Car payments can take a significant bite out of your monthly budget. According to Edmunds, the average monthly car payment in the second quarter of 2023 was $733 for a new vehicle and $569 for a used vehicle.
While knowing the average car payment can be helpful, keep in mind that the actual amount you’ll pay on a car loan will depend on multiple factors, including the loan amount, interest rate, type of car you buy, your credit score, and the length of the loan.
So how do you know if you’re getting (or you got) a good deal? Read on to learn more about average car payments and what to do if you’re paying too much — or more than you can currently afford.
Every auto loan has an annual percentage rate (APR), which is the annual cost you’re charged by the lender for borrowing money. A loan’s APR includes the loan’s base interest rate plus any added fees, so it represents the true cost of the loan.
In the second quarter of 2023, the overall average auto loan APR was 7.1% for new cars and 11% for used cars.
The actual APR you receive for an auto loan will be based on several factors, including your income, credit history, and credit score. Typically, your credit score will have the greatest influence over the rate you’ll get, since lenders use it to gauge how likely you are to repay the loan. Generally speaking, the higher your credit score, the lower your car loan APR will be.
For example, the average APR for someone with a credit score between 781 to 850 is 5.18%, whereas the average rate for someone with a credit score between 300 and 500 is 14.08%
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What to Do if Your Car Payments Are Too High?
If you’re paying more than the average car loan payment, or simply more than you can comfortably afford, here are some ways you may be able to lower your payment.
• Refinancing When you refinance a car loan, you replace your current loan with a new one and hopefully lower your car payment in the process. You may be able to qualify for a lower APR on a new loan and/or extend your loan term, which can lead to a lower monthly payment. Keep in mind, though, that if you extend your loan term, you may end up paying more in total interest over the life of the loan.
• Selling or trading in your car If your car is beyond your budget, you might consider selling it and then buying a cheaper car. Trading it in at a dealership can be the simplest option, though you might get a better price with a private sale. Just keep in mind that selling a car that has a loan attached to it can be complicated. You‘ll want to check with your lender to make sure you aren’t breaking any terms of your loan contract.
• Making extra payments whenever you can Consider putting the occasional windfall (such as a tax refund, bonus at work, or cash gift) toward your loan principal. This will reduce the total amount that you owe, which, in turn, can lower your monthly payments. Before you try this tactic, however, make sure your lender will apply extra payments directly to your loan’s principal and not to interest.
If your car payment is lower than the average, that doesn’t necessarily mean you won’t benefit from refinancing. This is especially true. If your credit has improved or rates have dropped since you originally took out your car loan.
You might also be able to lower your monthly car payments if you initially received your loan from the dealer. APRs offered by car dealers tend to be higher than those offered by banks and credit unions. If you took out your initial loan through dealer-arranged financing, refinancing with a different lender could potentially get you a lower rate, and a lower monthly payment.
If your budget is stretched and you really need to lower your payments, refinancing to a longer repayment term can help lower your payments, even if you don’t get a lower interest rate. Just be aware that you’ll pay more in total interest because you are extending the length of the loan.
💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.
Using a Personal Loan to Refinance an Auto Loan
Many people assume that the only way to refinance an auto loan is with another auto loan. But that’s not necessarily the case. In fact, taking out a personal loan can be an option worth considering, particularly if you have excellent credit and can qualify for low APRs.
Personal loans are available through banks, credit unions, and online lenders and can be used for virtually any use, including debt consolidation, home repairs, and other large purchases. This makes it different from an auto loan, which can only be used to pay for a car.
If your auto loan rate is higher than the rate you can receive on a personal loan, using a personal loan to refinance your auto loan may be a way to lower your car payments.
Another reason you might refinance with an unsecured personal loan is that these loans don’t require that you use your car as collateral. That means if you’re unable to make your payments, you won’t lose your vehicle (though your credit score will likely take a significant hit).
Also, if you plan to sell your car, it can be complicated to sell a car with an auto loan attached. If you use a personal loan to pay off your car, you’ll receive the title from your auto lender, which enables you to sell it more easily.
For a personal loan to make sense for an auto loan refinance, however, you’ll need to qualify for a low rate. Just like you shopped around for an auto loan, it’s a good idea to compare personal loan rates, terms, fees and borrowing limits to ensure you find a lender that will best fit your needs.
