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When you purchased your home, you probably had a thousand things on your mind. It’s easy to get caught up in the details of finding the home you want, where you want it, for the price you want to pay. It’s possible that you overlooked other important components of the home-buying process that are now affecting your monthly mortgage payments, including your mortgage terms, insurance costs, and taxes.

You may be able to negotiate that perfect home’s price down to an unbelievable bargain, but if you don’t hone in on those other factors, you still could end up paying more than you hoped for your mortgage. The good news is it’s never too late to make changes and save money on your mortgage. Here are five strategies to consider:

1. Refinancing Your Current Home Loan

If your income has improved or you have strengthened your credit score since you got your original mortgage — or if you just didn’t secure great loan terms the first time—a mortgage refinance could be your chance for a do-over. This is especially worth considering if you obtained your mortgage prior to 2000, although even more recent mortgages could be candidates for a refi.

Securing a lower interest rate can make your monthly payments go down. (Even a small difference in rate can result in significant interest savings over the life of the loan.) Getting a shorter loan term will likely make your payments go up, but if your income can accommodate the expense, you’ll pay off the loan much sooner. A lower rate and a shorter term would deliver even better benefits.

If that sounds like a goal worth aiming for, here are some steps you could take:

•  Know what you owe. Before you start looking at refinancing loans, examine the balance of your current loan, the monthly payment, and the interest rate.

•  Check your credit report. Lenders may offer favorable rates or loan terms to borrowers with higher credit scores. You can get a free credit report every year from each of the three big credit bureaus, so you can review the information for accuracy and fix any errors. (But keep in mind that the annual free credit report provides an overview of your credit history, rather than your specific FICO_Ⓡ scores.) If your report isn’t as strong as you hoped, you could always press pause and come back to your plan after you’ve had a chance to rehabilitate your credit status.

•  Shop for the best lender, rates, and terms. Remember, even a half-percent difference in the interest rate can make a big difference. (And keep fees and other costs in mind as you’re doing your research may help.)

•  Clearly understand the consequences. Getting a lower mortgage payment isn’t always a money-saver. For example, stretching out the loan term can lighten your monthly financial burden, but you could end up paying substantially more in interest over the life of the loan. And though borrowers often choose to roll closing costs into their loan — either because they can’t afford them or don’t want to pay them upfront — doing so means you’ll pay interest on that added amount, diminishing your overall savings.

💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.

2. Pulling the Plug on PMI

If you couldn’t put 20% down when you purchased your home (and many first-time homebuyers can’t), you probably were required to buy private mortgage insurance.

(This is not the same thing as your homeowner’s policy, which is for your protection in case of loss or damage in your home. PMI protects the lender in case you default on your loan.)

How expensive is it? PMI typically costs .5% to 1% of your loan amount, so on a $200,000 home loan, that could be $2,000 a year, or $166 a month. If your loan closed on or before July 29, 1999, PMI is automatically canceled:

•  On the date the principal balance of the mortgage loan is first scheduled to reach 78% of the original value of the property. (And just FYI, the original value is defined as the purchase price or original appraised value, whichever is less.)

•  Or, halfway through the mortgage loan amortization period — that’s if the scheduled loan-to-value ratio doesn’t reach 78% before you make it halfway through the mortgage

However, you can petition your lender to cancel your PMI after 2 years when you think you have built up sufficient equity. Your loan payments must also be current.

Refinancing also can provide an opportunity to dump this cost. If your home’s value has appreciated, and the amount of your new loan is less than 80% of the home’s value as evidenced by a new appraisal, you’ll no longer be obligated to pay PMI.

3. Filing for a Homestead Exemption

Most states offer a homestead exemption to provide tax and creditor relief on a primary residence. (New Jersey, Pennsylvania, and Rhode Island are among the states that do not.) Depending on your state, a claim form may be mailed to you automatically once your house purchase goes through. But you can also get a Homeowner Exemption Claim Form from the County Assessor’s office or website. And P.S., counties often have deadlines for when the forms need to be filed.

