woman on couch with laptop

How Many Personal Loans Can You Have at Once?

Technically, there is no limit to how many personal loans you can have at once. Lenders may approve a second or third loan if the borrower has paid off part of the first loan and has a history of on-time repayment.

In fact, it’s fairly common for one loan to fall short of covering all of a borrower’s needs. Let’s say you’re remodeling your primary bathroom. You take out a $5,000 personal loan to cover the costs. But then you discover major plumbing issues that will cost thousands more to fix, making your $5,000 budget woefully inadequate.

What is someone in this situation supposed to do? Even if you can have more than one personal loan, should you? We’ll investigate when it makes sense to take out additional loans, and what the potential risks are.

Can You Have Multiple Personal Loans at Once?

There is no law against having multiple personal loans, either from the same bank or different lenders. However, some lenders limit the number of concurrent loans they’ll extend to an individual. Other lenders have no such limit, but do cap the total amount one person can borrow.

Personal loan interest rates tend to be low compared to the alternatives. So carrying multiple loans at once can be a smart way to avoid the trap of revolving credit.

However, many lenders allow individuals to take out additional loans only if they have paid off part of the initial balance of the first loan — three to six payments, for instance.

Does It Ever Make Sense to Have Multiple Loans?

It’s never a good idea to take on debt unnecessarily, but there are a few situations where taking out an additional personal loan might be your best option.

Let’s say you take out a personal loan to consolidate credit card debt — one of the more common reasons for applying for a personal loan. After a year of making payments, you and your spouse decide to start a family. But you need fertility treatments, which aren’t covered by your insurance. The doctor requires payment upfront and doesn’t offer payment plans. A personal loan may be preferable to running up credit card debt.

Similarly, say you need money for emergency home repairs, veterinary bills, or automotive repairs. If ignoring an expense will cause more financial challenges and emotional stress than taking on more debt, a new loan is a viable option.

Awarded Best Personal Loan of 2022 by NerdWallet.
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Ways Multiple Personal Loans Can Affect Your Credit

Any time you open a new loan, the repercussions ripple out to your credit report in a few different ways. First, opening a loan produces a hard inquiry on your credit report, and remains on it for two years.

Too many hard inquiries will affect your credit score, because the credit scoring models most commonly used will verify how recently and how often you’ve applied for credit. An uptick in both can, in turn, affect the interest rate available to you for a new loan.

Recommended: Can Personal Loans Hurt Your Credit?

Juggling multiple payments is another issue. An additional loan means another bill to pay every month. If you miss any payments — whether on your student loans, mortgage, credit cards, or personal loans — it can have consequences for your credit score. Payment history counts for a whopping 35% of your total FICO® Score. Beware of overborrowing when considering multiple loans.

Other Potential Complications

If you have multiple personal loans and are applying for a mortgage or other type of loan, your application could be denied because of your debt-to-income ratio (DTI). This ratio is calculated by adding up your monthly debt payments and dividing them by your monthly gross income.

Every lender will have different DTI requirements when considering someone for a loan, so check with your lender for specifics.

Getting Multiple Loans From the Same Lender

If you’re considering applying for a second loan from the same lender, you’ll first want to consider the following:

•   Ensure your current loan is in good standing. If you have missed or late payments, your lender can either decline your second loan application or charge you a higher interest rate.

•   Check whether your lender limits the number of outstanding personal loans, or caps the amount you can borrow.

•   Calculate your overall DTI, including any auto loans, mortgage, credit cards, and student loans. If the sum of all your monthly loan payments comes close to 50% of your income, another personal loan may not be in the cards. Many lenders recommend a DTI of no more than 36%.

If you believe you’ll meet the lender’s requirements for a second personal loan — and you feel comfortable making the additional monthly payment — getting an additional loan from the same lender could be the right strategy.

Recommended: Fixed vs. Variable Rate Loans

Qualifying for Another Personal Loan

Getting approved for a personal loan from another lender isn’t much different. While you won’t have to worry about a cap on the number of loans you have or the combined amount you can borrow, you will have to show that your DTI falls within recommended parameters.

The second lender will likely do a hard inquiry (or hard pull) on your credit report. They will see the payment history for your other personal loan, as well as other debt going back seven years. You can prepare by following the guidelines above in the first and third bullets.

Alternatives to Personal Loans

When you need to cover unexpected expenses, personal loans are a great resource — but not your only option. What’s right for you will depend on how much you want to borrow, and how long you’ll need to pay the money back. Here are some alternatives to personal loans you might consider.

•   Credit card. If your credit score is high, you can apply for a 0% APR credit card. The introductory rate is for a limited time — generally 12 to 18 months. If you can pay off the purchase by then, you’ll save a lot on interest.

•   Buy now, pay later (BNPL). Also known as a point-of-sale loan, BNPL gives you more time to pay off a large purchase — from several weeks to several years, sometimes at 0% interest. But terms and fees vary wildly, so make sure you understand what you’re signing up for.

•   401(k) loan. If you have funds in a 401(k) plan, you can borrow against them without any penalties — and the interest you’re charged goes back into your investment plan. This might make sense for short-term loans of 1 year or less.

•   Home equity loan. A home equity loan is a type of secured loan, meaning you offer your home as collateral in the event of default. These loans offer low fixed interest rates for those who qualify, as well as longer terms.

