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How many savings accounts you should have will depend on your savings goals and money management style. You may prefer the simplicity of having just one savings account. Or, you might find it helpful to have different savings accounts for different savings goals, such as an “emergency fund” and a “travel fund.”

There’s no ideal number of savings accounts to have, nor is there a limit to how many savings accounts you can open. So what’s the right number?

Read on to learn why you may want to have more than one savings account, the pros and cons of having multiple savings accounts, types of savings accounts to consider, and how to manage your savings accounts so you reach your financial goals.

How Many Savings Accounts Should You Have?

There is no one-size-fits-all answer to this question. The number of savings accounts you should have depends on your financial goals and personal preferences. Some people find it helpful to have multiple accounts to separate their savings for different purposes, such as an emergency fund, a vacation fund, or a down payment on a house. Others prefer to keep all their savings in a single account for simplicity.

You might aim to have at least two savings accounts, one for your emergency fund (since you don’t want to accidentally deplete that for another purpose) and one for other savings goals. Or, you might want to further subdivide your savings. For example, you might have savings accounts for:

•   A vacation

•   A home improvement project

•   A down payment for a car or home

•   Holiday shopping

•   A wedding or other event

Reasons to Have Multiple Savings Accounts

Here’s a look at some reasons why you may find it helpful to have more than one savings account.

Separating Your Goals

Having multiple accounts allows you to separate your savings for different goals. This can make it easier to track your progress toward each goal and avoid the temptation to dip into funds earmarked for a specific purpose.

Emergency Fund

Many financial experts recommend having enough money set aside in an emergency fund to cover at least three to six month’s worth of living expenses. This helps ensure you can pay for a sudden expense like a car repair or medical bill without having to run up expensive debt. By keeping your emergency fund in a separate account, you’re less likely to touch it until it’s truly needed.

Tracking Your Progress

If all of your savings are lumped into one account, it can be hard to tell how much you have saved up for different goals, and how much farther you have to go. For example, if your goals include building up your emergency fund, saving for a vacation next year, and making a down payment on a home within three years, it can be unclear how much you’ve put away for each purpose. If you have multiple accounts, on the other hand, you’ll have different balances attached to different goals.

Advantages of Having Multiple Savings Accounts

There are both pros and cons to having more than one savings account. Here’s a look at some of the benefits.

•   Organization: Multiple accounts can help you keep your savings organized and easily accessible for different purposes.

•   Goal tracking: Separating your savings into different accounts makes it easier to track your progress toward each goal.

•   Earning more bonuses: If you set up savings accounts at several financial institutions, you might reap an account-opening bonus (which is usually cash) from each bank or credit union.

•   Get a higher interest rate: Opening savings accounts at different banks could help you take advantage of higher interest rates. For example, your brick-and-mortar bank may pay a lower annual percentage yield (APY) for a regular savings account compared to a high-yield savings account at an online bank.

Disadvantages to Having Multiple Savings Accounts

There are also some downsides to having multiple savings accounts. Here are some to consider.

•   It may trigger fees: Some savings accounts may be fee-free, while others might charge fees if your account dips below a certain balance. If you can’t meet the minimum balance required for each account, you could end up racking up fees by having multiple savings accounts.

•   More difficult to keep track of: Managing multiple accounts can be more time-consuming and require more effort than managing a single account. You may find that monitoring multiple accounts is too much of a juggling act.

•   Potential for errors: With multiple accounts, there is a risk of forgetting about or neglecting some accounts, which could lead to missed savings opportunities.

•   You could lose out on higher interest rates: Some banks have a tiered interest rate structure for savings accounts, meaning you only earn the highest rates once your balance reaches a certain amount. If your money is spread out, you may find it hard to reach the threshold for the best rate.

Types of Savings Accounts to Consider

There are different types of savings accounts you can open, and which one is best will depend on your goals and needs. Here’s a brief look at how they compare.

•   Traditional savings accounts: These accounts are offered by brick-and-mortar banks and credit unions and are designed to be a basic savings option. They typically pay a low interest rate, and may come with a monthly or minimum balance fee.

•   High-yield savings accounts: These accounts offer a higher interest rate than the average for savings accounts. You’re more likely to find high-yield savings accounts at online banks, though some traditional banks and credit unions offer them. In addition to providing higher average APYs, online banks usually charge lower (or no) fees due to their reduced overhead costs.

•   Money market accounts: These accounts are a hybrid of a checking account and a savings account. They pay interest on your deposits and also allow you to write checks or make withdrawals and purchases using a debit card. Money market accounts typically offer higher interest rates than basic savings accounts but may have higher minimum balance requirements.

•   Certificate of Deposit (CD): Certificates of deposit, or CDs, usually pay a higher yield than traditional savings accounts because you agree to let the bank keep your money locked up for a specific term that could range from three months to five years or longer. Should you need to withdraw your money before the CD has matured, you’ll incur an early withdrawal penalty.

Tips on Managing Multiple Savings Accounts

While having more than one savings account may sound confusing, it doesn’t have to be. Here are six tips for making the most of multiple savings accounts.

1.   Use account nicknames. If your bank allows it, consider giving each saving account a title, such as “Hawaii Fund” or “New Furniture Fund.” This makes it easy to identify the account and track your progress.