4. Requesting a New Tax Assessment

The county’s tax records could contain inaccurate, incomplete, or dated information that is causing the tax assessor to put a higher value on your home. You can get a copy of the record at the tax assessor’s office — and property tax records are public and available on county tax assessors’ website. Among the things you can check:

•  Is the age, purchase price, square footage, and lot size listed correctly?

•  Does the record have the right number of bedrooms and bathrooms?

•  Has your homestead exemption been applied?

•  Are there any defects that would detract from value listed? Or are there improvements listed that you haven’t made?

If you paid more for your home than what it’s now worth, and the assessment was never adjusted, you could potentially request a lower taxable value. There are a few ways to determine your home’s value:

•  Looking in the tax assessor’s records for similar homes in the same neighborhood and comparing them to your own.

•  Checking online real estate sites for estimates. (Just remember, you’ll need to know the actual sale price to make a solid argument.)

•  Hiring an appraiser to give you a home appraisal or requesting a value estimate from the real estate agent who helped you purchase the home.

•  If you are refinancing your mortgage and the lender ordered a professional appraisal, you can (and will) get a copy.

Once you have a good idea of where you stand, you can contact your county for a new assessment. This process varies by county, but if your property tax is successfully lowered, the assessment will likely be reviewed every year for changes.

💡 Quick Tip: There are two basic types of mortgage refinancing: cash-out and rate-and-term. A cash-out refinance loan means getting a larger loan than what you currently owe, while a rate-and-term refinance replaces your existing mortgage with a new one with different terms.

5. Downsizing to a Less Expensive Home

Homeowners often think of downsizing as a move they’ll make in retirement — at that stage, it’s as much about making life easier as it is about saving money.

But if you realize you simply can’t afford the house you have — or that a fourth bedroom and third bathroom aren’t as essential to life as you thought — going smaller is a great way to cut costs. Not only can you save on your house payments, but your heating, cooling and other bills will likely go down.

You also may see your costs drop if you move to a less expensive part of town or a state with low property taxes, or lower sales or gas taxes. (Check out a guide to the cost of living by state for inspiration.)

Of course, you’ll want to walk away from your current home with enough money for the move to make sense. You may want to check out what a new home will cost before you put your place on the market.

Among other things, checking figures such as how your property taxes may change can be helpful. You can also consider looking into homeowners insurance; are you moving from a no-flood zone into a flood zone? How will that change your home insurance premiums? Checking your current mortgage interest rate against the new rate you’d potentially qualify for on a new home is a pragmatic thing to do, too. Have rates gone up since your last home purchase? If so, would the higher rate be offset by a lower purchase price and loan amount?

The Takeaway

If you love your home but hate the payments, remember that there are ways to reduce what you’re paying every month. Whether you choose refinancing to get to a more manageable number or you explore downsizing, working with a mortgage loan representative can help you find the savings you need.

Most people expect owning their own home to be their biggest financial undertaking. But that doesn’t mean you should pay more than is absolutely necessary to get it.

SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.

The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.
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 on credit.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
FICOⓇ is a registered trademark of Fair Isaac Corporation.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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As winter approaches, it may make sense — practically and financially — to prepare for the season ahead. Seasonal weather can transform minor issues into major ones, and cracks and holes around doors and windows can allow the money you spend on heating to literally fly away.  

Here, some smart moves for protecting your home, from the top of the chimney to the water heater in the basement. Plus, you’ll learn ways to finance improvements that will help get (and keep) your property in top condition.

Ways to Winterize a House

While the steps to winterize a home may differ in Alaska vs. Texas, it still helps to get ahead of any issues that may arise. No one wants to wind up with a leaky roof or an ice-cold home during a cold snap. 

It can be a smart move to start planning to winterize several months before the season arrives. The timing of the first frost varies from state to state, and of course, there are some regions of the U.S. that enjoy mild temperatures year-round. It may help to check the National Weather Service’s data that forecasts the first frost for each state to assist in your winterization preparation timeline. 

The following tips for winterizing a house may help you reduce future repair costs and heating bills. 

Protect Pipes or Pay the Piper

When deciding how to winterize a house, you may first consider how to address plumbing leaks and other issues.