•   Payday loan. Also known as cash-advance loans, these are short-term, high-interest unsecured personal loans provided by small local merchants. Borrowers must show proof of income via a recent paycheck, but no credit check or collateral is required. The risks of payday loans are so great that many states have outlawed them.

The Takeaway

There is no law against having multiple personal loans. However, some lenders limit the number of concurrent loans they’ll extend to an individual, or cap the total amount one person can borrow. If you have two or more personal loans, having a solid repayment strategy helps prevent late payments and other potential problems. One of the simplest methods to avoid late payments is to set up automatic bill pay.

You may consider leveraging technology, such as SoFi Relay, to help keep track of your budget while you pay off these loans. If you’re looking to apply for a personal loan, consider seeing what options are available at SoFi. SoFi’s personal loans have absolutely no fees — no origination fees, no prepayment fees, and no late fees.

Learn more about personal loans at SoFi.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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
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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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What Is a Cashier’s Check & How Do You Get One?

What Is a Cashier’s Check?

Checks may not be as common as they once were, but there’s one kind of check that remains a gold standard in financial transactions: a cashier’s check.

If you’ve never heard of one before or are not sure how they work, you are probably not alone. Cashier’s checks aren’t typically used in most people’s daily banking.

Guaranteed by the bank, these checks are used for special kinds of transactions. They are typically a faster and more secure way to make a payment than using a credit card or writing a personal check. You may need to use one when you’re making a large purchase, putting a downpayment on a home, or completing another major transaction.

Read on to learn more about this financial tool, including answers to these questions:

•   What is a cashier’s check?

•   When should you use a cashier’s check?

•   How much are fees for a cashier’s check?

•   How can you get a cashier’s check?

•   Are there cashier’s check scams?

Here’s the lowdown.

How Does a Cashier’s Check Differ From Other Checks?

Unlike a personal check, a cashier’s check is a check that is issued by the bank or credit union, rather than the buyer (or payer).

Sometimes called an “official bank check,” the funds from a cashier’s check are drawn against the bank’s account rather than the payer’s personal account. This means the bank stands behind the check and guarantees that the recipient, or payee, can deposit or cash it and receive the promised funds.

Here are some more specifics:

•   The person who deposits a cashier’s check generally runs a much lower risk of having the check bounce. In addition to the frustration this can trigger, bounced checks can lead to hefty fees for both parties in the transaction.

•   Cashier’s checks are also considered more secure than personal checks because they are generally harder to forge. Cashier’s checks will have several security measures in place, such as watermarks and color-changing ink, making the possibility of a counterfeit more rare.

•   Cashier’s checks are typically faster than a personal check in terms of when the money also gets transferred to another account. With personal checks, the money doesn’t leave a person’s bank account until the payee cashes the check. That could be days, weeks, or sometimes never (in the event the check gets lost).

   But, when a person goes to the bank to get a cashier’s check, the amount is immediately transferred out of their account and into the hands of the bank. You can think of a cashier’s check like a prepaid check.

The Original Check

Curious about how cashier’s checks came into being? They date as far back as the 1500s in Holland. As an international center of trade, Amsterdam was home to merchants and banks, and many of them didn’t want to lug around bags of cash to conduct business.

Instead, banks held onto customer’s money and when they needed to pay for something, the teller (then called the “cashier”) at the bank would write a check or bill for that amount.

As they say, the rest is history. Check writing was adopted across the continent and evolved from there. Soon, cashiers weren’t the only people writing checks; account holders could too. Then we evolved to having today’s checkbooks.

Recommended: A Complete Guide to Ordering Checks

When to Use a Cashier’s Check

Cashier’s checks can be used in a variety of transactions, but they’re most likely to be used in one of the following scenarios:

High Dollar Payments

Because of their relative security, cashier’s checks are typically used for larger ticket transactions and payments between people (or businesses) that don’t know each other. For instance, if you were buying a used car from a stranger who listed it online, a regular check might not be sufficient. A cashier’s check could be a better option.

Instead of hoping that a buyer has funds available in their checking account, a person can be reasonably confident that a bank has enough cash on hand to pay what’s needed.

Real Estate Transactions

Cashier’s checks are often used in real estate transactions because they’re generally paid out faster than personal checks. The money is guaranteed, and the transaction is more secure.

These checks are often required when a person is making a down payment on a home. Also, a landlord might ask for a cashier’s check for the security deposit on a rental.

In Lieu of Cash

Not unlike ancient merchants, people might use cashier’s checks today to avoid dealing with stacks of cash.

If someone buys something pricey off an online second-hand marketplace, like a boat, the seller might ask for payment to be made in a cashier’s check instead of cash, so they don’t have to count the bills.

When Personal Checks Are Not Accepted

When personal checks are not accepted at a business, the store still might accept a cashier’s check. It can be worth asking if you find yourself in this situation and don’t want to pay in cash.

Cashier’s Check Fees

Cashier’s checks typically aren’t free. You’ll likely have to pay for the privilege of having one created for you. Depending on the policy of the bank or credit union, the cost of getting a cashier’s check can run around $10.

The fee is due at the time of writing the check. In order to cover that cost, the payer will need to have the extra money in cash or available in their bank account, so it can be directly deducted from the account.

