benefits and drawbacks you may want to consider as you make your decision.

Pros

•   Reusable

•   May have a smaller environmental footprint

•   Produces less waste

•   Softer fabric and natural fibers that may be more breathable

•   Attractive designs

•   Can help you decrease diapering costs, especially when going from one child to two

Cons

•   Larger upfront cost

•   Inconvenient

•   Requires more laundry

•   Requires more electricity and water

•   Many daycare centers will not accept cloth diapers

Cloth Diaper Factors to Consider

Beyond the cost of disposable diapers vs. cloth, there are other important factors to consider.

Health and Comfort

Cloth diapers are usually made from breathable fabrics, like cotton and hemp, which can feel soft on baby’s skin. Proponents also tout the benefits of the diaper’s natural materials, which generally don’t have artificial materials, such as plastic, absorbent gelling materials, or adhesives.

Convenience

While you can certainly manage a cloth diaper change when you’re on the go, it’s usually not as convenient as a disposable diaper. (You’ll need to carry the soiled diaper in a wet bag until you get home and can drop it in the washing machine.) What’s more, if you’re planning to use daycare, check if the center will accept cloth diapers — many don’t.

Price

Cloth diapers can cost anywhere from $2 to $24 each. If you plan on buying 25 diapers for each size your child will need — newborn, small, medium, and large — then you could spend between $200 and $2,400 on 100 diapers.

Recommended: How Much Does it Cost to Raise a Child to 18?

Environment

Cloth diapers have a different environmental impact than disposable diapers. Instead of piling up in a landfill, a cloth diaper is washed and used over and over again. However, they can use up twice as much water to produce as a disposable diaper. Plus, you’ll need to use electricity and water to launder dirty diapers, which could be an issue if you live in a state that experiences droughts or routinely restricts water or energy usage.

Cost of Cloth Diapers vs Disposable Diapers

Budgeting for a baby? Cloth diapers can require a significant upfront investment of anywhere from $300 and $1,000 — and that’s not including the cost of extras, such as using a diaper laundering service. However, that initial fee may end up being less than the $960 to $1,200 per year many parents spend on disposable diapers.

Reasons to Choose Cloth Diapers vs Disposable Diapers

As with many other parts of parenting, there’s no one-size-fits-all solution when it comes to diapering. However, if cost is a determining factor — and your caregiver or daycare center is on board — cloth diapers may be the way to go. Plus, since this type of diaper is washable and reusable, it means it’s one less item ending up in a landfill.

The Takeaway

Disposable diapers are incredibly popular among parents and for good reason. They’re convenient, highly absorbent, and, compared to cloth diapers, less expensive. On average, parents spend around $960 to $1,200 per year on diapers. And while it’s true that cloth diapers do require a hefty upfront investment of around $300 and $1,000, they may have a smaller environmental footprint. Plus, they’re usually made of fabric that’s softer, breathable, and more natural, which some parents may prefer. All of those factors are important when you’re budgeting for a baby.

That said, diapers are just one line item in the family budget. Whether you’re saving up for their college education or looking for ways to lower monthly bills, using a money tracker app can help you manage your overall spending and saving.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Is it cheaper to use cloth diapers or disposable?

It depends on how much use you get out of your cloth diaper. However, generally speaking, over time, it’s cheaper to use reusable cloth diapers, even when accounting for the cost of electricity and water needed to launder dirty diapers.

What is the average cost of cloth diapers per month?

Cloth diapers have a larger upfront cost but a lower monthly cost. If an initial investment of $500 is spread out over 30 months, for example, the cost comes out to around $17 per month.

How many disposable diapers does one cloth diaper replace?

The average baby uses 8,000 diapers by the time they’re potty trained. And let’s say you invest in 100 cloth diapers, or 25 diapers for each size your child will need until they’re potty trained. This means each cloth diaper could potentially replace up to 80 disposable diapers.