2.   Look for the best rates. If you’re looking to open a new savings account, see what online banks are offering (thanks to lower overhead, online-only banks often offer the most competitive APYs).

3.   Automate your savings. Setting up automatic transfers from your checking account to your savings accounts will ensure that you’re consistently saving toward your goals.

4.   Use technology to track your accounts. Many banks offer online or mobile banking apps that make it easy to track your savings goals and account balances all in one place.

5.   Resist the urge to dip into different accounts for different needs. For example, try not to touch your emergency fund to come up with cash for a home improvement project.

6.   Stay on top of your financial goals. If your goals change, you might want to adjust how much money is going into each account – and how often.

Recommended: How Much Money Should I Save a Month?

The Takeaway

Ultimately, the decision of how many savings accounts to have is an individual one. While having multiple accounts can offer benefits such as goal separation and organization, it’s important to weigh these benefits against the potential drawbacks, such as fees and complexity.

By carefully considering your financial situation and goals, you can make an informed decision about how many savings accounts are right for you.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Is it a good idea to have multiple savings accounts?

Having multiple savings accounts can be a good idea for several reasons. It can help you organize your finances by separating your savings goals, such as an emergency fund, a vacation fund, or a down payment for a house. Being able to clearly see individual goals and track progress can help you stay committed and motivated to save.

However, having multiple accounts can also mean more fees (if your bank charges them) and more effort to manage them, so it’s important to weigh the pros and cons based on your individual financial situation and goals.

Can you have multiple savings accounts at the same bank?

Yes. Many banks allow customers to open multiple accounts, each with its own account number and possibly different features or benefits. This can be useful for organizing your savings for different purposes or for taking advantage of different interest rates or account types offered by the bank.

What is the cost of having multiple savings accounts?

The cost of having multiple savings accounts can vary depending on the bank and the specific accounts you have. Some banks don’t charge any fees for savings accounts. Others may charge monthly maintenance fees or only charge fees if your account dips below a certain minimum balance. Before you open multiple savings accounts, you’ll want to make sure you understand what fees (if any) may be involved.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

Our account fee policy is subject to change at any time.
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.

SOBK0124038

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It may seem as if having a bank account is a given in life, but actually, it’s not: Some people get rejected and have to work hard (really hard) to attain that privilege. There’s a situation called being blacklisted by banks, and it’s a tough one to overcome.

Granted, for many, having enough money for a deposit and valid ID gives you all you need to open a bank account.

But if you’ve had problems with a bank account before and your screening report reveals those issues, you could be denied. But all is not lost: Take a deep breath and read on. We’ll share:

•   What it means to be blacklisted

•   Why this happens

•   What you can do to earn back the ability to access the financial products and services you need

What Does It Mean to Be on the ChexSystems Blacklist?

Unless you’ve had trouble opening a bank account, it’s possible you’ve never even heard of ChexSystems. Think of ChexSystems as being akin to the credit reporting agencies that determine your all-important FICO credit score. Except instead of keeping track of how well you manage debt the way Equifax, Experian, and TransUnion do, ChexSystems records how well you manage your banking life.

Do you have a history of bouncing checks, overdrawing your account, failing to pay bank fees, suspicious activity, or have had your account closed by a financial institution? If so, it’s likely ChexSystems knows about and is keeping track of those negative activities. Approximately 80% of banks use these agencies’ screening reports when deciding whether to approve a consumer’s application to open a checking or savings account.

Along with your report, banks also may use your ChexSystems Consumer Score to assess your potential risk as a new or returning customer. A score can range from 100 to 899 — and a higher score signifies lower risk.

There’s no official point or score at which consumers are automatically “blacklisted” by ChexSystems or the banks that use its services. Each financial institution determines independently how much risk is acceptable when deciding to open a new account for a client. But if your score is in the lower range, you should be aware that your application could be refused. The reason why: You don’t appear to be someone who will use your bank accounts responsibly.

If you’re planning to open an account and you’re wondering what your current ChexSystems Consumer Score is, you can request it at the ChexSystems website. You’re able to get one free report per year.

What to Do If You Are Blacklisted

So let’s say you’ve applied for a bank account and got rejected. That can be an upsetting feeling. After all, bank accounts — especially checking accounts — are the hub of most people’s financial lives. Paychecks are deposited there, and bills and other debts are paid out of that same account. You may wonder how you will ever get a bank account after being blacklisted.

We have good news: If a financial institution denies your request to open an account, there are a few things you may be able to do to improve your standing. Here are four steps to take.

1. Request a Consumer Disclosure Report

The bank or credit union that declined to open an account for you should inform you which reporting agency (ChexSystems or another) generated the report it used when considering your application. You can then contact that agency by phone, mail, or online to request a free copy of the report. You’ll then take a look at exactly what’s on your record.

2. Report Any Discrepancies

Once you receive a copy of your file, you should be able to see which banks or credit unions provided negative information about you to the reporting agency. If the report doesn’t match up to your experiences, there may have been an error, or the problem could be connected to identity theft. Either way, it’s a good idea to check your own records for any discrepancies and prepare to address what you may uncover.

