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The best bank for you will depend on factors like your financial needs, priorities, and what you value most in day-to-day banking. Whether you’re looking for a bank with competitive interest rates or one with local branches and a large ATM network, it’s important to find a financial institution that suits your needs.

The tips below on how to choose the best bank for daily banking can help you as you’re making your decision.

Why It Is Important to Find a Good Bank

Knowing how to choose a bank matters more than most people realize, and the potential benefits go well beyond having a place to store money:

•   A bank account provides a home base for the money you earn.

•   It can provide security, knowing that the bank has deposit insurance and that your cash is safe.

•   It can pay you interest on your funds so your cash grows.

•   It could help you build your financial security and literacy.

•   It may offer you additional benefits, like a cash back debit card or a lower mortgage rate.

What to Look For When Picking a Bank

There are thousands of banking options in the U.S. So how to find a good bank for you? Consider the following 12 factors that can help you find the right bank account for your needs. Creating a comparison chart in a spreadsheet lets you track the factors that matter most as you research your options. Then you can use the process of elimination to find your perfect financial institution match.

Here are key things to consider when choosing a bank.

1. Bank Security and FDIC Insurance

Whether you choose to put your money in an online bank, a traditional bank, or a credit union, it’s vital to make sure your funds are safe with secure banking features. Check to make sure any bank you’re considering is insured by the Federal Deposit Insurance Corporation (FDIC) or if you’re looking at a credit union, that it is insured by the National Credit Union Administration (NCUA).

In the very rare event of a bank or credit union closure, either FDIC or NCUA would cover your deposits up to the insurance limits. You would be covered for up to at least the standard limit of $250,000 per depositor, per insured institution, for each account ownership category.

You’ll also want a

2. Low or No Monthly Bank Fees

Fees can eat away at your deposits and the savings you’re trying to build. Some banks charge minimal or no account fees, but others have multiple charges that can add up fast. Common examples include ATM charges, monthly maintenance fees, and overdraft fees.

ATM fees can run almost $5 per out-of-network withdrawal and sometimes even more. Overdraft fees often range from about $30 to $35, and while they’re a good way to avoid negative balances, they can cost you hundreds of dollars if you fall behind.

Returned deposits, foreign transactions, low balances, and lost cards also incur fees. If you want to avoid monthly maintenance fees and other fees, be sure to read through the terms and conditions carefully so you aren’t unpleasantly surprised. You may decide to choose an account that’s fee-free instead.

3. Competitive Interest Rates and APY

While some banks might still offer the standard low savings account interest rates , it doesn’t mean you’re stuck with that.

When choosing the right bank account for your needs, keep in mind that online-only banks typically have lower overhead than traditional brick-and-mortar banks, so they often pass those savings on to customers through annual percentage yields (APYs) that are many times higher than the national average when you open a savings account. Some online banks also offer high-yield checking accounts.

Recommended: APY vs. Interest Rate

4. Branch Locations and ATM Access

As you’re thinking about how to choose a bank, consider whether you like to visit brick-and-mortar branches. If you do, you may want a bank that has physical locations close to your home or workplace, or both.

You might also want to check if your bank has ATMs or a partner network of no-fee machines near you and the neighborhoods where you typically spend time. This can be important for avoiding ATM fees, such as non-network fees and ATM operator fees. These fees can add up to a few dollars or more per transaction, which accumulates quickly if you use ATMs regularly.

5. Mobile Deposits and Ease of Access

Along the same lines, you may want to consider how easy it is to deposit funds in a particular financial institution. Many banks offer mobile check deposit, which allows you to add a check to your account by snapping a photo with your cell phone and uploading it. Check to see what’s available.

Also, if you are looking at online banks, suss out how you might deposit cash, if that’s something you frequently do, and make sure it’s a convenient process for you.

Recommended: What Do You Need to Open a Bank Account?

6. Strong Digital Banking Features

It’s also a good idea to check out a potential bank’s app and online services. Are they easy to navigate? Do they offer the features you’re most likely to use? Comparing a couple of financial institutions’ user experiences can reveal important nuances.

See if you can download a demo. Ratings and reviews can also be a great way to find out other customers’ experiences.

7. Minimum Balance Requirements

Explore whether your potential bank has a minimum deposit and minimum account balance requirement. If so, that means you must initially put in a certain amount of cash to open your account or to start it and earn a certain APY. Then, with minimum balance requirements, if you dip below a given level, you’ll likely pay a monthly account charge.

With online banks, you may not face a minimum opening deposit or balance requirement, but earning the top APY often depends on conditions like maintaining a certain balance, making a set number of debit card transactions per month, or setting up direct deposit. Read the details and fine print when considering a bank.

8. Quick Availability of Funds

Few people like waiting for funds to clear, so it’s worth comparing how quickly different banks make deposits available before opening an account. Some banks may offer early paycheck access, for instance, for qualifying accounts.

9. Reliable Customer Service

Here’s another dimension to consider when thinking about how to find a good bank: What kind of customer service do they offer and when? If you like to interact in-person, you may prefer a traditional bank with branches.

Also consider the availability of support by phone and online chat during non-business hours. What if you have a pressing financial problem at 9am on a Sunday? Would help be there for you?

10. Integrated Investment Options

If you’re looking for more than just checking and savings, consider a bank that also has investment account options. Keeping your checking, savings, and investments in one place could simplify transfers, deposits, and automatic saving.

11. Sign-Up Bonuses and Member Perks

Some banks may offer perks that appeal to you, so see what’s out there. For instance, some banks might offer a cash bonus when you set up direct deposit, while others provide cash back on everyday purchases. Still others may offer educational events to boost financial literacy. Some online banks may offer a cash bonus for opening an account like a checking account or setting up qualifying direct deposits.

However, when choosing a bank, it’s important to make sure any financial institution you’re considering aligns with your everyday needs and overall goals.

12. Your Personal Banking History

One last factor to consider when choosing a bank: if your financial history has a few rough patches, find out whether a bank may consider your application. For instance, some banks might scrutinize your banking history. If you have enough overdrafts in your history or other issues, they may not approve your account application. Or you might need to open what’s known as a second chance checking account until you prove that you’re a reliable client. It’s wise to consider this as you go bank shopping.

The Takeaway

Choosing the right bank depends on your needs and financial goals. In general, you’ll want to look for low (or no) fees, competitive interest rates, and convenient access, whether through local branches, ATMs, or online banking.

Also consider your personal banking preferences. For example, if you want to have the option of meeting with bank staff in person, you might choose a bank or credit union with nearby branches. If, on the other hand, you prioritize digital convenience and user-friendly interfaces, you might consider an online bank. Either way, be sure to compare your options, read reviews, and choose a bank that aligns with your lifestyle and financial priorities.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

How do I know which bank is best for my daily needs?