Photo credit: iStock/FotoDuets

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SORL-Q425-027

A fair credit score falls in the mid-lower range of the credit-scoring spectrum. With the FICO® scoring model, which ranges from 300 to 850, a fair score is 580 to 669.

Fair credit is better than poor credit but below the average credit score. While you’ll likely be able to get a credit card or loan with fair credit, you probably won’t qualify for the most favorable rates and terms.

Read on to learn how fair credit compares with other credit score ranges, the difference having good credit can make, and what you can do to build your credit.

What Is Fair Credit?

What “fair credit” means will depend on the scoring model. With FICO, the most widely used credit score by lenders in the U.S., fair credit is a score between 580 and 669. With VantageScore®, another popular scoring model, fair credit is a score of 600 to 660.

The fair credit range is above poor credit but below good credit, and is considered to be in the subprime score range.

Credit scores are calculated using information found in your credit reports (you have three, one from each of the major consumer credit bureaus). People typically have multiple, not just one, credit score, and these scores can vary depending on the scoring model and which of your three credit reports the scoring system analyzes. While each score may be slightly different, they typically fall into similar ranges and scoring categories, such as poor, fair, good, and excellent/exceptional.

Is Fair Credit Good or Bad?

As the name “fair” implies, this score is okay, but not great. A fair credit score isn’t the lowest category on the FICO chart — that’s the poor credit category, which runs from 300-579. But it’s definitely not the highest either. Above fair credit, there is good credit (670-739), very good credit (740-799), and exceptional credit (800-850).

With a fair credit score, lenders will likely see you as an above-average risk and, as a result, charge you more upfront fees and higher interest rates. They may also approve you for a lower loan amount or credit limit.

With fair credit, you might also have difficulty getting approved for certain financial products. For example, you might need a higher credit score to get the best rewards cards or certain types of mortgages. Landlords and property managers may also have credit score requirements. You might have to pay a larger security deposit if you have a fair credit score.

Is a 620 Credit Score Fair?

Yes, 620 is within the 580-669 range for a fair FICO score and, thus, would be considered a fair credit score. A 620 is also in the VantageScore range for fair (600 to 660).

Why Do I Need to Know My Credit Scores?

A credit score is a three-digit number designed to represent someone’s credit risk (the likelihood you’ll pay your bills on time). Lenders use your credit scores — along with the information in your credit reports — to help determine whether to approve you for a loan or credit line and, if so, at what rates and terms. Many landlords, utility companies, insurance companies, cell phone providers, and employers also look at credit scores.

Knowing your credit score and credit score range can help you understand your current credit position. It also provides a baseline from which you can implement change. With time and effort, you may be able to build your credit and gradually move your credit score into a higher category, possibly all the way up to exceptional.

Recommended: How to Apply for a Personal Loan

Using Credit Bureaus to Find Credit Scores

It’s a good idea to periodically review your credit report from each of the three major credit bureaus (Equifax®, Experian®, and TransUnion®) to make sure all of the information is accurate, since errors can bring down your scores. You can get free weekly copies of your reports at AnnualCreditReport.com .

However, your credit reports will not contain your credit scores.

Fortunately, there are easy ways to get your credit scores, often for free. Many credit card companies, banks, and loan companies have started providing credit scores for their customers. It may be on your statement, or you can access it online by logging into your account.

You can also purchase credit scores directly from one of the three major credit bureaus or other providers, such as FICO. Some credit score services and credit-scoring sites provide a free credit score to users. Others may provide credit scores to credit monitoring customers paying a monthly subscription fee.

Reasons Your Credit Score Might Be Fair

Your credit scores are based on information in your credit reports, and different things can help or hurt your scores. FICO scores are based on the following five factors.

1. Payment History

This looks at whether you’ve made your debt payments on time every month and is the most important factor in computing your FICO credit score. Even one payment made 30 days late can significantly harm your score. An account sent to collections, a foreclosure, or a bankruptcy can have even more significant and lasting consequences.