3. Dispute Any Errors Found

Consumer reporting agencies must comply with the federal Fair Credit Reporting Act. That means they are required to ensure the information they provide is as accurate as possible. What’s more, by law, they can’t include certain types of negative information that’s more than seven years old. (ChexSystems typically keeps negative information on a report for five years.)

If you feel your banking report has errors, is incomplete, or that some negative information is out of date, your next move may be to file a dispute. The Consumer Financial Protection Bureau (CFPB) provides sample letters for contacting both the financial institution that supplied the incorrect data and the agency that included it in its report. Or, you can file your dispute on the ChexSystems website.

Under the Fair Credit Reporting Act, ChexSystems must verify the negative information within 30 days or delete it from your ChexSystems report.

You also may want to get an updated credit report from one or all three of the major credit bureaus to see if there are similar problems there. You can request those reports for free at annualcreditreport.com. If you find anything amiss, you can dispute those credit report errors.

To be clear, your ChexSystems score is not the same as the FICO credit score lenders look at when you apply for a credit card or loan. And the banking reports ChexSystems provide do not include the same information as credit reports. But if there’s inaccurate information in a report about your checking account activity, there may be similar issues with your credit reports — especially if you’ve been the victim of identity theft. If you can catch discrepancies early, you may be able to head off future questions about your creditworthiness.

4. Pay Off Outstanding Debts and Fees

Of course, there is the possibility that the black marks on your report are valid. Maybe you bailed on an account that was overdrawn or had another negative situation. If information on your report was accurate, you still may be able to improve your chances of opening an account. You will probably want to show that you are trying to rectify past problems.

Check with the bank that declined your recent application for an account. A banker there may have some suggestions. It could help, for example, if you can pay off any old fees you still owe to ChexSystems’ member institutions. Once those past bad debts are taken care of, you can ask the bank or credit union that provided the negative information to update that item on your ChexSystems report.

You still may have to wait five years for the negative information to be completely removed from your report. But ultimately, it’s up to each individual bank — not ChexSystems — to decide if a customer’s application will be approved or denied. If the bank sees you’re making an effort to right old wrongs, it may reconsider your application. That’s why connecting with a banker to explain what steps you’re taking can be a move in the right direction.

How to Avoid Being Blacklisted by ChexSystems

Obviously, the best way to avoid getting a low ChexSystems Consumer Score or a negative report is to avoid the activities that could make you a riskier bank customer. If you want to be a good checking and savings account customer, avoid such things as:

•   Bouncing checks or running up too many overdraft fees

•   Having an account closed involuntarily

•   Committing ATM or debit card abuse

•   Being suspected of fraud or illegal activity

•   Opening and closing multiple accounts in a short period of time

But there are other steps you can take to further secure your finances and your financial reputation. Consider these options as well to boost your standing as a banking customer. They can help you avoid being blacklisted.

Monitor Your Financial Health

If there’s information on a ChexSystems report that you weren’t aware of, you may have been the victim of identity theft. Reviewing your accounts regularly could help you clear up problems faster. Even if you don’t have this kind of fraudulent activity on your record, it’s still a good idea to stay on top of your financial profile. Here are some key steps.

•   It’s a good idea to periodically request and scrutinize your free ChexSystems report.

•   You’ll also want to get free copies of your three major credit reports from annualcreditreport.com at least annually. Again, your goal is to make sure that everything is up-to-date and accurate and that there isn’t any fraud or identity theft occurring.

•   It’s also a good idea to regularly check your bank account and credit card statements to make sure there aren’t any transactions you aren’t aware of. Many financial institutions offer online tools and mobile apps that can make tracking your accounts easy and convenient.

•   You may want to set up a low balance alert for your checking account. That way, you’ll get a text or email when your balance reaches a certain threshold, and you’ll know to stop using the account until you make a deposit. That can help avoid overdrawing your account and bouncing checks and/or triggering fees. You also might consider setting up bank alerts for unusual activity, overdrafts, and new log-ins.

Find an Alternative to a Traditional Banking Account

If you’ve been rejected and are worried that you might be unable to open a bank account, don’t give up hope. If your ChexSystems report seems to be blocking you from getting an account, you may have other options.

•   Some banks and credit unions offer what are called “second chance” checking accounts. These typically offer fewer features and higher fees than regular bank accounts to customers who have been blocked by a ChexSystems report or score.

•   There are also some banks and credit unions that don’t use ChexSystems when making decisions on account applications. You might be able to enjoy the same benefits as other account holders, with low or no fees, if you choose to do business with one of those financial institutions. A little online research should show you which banks don’t depend upon ChexSystems.

By investing a bit of time and energy, you should be able to find an account that suits your needs even if you have been blacklisted.

The Takeaway

If a bank denied your application for a new checking or savings account, it could be that you were blacklisted due to negative information on your ChexSystems report.

You still have options, though. If the information on your report is wrong or more than seven years old, you can dispute the negative information and have your report corrected. And if it turns out the negative information is true, you can take steps to remedy the situation and possibly open an account elsewhere. The convenience of a bank account may well be within reach.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Can I open a bank account if I’m blacklisted?