To help find a bank that suits your daily needs, consider your everyday spending and saving habits. For example, do you prefer to take out money from an ATM? If so, you may want to look for a bank with convenient ATM access in the area where you live and work. Do you want a bank you can visit and do your banking in person? Then a financial institution with branches near you might be a good option. Also, be sure to consider factors like fees and minimum balance requirements, as well as digital features like mobile deposit.

Is it better to choose a traditional bank or an online bank?

Whether a traditional bank or online bank is better for you depends on your financial needs and priorities. Generally speaking, a traditional bank may be a better fit if you want to visit a physical location where you can interact with staff for your banking needs and/or if you regularly make cash deposits. An online bank might suit you if you are looking for higher interest rates and lower fees, which online banks typically offer, and you don’t typically need to make cash deposits. Think carefully about what you want and need from a bank before making a decision.

What are the biggest red flags when choosing a new bank?

Some of the biggest red flags to look out for when choosing a bank include high fees, negative reviews from other customers, outdated or slow digital features like apps and websites, and poor customer service, such as long telephone wait times. Also, check to make sure that the bank is FDIC insured. If it’s not, look for another financial institution that does carry FDIC insurance.

Does opening a new bank account affect my credit score?

Opening a new bank account typically does not impact your credit score because new bank account openings are generally not reported by banks to the major credit reporting bureaus.

How many bank accounts should a person have?

There’s no one “right” number of bank accounts a person should have. The number of bank accounts a person has generally depends on their financial needs and lifestyle. For example, you might be satisfied with two bank accounts — one for checking and one for savings — or you might want joint accounts with a partner as well separate accounts. Some people also open different accounts for different savings goals, such as one account for an emergency fund and another for a down payment on a house. Think about your situation and financial priorities to help determine how many bank accounts make sense for you.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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P2P payments, or peer-to-peer transfers, are a popular digital way to send money to and receive money from other people. With P2P, you can send a friend your half of the dinner bill, gas money, or other payments, quickly and easily from your mobile device.

To move money via P2P, all you need to do is to download a P2P app, like Venmo or PayPal, and connect your bank account, debit card, or credit card to it. Or your financial institution may offer app options you can enable. Either way, once you are set up, you are just a few clicks away from being able to send money.

Read on to learn what P2P is and how P2P payment works.

What Is a P2P Payment?

What P2P means is peer-to-peer, and it’s a quick and easy way to send money to someone. With a P2P payment, you can send money to a friend with just a few clicks on your mobile device. This replaces the need to get cash at an ATM or write out a personal check, options that aren’t always quick or convenient.

For traditional P2P apps like Venmo or PayPal, both parties need to have an account with the transfer service in order to make the transaction. For example, if you want to use Venmo to repay a friend for the salad they bought you at lunchtime, that person would also need to have a Venmo account to receive the payment.

Typically, a P2P account is attached to your online bank account. Some P2P platforms, however, allow customers to link their P2P accounts to a debit card or even a credit card, though it may involve additional fees.

Recommended: Guide to Direct Deposit

How Does a P2P Payment Work

Here’s a closer look at what goes on when you use a P2P payment app.

Overview of the P2P Transfer Process

Say that you want to send money P2P to your sister for your mother’s birthday present. Depending on the type of P2P service you use, you’ll follow some variation of these basic steps.

•   Creating a P2P account. You will need to download a P2P app and then sign up for an account. In order to send money to your sister, you’ll both need to have an account with the same money transfer service.

•   Linking your bank account to your P2P account. Some P2P services have the ability to hold funds, but they generally must be linked to a primary bank account (such as your checking account), credit card, or debit card in order to be fully operational. This is how the account will pull any funds needed to make a payment.

To link your checking account, you may need your checking and routing number (which appear at the bottom of a check). Some P2P transfer services may only need your bank log-in information. Others may allow you to set up extra verification measures.

•   Searching for a user to transfer funds to. To send money to your sister, you’ll need to find her on the P2P platform. You can typically search by username, email address, or a phone number.

•   Initiating a transfer. The next step in how P2P payment works is getting the money moving. Your sister can request a payment from you, or you can initiate the payment yourself. This requires choosing the option to pay, entering a dollar amount, and confirming the transfer. If you’ve enabled additional security measures on your account, you may need to enter a PIN that gets texted to you as well.

You may have the option to add a description or note to your transaction. Some P2P services may require this information so that they can charge a fee for business-related transactions. Others offer the option to act as a personal ledger should you need it in the future.

•   Waiting for the transfer to complete. Now the funds are in motion via a P2P bank transfer. When money is sent from one customer to another, it moves in the form of an electronic package safeguarded with multiple layers of data encryption. This makes it hard for hackers to access data (like your bank account number) within the transfer while it is in motion. Similarly, data encryption is designed to keep your money and account information safe. Once the data set reaches its destination, it is decoded and deposited as currency.

•   Transferring the funds into the payee’s bank account. When a P2P transfer is completed, the funds may be deposited directly into your sister’s bank account, such as a savings account. Or they may go into an account created for her by the P2P service. Funds received into P2P user accounts can then be transferred into a person’s bank accounts at little to no cost. (Recipients are likely to pay a fee if they want the funds transferred ASAP versus in a couple of days.)

Your sister will likely receive some combination of email, text, and/or in-app notifications that the funds have arrived. If she decides to leave the money in her P2P account, she can use that account balance the next time she needs to pay someone or purchase something from a business that accepts P2P transactions.

How Long Do P2P Transfers Take?

Money transferred via P2P is usually available instantly for use within the app. However, if you choose to transfer the money into your bank account, the amount of time it takes depends on whether you opt for a standard transfer or an instant transfer.

For a standard transfer, the general rule of thumb is to allow one to three business days to complete and the money to land in your bank account. That’s because standard bank transfers use the ACH (or Automated Clearing House) system.

If you choose an instant transfer of the money from the app into your bank account, some apps may not charge a fee; others may assess a charge of 0.5% to 1.75% of the overall transfer amount.

Are P2P Money Transfers Safe?

You may wonder if mobile payment apps are safe. Any time your bank account, credit, or debit card information is online, there is a chance that someone can get a hold of it, and P2Ps are no different. While all major money transfer companies encrypt your financial information, no P2P system can say it’s totally impervious to hacks and scams.

There are additional measures you can take to make sure that your account remains secure. For example, you may be able to set up two-factor authentication, which might involve typing in a unique pin number that is texted to your phone for each transaction. Or you might elect to receive notifications each time there’s a transaction posted on your account, enabling you to spot financial fraud right away if it were to happen.

You may also want to take care when you type in a recipient’s email address, phone number, or name. A typo could lead to the money going to the wrong person.

How Do Peer-to-Peer Transfer Companies Make Money?

P2P transactions are largely offered for free to consumers, which may beg the question of how the companies that offer these services stay in business. Here are two major ways that P2P money transfer apps may generate income.