2. Amounts Owed

This notes the total amount you’ve borrowed, including how much of your available credit you’re currently using (called your credit utilization rate). If you’re tapping a sizable percentage of your available credit on your credit cards (such as 30% or more), for example, that can have a negative impact on your score.

3. Length of Credit History

Experience with credit accounts generally makes people better at managing debt (research bears this out). As a result, lenders generally see borrowers with a longer credit history (i.e., older accounts) more favorably than those that are new to credit. All things being equal, the longer your credit history, the higher your credit score is likely to be.

4. Credit Mix

This looks at how many different types of debt you are managing, such as revolving debt (e.g., credit cards and credit lines) and installment debt (such as personal loans, auto loans, and mortgages). The ability to successfully manage multiple debts and different credit types tends to benefit your credit scores.

5. New Credit

Research shows that taking on new debt increases a person’s risk of falling behind on their old debts. As a result, credit scoring systems can lower your score a small amount after a hard credit inquiry (which occurs when you apply for a new loan or credit card). The decrease is small, typically less than five points per inquiry, and temporary — it generally only lasts a few months.

Steps That Can Help Build Fair Credit

While you may still be able to qualify for loans with fair credit, building your credit can help you get better rates and terms. Here are some moves that may help.

•   Pay your bills on time. Having a long track record of on-time payments on your credit card and loan balances can help build a positive payment history. Do your best to never miss a payment, since this can result in a negative mark on your credit reports.

•   Pay down credit card balances. If you’re carrying a large balance on one or more credit cards, it can be helpful to pay down that balance. This will lower your credit utilization rate.

•   Consider a secured credit card. If you’re new to credit or have a fair or low credit score, you may be able to build your credit by opening a secured credit card. These cards require you to pay a security deposit up front, which makes them easier to qualify for. Using a secured card responsibly can add positive payment information into your credit reports.

•   Monitor your credit. It’s a good idea to closely examine the information in your three credit reports to make sure it’s all accurate. Any errors can drag down your score. If you see any inaccuracies, you’ll want to reach out to the lender reporting the information. You can also dispute errors on your credit report with the credit bureaus.

•   Limit hard credit inquiries. Opening too many new credit accounts within a short period of time could hurt your scores because credit scoring formulas take recent credit inquiries into account. When rate shopping, be sure that a lender will only run a soft credit check (which won’t impact your scores).

Reasons to Improve Your Credit Score

Building your credit takes time and diligence, but can be well worth the effort, since our scores impact so many different parts of our lives.

Loans

Credit scores are used by lenders to gauge each consumer’s creditworthiness and determine whether to approve their applications for loans. A higher score makes you more likely to qualify for mortgages, auto loans, and different types of personal loans. It also helps you qualify for more favorable lending rates and terms.

Credit Cards

Credit card issuers typically reserve cards with lower annual percentage rates (APRs), more enticing rewards, and higher credit limits for applicants who have higher credit scores. A fair credit score may qualify you for a credit card with a high APR and little or no perks. Building your credit score could potentially give you the boost you need to qualify for a better credit card.

Security Deposits

Just found your dream apartment? A fair credit score could mean a higher security deposit than if you had a good or better credit score. With a poor or fair credit score, you may also be asked to pay security deposits for cell phones or basic utilities like electricity.

Housing Options

A fair or poor credit score can even limit which housing options are available to you in the first place. Some landlords and property management companies require renters to clear a minimum credit bar to qualify.

Recommended: Typical Personal Loan Requirements Needed for Approval

Can You Get Personal Loans With Fair Credit?

It’s possible to get a personal loan with fair credit (or a FICO score between 580 and 669), but your choices will likely be limited.

Personal loan lenders use credit scores to gauge the risk of default, and a fair credit score often indicates you’ve had some issues with credit in the past. In many cases, borrowers with fair credit may be offered personal loans with higher rates, steeper fees, shorter repayment periods, and lower loan limits than those offered to borrowers with good to exceptional credit.