There usually is no fee involved for depositing a cashier’s check, however.

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How to Get a Cashier’s Check

Wondering where to get a cashier’s check? You can get one at a bank or credit union, either in person or online.

If you’re going to a brick and mortar bank location, getting the cashier’s check issued shouldn’t take more than a few minutes, provided you have all the required information and documents.

Most banks will only write cashier’s checks for customers who have an account with them. If a credit union member wants a cashier’s check, they can usually get one from any credit union, not just the one they bank with, but ask beforehand to be sure.

If you don’t have a bank account, you may be able to have a cashier’s check written at a financial institution, but you will likely have to bring the funds in the form of cash. For large amounts, this can obviously be challenging.

Some online banks allow their customers to request a cashier’s check online. However, this isn’t as speedy as the process inside a bank branch. Customers will need to request the check, then wait for it to be mailed to them.

The process of getting a cashier’s check will vary based on a person’s bank or credit union. However, a person will generally need:

•   Money in their account. Remember, a cashier’s check immediately deducts funds from the payor’s checking account. That means they’ll need to have the funds available when they write the check. Alternatively, some banks and credit unions allow customers to bring in cash to be converted to a cashier’s check.

•   A valid ID. Typically, a person needs their license, passport or other government-issued photo ID to confirm their identity.

•   Payment information. A person will need to tell the bank exactly how much the check is for. It is important to have the precise amount because that number is printed on the check and cannot be changed.

You also need the name of the payee (the person or business the check should be payable to), and any other details (for example, you may want to add a “memo” or note on the check, such as a reference number).

The Difference Between Cashier’s Checks and Money Orders

Similar to a cashier’s check, money orders are guaranteed funds.

However, money orders can be purchased at many different locations. This includes banks and credit unions as well as post offices, grocery stores, drug stores, and check cashing companies.

On average, money orders have lower fees than cashier’s checks — often customers will only pay a few dollars per order. But money orders also have a limit on their value, they can typically only be made up to $1,000. If you’re trying to put a down payment on a house or buy a used car, this may not cover the amount needed.

If a person doesn’t have a bank account, they may choose to use money orders when transactions require secured funds.

Money orders may seem preferable to cashier’s checks, since they are often cheaper and available in more locations. However, one of the most significant differences between the two is availability of funds.

While cashier’s checks and money orders both guarantee funds, money orders will typically take a little longer to deposit. Generally, with a cashier’s check, a person can expect up to $5,000 within a day. However, with a money order, only $200 may be available within 24 hours after it’s deposited.

Additionally, if the transaction is over $1,000, it might not make sense to use money orders. For example, if someone needs $5,000 in certified funds and the money orders cost $3 each, it would cost $15 in fees. Contrast that with a single cashier’s check, where it might just cost $10 in fees.

Both cashier’s checks and money orders are secure methods of payments, but when the payee needs the funds immediately, they might require a cashier’s check.

Beware of Cashier’s Check Scams

When they’re legitimate documents issued by a bank or credit union, cashier’s checks are relatively safe. If you are selling something of value, you can typically view a cashier’s check with confidence because the bank promises to pay — not just the person who hands you the check.

Unfortunately, not all cashier’s checks are legitimate.

There’s a common scam, according to the Federal Deposit Insurance Corporation (FDIC) , involving what appear to be cashier’s checks. Here’s how they usually unfold:

•   The fraudster sends payment in the form of a cashier’s check for more than the agreed upon amount. The scammer will ask you, the payee, to cash it anyway and simply send the excess money back to them (or to somebody else).

•   Because your bank assumes the check is valid, it allows you to withdraw the funds. You likely would go ahead and send the overage back, as directed.

•   The check is then discovered to be fake, your bank reverses the deposit, and you have been cheated out of that overage amount. Some banks also charge the depositor a returned item fee, even if the account doesn’t overdraw.

Once a victim of this type of fraud sends money to a thief or spends the money, they often have no recourse other than to try and find the scammer themselves — which may not be easy, and might require hiring private help.

Your bank typically does not help. Local police often lack the resources to track down a scammer who may be in another country.

Another kind of bank fraud to watch out for: forged or fake cashier’s checks. With a good printer and advanced graphic-editing skills, some forged cashier’s checks can fool even a seasoned bank teller.

To help combat potential fraud when receiving a cashier’s check from a stranger, it’s a good idea to inspect it prior to depositing it. Look for typos, a bank phone number (check that it works), and common security features like watermarks and a security thread (a thin embedded strip you can detect when the check is held up to light).

Payees can also play it safe by waiting for the check to be completely verified and deposited before spending it (which can take up to two weeks for some cashier’s checks).

Another safeguard is to only accept exact payments in a cashier’s check. If you must take a check for more than the amount due, you may want to inform the seller that you’ll wait at least two weeks before returning any of the money.

Recommended: How to Verify a Check Before Depositing

The Takeaway

Cashier’s checks are checks that banks issue and guarantee, and they are often needed for large purchases, like a car, or the down payment on a house. These checks are printed by your bank or credit union and include the name of the recipient (or payee) and the amount of the check.

When compared to personal checks, cashier’s checks are generally more secure for sellers because the checks shouldn’t bounce. But sellers need to be on the lookout for fakes, which can cause serious problems.