Account Fees

Typically, you can make P2P payments from a linked bank account or straight from the P2P account for free. But if you want an instant transfer or you are transferring money using a credit card or from depositing checks into your P2P account, there may be a fee involved.

Business Fees

P2P platforms aren’t just for consumers — they are used by businesses as well. Compared to the free transactions offered to standard users, businesses are generally subject to a seller transaction fee for each customer purchase made with a P2P money transfer app. Venmo, for instance, charges a fee of 1.9%, plus 10 cents for each transaction.

What Are the Benefits of P2P Money Transfers?

There are three main benefits to using online money transfer services.

•   They’re fast. Depending on the service, P2P money transfers can happen very quickly. They can take anywhere from just a few seconds to a couple of business days.

•   They’re cheap. When exchanging money between friends and family, P2P money transfers are often free. There may be a small fee, however, if you want an instant bank transfer, or if you’re using a credit card instead of a bank account, making a transfer above a certain dollar amount, conducting a high volume of transfers, or using the service for a business transaction.

•   They’re easy. P2P transfers eliminate the need to make trips to the ATM or a local bank branch to get cash, which can make money management more convenient. They also eliminate the need to get out your checkbook, write a check, and then mail it to someone. For a P2P transfer, all you likely need is a mobile device, the app, and cell service or wifi.

Alternatives to P2P Money Transfers

What if a P2P money transfer isn’t available or doesn’t suit your needs? Try these options instead to move money.

Sending a Check

You can go old-school and write a paper check. You fill out the necessary details and hand or mail the check to the person you are paying. Typically, no fee is involved, although you may sometimes have to pay for a new checkbook when you run low and order more checks.

Money Orders

Money orders are in some ways similar to a check, but you don’t write them from a bank account. Instead, you purchase them (essentially pre-paying for the amount you are sending) at the post office, businesses like Western Union or Moneygram, or from certain retailers.

Typically, you will pay a small fee. For example, the United States Post Office will issue domestic money orders up to and including $1,000. Those that are for amounts up to $500 will be assessed a $2.65 fee; for ones that are $500.01 to $1,000, $3.75 will be charged. Once you have a money order, you can either give it to the recipient in person or mail it. You can also typically track a money order to see when it’s cashed.

Using Online Bill Payment Services

Many financial institutions offer ways for their customers to pay bills electronically. A key feature of mobile banking, this bill payment service can be a simple way to send funds from your checking account, regardless of where you are or what time it is. You may be able to set up recurring payments as well for bills you receive regularly.

Wire Transfers

Wire transfers are another way to send funds electronically using a network of financial institutions and transfer agencies that operate globally. Typically, you will make a wire transfer via your bank, its website, or its app.

The process for how to wire transfer is fairly simple. You’ll need to have your payee’s banking details and will likely pay a fee to wire money.

For instance, domestic wire transfer fees can be anywhere from $0 to $30 (depending on whether they are incoming or outgoing), and they can often be processed in a few hours or within a day. International wire transfers can cost more (with both the sender and recipient possibly paying fees, typically $35 to $50 for the sender) and can take longer, typically two days. Certain banks may offer free wire transfers, perhaps only for certain types of accounts (such as premium ones), so if this is an important feature for you, it can be worthwhile to do your research.

You can also use wire transfers to transfer money between bank accounts you may have.

Recommended: Wire Transfer vs. Direct Deposit

The Takeaway

Peer-to-peer (or P2P) payment apps facilitate mobile money transactions. You can use them in place of cash or writing a check when you want to give friends or family money, whether it’s to cover your portion of a dinner bill or split the cost of a vacation rental. Some businesses also accept this form of payment.

All you need to make a P2P transfer is a mobile device, an internet connection, and your P2P app, which you must link to your bank account, debit card, or credit card.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Can you cancel a P2P payment?

You cannot typically cancel a P2P payment once the recipient has accepted it. Be sure to check the recipient’s username, email, or phone number to make sure the information is correct before sending a P2P payment.

Is P2P digital money?

P2P itself isn’t a form of money — instead P2P is a digital way of moving money from one person to another. Once a P2P transfer is complete, the recipient has money they can use to pay for purchases or transfer into their bank account.

What’s an example of a P2P payment?

An example of a P2P payment would be to use a P2P app such as PayPal or Venmo to send funds to a friend you owe money. You could also use a P2P app to send a payment to a service provider, like a hair stylist for a haircut, or a retailer when you buy an item.

Do banks use P2P?

Many banks offer their own version of P2P apps. For example, you might be able to send funds from your account to a friend, a retailer, or a service provider by using a bank’s app.

Are there tax implications for using P2P payments?

If you are using P2P to send money to friends or pay for personal goods or services you received, there are no tax implications involved. However, if you use P2P payments for business, there are potential tax considerations. If a business uses P2P to accept payments from customers, those payments need to be reported as income.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

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.

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Both savings accounts and certificates of deposit (CDs) can be a safe place to keep money, but there are key differences between them. A savings account can be more accessible, meaning you can typically withdraw funds when you need them, while with a CD, you agree to keep your money on deposit for an agreed-upon period of time.

Also, interest rates of CDs and savings accounts may vary. CDs typically offer higher rates than traditional savings accounts do. However, high-yield savings accounts (HYSAs) may offer rates close to (or possibly even exceeding) those of CDs.

Depending on your needs and preferences, you may discover that one option is a better fit for you. Read on for details on what savings accounts and CDs offer, how they are different, and their pros and cons.

Certificate of Deposit (CD) vs HYSA Savings Accounts

A certificate of deposit and a savings account are both vehicles that can help you build your savings thanks to interest earned. A key difference, however, is that a savings account is more accessible. With a CD, you agree to keep the funds on deposit for a certain period of time, but you may earn a higher interest rate.

That said, high-yield savings accounts may offer competitive interest rates and provide more flexibility. You can withdraw funds as needed, without being hit with penalties.

To understand more about the difference between savings accounts and CDs, it’s helpful to know how each type of account works.

What Is a Certificate of Deposit (CD)?

A certificate of deposit is a type of savings account that pays interest. An account holder agrees to keep the money on deposit for a specific term, which can range from a few months to several years, for a specific interest rate (usually, but not always, a fixed rate). CDs are also known as time deposits. A couple of points about CDs to be aware of:

•   Generally, the longer the term you choose, the higher the deposit interest rate may be. You may also find a promotional CD with a higher than usual rate.

•   You may find some variable-rate CDs offered. With these, the interest can fluctuate with the market.

•   Typically, you will pay a penalty if you withdraw funds before the end of the term. There are some no penalty CDs on the market that don’t involve a penalty for pulling money out early. They may, however, offer lower interest rates.

CDs are considered to be a safe savings option, provided they are held at a bank with Federal Deposit Insurance Corporation (FDIC) insurance. If so, you will be covered up to $250,000 per depositor, per account category, per insured institution. That means even in the rare instance of the bank failing, your funds would be covered up to that amount. If you open a CD at a credit union, you would likely be insured by the National Credit Union Administration, or NCUA, in a similar way.