You may have a few options if you’ve been blocked from opening an account. You could try to fix your old problems, and ask the bank to reconsider. You could sign up for a “second chance” account that’s geared to people with a negative banking history. Or, you could look for a bank that doesn’t base its decisions about customer accounts on ChexSystems reports.

How long are you blacklisted from banks?

Every bank has its own policies when it comes to deciding a customer’s account eligibility. But if you have negative items on a ChexSystems report that could cause a bank to decline your account application, you can expect that information to stay on your report for up to five years.

What does it mean when your bank account is blacklisted?

If someone tells you that you have a blacklisted bank account, it generally means you have enough negative information on your ChexSystems report — or a low enough ChexSystems score — that the bank sees you as a risk. They therefore decline to offer you an account.

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Photo credit: iStock/PeopleImages

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

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.

Our account fee policy is subject to change at any time.
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.

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.

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Fintech refers to companies that use new technologies vs. traditional methods in order to deliver financial services. The name is derived from the words “financial’ and “technology,” and the combination has certainly caught on, with 80% of Americans saying they use some form of technology to manage their money.

Read on to learn more about fintech and how it impacts the role of traditional banking.

What Is Fintech?

As briefly noted above, fintech refers to using technology in money management. There are various kinds of fintech, from services that protect your finances online to apps that transfer money. Typically, these services can make it quicker, easier, and more secure to wrangle your finances.

What Types of Fintech Succeed

The fintech enterprises that usually get the most attention (and the most investment money) are the ones that are specifically designed to be a threat to traditional banks.

The hope is that these startups can bring more flexible and faster service, and make traditional banking a more acceptable and even enjoyable experience. There are also fintech businesses that specialize in tracking spending, rounding up your payments to help you save, and simplify money transfers (think of PayPal, for instance).

Where Is Fintech Concentrated?

North America produces the most fintech startups (thank Silicon Valley), with Asia, particularly China, coming in at a close second. Singapore is another major player in Asia and on the global stage, thanks to tax benefits, government assistance, and access to regional markets.

Fintech As Disruptor

Fintech has been chipping away at the formerly sturdy foundation of traditional banks. Mobile banking innovation, artificial intelligence, and other tech tools are leading the disruption parade for brick-and-mortar banks. Many of these traditional banks are working to adopt new services and expand their offerings to stay competitive.

Post-COVID, fintech investment boomed considerably, as people sought remote ways to manage and move their money. In the last year or so, however, KPMG data shows considerable slowing of investment as many technologies have become established as basic services.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Is Fintech Going to Overtake Traditional Banks?

Gartner, a global research and advisory firm, has said that banking as a service (BaaS) will hit mainstream adoption within the next year or two, as banking is transformed by digital technology.

Traditional banks face a risk of failure if they continue to maintain 20th-century business and operating models, but many are adapting and incorporating new technologies.

Banks have been closing branches as people can perform more functions online or via mobile apps. In one recent year, almost 3,000 branches closed nationally. This pace may continue as financial management becomes more digitized.

How Traditional Banks Work

Next in considering fintech vs. banks, take a closer look at traditional banks. These financial institutions usually focus on their business priorities and client services, rather than how to streamline, digitize, and accelerate their business. For retail banks, they may offer checking and savings accounts, home loans, and other services that help in day-to-day money management.

In pursuing these functions, banks are regulated by national or central banks. This can promote a feeling of security, knowing there are guidelines that banks must follow. Fintechs, however, may not be subject to review and regulation in this way.

Also, banks are typically insured by either the Federal Deposit Insurance Corporation (FDIC), and credit unions are covered by the National Credit Union Administration, or NCUA. This can give customers the knowledge that, in the very rare occurrence of a financial institution failing, they are covered for $250,000 per account holder, per account ownership category, per insured institution.

Also, traditional banks provide personalized service. You can go to a branch and discuss your needs or concerns with a customer service rep. You can have that human contact that can be hard to find with some fintech companies.

One last point: Banks typically have a smaller reach than fintech. For instance, a mobile security app could be in a majority of mobile devices across the country. But you might actually keep your money with a local bank that only has a couple of branches.

Fintechs vs Banks

Here’s a little more detail on how fintech vs. banks compare.

Similarities

Both banks and fintech can play a role in the typical person’s financial life. They may allow people to securely store, spend, and save money. They can service to enable transactions, whether paying a friend back for your share of dinner or securing a car loan.

They also each work to meet a consumer need and make finances easier to manage and help customers grow their wealth.

Both traditional banks and fintech can play a key role in both personal banking and the overall economy.

Differences

That said, there are considerable differences. Banks typically hold and lend money, while fintech may simply accelerate a process, make it more convenient, or otherwise enhance its accessibility.

Banks tend to have financial regulations in place, while fintech often does not.

Another point of difference between banks and fintech: Banks traditionally have brick-and-mortar locations and in-person support. For that reason, they may have more limited reach or only operate in a given region.

Not all fintechs offer in-person support, and you may find varying degrees of support by phone, email, and chat. They may, however, have a broader reach since they aren’t limited by location.