Cashier’s checks might be the norm for some transactions, but there are other secure ways to send money. With a Checking and Savings online bank account with SoFi, users can send money quickly and securely to anyone right from the app. All you need to initiate a transfer, is the receiver’s phone number or email.

That’s not the only advantage to having an online bank account with SoFi. Our Checking and Savings, when opened with direct deposit, will pay you a super competitive interest rate which could help your money grow faster.

With no account fees and up to 2.00% APY, you’ll earn more interest in one week than you would in one year in a big bank’s checking or savings account — so you can get the most out of your money.

FAQ

How can you get a cashier’s check?

Cashier’s checks are available both online and in-person from your financial institution. You will need to be able to verify your ownership of your account as well as provide details on the amount of the check and exactly to whom it should be written.

What’s the purpose of a cashier’s check?

A cashier’s check is a fast and secure form of payment, typically used for big-ticket items like the down payment on a house or buying a car or boat. With these checks, the bank, not the account holder, is guaranteeing the funds, making them significantly more reliable than standard checks.

How safe are cashier’s checks?

Because cashier’s checks are guaranteed by the bank writing them, they are a very secure form of payment. That said, it’s important to be aware of the scams out there in which forged and fraudulent documents that look like cashier’s checks are used. Educate yourself about these scams so you can avoid getting cheated.


Photo credit: iStock/TARIK KIZILKAYA

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.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 2.00% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 1.00% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. Rate of 2.00% APY is current as of 08/12/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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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How to Transfer Money From One Bank to Another

You probably find yourself wanting to transfer money from one bank to another on a regular basis. Maybe you’ve opened a high-yield savings account at a new bank and want to set up regular payday transfers from your existing checking account.

Or, perhaps you need to get money to someone else, such as a friend or family member, which also requires a bank-to-bank transfer.

These are just a couple of examples of situations that can have you wondering, “How can I transfer money from one bank to another?” Fortunately, a variety of ways to do this are available, depending on whether you are moving money within a single bank or to a different one, along with other factors. Here, you’ll learn the fastest, least expensive, and most secure ways to get funds where you need them to go, including:

•   Directly making an online transfer from one bank account to another

•   Writing a check

•   Making a peer-to-peer transfer

•   Completing a wire transfer

•   Working with a third-party company

•   Making an email money transfer

How to Transfer Money Between Banks

Here’s a look at different ways to transfer money to someone else or to another account that you own. You’ll also learn which method is best for each situation.

1. Directly Making an Online Transfer From One Bank Account to Another

If you want to transfer money from your account at Bank A to your account at Bank B, follow these steps:

•   Log into Bank A’s account, then choose the option to “add an account,” “link account,” or “add external account.” You can often find these options, or something similar, in your bank’s “customer service” or “transfers” menu.

•   Bank A will likely ask for the routing number (a nine-digit number) and account number (eight to 12 digits) for bank B. You can find these numbers on a check, typically along the bottom (the routing number comes first, followed by the account number, then the check number). If you don’t have checks, you can also find the bank’s routing number on their website and your account number on your monthly statement.

•   To prove that the account at Bank B belongs to you, Bank A may ask you to input the username and password you use for Bank B. Another way Bank A may verify the account is to make a small deposit (maybe a few cents) and ask you to confirm the amounts, a process that might take a day or two to complete.

•   Once the account is confirmed, you can choose an amount you want to transfer from Bank A to Bank B and the date on which you want it to occur. You can also choose to make it a one-time transfer or a recurring transfer (such as once a month). You can then select the option to submit your request.

These steps will work whether you are transferring funds to a brick-and-mortar bank or to an online-only financial institution.

Transferred funds typically arrive at their destination in two or three business days. The timing will depend on which banks you use and whether you are moving money internationally or domestically.

While transferring money between linked bank accounts at different institutions is often free, you might be limited in the amount you can transfer each time. It can be a good idea to check your financial institution’s rules for bank-to-bank transfer limits.

2. Writing a Check

If you want to transfer money from your bank account to someone else’s bank account, you will likely need to find an alternative bank transfer solution.

You may be asking yourself if checks are useful. Perhaps you don’t have any checks on hand and are wondering if you should order a checkbook. That may be wise; here are some ways you can use checks to move money around:

•   Writing a check is still a good way to make a bank-to-bank funds transfer. When you write a check, you are authorizing your bank to transfer funds to the recipient.

•   You can also make a check out to yourself by entering your own name as the payee. This can be a good option if you are closing out a checking account and want to transfer the remaining funds into a new account. If you take advantage of mobile deposit, you can write a check from one account and deposit it into a different account without ever leaving home. That little rectangle of paper’s job is to transfer money from one bank to another, and it will get it done.

You may want to keep in mind, however, that writing a check is not an instant money transfer. It can take a few business days for a check to clear and be available in the new account.

Also, if there aren’t sufficient funds in the account to cover the amount, your check will bounce, and the payment won’t go through. You may also be charged a fee. To avoid this glitch, you’ll want to make sure you have sufficient money in your account before writing a check.

3. Peer-to-Peer Transfer

Whether you’re reimbursing your roommate for the monthly rent or splitting dinner with a friend, a peer-to-peer (P2P) money transfer service or app can be a good solution.