How Does a CD Work?

When you open a CD, you typically commit to leaving the money in the account for a set period of time such as six months or three years. In exchange for locking up your funds in this way, the bank issuing the CD will pay out a certain amount of interest.

Many financial institutions give account holders the option to collect interest at intervals during the term of the CD or at the end of the term.

However, if you withdraw funds from the CD before its term is over (also known as its maturation date), you will likely be charged a penalty.

When the agreed upon period of time is over, you can get your original deposit back, along with the interest earned and not yet paid out, or you can roll it over into a new CD.

Pros and Cons of a CD

CDs have benefits but they also have drawbacks to consider. These are some of the pros and cons:

Pros

•   Typically have higher interest rates than many savings accounts.

•   They offer a fixed interest rate that doesn’t change over the term of the CD.

•   May be helpful for longer-term savings goals.

•   FDIC-insured

Cons

•   Money in a CD is locked in for a specific period of time.

•   Potential to miss out on a rise in interest rates after the rate is locked in

•   Early withdrawals typically incur a penalty.

•   Requires having other savings that are easy to access in case of emergencies

What Is a High-Yield Savings Account (HYSA)?

A savings account, which you can open at a bank, credit union, or other financial institution, is a place where you can save money without locking it in for an extended period of time. A high-yield savings account may help your money grow even faster.

•   A high-yield savings account is a place to keep money while still being able to access it — say, for an emergency fund or a down payment for a car you plan to buy in the coming months.

•   The funds in a HYSA account are accessible without a penalty, though some financial institutions do limit the number of transactions per month.

•   Similar to CDs, high-yield savings accounts generate interest, typically at higher rates than traditional savings accounts. For example, as of August 2026, the interest rate for an HYSA was about 4.00% while the interest rate for traditional savings accounts was 0.38%.

Most high-yield savings accounts at major banks offer FDIC insurance. If the savings account is held at a credit union instead of a bank, then the NCUA vs FDIC typically insures the money with similar guidelines.

How Does a High-Yield Savings Account Work?

With a high-yield savings account, which are often offered by online banks, money deposited in the account earns interest. Funds can generally be withdrawn as needed (though some financial institutions may put a limit on how many transactions they allow per month). The interest rate on a high-yield savings account is significantly more robust than the interest rate on a traditional savings account. However, the interest rate is usually variable, which means it can change based on market conditions.

An individual might put money in a high-yield savings account to:

•   Earn interest and grow

•   Save money for a short-term financial goal

•   Create an emergency fund

•   Keep money safe vs. having cash at home

•   Separate the money they want to save from the money they want to spend

Recommended: APY Calculator

Pros and Cons of a High-Yield Savings Account

High-yield savings accounts have advantages and disadvantages to be aware of, such as:

Pros

•   Higher interest rates than traditional savings account

•   Easy access to funds

•   FDIC insured

•   May be useful for saving for short-term goals

Cons

•   Interest rates are typically variable and can change over time.

•   Withdrawals may be limited at some institutions.

•   Because they are often offered by online banks, there may be no in-person assistance

•   Making cash deposits may require using specific ATMs or retail partners

Similarities Between CDs and Savings Accounts

CDs and savings accounts do share some similarities, including:

FDIC Insurance Protection

Typically, a CD or savings account is insured by either the FDIC or the NCUA, which help protect the money in these savings vehicles.

Guaranteed Interest and APY

Both CDs and savings accounts earn interest on the money deposited into them. While CDs may earn a higher interest rate than traditional savings accounts, a HYSA may offer a competitive interest rate to a CD.

Key Differences: CD vs Savings Account

Of course, there are some important differences between these two types of accounts that are worth understanding.

Liquidity and Fund Access

With a CD, you can’t remove your money until the date of maturity without being penalized. With a savings account, you can usually make either up to six withdrawals a month or unlimited withdrawals. (Check with your financial institution for specifics.)

Interest Rates and Fixed Terms

Traditional savings accounts generally earn less interest than CDs. However, a high-yield savings account may offer a rate that’s competitive to a CD. Comparison-shop to see what’s offered.

While CDs have fixed interest rates, savings accounts typically have variable rates that can change based on market conditions.

Early Withdrawal Penalties

If you withdraw money early from a CD you will be charged an early withdrawal penalty. With a savings account, your funds are easily accessible.

Recommended: APR vs. APY

When to Choose a CD Over a Savings Account

Here’s some guidance on when an individual might opt for a CD vs. a savings account.

•   A CD may be a good fit if you don’t need to access your money in the near future. If you can leave the money untouched in the CD for the specified number of months or years, you could earn a higher interest rate than you would with a savings account.

•   Another scenario in which a CD may be a wise move is if interest rates are expected to fall. Locking in your rate with a CD before that happens could potentially help your money grow.

When to Choose a Savings Account Over a CD

A savings account may be a better option in certain situations.

•   A savings account can be a good place to store money you need to be easily accessible in the near future, such as when you’re building an emergency fund or saving up for a short-term financial goal.

•   Putting money in a savings account may be a wise move if interest rates are expected to rise. That way, you can enjoy higher earnings as rates climb. That wouldn’t be the case if you locked in to a fixed-rate CD.

CD vs Savings Account vs Money Market Account

Another option for saving money and earning interest is a money market account, which is another type of deposit account. Money market accounts have similarities to and differences from CDs and savings accounts. These include such factors as:

•   Like CDs, money market accounts generally offer higher interest rates than traditional savings accounts (although CDs typically offer higher rates than money market accounts).

•   Like savings accounts and CDs, money market accounts are FDIC (or NCUA) insured.

•   When it comes to money market accounts vs. certificates of deposit, money market accounts don’t limit access to your money for months or years the way CDs do.

•   Unlike some savings accounts, money market funds may have restrictions on the number of deposits and withdrawals account holders can make.

•   Unlike savings accounts or CDS, money market accounts generally allow account holders to write checks or process debit transactions against the funds in their account.

•   Money market accounts may require higher minimum balances to avoid monthly fees.

How to Open a CD

To open a CD, you can choose a financial institution, and pick the type and term of CD you want. You’ll also determine how often you want to collect your interest payments (say, monthly or when the CD matures, meaning when it reaches the end of its term).

Typically, you can open a CD in person or online. The process generally involves providing your personal details (name, address, Social Security number, and so forth), and other credentials.

The final step will be to fund the CD. That usually happens by transferring the money online, handing over cash if you’re at a branch, or by using a check.

How to Open a High-Yield Savings Account

The first step for opening a savings account, including a high-yield savings account, is generally to compare financial institutions and account options.

Things to consider include minimum opening deposits and minimum balances; the interest rates (these will vary between standard and high-yield accounts). You may also find a variety of fees relating to some savings accounts, so consider how those might impact your savings.