Angi.com reports that the average burst pipe repair costs $500, but charges of up to $3,000 are not uncommon. Pipes in unheated areas of a home, including basements, attics, and garages, are among the most likely to sustain damage. But pipes running through exterior walls (including those in kitchens and bathrooms) in the heated parts of your home can also freeze.

Protecting the plumbing is clearly a situation where being proactive may save you a bundle. Pipe insulation can range from $0.50 to $1.50 or more per foot depending on whether you opt for tubular foam, spray foam, fiberglass, rubber or other kinds of insulation. Compare that to the $3,000 figure above to repair a significant leak, and the rewards of winterization can quickly become clear.

Adding insulation to attics (typically a $1,500 to $6,000 job), crawl spaces, and basements can help to keep those areas warmer, which can also help to keep pipes from freezing. (Yes, many houses have pipes in the attic.) What’s more, the E.P.A. says that homeowners can save up to 15% on heating and cooling costs by pumping up their home’s insulation. The higher an insulation’s R value, the better it may keep your home toasty. It can be a wise move to check the U.S. Department of Energy’s map and guide for more details on this topic.

Address HVAC Maintenance and Repair

Nobody wants the heating system to perform poorly during the winter — much less have it break down.

It’s a good idea to schedule a professional maintenance appointment (about $300 on average), including a filter change, before freezing temperatures arrive. Afterward, it’s best to change the filter at least every 90 days to keep your system operating optimally.

Additionally, maintenance and repairs to the heating, ventilation, and air conditioning (HVAC) system and cleaning out vents can improve airflow in your home.

One good move (if you haven’t already made it) can be to install a smart thermostat. If people in a home are away during reasonably regular times of the day or you want to lower the thermostat at night, it can make sense to install a programmable thermostat to save on energy costs. You could quickly shave $140 off your annual energy bill and plunk that into a high-yield savings account or your emergency fund.

It may be time to consider a new HVAC system for some people. The Department of Energy’s Energy Star program provides tips to homeowners to decide if replacing an HVAC system would be a good move.

Signs that it might be time to replace the unit include:

If you think cold-weather activities tend to be expensive (ski trips to the Rockies or snowboarding locally), consider all the fun free things to do in winter. Whether you’re looking for a solo pastime or an outing with friends and family, there are plenty of ways to enjoy winter without spending a dime.

Here’s a look at no- or low-cost places to go and activities to try in the winter.

Outdoor Winter Activities That Won’t Break the Bank

If you’re trying not to dip into your checking account while having some fun this winter, you’ll have plenty of options. Consider these ideas:

Sledding and Snow Tubing

Sledding is a free fun activity that the whole family can enjoy. Just bundle up with waterproof, well-insulated outerwear, and find an appropriate slope. You will need a sled, and they come in all shapes and sizes. Not seeing one stashed in your basement? A simple plastic disc or oblong sled might cost around $10 to $20 dollars, while a more fancy toboggan or wooden sled might cost hundreds of dollars.

Many ski resorts and local operations offer tubing, which involves riding down a slope on a rubber tire-shaped inflatable. If you can find a snowy hillside and bring your own ride, you could have a free activity. Otherwise, sessions are usually two hours long, and the cost can often be $25 for children. Some resorts impose a height limit of around 42″ or a minimum age typically around five. The cost for adults or teenagers range from $30 to $50. Group rates are often accommodated.

Winter Nature Walks and Photography

Of all the cheap things to do in winter, the simplicity of a winter’s walk on fresh snow is hard to beat. It’s an opportunity to see the landscape in a special, seasonal way. Photographers can take stunning photos, particularly if you can find wildlife, like birds, against the snowy backdrop. That’s a low-cost hobby that’s ideal for winter days.

For those who live in small cities or major metropolitan areas, snowy streetscapes can be equally picture-worthy.

Indoor Budget-Friendly Winter Fun

If getting outside has been nixed by a heavy storm or bitterly cold temperatures, try some indoor activities to entertain yourself while sticking to the budget you made.

DIY Crafts

Search online for winter crafts, and you’ll likely find no end of ideas that adults and children can try. Many options include holiday ideas to brighten the home or give as gifts. For instance, you may find ideas for holiday wreaths and frosted luminaria or handmade greeting cards.