Here’s how this information looks in chart form:

Traditional Banks vs Fintech
Similarities	Differences
Both deal with financial transactions	Banks focus on transactional, saving, and lending needs of customers; fintech may focus on other aspects, such as mobile app security
Both aim to improve customers’ money management	Banks are heavily regulated; fintechs may not be regulated at all
	Banks often provide in-person customer support, but fintechs may not
	Banks may have more limited reach than some fintechs

3 of the Latest Fintech Trends

Here are some of the latest trends in fintech:

1. Digital-Only Banks

Influenced by mobile banking, banks with no brick-and-mortar branches are increasing in popularity and acceptance. This year, almost 400 million people are projected to use their services. These banks can be as regulated, insured, and secure as traditional banks, but they often allow for easier, on-the-go mobile management. Because they don’t have branches and the subsequent expenses related to those, they can often pass the savings on to their clients with higher interest rates on accounts, for example.

2. Artificial intelligence (AI)

AI tech can automate data analysis, saving time, money and drudgery. It’s also used to create chatbots to assist in customer service and robo-advisors to help with investing. AI can also help detect fraud by monitoring patterns of customer behavior.

3. Biometric Technologies

Biometric technologies can provide ways to authenticate and protect financial and other digital transactions. Facial recognition is one option; voiceprints and fingerprints may also be used. This kind of technology can make logging into an app or conducting a transaction easier, faster, and more secure. It can help fight bank fraud.

💡 Quick Tip: Want a new checking account that offers more access to your money? With 55,000+ ATMs in the Allpoint network, you can get cash when and where you choose.

Fintech Rising In Developing Countries

In the developing world, not everybody has access to a bank account or a traditional banking system. Fintech banking alternatives can deliver solutions. For example, parts of Africa lack traditional banking infrastructure. For this reason, according to the World Economic Forum, Africa is the world leader in mobile and digital banking.

Mobile phone companies often allow customers to transfer cash-convertible phone credits to each other, too. These phone credits act as a digital medium of exchange — the payment structure and its support fintech is the mobile phone network itself.

Traditional Banks Are Seeing The Future and Feeling The Pain

Traditional financial services are paying close attention. Consumers, especially younger ones, are expecting more technology and personalization when it comes to their financial services. A growing group of entrepreneurs and startups are answering the call.

Many traditional financial institutions are adopting digital and mobile tools to serve their customers’ needs and make the user experience more nimble. This collaboration between traditional banks and fintech could help banks stay relevant.

How Traditional Banks Are Responding

Most traditional banks got with the program at least on a basic level. They know to offer mobile apps, electronic online bill payment, and other digital services. They’re also experimenting with fintech such as voice adaption to pay bills and to make transfers. The challenge remains in keeping these programs safe, fresh, and user-friendly when fintech innovation is happening at such a swift pace.

At least for now, banks may retain the advantage of recognizable brands and large customer bases, particularly older clients who have grown up doing business with human tellers in brick-and-mortar locations.

What they still haven’t completely mastered are faster transaction times, lower costs and a better customer experience. Also, younger generations have grown up using tools like online-only banks, Venmo, and the like, so it may be hard to convince them to bank with a brick-and-mortar institution.

The Need for The Best of Both Fintech and Traditional Banks

As you may have thought, a collaboration between traditional and online banks and fintech services could promise consumers the best of both worlds. Just as you can shop online or stop into a brick-and-mortar store, you may want to do your daily money management via an app but stop into a branch to meet with a loan officer to discuss the different types of mortgages when you are shopping for a home.

The prospect of having the best of both worlds, and having these two types of businesses work to solve customer pain points and enhance their wealth, is an exciting one.

Traditional Banks Are Keeping More of Your Money

While traditional banks continue to attempt to adjust to the digital age, they’re likely not giving customers a break financially. Typically, they pay less in interest when you keep your money with them than, say, online-only banks, or have more requirements (such as loftier minimum deposits and balances) to earn higher rates. Typically, banks make more money when they pay lower interest rates vs. the competition.

An example: Currently, traditional savings account interest rates are averaging 0.47% in March 2024, according to the FDIC. Online banks, however, may pay between 4.00% and 5.36% or even higher.

SoFi Checking and Savings

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What is the difference between a bank and a fintech?

Traditional banks are highly regulated, have brick-and-mortar locations with in-person customer service, and may be limited in their range. They usually offer ways for consumers to save, spend, and borrow. Fintechs can be digital or mobile services, and may focus on just one aspect of finances, such as securing apps.

Why is fintech better than traditional banks?

If a fintech is an online-only bank, it may be more convenient to use and offer higher interest rates on deposits, since it doesn’t have to spend money on brick-and-mortar locations.

Is fintech the future of banking?

Fintech is contributing to the future of banking, but traditional banking, with its regulations and customer service, will likely still have a place in many people’s financial lives in the future.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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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Short of getting a raise, the only way to save more money is to spend less. While that may sound like a bitter pill to swallow, tightening your budget could be a lot easier than you think.

Thanks to the constant allure of consumerism, many of us mindlessly overspend on small recurring expenses that can seriously add up over time. We often don’t realize how much we waste on things we don’t need or, in truth, really care all that much about.