Next, you will likely have to provide personal information (such as name, address, and SSN), and other details to complete the process.

Then, you’ll need to add cash to open the account, whether by handing over money in person or transferring funds. A typical deposit requirement for a basic savings account might be $25 to $100; you might find some that don’t need any deposit. For a HYSA, you could see minimums ranging from similar levels to thousands of dollars in some cases.

The Takeaway

Both CDs and savings accounts are secure, low-risk places to keep money and earn interest. With a CD, you may earn higher interest than with a traditional savings account, but you’ll need to keep your money on deposit for a specific term or else be penalized for an early withdrawal. With a savings account, your funds are easily accessible without that kind of penalty. With a high-yield savings account, you might earn an interest rate that’s competitive to the interest rate on a CD. Which financial product is the right choice will depend on your particular needs and goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.10% APY on SoFi Checking and Savings.

FAQ

Is a CD better than a high-yield savings account?

Whether a CD or high-yield savings account is better depends on your unique financial needs. If you have money you don’t need to access any time soon and you can find a higher interest rate for a CD vs. a savings account, then a CD may be a better fit. If, however, you need to be able to access your money and make withdrawals, a savings account may probably better suit you. And you might find a high-yield savings account that has a rate that’s competitive to a CD’s.

Can you lose money in a CD or savings account?

Generally speaking, no. Most major banks and credit unions are insured by either the FDIC or NCUA for up to $250,000 per depositor, per account type, per insured institution, which protects consumers with CDS or savings accounts in the unlikely event that the financial institution should fail.

Do CDs always offer higher interest rates than savings accounts?

In general, a CD can provide a higher interest rate than a traditional savings account, but it pays to research exactly what is being offered. It’s possible that a CD’s interest rate might not be high enough to outweigh the downside of not being able to access your funds the way you can with a savings account. Or you might find that a high-yield savings account offers an interest rate competitive to that of a CD, plus greater accessibility to your money.

How much does it cost to withdraw from a CD early?

Penalty amounts for early withdrawal from a CD vary by financial institution and the terms of the CD. Penalties are generally calculated as a certain number of days or months of interest. Typically, early withdrawals from a CD cost 60 to 365 days of interest, and longer CD terms tend to have steeper penalties. To calculate a penalty, divide the CD’s annual interest rate by 365 to get the daily interest, then multiply that number by the number of penalty days charged by your financial institution.

Can I transfer money from a CD to a savings account?

You can transfer money from a CD to a savings account once the CD has reached its maturity date without paying penalties. However, if you take money out of a CD early to transfer it to a savings account, you will typically need to pay an early withdrawal penalty.

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Photo credit: iStock/Moyo Studio

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 5/28/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
*Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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A wedding day is typically a celebration you’ve dreamed of and eagerly anticipated, but it can also be a major expense. If you’re wondering whether to finance your wedding, here is some guidance when it comes to making that decision. From payment plans to personal loans and everything in between, options abound for making your big day happen.

Understanding Wedding Costs Before Making a Plan

SoFi’s most recent survey found that the median cost of a wedding is $10,000, and when you look at average costs, you may see figures like the $36,000 price tag shared by Zola, a wedding registry site. Of course, prices can vary tremendously depending on what you plan. A destination wedding or one held in a big city with 300-plus guests will likely be a much bigger expense than having 50 of your nearest and dearest gather in your grandmother’s beautiful backyard flower garden.

Breaking Down Wedding Expenses by Category

Here’s a look at some of the key contributors to the cost of a wedding, according to The Knot, a wedding site:

•   29%: Venue and rentals

•   24%: Catering, cake, and drinks

•   10%: Photography and videography

•   9%: Floral design and decor

•   6%: Music

•   6%: Clothing and beauty

•   5%: Wedding rings

•   5%: Wedding planner

•   3%: Guest entertainment

•   2%: Transportation

•   1%: Stationery

•   1%: Officiant

Setting a Realistic Budget

To set a realistic budget, it’s wise to delve into some real-world prices and see what’s affordable given your financial situation. You may find that swapping out a swanky hotel ballroom for a local, loft-style event space can help you save money or that limiting the guest list to 75 people instead of 175 can be a way to have an affordable wedding of your dreams.

Developing a spreadsheet that lists out your total budget and how much you will spend on each category is a helpful exercise. Also consider what you might be able to borrow or what friends and family can help with (such as handling the flowers and the decor).

An online wedding cost calculator can help you set a realistic budget for your wedding, too.

8 Ways to Pay for Your Wedding

There are many variables that can affect the average cost of a wedding, including the time of year you say “I do,” the day of the week, the number of guests, the reception venue, and a host of other factors (such as unexpected wedding expenses).

Whatever your budget may be, here are some ways to fund your big day.

1. Personal Savings

Perhaps you have already saved up a nice bundle of cash that you can put toward your wedding. Or maybe you have just gotten engaged and have a year or two to save up enough money for the big day. Using this kind of money to finance your wedding can help you avoid interest charges. Keep the cash in a high-yield savings account to help it grow via the power of compound interest.

2. Wedding-Specific Savings Plan

You can also set up a wedding-specific savings plan. This means you have a dedicated amount into which you can regularly deposit a sum of money or use recurring automated transfers to stockpile cash in it. This can help you save enough money for your ceremony and celebration.

3. Family Contributions

Depending on your family situation, your parents and other relatives may be able to pay for some or all of your wedding expenses. It used to be common for the bride’s parents to pay for the wedding, but today, it’s often a matter of the family making a contribution toward the total cost, if at all.

4. Personal Loans

Personal loans are typically unsecured loans that can be used for almost any purpose. The interest rate charged can be lower than those of credit cards, and they offer a lump sum of cash (usually between $1,000 and $50,000 or even $100,000) that is then repaid by the borrower in installments over a few or several years.

Some lenders specifically offer wedding loans, tailored to the needs of couples planning their big day.

5. Credit Cards

A convenient way to finance wedding costs can be breaking out your plastic. While this is a quick and easy way to pay vendors, be sure you are aware of and can afford this kind of high-interest debt. Also be aware of your credit limit. Financial experts say that having a balance of more than 30% of your credit limit can negatively impact your credit score.

6. Wedding Funds or Registries

You can crowdsource money for your “I do” day by opening a wedding fund. Usually, the couple lets people know that they would prefer to receive cash vs. physical gifts from guests by directing invitees to a wedding registry. This money can then be used to fund the wedding costs.

7. Side Hustles and Extra Income

Not everyone has the time or energy for a side hustle, but working a part-time gig can help you pump up your savings for your wedding. Whether that means selling your service as a pet photographer or driving a rideshare every other weekend, these pursuits can help you bring in extra cash to pay for the wedding.

You might also sell stuff you no longer want or need to bring in some additional money.

8. Vendor Payment Plans

You may find that some vendors, such as your event space renter or your caterer, offer payment plans, allowing you to put money toward your debt over time. Check the details carefully to make sure you fully understand the interest rate and fees and that they are affordable.