If you’re more ambitious, set up an area in the home for refurbishing an old piece of furniture. An old painted chest of drawers can look amazing if stripped to show the beautiful wood underneath. Add varnish and new hardware, and you could have a gorgeous new piece to show off. (Or you might turn flipping furniture into a side hustle.)

Another idea for cheap winter activities: Perhaps it’s a good time to get a room painted or take on a bathroom remodel.

Movie Marathons

Need more free things to do in winter? Movie marathons are great when people are happy to be in from the cold. Take your pick from series like Star Wars, Marvel, Fast and Furious, Pirates of the Caribbean, Harry Potter, James Bond, or you might stick with any favorites on Netflix. Retro movie nights (Hitchcock, anyone?) are also a fun way to spend time indoors. The hardest part of movie marathons can be simply deciding what to watch amid the plethora of options.

Movies are a way for friends and families to get off their phones and come together. Plus, popcorn is a cheap snack option.

Recommended: How to Save on Utility Bills

Free Destination Community Winter Events

Most people can find cheap places to go in the winter close to home, what with all the winter festivals, holiday concerts, art and craft shows, and New Year’s Eve celebrations happening. Or if you’re a bit more adventurous and willing to do a bit of frugal travel, check out these unique winter festivals in various parts of the United States, which are among those recommended by Vrbo:

Polar Fest, Detroit Lakes, Minnesota

This event features a Polar Plunge, a jump into the icy waters of Detroit Lake, followed by a pancake breakfast, kids’ games, and activities. Don’t worry, you don’t have to plunge to enjoy the pancakes. There’s also an ice fishing derby, a motorcycle race on ice, a 5K fun run, a professional snowmobile race, and a curling competition.

Cedarburg Winter Festival, Cedarburg, Wisconsin, February

In Cedarburg, Wisconsin, there are various cooking contests and events. Notably, there’s a sled-pulling contest for dog-owners with a willing Alaskan Malamute. You can watch a grand parade, a costumed bed-race on ice, and an ice-carving contest.

Saranac Lake Winter Carnival, Saranac Lake, New York, February

In terms of cheap places to go in the winter, Saranac Lake, New York, hosts an annual winter festival with an expert ice sculptor crafting a stunning ice castle. At night, colorful lights inside the castle create a breathtaking scene. The event also showcases a fun run, a downhill ski race, and a scavenger hunt over 10 days of festivities.

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Budget-Friendly Winter Sports and Fitness

There are plenty of ways to bundle up and get some exercise in winter, whether that means ice-skating at your local rink or learning how to snowboard. Some sports are more expensive than others. For example, if you love skiing, cross-country skiing tends to be more budget-friendly than downhill skiing. And snowshoeing or otherwise walking in the snow with the right footwear can cost way less than a lift ticket, too.

Gear is often the biggest concern and expense for sports and fitness pastimes, and winter is no exception. Here are some tips for winter sports and fitness clothing and equipment that won’t deplete your bank account.

•   Don’t buy equipment until you know you are committed to the sport; rent instead. Ski and snowboarding equipment can be easily rented at the slope.

•   Buy second-hand clothing and equipment, especially for children who can grow so quickly. Check out consignment shops, REI’s online used section, Poshmark, eBay, The Hoarding Marmot, and Geartrade.

•   If you are currently job hunting, a seasonal gig at a resort or fitness center will give you access to the facilities for a budget price.

Affordable Winter Date Ideas

Winter can be a time to cozy up on date night. Here are a few ideas to try over the winter months that won’t blow your budgeting efforts.

Take a Hike

Winter is a wonderful time to get out and hike, particularly after a fresh snowfall. Just wear the right gear and maybe round it out with a hot toddy or hot chocolate.

Play a Board Game or Start a Jigsaw Puzzle

It may be old-school, but fun hours can be spent playing a board game or doing a jigsaw puzzle. Accompany the game with a bottle of wine and some tasty appetizers.