Services like Venmo and PayPal can offer some advantages:

•   They are easy to use, and once your bank account is linked in the app, you can quickly type in a dollar amount, select the recipient, and hit “Send.”

•   These services are typically free if you fund the payment from your bank account. There may be a fee, however, if you fund a transfer with a debit card or credit card. Many banks offer free or inexpensive P2P transfers through Zelle or a similar vendor.

Worth noting, however, is the fact that some payment apps may limit the amount you can transfer in a day or within a week, and some do not allow international transactions. Before using a P2P service, It can be a good idea to familiarize yourself with the company’s fees, timing, and limitations.

4. Wire Transfer

If you need to send a considerable amount of money to someone quickly and/or the recipient is located overseas, it’s useful to know how to wire money using a wire transfer. Here are some specifics:

•   A wire transfer is one of the fastest and most secure ways to transfer money electronically from one person to another. It can be done through a bank or a nonbank wire transfer company, such as TransferWise or Western Union.

•   Wire transfers are convenient because you can make them over the phone and online as well as in person.

•   Wire transfers can be extremely fast. If you are making a wire transfer to another bank in the U.S., the funds may be available within one business day or even a few hours. Sending money to a bank in another country may take more time to process.

•   There is usually a fee involved in making a wire transfer. For outgoing domestic transactions, the charge could be as high as $35; international transfers are often between $35 and $50.

Since wire transfers are not reversible, you’ll want to make sure you are sending money to the correct recipient and not a scam artist. To make a wire transfer, you’ll likely need to have the recipient’s bank name, routing number, and account number.

Recommended: The Biggest Money Scams in the U.S.

5. Third-party Companies

Another option to send money domestically and overseas is to use a third-party wiring service like MoneyGram or Western Union. Here’s how these work:

•   These companies do not require you to have a bank account to take advantage of services such as money transfers, money orders, and bill pay. You can fund your transaction using cash or perhaps a credit card.

•   Pricing varies widely depending on factors such as where money is sent from, where it is delivered, whether it’s paid in cash or wired to a bank account, and how fast the money is delivered. International transfers tend to be more expensive than domestic transfers.

Recommended: How to Send Money With A Credit Card

6. Email Money Transfers

Some banks will allow you to make email money transfers, an online service that allows you to send money between bank accounts using an email address. A few details to consider:

•   Recipients are notified of the transfer via email, though the funds are actually sent through traditional bank transfer channels. Popmoney and Zelle are two companies banks commonly partner with to provide these services.

•   You can usually make email money transfers directly from your bank’s app.

•   These transfers are typically free and can be instantaneous, though the speed is determined by the banks involved.

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How to Transfer Money from One Bank to Another at a Glance

Here’s a quick look at your options when you want to know how you can transfer money from one bank account to another. Included are such factors as cost and timing.

Online Transfer

Check

Peer-to-peer Transfer

Wire Transfer

Third-party Transfer

Email Money Transfers

Cost Typically fee-free. Check with your bank Banks may charge for boxes of checks Free domestically Up to $30 for domestic transfers, and up to $50 for international transfers Fees vary. May range from $5 to $50 Free
Timing Up to three days Usually take 1-2 days to clear May take a few minutes or a few days depending on the service Typically 24 hours for domestic transfers, up to 5 days for international Speed varies by fee, from immediate to multi-day transfers Varies by bank, but often immediate

There May be Limits on How Many Transfers You Can Make

You can typically make as many transfers into a savings account as you would like, but there may be some limitations when it comes to taking money out of a savings account.

Online withdrawals from savings accounts were once governed by the Federal Reserve’s Regulation D . Some banks are still enforcing the legacy limit of six withdrawals per month and will charge an excessive withdrawal fee for each transaction over the limit. Or they might convert your savings account to a checking account.

It can be a good idea to check your financial institution’s rules before you try to transfer money from a savings account into a different account. Transfers count as one of the kinds of withdrawals that may be limited.

The Takeaway

There are multiple ways to transfer money from one bank to another. The best option will depend on where you are sending the money, whether or not you own both accounts, how quickly you want the funds moved, and how much (if any) in fees you are willing to pay.

Options typically include online and email transfers, wire transfers, third-party services, checks, and P2P apps like Venmo. Isn’t it nice to know that there are so many bank-to-bank transfer options to help you get funds where you want them to go, at the speed and price you want to pay?

Banking Made Simple With SoFi®

SoFi Checking and Savings is a high yield online bank account that makes managing your money easy, and that includes transferring funds. You can use the app to quickly transfer money to another person’s account. If the recipient is also a SoFi Checking and Savings account holder, they’ll get access to that money immediately. Plus, SoFi helps you bank smarter on other fronts: Set up direct deposit, and you can earn an incredible 2.00% APY and pay zero fees!

Find out how easy it is to bank with SoFi.

FAQ

What is the easiest way to transfer money from one bank to another?

Online transfers, email transfers, and P2P apps can all make moving money very convenient; no checking writing is required, nor do you need to fill out as many forms as you might have to for wire transfers or when using a third-party service.

What is the safest way to transfer money from one bank to another?

While all methods of moving money have security features, wire transfers are generally thought to be one of the safest ways to send money from one bank to another.