Although some lenders offer fair credit loans, you’ll likely need to do some searching to find a lender that will give you competitive rates and terms.

The Takeaway

Having a fair credit score, which is better than a poor score, doesn’t necessarily mean you won’t qualify for any type of credit. However, the rates and terms you’ll be offered may not be as favorable as those someone with higher scores can get. With time and effort, however, you can move up the credit scoring ladder. If you work on building your credit score until you have good or better credit, you’ll gain access to credit cards and loans with lower interest rates and more perks.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Is fair credit good or bad?

A fair credit score is neither good nor bad, it’s just okay. FICO credit scores range from 300 to 850 and a fair score is 580 to 669.

What’s considered a fair credit score?

According to the FICO scoring model, which ranges from 300 to 850, a fair credit score is one that falls between 580 and 669. It’s one step up from a poor credit rating but below good, very good, and exceptional.

Is a 620 credit score fair?

Yes, a 620 credit score is considered to be in the fair range. According to the FICO scoring model, which ranges from 300 to 850, a fair credit score is one that falls between 580 and 669.

Photo credit: iStock/Ivan Pantic

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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The Federal Reserve Bank of New York announced that U.S. citizens hit a new milestone: $1.23 trillion in credit card debt as of Q3 2025. And when you look at overall debt, the number soars to an eye-watering $18.59 trillion, with the typical American household having $105,056 in debt.

Taking a closer look at how debt is tracked by age can help as you examine your own situation and think carefully about how you will manage your own debt load. Keep reading to learn more.

Breakdown Of Average Debt By Age

Here, you’ll learn more about the latest data and what it reveals about how Americans are using credit. Overall, people in their high earning years (early middle age) carry the most debt, typically in the form of mortgages, while younger families carry more student loan debt. Let’s take a closer look.

Age 18-29

Total debt: $1.05 trillion

Average per person: $19,972

During this stage of life, debt typically comes from a mix of student loans, credit cards, and auto loans, not mortgages, because many in this age group haven’t yet bought homes. The relatively high levels of education-related and personal debt for these younger adults highlight the financial burden they face early in their careers.

Age 30-39

Total debt: $3.89 trillion

Average per person: $84,565

Adults aged 30-39 carry a significantly higher debt load than younger cohorts, with a per-capita average of around $84,565, according to Federal Reserve–based data. By this age, many people have transitioned into more long-term financial obligations: mortgages make up a large share of their debt, as they often purchase homes and take on large loans to finance them.

Credit card debt in this age bracket is climbing, too, with 80% having a credit card (ages 30-44) and 53% carrying a balance. These increases show that people in this age range are taking on more debt — likely because they’re earning more and doing more: they’re settling into their careers, buying houses, and starting families.

Age 40-49

Total debt: $4.76 trillion

Average per person: $111,148

People aged 40-49 carry the most debt burden of all age groups, with an average per-capita debt of $111,148. At this stage, much of their debt stems from long-term obligations like mortgages, as many in this age group have purchased homes and are building significant home equity, as well as from auto loans and credit card balances.

Despite this high level of indebtedness, the New York Fed’s reports show that serious delinquency (90+ days past due) rates for major debt categories like mortgages remain relatively stable among this cohort. However, the concentration of debt also reflects that 40- to 49-year-olds are in a peak earning and borrowing phase — balancing large housing loans, potential family expenses, and other financial priorities.

Age 50-59

Total debt: $4.02 trillion

Average per person: $97,336

This age bracket continues to see drops in overall debt. They owe less on their mortgages and even less on education loans. With fewer large expenses related to education, housing, and family rearing, households in this age bracket can focus on paying down debt and building savings as they prepare for retirement.

Age 60-69

Total debt: $2.73 trillion

Average per person: $67,574

Households in this age range are likely beginning to or have begun their retirement. At this point, they are probably tightening their budgets to live on retirement savings, pensions, and social security. As a result, they’re spending — and borrowing — less.