Visit a Bookshop

Stroll the aisles together, sharing old favorites and discovering new titles. Bonus: Many bookshops serve coffee and snacks as well as host author readings. You might also shop for gifts for friends and family while there.

Visit a Museum or Planetarium

Feed your soul with beauty and challenging imagery. Most big cities have free museums or specific dates on which you can view art with no admission fee required. Are you lucky enough to have a planetarium near you? For date night, visit and contemplate the universe together. (If you are starstruck by this outing, try an app like the free StarView Lite, which puts a planetarium in your pocket. All you need to do is point it at the sky, and it’ll identify the stars, satellites, and more above your head.)

Cook a Meal Together

It sounds simple, but one of the most tried and true winter date ideas is to simply cook together. Recipes abound online, and if you skip the pricier steak or seafood options, you can save a bundle. Maybe French onion soup and some crusty bread would be good, or try a pot of chili and enjoy the leftovers together later in the week.

Get Fit Indoors

Challenge yourselves physically together. Indoor activities can be a great option when days are cold and short. Rock climbing is a great example if you have an indoor wall near you. Otherwise, yoga, strength training, or dance classes can be a fun date idea.

Recommended: Ideas for Making Money From Home

The Takeaway

Winter activities don’t have to cost a bundle. Skip the European ski trip, and instead find fun options close to home, like local ice skating, cooking together for date night, visiting a museum, or crafting side by side.
Stash the money you save in a high-yield bank account to help it grow faster.

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.

FAQ

How can I find free winter activities in my area?

Check your local parks department website for free and cheap winter activities. Search online for local media that advertises events. Your local library will likely also have information on local activities also. Another path: Check social media for ideas. There are often accounts sharing no-charge local events.

What are some cheap winter activities for kids?

If you live in an area where snow falls, it can provide a wonderful playground once kids are bundled up. They can build snowmen, go sledding, or go ice skating. Also, many town recreation centers, museums, and art schools offer affordable activities and lessons during winter break, knowing that kids can be out of school and in need of entertainment.

How can I budget better during the winter time?

Budgeting in the wintertime is no different than budgeting at any other time of year. Set a spending budget for your expenses in all categories, and stick to it. Be frugal at the holidays with gift giving. Perhaps the whole family will be willing to abide by a spending cap to help avoid credit card debt. And just because it’s cold out doesn’t mean you need to entertain yourself with pricey movies, shows, and meals out. Cooking something new at home, streaming classic movies, and catching up on reading are all cheap ways to get through the cold season.

Photo credit: iStock/4maksym

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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.

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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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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SOBNK-Q424-017

In today’s cashless society, many electronic financial transactions are done with a debit card. Most debit cards are tied directly to a checking account and withdraw money from it whenever you make a purchase.

However, there are many variations available, such as business debit cards, prepaid debit cards, and HSA debit cards. Understanding the different types of debit cards is important so you can determine which options are right for you and how to use them effectively.

Standard Debit Cards

A standard debit card is likely the one that most people are likely familiar with. If you have a checking account with a debit card, your standard debit card will be tied directly to your checking account. When you make a purchase with your debit card, the money is withdrawn from your checking account.

If you attempt to make a purchase with your debit card but don’t have sufficient funds, your purchase may be declined. If you have overdraft protection, the purchase may go through, but you will likely be charged overdraft fees.

Prepaid Debit Cards

Another type of debit card is a prepaid debit card. These prepaid debit cards are often sold in grocery stores, convenience stores, or pharmacies. Prepaid debit cards come in various denominations and often come with a small initial fee that you pay upfront. There are two main types of prepaid debit cards:

Reloadable Prepaid Cards

The first type of prepaid debit card is a reloadable prepaid card. When you buy a reloadable prepaid card, you can usually load it with a specific amount of money at the time of purchase. As you use your reloadable debit card, you can also add additional money to it. You don’t have to worry about overdraft fees when using a reloadable prepaid card, since you are limited to only spending the amount that is available on your card.

Gift Cards

In contrast to reloadable prepaid cards, gift cards are a different debit card variety, one that often comes in a specific preloaded denomination, usually ranging from $10 or $25 to several hundred dollars. Once you purchase the gift card, you cannot add any additional funds to it. You can continue to use the gift card anywhere its network (usually Visa, Mastercard, or American Express) is accepted, but once you have used up the initial funds, the gift card has no value.