How do I transfer money from one bank to another bank manually?

If you are using a banking or P2P app, you typically will need to type in the details of the account you are sending money to, the amount, the date you want the transfer to occur, and then verify that the specifics are correct. If you have cash in hand that you want to deposit in another person’s account and don’t want to use an electronic method, you might consider a third-party service like Western Union.

Is it free to transfer money from one bank to another?

Whether or not it’s free to transfer money from one bank to another depends on the method you select. An online, email, or P2P transfer and writing a check (excluding the postage to mail it) can be free; check details with your particular provider.


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 2.00% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 1.00% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. Rate of 2.00% APY is current as of 08/12/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
Third-Party Brand Mentions: 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.
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.
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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Guide to Electronic Checks (E-Checks)

From cash to credit cards to payment apps to cashiers checks, there’s no shortage of ways to make payments these days. One option that’s falling somewhat out of fashion? Paper checks. One modern alternative is to use an electronic check, which functions similarly to an old-school check but is managed completely digitally.

What is an electronic check? Keep reading to learn more about how this popular payment method works, including:

•   What is an electronic check or e-check?

•   How does an electronic check work?

•   What are the pros and cons of e-checks?

•   How do electronic checks differ from credit card payments and wire transfers?

•   Are e-checks safer than traditional checks?

What Is an Electronic Check?

An electronic check (also known as an e-check) serves the same purpose as a traditional paper check but works digitally. When someone uses an electronic check, the amount they wrote the check for will be withdrawn from their (the payer’s) checking account and will be transferred via ACH network to be deposited into the payee’s checking account.

The ACH (Automated Clearing House) network is an electronic network that U.S. financial institutions utilize to make payments digitally—eliminating the need for paper checks.

Recommended: How to Verify a Check Before Depositing It

How Does an Electronic Check Work?

An electronic check works in much the same way as a traditional paper check. It’s possible to use electronic checks to make a variety of purchases and payments online. Someone can use an electronic check to make significant recurring payments such as their monthly rent or loan payments. It’s fairly common for businesses to make it possible to make purchases using an electronic check. Here’s why: This method helps them avoid the processing fees required to accept credit card or debit card transactions. This is especially popular with small businesses who are hit harder by these fees.

It can take about three to five days for an electronic check to process. Why does it take so long? To start, the funds have to be verified as actually being available to make the purchase and then need to be cleared by the ACH. Next, the funds have to be deposited and made available to the recipient so they can withdraw the funds from their bank account.

There are two main ways a consumer can use an electronic check. These are the options, which are slightly different but achieve the same result:

•   Fill out an online payment form with information such as checking account number (whether you have a standard or a premium checking account), payment amount, and bank routing number. The payer will then submit the payment to the payee, thereby authorizing them to withdraw the check amount from the payer’s checking account.

•   Complete an automated online process that involves inputting payment information and bank account information and then authorizing the payment.

Processing Electronic Checks

Processing an electronic check works is similar to processing a paper check. It may move along faster (you don’t mail an e-check, for instance), while eliminating the use of paper which leads to waste. The exact processing time will vary, depending on the institutions involved; funds might be made available the next day, or (as noted above) it might take a few days for the payment to clear. Paper checks typically take two days or somewhat longer to clear.

These are the steps that occur to process an electronic check:

•   Approve authorization. The payer needs to authorize the payee to complete the transaction. Usually this is done over a recorded phone call, an online payment form, or a signed order form.

•   Set up payment. Once the purchase is authorized, the payee can add the payment information included on the electronic check and form into their online payment processing software. If the payer wants to set up a recurring payment, they can specify what that recurring payment schedule is.

•   Finalize and submit payments. After all required information is added to the payment software, the payee can submit the payment and begin the ACH transaction process.

•   Deposit the funds. The payment will be withdrawn from the payer’s bank account and deposited into the payee’s account. At this point, the payer should receive a payment receipt confirming the payment went through.

Recommended: How to Balance Your Account Monthly

Advantages of E-Checks

These are some of the advantages associated with electronic checks.

•   Electronic checks are usually protected by more security measures than paper checks like multi-factor authentication, digital signatures, and multiple forms of digital encryption which helps protect against hackers.

•   It’s unlikely that the payment amount can be altered or changed like on a paper check (by adding extra zeros).

•   Electronic checks are likely less expensive than paper checks as the payer doesn’t have to pay to order them, buy stamps to mail them, or spend gas money to drive and deliver them to the payee. Fees for a business to process electronic checks are also cheaper and only costs about $0.10 compared to $1 for paper checks. (Worth noting: Sometimes, there may be fees for cashing a paper check for consumers as well.)

•   There can be less work involved to deposit the check on the payee’s side since the payment goes through digitally.

•   This payment method may process a bit faster than paying by paper checks (although a paper check known as a cashiers check typically pays very quickly).

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Disadvantages of E-Checks

There are not many disadvantages associated with electronic checks, but some people may be concerned about these issues.

•   Hackers may try to gain access to them.

•   Not all merchants may accept them (although many do).

•   Paper checks can be signed over to someone else, which can in some situations make them more convenient than an e-check.

Another point to consider: If you are the kind of person who likes to write checks to yourself or to cash, you probably can’t do this with electronic checks.