By becoming more intentional in your spending, and cutting out unnecessary costs, you could potentially save hundreds per month with much sacrifice. That’s money you can then put towards things that are important to you, like going on a great vacation, buying a car, or putting a downpayment on a home.

While everyone’s spending habits are different, we’ve got 15 ideas for how to spend less and save more starting today.

Tips For Saving Money

One of the best ways to save money is to take a close look at where your money is currently going each month. You can track your spending by scanning your credit card statements and receipts over the last few months. But a simpler way is to use a budgeting app that syncs with your accounts and keeps track of what you spend in different categories in real time.

Once you have a bird’s eye view of your cash flow, you may realize that you’re spending more than you thought (or want to) in certain categories. You may also find some easy places to cut back — such as getting rid of a monthly subscription you rarely use or switching to a cheaper cell phone plan.

If you want to get started saving right away, we’ve got some simple suggestions for things you can stop buying right now. Eliminating even small recurring expenses can add up dramatically by the end of a year.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

15 Things to Stop Buying If You Are Trying to Save Money

To start saving money right away, stop buying these 15 things.

1. Multiple Streaming Services

With the proliferation of streaming services now available, it can be easy to sign up for more platforms than you can possibly watch. Consider picking one or two services that you actually watch consistently and getting rid of the rest. Or, stagger your streaming services so that you have each one for a few months out of the year. That can give you access to all the shows you want but keeps the price down.

2. Unused Gym Membership

A gym membership can be worth the cost if you’re actively using it. But if you rarely see the inside of your gym these days, it might make sense to cancel your membership and find lower-cost fitness alternatives, such as running/walking outside, lifting weights at home, or following free workout videos on YouTube.

Recommended: 27 Fun Things to Do for Free

3. Premium Cable

Premium cable subscriptions come with a high monthly price tag and often include tons of channels you never watch. To save money fast, think about cutting back to basic cable or negotiating for a cheaper rate with your provider. Or, cut the cord entirely and just use a few streaming services. If you still want live TV channels, consider options like Sling TV or YouTube TV.

4. The Daily Coffee

You may really enjoy your morning (or afternoon) takeaway coffee, but if you add up how much you’re actually shelling out on coffee drinks each month — and year — you might decide that there are better uses for this money. Consider buying a quality coffee maker or French press and (if you don’t have one) a portable coffee mug, so you can make your delicious brew to go at home.

5. Name Brand Items

Generic brands typically have the same ingredients and offer comparable quality to name brands but for a fraction of the price. Whether you’re shopping in the supermarket or a drug store, opt for the generic option whenever it’s offered. This small change can lead to significant savings without compromising your needs or lifestyle.

Recommended: How Much Should I Spend on Groceries a Month?

6. Extended Warranties

These days, you can get extended warranties on practically everything — appliances, cars, electronics, and even homes. While having that extra protection may sound like a good idea, it typically comes at a hefty cost. And, the odds of you using an extended warranty is low. Companies have done the math and generally offer warranties that end before the usual problems crop up — otherwise they would lose money. A better bet: Skip the extended warranty and put that money into your emergency fund.

7. Greeting Cards

Surprising but true: A greeting card can set you back as much as $10. Rather than a canned card from a greeting company, most people would likely rather you share your own words and thoughts. Consider stocking up on a box of pretty cards that are blank inside. You can then personalize and customize each one for any occasion, whether it’s a birthday, baby shower, or wedding.

8. Bottled Water

While keeping bottled water on hand is convenient, the cost can add up, especially if you have a family. A simple way to spend less at the grocery store each week is to give each person in your household their own reusable water bottle to fill with tap or filtered water. You can then take bottled water (and if you really want to save, all store-bought drinks) off your shopping list. This will not only save money but also reduce plastic waste.

9. Impulse Purchases

Those little purchases you make here and there without thinking can add up. Consider setting a 24 hour (or longer) waiting period for any item you have a sudden urge to buy but really don’t need. You may find that the urge passes. Or, try a “no-spend” week or month where you pause all unnecessary spending for a set time period. This can not only save cash but shed light on things you’re buying but can easily do without.

10. Pre-Cut Fruits And Vegetables

Pre-washed and cut produce (and bagged salads) are certainly convenient, but generally cost a lot more than whole fruits and veggies. This is an easy thing to stop buying — prepping produce at home doesn’t take that much time and you may find that your fruits and veggies actually taste fresher.

11. Books

Instead of paying for books, consider getting a (free) library card. This will give you access to countless print, digital, and audiobooks, both at your local library and through partnerships they might have with other libraries and streaming services. This is one of the easiest ways to cut back on spending.

12. Disposable Products

Buying disposable items — like paper plates, plastic cups, napkins, and paper towels — adds up and all of it an unnecessary expense. Consider using real dishware, cloth napkins, and washable cleaning cloths. Your weekly grocery bill (and bags) will get instantly lighter. Avoiding disposable items is also kinder to the environment.

13. Takeout/Delivery

It’s fine to get takeout every once in a while, but if you’re looking to save cash quickly, consider writing off all takeout/delivery for a month (or maybe two). Instead, plan and shop for your meals and do some meal-prepping on the weekend. That way, cooking won’t feel like a chore at the end of a long work day. You’ll end up saving money on food while still eating well.