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Teen and Student Debit Cards

There are also debit cards that are targeted to certain demographics and often associated with a specific type of checking account. When you apply for a debit card as part of a teen or student checking account, your debit card will be tied to your account. However, usually anyone who is authorized to make purchases on the account (such as a parent and the child) can use the card.

Business Debit Cards

Another type of specialized debit card is a business debit card, typically associated with a business checking account. Business debit cards can be useful for owners of small businesses, since it helps them keep personal and business transactions separate, as they make purchases for their company, such as buying ad space or paying for supplies.

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Virtual Debit Cards

Many banks and other financial institutions support the creation of virtual debit cards. These virtual debit cards are temporary debit card numbers that are tied to your account. So you could leave your physical debit card at home and make purchases while out and about with a virtual debit card stored in your digital wallet. You can also use a virtual debit card to buy goods and services online and in apps.

Using a virtual debit card number can help protect your account from fraud since you don’t have to use your actual account number or debit card numbers when making a transaction.

Rewards Debit Cards

While perhaps not as common as rewards credit cards, there are some debit cards that offer rewards every time you use a debit card online or in a store. While the exact details will vary depending on the bank or debit card program, you might earn cash back, points, or discounts on certain transactions.

EMV Chip Debit Cards

While debit cards traditionally transferred information by way of a magnetic strip on the back of the card, many debit cards today have an EMV chip installed in them. EMV stands for Europay, Mastercard, and Visa — the companies credited with pioneering cards that have encrypted information stored in the chip. These chip debit cards are considered to be a more secure way of transferring personal details.

Contactless Debit Cards

Another way that debit cards transfer information when making a purchase is through wireless technology known as RFID (radio frequency identification). When you tap to pay vs. inserting your card into a reader, you are accessing this contactless technology. Debit cards that support contactless payment are becoming increasingly prevalent as users look for more convenient ways to make purchases.

ATM Cards

When comparing ATM cards vs. debit cards, it’s important to understand the differences between the two. Debit cards allow you full access to your account, including conducting such transactions as making purchases, getting cash back, and withdrawing cash from an ATM.

ATM cards are more limited, only allowing you to complete financial transactions at ATMs. You might withdraw cash, say, or transfer money between bank accounts.

Specialized Debit Cards

While most debit cards are tied to a checking account, there are some specialized debit cards that work in a different way.

Health Savings Account (HSA) Debit Cards

Health savings account (HSA) debit cards are tied directly to a specific health savings account vs. a checking account. If you have a high-deductible health plan, an HSA can offer a tax-advantaged way to set aside money for qualified medical expenses. When you use a debit card that is tied to an HSA, you are responsible for ensuring that it is used correctly on appropriate expenses. Otherwise, you might face taxes and/or penalty fees.

Electronic Benefits Transfer (EBT) Cards

Electronic Benefits Transfer (EBT) cards are given to participants of Supplemental Nutrition Assistance Program (SNAP). These EBT cards allow SNAP participants to purchase food and use their benefits in a more convenient fashion. An EBT card is loaded each month with the participant’s benefit amount and can be used at most grocery stores and other food retailers.

Choosing the Right Debit Card

Understanding what debit cards are can help you choose the right debit card for your situation. Most debit cards are tied to your checking account, so choosing the right debit card comes down to choosing the right checking account. How a bank’s debit card works is one factor in whether an account suits your needs. For instance, some people may prefer a contactless debit card over other options but will also want to look into such bank account features as monthly fees (if any) and the size of the ATM network.

In addition, different debit cards can suit particular needs, such as:

•   Allowing you to save for qualified medical expenses if you have an HSA

•   Paying for business expenses

•   Giving a gift card as a present

It’s always wise to comparison-shop a bit and compare what a few different possibilities can offer you.