E-Checks vs Credit Card Payments

Electronic checks and credit card payments can feel similar since they are both cashless and don’t require you to write a paper check to process a payment. However, they do function differently.

•   An electronic check pulls funds from a checking account, while a credit card payment means the payer borrows money to make a purchase. That also means a payer who uses an e-check avoids interest charges if they are the type to carry a balance on their credit card.

•   While electronic checks rely on the ACH to process payments, credit cards use credit card networks for their processing.

•   Making payments with a credit card can lead to earning rewards like travel points and cash back. Electronic checks typically don’t earn any rewards.

Recommended: What Is a Second-Chance Checking Account?

E-Checks vs Wire Transfers

Electronic checks and wire transfers may sound similar, but they function differently. Here are some ways they differ:

•   A wire transfer electronically transfers funds from one bank account to another, but doesn’t use an ACH network to do so.

•   Electronic checks are usually cheaper than a wire transfer, which can cost as much as $50 in some situations.

•   Wire transfers may process faster than electronic checks. If a wire transfer involves two accounts at the same institution, funds can arrive within hours.

Are E-Checks Safer than Traditional Checks?

As noted above, electronic checks are seen as a more secure option than paper checks as there are more protections in place surrounding them. Because electronic checks are created and processed without “hard copies,” there are less opportunities for the check to be stolen, lost, or altered fraudulently.

Banking With SoFi

Electronic checks are an easy and convenient payment method. As a bonus, e-checks can process faster than paper ones and are usually more secure. These can be good reasons to use these financial tools and enjoy more efficient, less stressful banking.

Which is also what SoFi is all about. When you open an online bank account with direct deposit with SoFi, you’ll pay no fees and enjoy a terrific 2.00% APY. Those two factors mean your money could grow faster with us. Plus we make everything about banking, from opening an account to transferring funds, convenient.

Bank smarter with SoFi.

FAQ

How do you pay with an electronic check?

There are two main ways to pay with an electronic check: Either by filling out an online payment form or completing an automated online process. Both of these options are typically secure payment methods.

How do I send an electronic check?

Typically, you would either fill out an online payment form with your banking information and the payment amount or complete an online process and input your payment information and bank account information. In both cases, you, the payer, needs to authorize the payee to process the payment.

Can you get scammed with e-checks?

E-checks are usually viewed as a safer payment option than a paper check. The process involves fewer gaps in which fraud can occur. Also, there isn’t the opportunity for an electronic check to become lost or stolen, the way a paper one might. There are also additional security measures in place to help prevent digital fraud with e-checks.


Photo credit: iStock/kazuma seki

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 2.00% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 1.00% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. Rate of 2.00% APY is current as of 08/12/2022. Additional information can be found at http://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.
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How Families Can Afford to Travel on Vacation: Budget Friendly Travel Tips

How Families Can Afford to Travel on Vacation: Budget Friendly Travel Tips

As travel returns to pre-pandemic levels, some families might be considering their vacation options for the near future. In a recent report, Expedia Group found that 81% of respondents planned on taking at least one vacation with family or friends in the next six months.

However, a family vacation not only requires additional logistical planning, it often calls for financial planning, too. Here’s a look at how to afford a family vacation.

Calculating the Cost of Family Vacations

Cost is an inevitable part of planning a trip with your family. When calculating the total cost of your next family vacation, make sure to consider the following expenses:

•   Airfare (roundtrip)

•   Car rental (and/or gas)

•   Accommodations (including taxes and fees)

•   Food and drinks (whether dining out or meal prepping)

•   Activities

•   Souvenirs

•   Travel insurance

•   Miscellaneous costs (e.g. parking fees, passport fees, currency exchange, etc.)

Additionally, you’ll want to account for expenses incurred at home, such as pet-sitting costs, and lost wages if you don’t have paid time-off available for some or all of your vacation days.

By having the total cost of your family vacation in mind, you can better plan ahead and ensure you’ve appropriately budgeted to cover all of your costs. From there, you can more strategically allot the funds you’ve saved or the different credit card rewards you’ve accrued.

Recommended: Can You Buy Crypto With a Credit Card

How to Take a Family Vacation on a Budget

Being a frugal traveler with your family in tow is, of course, an added challenge, but there are ways to make your next vacation more affordable.

Recommended: When Are Credit Card Payments Due

1. Have a Strict Budget

After tallying up your essential monthly expenses, such as your rent or mortgage payment, bills, and other household expenses, see how much of your discretionary income is left.

Using that number, break down how much you’re able or willing to allot toward the travel categories listed earlier. Although your budget in each subcategory can be somewhat fluid, make sure your total family travel costs don’t exceed your maximum budget.

2. Keep a Dedicated Vacation Savings Account

An important part of creating a travel fund is ensuring that your vacation savings isn’t accidentally tapped into for anything other than your trip goal. One way to avoid this is by opening a high-yield savings account that holds savings exclusively for your next trip.

3. Use Credit Card Bonuses and Miles

If you already use a rewards credit card for many of your day-to-day purchases, applying your earned cash back rewards and miles toward your trip is a must. This can help shave down your costs, especially if you stash up your rewards earnings for a while in preparation for your trip.