14. Bank Fees

If your bank charges you monthly maintenance or minimum balance fees, consider switching to a bank that offers free checking and savings accounts. To avoid getting hit with hefty overdraft fees, keep tabs on your balance to ensure you can cover your checks and debits. To avoid ATM fees, plan ahead and stop at an in-network machine before you go out.

💡 Quick Tip: Bank fees eat away at your hard-earned money. To protect your cash, open a checking account with no account fees online — and earn up to 0.50% APY, too.

15. Fancy Cleaning Supplies

Nowadays stores carry a different cleaning product for every spot in your home. There’s tile cleaner, sink cleaner, floor cleaner, window cleaner, you name it. Rather than purchase a dozen different specialized cleaning products, you can simply make your own all-purpose cleaner: Mix one cup of distilled water, one cup of white vinegar, the juice of half a lemon and about 15 drops of essential oil and put it in a spray bottle.

The Takeaway

Everyday items that drain your budget include expensive daily coffee, unnecessary subscription services, takeout/delivery, brand name products, and daily impulse shopping. Once you stop spending money on these things, you should start to see extra money in your checking account that you can now transfer to your savings account — cha-ching!

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

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Photo credit: iStock/pixdeluxe

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

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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If you’re no longer being well-served by your current savings or checking account, it may be time to make a switch. Maybe you’re moving and need a bank with closer branches or ATMs. Or, perhaps you’re annoyed by your current bank’s fees or poor customer service. A common reason for closing a bank account is finding a new account that pays a higher annual percentage yield (APY).

Whatever the reason, closing a bank account isn’t complicated. However, you’ll want to make sure you follow certain steps, in a certain order, to prevent hassles and fees. Here’s what you need to know about closing a bank account.

6 Steps to Closing a Bank Account

While closing a savings account (or checking account) is generally a simple process, it requires more than just contacting your bank. There are a series of steps you’ll want to follow to ensure a smooth transition. Here’s how to close a bank account.

Step 1: Decide Where You Want to Keep Your Money

Before you end one banking relationship, it’s a good idea to have another place lined up to stash your money. You may be able to increase your returns and reduce the cost of banking if you take time to research your options. For example, the top high-yield savings accounts currently have APYs of up to 5% or more — that’s many times higher than the average national average rate of 0.46%.

If you have multiple financial goals and needs, you may want to have more than one bank account. For example, you might open different savings accounts for different objectives, such as one earmarked for an upcoming vacation or large purchase and another for your emergency fund. Just keep an eye out for any fees.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

Step 2: Update Any Automated Transactions

If you have any direct deposits or automatic payments set up, you’ll need to move them to the new account. Check with your employer regarding any forms you need to fill out for direct deposit so your paycheck can be rerouted to the new account.

It’s also a good idea to comb through your statements and create a list of monthly recurring payments, such as automatic payment for loans, insurance policies, credit cards, streaming services, and the like. If you have any annual subscriptions, go through the last 12 months of transactions. A failed automated payment or negative account balance could trigger penalties.

Step 3: Move Your Money

Once your automatic payments are updated and any pending transactions have cleared, you can move your money out of your old account. However, the timing on this is critical: If an automatic payment or outstanding check goes through after you empty the account, you could end up overdrafting the account, which can trigger a hefty fee.

Also, if your bank account has a minimum balance requirement, you may want to wait to transfer money out of the account until just before you officially close the account, so you don’t get hit with a monthly maintenance fee due to a low balance.

Recommended: How Much Money Do You Need to Open a Bank Account?

Step 4: Monitor Your Old Account

After you’ve funded your new bank account, you can begin using it. However, you may want to keep your old account open for a couple of months as you transition to the new account, as long as it’s not costly to do so. This allows you to catch any automatic transactions you forgot to change over.

Step 5: Download Your Transaction Records

Once your account is closed, you likely won’t have access to your transaction history and online statements. If you require any records of your banking activities under the old account (say, for tax purposes), you may want to download your documentation before you officially deactivate your account.

Step 6: Close Your Old Account

Once you’re set up and using your new savings account, you can close the old one.

The exact process for doing this will depend on your bank — some allow you to close an account online or via a phone agent, while others require you to fill out an account closure request form or submit a written request. Be sure to follow your bank’s guidance on the proper method for closing an account.

If you still have money left in your account, you should be able to request a transfer to your new account or receive a check by mail.

Because closed bank accounts can sometimes be reactivated in error and incur fees, it’s smart to get written confirmation of the account closure for your records. You’ll also want to carefully review your final bank account statement for any errors.

Recommended: How to Switch Banks in 3 Easy Steps

Common Reasons for Closing a Savings Account

Here’s a look at some reasons why you might want to close your current bank account and open a different one at the same or a different bank.

•  You’re moving and your current bank doesn’t have branches and ATMs near your new location.

•  Your bank’s hours don’t suit your lifestyle.

•  The bank has policies that don’t work for you, such as minimum balance and service fees.

•  You have multiple bank accounts and want to consolidate.

•  Another bank offers higher interest rates on savings accounts.

•  You want to change from a brick-and-mortar bank to an online bank.

•  You aren’t happy with your bank’s customer service.