The Pros of Financing a Wedding

Here are some of the upsides of financing a wedding:

•   You get your day with all the bells and whistles that you’ve dreamed of. You have the wiggle room to have more guests, a highly sought-after DJ or band, and food that will still be talked about on your anniversary. Mission accomplished in having a special day that will create a lifetime of memories, even if you don’t have all the cash sitting in the bank.

•   You might be able to borrow enough money to have a relaxing honeymoon, too, which might be nice after the stress of wedding planning.

•   You won’t deplete your savings to pay for your wedding. Starting your life together without an emergency savings account can be stressful.

The Cons of Financing a Wedding

Here are the downsides of financing a wedding:

•   When the wedding is long over, that monthly loan payment is still lingering. Depending on the amount and term of the loan, that can be a big commitment.

•   Interest rates for loans and lines of credit typically vary based on the borrower’s credit rating and other factors. If you don’t qualify for favorable interest rates, you could end up paying a decent amount in interest over the life of the loan.

•   Taking out a loan also increases your debt-to-income (DTI) ratio. If you are planning on near-future large purchases that will require another loan, such as a mortgage, having a high DTI ratio might make it more difficult to qualify for future loans, or it might affect the rates you qualify for.

Creating Your Wedding Payment Strategy

Paying for wedding expenses can require a significant amount of cash, so it’s wise to be strategic about how you’ll pay your bills. Here are a couple of ideas.

Mixing Different Payment Methods

You don’t have to go all in on just one payment plan. For instance, if your caterer offers a super-low interest rate on their payment plan, you might want to sign up for that, and then use a personal loan to pay for other expenses, such as the wedding dress, rings, music, and photography.

As with any kind of loan or line of credit, but sure you understand the fees and interest rate (and whether, say, prepayment penalties are applicable). Either a lower interest rate or a shorter term may save money in the long run. A personal loan calculator or amortization table can help with this analysis, so you know exactly how much you are spending.

Timeline Considerations

Another important consideration when deciding on financing is how long of a run-up you have to the wedding itself. If you are planning on getting married in, say, two years, you could have a decent amount of time to budget and save.

If, however, you are planning on a short engagement, then financing your wedding or asking for cash gifts might better suit your timeline.

Recommended: A Guide to Unsecured Personal Loans

Tips for Reducing Wedding Costs

If you’re having second thoughts about the cost of your wedding and how to afford it, know that with wedding planning, there’s usually a way to reduce expenses.

Off-Season and Weekday Discounts

The high season for weddings is usually late spring through fall. That’s when demand and prices are highest. You may be able to save big by booking a winter wedding or an early spring one.

Similarly, you’ll find that costs tend to peak for weekend weddings. If you can swing, say, a Thursday night instead of a Saturday, you could save a significant amount.

DIY Elements

Think about how you could save money by DIY-ing some aspects of your wedding vs. paying a professional. Also, you might tap friends and family to contribute. For instance, if you have a friend who loves to bake, perhaps they could make your cake. Or if you have a friend with a flair for photography, they could shoot your wedding pictures as a gift to you and your partner. If you have a cousin who’s in a band, they might play at your wedding at no cost or at a reduced rate. Perhaps your family members would be happy to create centerpieces and bouquets from affordably sourced flowers. Think outside of the box, and call in those favors!

Any of these ideas will help you save money and avoid financing your wedding’s full cost.

Prioritizing What Matters Most

There’s no law that says you have to have a traditional wedding. If what matters most to you is having a wedding that involves dancing till dawn, or having 200 friends and family members with you as you say your vows, go ahead, but then perhaps arrange for a potluck meal so you don’t have to shell out for a huge catering bill on top.

If you’re a foodie, maybe your wedding celebration could be a small dinner in a private room at your favorite restaurant after the ceremony. By prioritizing what matters most to you on your special day, you can have a wonderful wedding without landing in deep debt.

How to Avoid Wedding Debt Altogether

If you’re looking for some inspo on how to avoid wedding debt, consider these possibilities:

•   Postpone the wedding. You might be able to avoid borrowing altogether by postponing the wedding to give yourself time to save the money to pay for it. Cutting unnecessary expenses might free up some money in your budget. Or earning extra money by taking on a side hustle might be a good way to add to your savings.

•   Use a zero-interest credit card. Using a credit card to pay for wedding expenses might be another option. While a personal loan might offer a lower rate than a credit card, you might find credit card offers with low introductory rates — perhaps even 0% — for a limited time. If you’re confident that you can pay the card off in full before the introductory rate ends, this could be an attractive option.

•   Ask your family to contribute. Asking parents for money might not be the most appealing option, but it might be a worthwhile consideration. Even though the average age of newlywed couples is rising, which might mean more couples are established financially before they marry, it’s still common for them to have help paying for the wedding.

•   Elope. If your priorities are saving for a down payment on a house or paying off college debt, maybe you and your partner are the kind of people who would be comfortable eloping or having a city hall ceremony and Champagne with just a few of your nearest and dearest. That can definitely be a way to avoid debt from financing a wedding.

The Takeaway

Your wedding is a special day, but it can be a very expensive one. Think carefully about how to budget for and finance your wedding, which can often cost five figures. Some ideas are saving up for the big day, asking loved ones to contribute, using vendor payment plans, and taking out a personal loan.

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.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What’s the best way to pay for a wedding?

There is no one best way to pay for a wedding. Your personal finances and the kind of wedding you want will play a role in deciding what works best. But by saving up for your wedding or asking for help financing it, you may be able to avoid some or all of the interest charges you’ll encounter if you take out a loan or use a credit card.

How far in advance should we start saving for our wedding?

A wise way to figure out when to start saving is to calculate how much your wedding will cost, subtract how much relatives might contribute, and then divide that sum by how much you can save every month. So if you want to raise $10,000 and you and your partner can put aside $500 a month, then it would take 20 months to accumulate the funds needed.

Is it common for parents to pay for weddings today?

It is less common than in the past for parents to pay for the wedding, but many do, or at least make a contribution to the cost. Since the age at which people marry is rising, it has become more natural for the couple to have the financial means to pay their own way.

How can we ask for money instead of gifts?

You can put the word out tactfully among friends and family, or use a wedding website that clearly shows that your registry preference is cash vs. gifts. Zola, Honeyfund, The Knot, and Joy are among the options you may find. Compare fees and features to find the best fit.

Where should I keep a wedding fund?

If you’re saving money toward a wedding, it’s wise to keep it in a high-yield savings account, where it’s safe and accessible and earns interest. Shop around for features and rates that best suit you.

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Photo credit: iStock/PeopleImages

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

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It can be challenging to qualify for a personal loan after a bankruptcy. A bankruptcy will remain on your credit reports for up to 7 or 10 years., But with effort, your credit scores can be rebuilt during that time and beyond.