The Takeaway

A traditional debit card is generally tied to a checking account, and purchases made with a debit card are deducted from your account balance. However, these may operate differently (some are contactless, for example) and offer different perks, such as rewards. There are several other types of debit cards, too. These include prepaid debit cards, EBT cards, and HSA debit cards. Understanding the different types of debit cards available can help you make the right choice for your needs.

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.

FAQ

What’s the difference between a debit card and a credit card?

The main difference between a debit card and a credit card is how funds for a purchase are financed. With a debit card, the funds are removed within a short period of time (often almost instantly) from your bank account. In contrast, purchases made with a credit card are funded as a line of credit with the credit card company. Each charge is posted to your account, and you then have until your statement date to pay for the purchases. If you don’t pay off the debt in full within the specified period, you are assessed an interest charge for the privilege of being extended this credit.

Can I use my debit card internationally?

Whether you can use your debit card internationally depends on the type of debit card you have as well as the policies of your bank or other financial institution. Many debit cards are issued by a major processing network such as Visa or Mastercard, and in most cases you can use them internationally, wherever those processing networks are accepted. If you’re not sure if you can use your debit card internationally, check with your bank before traveling.

Are prepaid debit cards safer than standard debit cards?

Prepaid debit cards come with many of the same fraud protections as standard debit cards. One thing to be aware of is that in many cases a prepaid debit card should be treated as cash. If you lose or misplace your prepaid card, you may not be able to access or recover the money that was on the card. With a lost or stolen debit card, if you cancel it quickly, you can have some protection against unauthorized usage.

Photo credit: iStock/Lordn

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. 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.
*Awards or rankings from NerdWallet 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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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.

SOBNK-Q424-013

Online banking offers a convenient way to manage your money. Plus, online banks typically offer attractive perks like competitive rates on savings and no-fee checking accounts. Still, many consumers worry that online banks aren’t as safe, dependable, or customer-friendly as the big traditional players. Are they right to be concerned?

While all types of banks have pros and cons, many fears about online banks are actually based on misinformation. Below, we debunk five common myths about online banks, and uncover some important truths about online vs. traditional banks.

Myth: Online Banking Isn’t Safe

Security is often the largest concern about online banking, and in a world where we’re constantly hearing of data breaches, that’s a valid consideration. But online banks and traditional banks store your data digitally and both are susceptible to data breaches.

That said, both online banks and traditional brick-and-mortar banks go to great lengths to protect your personal and banking information, including the use of encryption software (which blocks your accounts to unauthorized parties) and multi-factoring authentication (which requires you to enter unique personal information in order to access your account). Many online, and some traditional, banks also offer 24/7 account monitoring, instant card freezes, and real-time alerts so you’re aware of any unusual account activity as soon as it happens.

There are also steps you can take on your own to keep your accounts safe (regardless of where you bank). These include choosing a unique user ID and password, not using public wifi when you access your accounts, and avoiding phishing attempts to get your banking information.

Myth: You Can’t Get Help From a Human

Many consumers like being able to walk into a physical location and speak to a real human when they need assistance. And that’s simply something online banks can’t offer. By nature, there are no brick-and-mortar locations; all customer service is virtual. But that doesn’t mean mobile banking doesn’t come with good customer service.

Online banks typically offer phone-based customer service, where you can easily speak with a live customer service representative when there’s an issue or you simply want someone to walk you through setting up bill pay or making an online transfer. In addition, many offer 24/7 customer service via live online chat (with a human not a bot on the other end), as well as help via email. A lack of physical locations doesn’t necessarily equate with a lack of good customer service.

Recommended: How to Deposit a Check

Myth: It’s Hard to Access Money From an Online Bank

It’s true you can’t visit a bank branch and withdraw money at a teller window. But online banks typically partner with wide ATM networks to offer customers a convenient and free way to withdraw cash from their accounts. Some online banks will also reimburse for out-of-network ATM charges, though you may be capped to a certain max per month.

You can also access money in an online account by transferring it to an account at a different bank or using the bank’s bill pay function. If you have an online checking account, you can use your debit card for purchases and may be able to order checks. Some online banks also offer a peer-to-peer (P2P) payment service, so you can send money to friends and family directly from your bank account.