While average balances may still be substantial, most of these older borrowers continue to manage repayments. For many in their 60s, carrying this level of debt can be part of a long-term wealth management strategy — balancing ongoing liabilities while preserving or building on accumulated assets.

Age 70 and up

Total debt: $1.73 trillion

Average per person: $43,142

Seniors in this bracket are most likely retired and living on a fixed income. While there are fewer and lower levels of borrowing in this bracket compared to the others, one report says that more than 97% of those ages 66-71 do still carry some form of debt. While much of this is accounted for by small mortgages, some of it may be related to high cost of medical care, senior living facilities, and credit card debt.

💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

How Much Debt Is Too Much?

Americans have clearly become accustomed to borrowing in order to move through their everyday lives. In fact, financing is often a necessary step in order to get the graduate level training needed for a professional career or to buy a home that will become a financial asset. But are we culturally becoming too comfortable with borrowing larger and larger sums of money? And how do you know when you’ve over-extended yourself?

One way to find out if you’re carrying too much debt is to calculate your debt-to-income ratio by dividing your monthly debt payments by your monthly income. For instance, if your total debt payments (student loan, credit card, mortgage, car loan, etc.) come to $2,500 per month and your after-tax monthly income is $8,000, your debt-to-income ratio would be 31.25%. That means that a little over 31% of your income goes straight to your debts.

As a rule of thumb, the lower your debt-to-income ratio, the better: a ratio of around 30% is considered very good, while a ratio of 40% or higher could threaten your financial security.

Recommended: Which Credit Bureau Is Used Most?

How to Take Control Of Your Debt

Carrying debt can be extremely stressful, especially if it keeps you from being able to save enough to feel financially secure. Here are some solutions if you’re looking for a strategy for paying down your debt.

Make a Debt Inventory

Start by listing out all of your outstanding debts and sorting them based on whether they are “good” debts (debts taken out to help build wealth or income potential like mortgages and student loans) or “bad” debts (high-interest loans, credit cards, and auto loans). The bad, or high-risk debts, will be the ones you’ll want to take on first.

Create a Debt Pay-Down Goal

Creating a debt pay-down goal gives you a clear roadmap for reducing what you owe. Two popular strategies that can help you get there are the debt avalanche and the debt snowball methods.

With the debt avalanche method, you focus on paying off the debts with the highest interest rates first, which minimizes the total interest you’ll pay over time. The debt snowball approach, on the other hand, prioritizes paying off your smallest balances first, giving you quick wins and motivation to keep going. Whichever method you choose, setting a specific, achievable goal helps you stay focused and build momentum toward becoming debt-free.

Consider Consolidating Your Debt

If you are carrying a high credit card balance or other high-interest debt, but have a steady income and good credit, you may be able to make your repayment simpler and cheaper by taking out a lower-interest personal loan to pay off those debts. You can’t use an unsecured personal loan to consolidate student loan debt, but it can be immensely helpful if you’re trying to get out from under credit card debt.

Recommended: Can You Refinance a Personal Loan?

The Takeaway

Many Americans have debt, with younger people having more student debt and those in midlife having more in the form of mortgages.

If you’re concerned about managing your debt (especially from credit cards), you might consolidate your high-interest debt into one monthly payment, which might offer a lower interest rate that could help you get out of debt sooner.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

How much does the average American have in debt?

As of 2024, average household debt sits at $105,056. This may include mortgage debt, credit card debt, auto loans, student loans, personal debt, and more.

How many people have $10,000 in credit card debt?

Roughly one in four Americans (25%) who carry credit card debt owe more than $10,000. Keep in mind that about 46% of Americans have credit card debt, in general.

What percent of Americans are debt-free?

According to data from the Federal Reserve, about 23% of Americans are debt-free. Keep in mind, though, that not all debt is considered bad. Having mortgage debt, for example, is much better than carrying credit card debt.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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