If you are approved for a personal loan, you likely will pay fees or a higher interest rate than you might have without having a bankruptcy on your credit report.

Read on to learn how bankruptcy works, the pros and cons of filing for Chapter 7 vs Chapter 13 bankruptcy, and how to get approved for a loan with a bankruptcy in your credit history.

How Does Bankruptcy Work?

When a person can’t make payments on their outstanding debts, despite trying to do so, bankruptcy may be an option for a fresh financial start.

Bankruptcy can be either a liquidation of the debtor’s assets to satisfy creditors or the creation of a repayment schedule that will satisfy creditors and allow the debtor to keep their property instead of liquidating it.

💡 Quick Tip: A low-interest personal loan can consolidate your debts, lower your monthly payments, and help you get out of debt sooner.

Filing for Bankruptcy

Bankruptcy petitions are filed with the bankruptcy court in the debtor’s judicial district. The process is mostly administrative, with minimal time spent in front of a judge — often no time at all unless there is an objection by a creditor. A court-appointed trustee oversees the case.

The debtor must attend a “341 meeting” (named for section 341 of the Bankruptcy Code), at which creditors can present questions and concerns. For Chapters 7 and 13 bankruptcies, which are being discussed here, the remainder of the process differs slightly.

Common Reasons to File for Bankruptcy

Among the reasons people may file for bankruptcy are the following:

•   Medical debt

•   Job loss

•   Credit card debt

•   Divorce or separation

•   Unexpected events (natural disasters, pandemics, etc.)

Can I Get a Loan With a Discharged Bankruptcy?

It’s not impossible to get a loan after bankruptcy, but interest rates may be high and loan terms less favorable than for someone who hasn’t been through a bankruptcy. The negative effect a bankruptcy has on a person’s credit lessens over time, but lenders may not be willing to offer their best rates to someone they perceive as not having been financially responsible in the past.

Factors That Impact Loan Approval After Bankruptcy

There are a few forces that impact getting approved for a loan after bankruptcy:

•   Credit score and history: A bankruptcy can lower your credit score by 100 or 200 points, which can make it challenging to build credit to the level needed to qualify for a personal loan or a loan with a favorable rate.

•   Timing: As noted, a bankruptcy can stay on your credit report for up to 7 or 10 years. There can be a waiting period of one to two years or longer before you can qualify for a loan.

•   Lender requirements: Different lenders have different guidelines. There are some who specialize in lending to those with poor credit.

•   Type of bankruptcy: Some lenders may look more favorably upon those who have a Chapter 13 bankruptcy, which involves repayment of debt, vs. Chapter 7. (Learn more below.)

Two Main Types of Bankruptcy Filings

There are two main types of bankruptcy available to individuals: Chapter 7 and Chapter 13. With both, a bankruptcy trustee reviews the bankruptcy petition, looks for any red flags, and tries to maximize the amount of money unsecured creditors will get.

Chapter 7 is the most common type of bankruptcy for individuals, followed by Chapter 13.

Chapter 7 Bankruptcy

This is often called liquidation bankruptcy because the trustee assigned to the case sells, or liquidates, nonexempt assets in order to repay creditors.

Many petitioners, though, can keep everything they own in what is known as a no-asset case. Most states allow clothing, furnishings, a car, money in qualified retirement accounts, and some equity in your home if you’re a homeowner to be exempt from liquidation. (Each state has a set of exemption laws, but federal exemptions exist as well, and you might be able to choose between them. A bankruptcy attorney should be able to provide insight on this subject.)

After the bankruptcy process is complete, typically within three to six months, most unsecured debt is wiped away. The filer receives a discharge of debt that releases them from personal liability for certain dischargeable debts.

Are Personal Loans Covered Under Chapter 7?

In most cases, personal loans may be discharged in a Chapter 7 bankruptcy proceeding. A secured personal loan for which collateral has been pledged is included in discharged debts, but the asset put up as collateral will likely be sold to satisfy the debt.

Recommended: Secured vs. Unsecured Personal Loans — What’s the Difference?

The Pros and Cons of Chapter 7 Bankruptcy

A Chapter 7 bankruptcy can create a fresh start for someone struggling to repay their debts, but it’s not a magic wand. Here are some pros and cons:

Pros of Chapter 7 Bankruptcy	Cons of Chapter 7 Bankruptcy
Debtors are free of personal liability for discharged debts.	Some types of debt, such as student loans or tax debt, cannot be discharged.
Certain assets may be exempt from bankruptcy, giving the debtor some property to sustain themselves.	A trustee takes control of the debtor’s assets.
If all of a debtor’s assets are deemed exempt, the bankruptcy is termed a no-asset bankruptcy.	Creditors will not receive any funds from the bankruptcy because there won’t be any assets to liquidate.

Chapter 13 Bankruptcy

This form, also called reorganization bankruptcy or a wage earner’s plan, allows petitioners whose debt falls under certain thresholds to keep their assets if they agree to a three- to five-year repayment plan.

There are three types of claims in a Chapter 13 bankruptcy: priority, secured, and unsecured. The plan must include full repayment of priority debts. The individual debtor will typically have no direct contact with the creditors, as the trustee collects the money and pays debts. The unsecured debts often do not get paid in full, sometimes as low as 5%-10% of debts owed.

Once the terms of the plan are met, most of the remaining qualifying debt is erased.

The U.S. Bankruptcy Code specifies that if the debtor’s monthly income is less than the state median, the plan will be for three years unless the court approves a longer period. If the debtor’s monthly income is greater than the state median, the plan generally must be for five years.

Certain debts can’t be discharged through a court order, even in bankruptcy. They include most student loans, most taxes, child support, alimony, and court fines. You also can’t discharge debts that come up after the date you filed for bankruptcy.

Are Personal Loans Covered Under Chapter 13?

Personal loans can be discharged in Chapter 13 bankruptcy, but whether a creditor is likely to be repaid in full depends on whether the personal loan is secured or unsecured. Priority claims are paid before any others, followed by secured, then unsecured claims.

The Pros and Cons of Chapter 13 Bankruptcy

Debtors who have assets they’d rather not have liquidated might opt for Chapter 13 bankruptcy vs. Chapter 7, which involves liquidation of most assets. But as with any type of bankruptcy, there are pros and cons.

Pros of Chapter 13 Bankruptcy	Cons of Chapter 13 Bankruptcy
Debtors may be able to save their assets, such as their home, from foreclosure.	If the repayment plan is not followed, the bankruptcy could be converted to a liquidation under Chapter 7.
Debtors have no direct contact with creditors, as all payments are made to the trustee, who then pays the creditors.	Living on a fixed budget for the duration of the repayment plan will take some adjustment.
Debtors have more options to repay their debts than they might under Chapter 7.	Chapter 13 bankruptcy is more complex than Chapter 7, and may lead to higher legal costs.
Debtors can extend repayment of secured, non-mortgage debts over the life of the plan, likely lowering their payments.	Taking more time to repay the secured installment debt may lead to more interest before it’s paid in full.