Myth: Online Banks Aren’t Insured

Like traditional banks, online banks are typically insured by the Federal Deposit Insurance Corporation (FDIC). This means your deposits are protected up to $250,000 (per depositor, per insured bank, per account ownership category) if the bank were to go out of business. Co-owners of joint accounts are each insured up to $250,000 for the total they have in joint accounts at an insured bank.

If you opt for an online credit union instead of an online bank, your money won’t be insured by the FDIC but it will still be protected. Credit unions are covered by the National Credit Union Association (NCUA), which offers similar insurance.

Before opening an account at an online (or brick-and-mortar) bank, it’s always a good idea to make sure it’s insured. You can do this by using the FDIC’s “Bank Find” tool or the NCUA’s Credit Union Locator tool.

Myth: The Big National Banks Offer Better Rates

You might assume big banks offer the best deals due to their size and scale. But it’s more likely to be the opposite: Online banks typically beat out the major national banks when it comes to annual percentage yields (APYs) on savings accounts, with some offering 9x the national average.

How do they do it? Online-only banks generally have lower overhead costs and can pass that savings to their customers in the form of higher-than-average yields. Many of these banks also offer better rates as a way to compete with the bigger players for customers.

In addition to better rates, online banks also tend to charge fewer and lower bank fees compared to the big traditional banks. Many online accounts don’t charge monthly service fees, for example, and some don’t charge overdraft fees, either.

Understanding Digital Banking Features and Limitations

Online banks offer several advantages over traditional banks, which often include higher APYs on checking and savings accounts and lower (or no) fees. They also tend to outshine traditional banks when it comes to technical innovation, offering state-of-the art banking platforms and apps.

That said, digital banking does have its limitations. Here are some downsides to consider:

  No branches: Since they lack physical locations, online banks aren’t able to provide customers a way to interact face-to-face with a teller or other bank representative. They also can’t offer services that require a physical location, such as getting a cashier’s check or renting a safe deposit box.

  Cash can be harder to deposit: It’s not always as straightforward to deposit cash into an online bank account. You may need, for example, to deposit cash at a participating retailer for a small fee rather than at an ATM or use another option, such as depositing your cash into a traditional bank account and transferring it to your online bank account.

  Fewer financial services: Unlike large traditional banks, online banks sometimes aren’t a one-stop shop. Some only specialize in a few types of accounts. While others offer a range of products and services, including credit cards and loans, they generally don’t have as many products and services as the biggest brick-and-mortar banks provide.

Recommended: Pros and Cons of Online Banking

The Takeaway

Online banks work very similarly to traditional banks. They just lack physical locations to conduct in-person services. They typically offer the same kinds of checking and savings accounts that you may find at brick-and-mortar banks. And since online banks don’t need to maintain and staff physical locations, they can often offer higher interest rates on both checking and savings. While some people are concerned about the safety and security of online banks, you can feel confident that online financial institutions are just as secure as brick-and-mortar options.

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.

FAQ

Is online banking safer than traditional banking?

Online banking and traditional banking are considered equally safe. Both online and traditional banks generally use robust security measures like encryption, multi-factor authentication, and fraud monitoring to protect customer accounts. In addition, both types of banks are usually insured by the Federal Deposit Insurance Corporation (FDIC), which means your funds will be covered (up to the insured limits) even if the bank were to go out of business.

Can I do everything online that I can do in a physical bank?

You can do nearly everything online that you can do in a physical bank. This includes opening an account, making transfers, paying bills, depositing checks, and managing your account. Many banks also offer one-on-one customer service via phone or online chat. However, certain services like obtaining cashier’s checks, notary services, or large cash withdrawals generally require visiting a physical bank.

How does online banking affect my privacy?

Information that is stored digitally (by an online or traditional bank) could potentially have an impact on your privacy, as online information is susceptible to cyber attacks. However, reputable banks use strong encryption and cybersecurity practices to protect customer data. There are also steps you can take on your own to protect your accounts. These include choosing a unique user ID and password, not using public wifi when accessing your accounts, and logging out of your account after every session.

Photo credits: iStock/AleksandarNakic

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. 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.
*Awards or rankings from NerdWallet 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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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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