•  You’re opening a joint account.

•  You’re switching from a child account to an adult account.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.

Why It’s Important to Close a Savings Account Properly

Once you’ve decided you no longer want or need a certain bank account, it’s a good idea to go through all of the steps involved in properly closing that account, rather than just let it sit around unused. Here’s a look at some reasons why this is important.

Dormancy Fees and Other Penalties

Some banks charge account holders a “dormancy fee” after a period of time without any deposits or withdrawals. These fees can add up over time. Also, if your old bank account charges a monthly maintenance fee when your balance goes below a certain level, you could end up triggering that fee. If you have funds left in your unused savings account, these penalties could deplete them.

Fraud

If you’re not closely monitoring your old bank account, it can be more difficult to spot suspicious activity. Even inactive accounts contain personal information that could be exploited by identity thieves. Closing a rarely or never-used account reduces the likelihood of your sensitive data falling into the wrong hands.

Lost Deposits

If you’ve signed up for direct deposit you don’t receive regularly — your yearly tax refund, for instance — you may forget you’ve done so. And if they one day make a deposit to a savings account you’re no longer using, you may not notice you received that payment.

While there are drawbacks to keeping an unused account open, you may also be wondering: Is it bad to close a savings account? The good news is, closing your account usually comes at no cost. Not only do most banks not charge a fee to close a basic savings account, but doing so will not affect your credit score.

If, however, your account has a negative balance, you will need to repay that at the time of closing the account.

Recommended: What Happens to a Direct Deposit If It Goes to a Closed Account?

Closing a Joint Account

If you’re looking to close a joint checking or savings account, you’ll want to check with your bank about the correct procedure. Some banks allow only one account holder’s authorization to close a joint account, while others require both parties to sign an account closure request or to request an account closure online.

Closing a Child’s Account

A childs’ bank account is designed for kids under age 18. Typically, both the child and a parent or guardian act as joint account holders.

In some cases, a bank will automatically convert a child’s account into a regular account when the child turns 18. In that case, the child/now adult can likely close the account on their own. If a parent or guardian is still the co-owner of the account, however, both parties will usually need to request the closure of the account.

Closing an Inactive Account

An account can become “inactive” or “dormant” if its owner does not initiate any activity for a specific period of time, often two years. If your account has been marked inactive or dormant, you’ll need to reactivate it before it can be closed by the bank. Contact your bank’s customer service to reactivate your bank account. There might also be an option to do this through your online or mobile banking.

Closing the Account of Someone Deceased

Closing the bank account of a loved one who has passed away is generally more complicated than closing your own bank account. The first step is let the bank know of the account owner’s death. To do this, you may need to supply an original or certified copy of the death certificate and, possibly, other documents. The bank can then freeze the account, and stop any standing orders or direct debits.

When you’ve notified the bank about the death, they can let you know what the next steps will be and what other documentation they need to officially close the account.

Recommended: What Happens to a Bank Account When Someone Dies?

How Long Does It Take to Close a Bank Account?

If your bank account has a zero or positive balance and there are no pending transactions, closing a bank account is a quick process. Typically, the bank can close the account as soon as you make the request. If there are still pending transactions or unpaid fees, however, the process can take longer. You will likely need to wait for deposits or payments to fully clear and/or bring the balance into positive territory before you can close the account.

Can You Reopen a Closed Bank Account?

Generally, once a bank account is closed, it can’t be reopened. However, it may be possible to reopen a closed account if it was closed due to inactivity. Also, some banks reserve the right to reopen an account if another payment or deposit comes through.

When closing your account, it’s a good idea to ask the bank about their policy on transactions after an account is closed. If you find out that an old account was reopened due to a new transaction, you’ll want to withdraw or add funds and then close the account again. Be sure to update the person who billed or paid you with your new bank account information.

Does Closing a Bank Account Hurt Your Credit Score?

No, closing a bank account will not have any impact on your credit. Bank accounts are different from credit card accounts and aren’t part of your consumer credit reports. Banks report account closures to the consumer reporting agency ChexSystems. Opting to close a bank account, however, won’t have a negative impact on your ChexSystems report.

Finding an Account That Meets Your Needs

Even if you’ve been with the same bank forever, it’s worth taking a pulse check from time to time to ensure that your current savings and checking accounts meet your financial needs and are helping you get closer to achieving your goals.

If you find an account that offers a higher APY on your deposits and/or charges lower or no fees, it can be well worth making the switch. Closing a bank account is a simple process and there are typically no fees involved.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Does it cost money to close a savings account?

Typically, no. The one exception is if you close your account soon after opening it. Some banks charge something called an “early account closure” fee (ranging from $5 to $50) if a customer closes their account within 90 to 180 days of opening it. However, many banks and credit unions don’t charge early account closure fees. Check the institution’s policy before opening an account.

Can you close a savings account at any time?

Yes, you can request to close a savings (or checking) account anytime. Just keep in mind that some banks charge what’s known as an early closure fee if an account holder closes their account within 90 to 180 days of opening it.

What happens when you close a savings account with money in it?

If you close a bank account but still have money in the account, you should receive a check from the bank for the remaining funds.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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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.

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