Recommended: What Is an Installment Loan?

Will Bankruptcy Ruin My Credit?

A bankruptcy will be considered a negative entry on your credit report, but the severity depends on your entire credit profile.

If you have a high credit score before bankruptcy, you could expect a significant drop in your credit score, but if you have negative items already on your credit report, you might see only a modest drop.

The good news is that the negative effect of the bankruptcy will lessen over time.

How Long Bankruptcy Stays on Your Credit Report

Lenders who check credit reports will learn about a bankruptcy filing for years afterward. Specifically:

•   For Chapter 7, up to 10 years after the filing

•   For Chapter 13, up to seven years

Still, filing for bankruptcy doesn’t mean you can’t ever get approved for a loan. Your credit profile can be positively impacted if you stay up to date on your repayment plan or your debts are discharged, among other steps that can be taken.

You may even be able to begin building your credit during bankruptcy by making the required payments on any outstanding debts, whether or not you have a repayment plan. Of course, everyone’s circumstances and goals are different, so always consult a professional with questions.

Some lenders may specialize in offering loans to people who have a bankruptcy on their record (though rates and terms may be less favorable). That said, some lenders may deny credit to any applicant with a bankruptcy on a credit report.

Recommended: What Is Considered a Bad Credit Score?

How Long After Bankruptcy Discharge Can I Get a Loan?

As long as you can find a lender willing to approve you for a loan, there is no specific amount of time needed to wait before applying for one. Often, waiting one or two years will be enough. However, your credit report will reflect a discharge for up to 7 or 10 years, and lenders may not offer favorable terms or interest rates.

Should I Apply for a Loan After Bankruptcy?

Making sure you are in a stable financial situation after bankruptcy is a good idea before thinking about applying for a loan. Having a repayment plan that you can stick to before taking on more debt is imperative. That being said, taking out a loan and repaying it on time and in full can be a good way to help rebuild your credit.

Some pointers:

•   Before applying for an unsecured personal loan, meaning a loan is not secured by collateral, it’s a good idea to get copies of your credit reports from the three major credit reporting agencies: Equifax®, Experian®, and TransUnion®. Make sure that your reports accurately present your current financial situation and check for any errors.

•   If you filed for Chapter 7 bankruptcy and had your debts discharged, they should appear with a balance of $0. If you filed for Chapter 13, the credit report should accurately reflect payments that you’ve made as part of your repayment plan.

•   Consider getting prequalified for a personal loan and comparing offers from several lenders. They will likely ask you to supply contact and personal information as well as details about your employment and income.

•   If you see a loan offer that you like, you’ll complete an application and provide documentation about the information you provided. Most lenders will consider your credit history and debt-to-income ratio, among other personal financial factors.

•   You may want to think carefully before considering no credit check loans: They typically have high fees or a high annual percentage rate (APR).

💡 Quick Tip: Fixed-interest-rate personal loans from SoFi make payments easy to track and give you a target payoff date to work toward.

If You’re Approved for a Personal Loan

Before you sign on the dotted line, it’s smart to take the following steps:

Read the Fine Print

If you’ve had a bankruptcy on your record, the terms of your offer may be less than favorable, so consider whether you feel like you’re getting a reasonable deal.

People with credit scores considered poor might see APRs on personal loans running into the triple digits. Make sure you are clear on your interest rate and fees, and compare offers from different lenders to make the choice that works for you.

Avoid Taking Out More Than You Need

You’re paying interest on the money you borrow, so it’s generally better to only borrow funds that you actually need. Further, it’s probably wise to only take out as much as you can afford to repay on time, because paying on time is an important key to rebuilding your credit. Having a focused plan for what you’ll spend the personal loan funds on may give you some incentive to manage it responsibly.

If You’re Not Approved for a Personal Loan

If you are denied a personal loan, don’t despair. You may have options for moving forward:

Appealing to the Lender

You can try to explain the factors that led you to file for bankruptcy and how you have turned things around, whether that’s a record of on-time payments or improved savings. The lending institution may not change its mind, but there’s always a possibility the lender can adjust its decision case by case.

You likely have the best chance at an institution that you’ve worked with for years or one that is less bound to one-size-fits-all formulas, such as a local credit union, community bank, online lender, or peer-to-peer lender.

Looking Into Applying With a Cosigner

A cosigner who has a strong credit and income history may be able to help you qualify for a loan. But both parties should keep in mind that the cosigner is typically responsible for paying back the loan if the primary borrower can’t do so.

Building Your Credit

You may need to take some time to try to build your credit profile before reapplying for an unsecured personal loan. You still have a chance to work toward reducing your other debt. There are many types of personal loans available, and a little waiting time to consider what’s right for you isn’t a bad thing.

There are several important habits to adopt when building your credit, but the most important one is your payment history, meaning whether you pay bills on time. This decides 35% to your credit score, so it’s wise to be diligent about it as you move past bankruptcy. Setting up autopay can be a good move as it ensures you won’t accidentally pay a bill late or miss it.

Alternatives to Personal Loans After Bankruptcy

If you don’t qualify for a personal loan after bankruptcy or feel that’s not the best option, here are other ways to access credit and/or build your credit score:

•   Secured credit cards, which involve putting down a deposit that usually serves as your credit limit

•   Secured loans, in which collateral (such as a savings account or a vehicle) is needed and can lessen the lender’s risk

•   A loan from a trusted friend or family member

The Takeaway

Getting approved for an unsecured personal loan after bankruptcy isn’t impossible, but it may take some time to qualify, and your rates and fees will likely be less favorable. It’s a good idea to compare offers from several lenders and gauge whether it’s the right time to borrow.

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.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

Can I get a loan with a discharged bankruptcy?

Yes, it is possible to get a loan after bankruptcy. The bankruptcy will be reflected on your credit report for up to 7 or 10 years, and rates and terms may be less favorable while it remains on your report.

Are personal loans covered under Chapter 7?

Yes, personal loans can be discharged under Chapter 7 bankruptcy. Whether a creditor is likely to be repaid in full depends on whether the personal loan is secured or unsecured.

Are personal loans covered under Chapter 13?

As with Chapter 7, personal loans can be discharged under Chapter 13 bankruptcy, typically after the court-approved repayment period of three to five years. Secured personal loans will take priority over unsecured personal loans, however.

How long after bankruptcy discharge can I get a loan?

There is no set time a person must wait in order to apply for a loan after bankruptcy discharge. Each lender will have its own conditions for approval. However, a typical period might involve waiting one to two years.

What are the best ways to rebuild credit after bankruptcy?

To build credit after bankruptcy, it’s wise to be especially diligent about paying bills on time, every time, since that’s the single biggest contributing factor to your score. You also want to be cautious about your credit utilization rate when you are able to access credit again, and not apply for too many forms of credit at one time.

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This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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