As another bonus, your card may offer credit card travel insurance, which can help protect you against any unexpected financial losses when you’re away.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

4. Be Flexible With Travel Dates

The travel dates you choose for your trip greatly affects the total price of your family vacation. If you’re willing to be flexible about when you travel, you might be able to save a good amount.

Compare flight costs on weekends versus weekdays to find travel deals. Also consider traveling during the shoulder season or off season. This can be more affordable than traveling to your destination during peak season when other families are arriving in high volumes.

5. Explore All-Inclusive Cruises

Exploring cheap cruises is another way to afford a family vacation. All-inclusive cruises offer families a package deal that generally includes food and non-alcoholic drinks, as well as activities that adults and children can enjoy on board.

Some cruises even offer “kids sail free” promotions that offer a complimentary pass for children under a certain age on specific booking dates. (Taxes and fees will still apply though.)

6. Find Ways to Budget on the Trip

Once your family arrives at your destination, cut costs on variable expenses, like food and beverages, as well as activities. Find ways to meal prep, like assembling sandwiches for lunch while on vacation, or focusing on shareable meals, like pizza, that can be split with the family.

Additionally, research free or low-fee activities to do ahead of time. For instance, you could take a free walking tour of the city, visit tourist attractions that offer free children’s or elderly admission, and more.

7. Travel in Groups With Other Families

Coordinating a vacation with other families is an effective budget family travel option. For example, as a group, you might decide to split the cost of food, gas, and accommodations for the trip. If your group is large enough, certain attractions might also offer group discounts for admission.

8. Be Flexible With Your Destination

Although your preferred destination might be known for a particular setting, like nature or an urban sprawl, chances are that you can find an alternative destination that provides the same sentiment for less.

If you’re on a budget, consider what your dream destination offers. Family beach options in Mexico, for example, might be more affordable than a beach trip to the Maldives.

9. Work a Side Gig for Extra Income

Bringing in supplemental income is another way to afford a family vacation, if you plan ahead of time. Consider your own skills and expertise, such as tutoring, crafting, or freelancing.

Offer your services through platforms, like UpWork, or within your local community for a fee. Use the extra money you earn toward your family trip.

10. Leverage the Sharing Economy

Innovative sharing communities are another way that families afford to travel. For example, to save money on hotels, consider a modest Airbnb with a full kitchen or kitchenette where meals can be affordably prepped.

There are also domestic and international house-sitting opportunities that your family can participate in through sites like Nomador and Mind My House.

Are Timeshares Worth it in 2022?

One option that some families consider for future travel is a timeshare. A timeshare is a vacation property wherein you — and other people — purchase the right to use it at a specific time. Generally, when it comes to budget family travel, timeshares are not always the best option.

Although a timeshare simplifies certain aspects of your travel planning, such as deciding on a destination or finding accommodations, it can be restrictive in other ways. For example, your timeshare dates might not align with your available days off. Or you might want to change your destination later, and time shares can be difficult to sell, if needed.

Recommended: How to Avoid Interest On a Credit Card

Tips to Avoid Debt While Going on a Family Vacation

Although you can pay for your family vacation on a rewards credit card and earn credit card points in the process, proceed with caution. Like any large expense put on a credit card, your total debt can balloon if you don’t have the savings or income to pay it back quickly and start to rack up interest charges.

As much as possible, avoid putting your next family vacation on your credit card. Instead, give yourself ample time to save up toward your trip. Also, don’t forget to apply your any credit card miles or cash back that you’ve earned toward your travel bookings to immediately cut your out-of-pocket travel expenses toward flights, accommodations, or car rentals.

Recommended: What is a Charge Card

The Takeaway

Creating cherished memories with your family through travel can be more challenging when you’re on a budget. However, you don’t have to spend thousands of dollars to accomplish this goal. With a solid budget and using strategic tips to cut travel costs, like using credit card rewards to travel for less, you can plan a vacation that fits your needs and your financial situation.

For instance, the SoFi Credit Card offers cardholders 2% unlimited cash back rewards when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1 It also doesn’t charge foreign transaction fees, making it a handy companion for families traveling abroad.

See if you qualify for a SoFi credit card today.

FAQ

How do people afford to travel every year?

Dedicating a portion of your budget each year toward travel might be possible if traveling is a priority and you’re planning a realistic vacation within your means. Calculate how much discretionary income is left after you’ve allocated funds toward non-negotiable expenses, like monthly rent and bills. Once you have an approximate number, explore your options based on your budget.

How much does it cost to travel the world with a family?

The cost to travel the world with your loved ones varies greatly. Factors like the number of adults and children in your party, your destination, the duration of your trip, when you travel during the year, and your travel activities will all determine how much you’ll spend.

How much does the average family spend on travel per year?

The average person in the U.S. expects to spend an average of $2,353 on their next vacation, according to Expedia Group. For a family of four, that’s as much as $9,412.

How do I get enough money to travel?

Taking on extra shifts at work, selling things you no longer use, earning extra income through a side hustle, and cutting your existing non-essential expenses are all popular ways to save money for travel. However, you’ll need to find a tactic that works for your financial situation and lifestyle.


Photo credit: iStock/Nutthaseth Vanchaichana
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.
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
.

The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) 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.
1See Rewards Details at SoFi.com/card/rewards.
Third-Party Brand Mentions: 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.
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