As you compare lenders, consider a SoFi Personal Loan. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
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You’ve likely made some impulse purchases in your life — or at least purchases you later realized weren’t all that wise or well thought out. It can be easy to get caught up in the excitement of buying something new or “just marked down,” that you lose sight of your better instincts — not to mention your budget.
One way to avoid making impulsive or bad buying decisions is to hit pause just before you make a purchase to ask yourself a series of simple questions. This extra step forces you to step back and honestly consider how the potential purchase fits into your life. You might ultimately decide you don’t want the item after all. And, if you do decide to buy it, you can feel confident that you’re doing it for the right reasons.
9 Questions To Ask Yourself Before Buying Something
Knowing some key questions to ask yourself before you buy something can help ensure that you spend according to your values and cut down on purchases you’ll regret later. After all, the last thing you want is to spend money on things that don’t really enhance your life — and may add to your debt (especially if you’re already paying off some debt).
Here are some key pre-purchase questions to consider.
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1. Is This a Want or a Need?
A great first question to ask is whether your prospective purchase fulfills a need or is just something you want. If it’s an item you need — and you can afford it — then you might just go ahead and buy it. If, on the other hand, it fills a want, it’s a good idea to continue vetting the purchase with the questions that follow.
2. What Do You Gain From Buying This?
Consider what you hope to gain from making the purchase. Is it the admiration or approval from other people? Does someone you know or follow on social media have it? Is this something that will genuinely improve your quality of life?
Research suggests that people feel more satisfied when they spend money on things or experiences that mean something to them and reflect their values.
Though retailers will often make you think you need to act quickly (due to low stock), there’s a good chance that the items that you’re thinking of buying will still be available at a later date. If you’re feeling pressured to buy due to a limited-time sale, keep in mind that sales pop up all the time. Waiting for the next one could save you even more money, as you may decide you don’t really want it that much.
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4. Can You Get It Used or for a Better Price
If you’re thinking of pulling the trigger on a full-price item you don’t need right away, consider whether you may be able to find a better deal. For example, you might:
Buy Used
If you’re looking at a piece of equipment (like sports, exercise, or baby gear) or furniture, keep in mind that you may be able to find it in great condition on a second-hand marketplace online or even a yard sale.
Find Discounts
While buying used is not everyone’s cup of tea, buying on sale should be. These days, there are websites and apps that can help you do quick price comparisons to find the best deals. Some apps will even alert you when the price for a wanted item drops.
5. Do You Own Something Similar?
If you were to look at what you already own, you might be surprised to find how often you purchase nearly the same items over and over again. Buying similar items is totally understandable. We all know what makes us comfortable and what we tend to wear or like, so we gravitate to similar-looking clothes, shoes, home decor, and so on.
If you already have several coffee mugs, jean jackets, baskets, whatever that are similar to your prospective purchase, you may want to pass.
Sometimes there is a clearcut reason to make a purchase, even an impulse purchase. You might be at a store and remember you need hand soap or a certain tool to make a repair. But if there isn’t a clear reason for making this purchase right now, you may want to pass.
If you will only use or wear the item you’re thinking about buying once, or even a handful of times, you may want to rethink the purchase. It’s possible you can get by with something you have, can rent the item, or can borrow it from a friend or neighbor. This can end up saving you money — and potential buyer’s remorse.
8. If the Item Was Full Price Would You Still Buy It?
A sale price can make an item look particularly appealing. You might even think you’d be a fool to pass it by. But it’s important to put the price tag to the side for a moment and consider whether or not you really want and love the item. Would you even be considering it if it were full price? If the answer is no, it’s likely you can forgo it.
9. Would It Be Better To Put the Money Elsewhere?
If you can ask yourself this question, then you’ve arrived. You’re thinking of the big picture and wondering whether there may be other things that are more important than what’s in front of you. This involves delaying gratification and knowing how to control your spending habits.
The Psychology Behind Reflecting Before Purchasing
One common reason why we shop for new (and often similar) things is because we don’t fully appreciate the things we already possess. But there is a way you can turn this psychology around.
Before you make a purchase, consider whether or not you already own something that can fulfill the same purpose. If you do, next think about whether there is a reason you need something similar. If you can’t, you can probably easily pass on the purchase. The process of reflection not only avoids an unneeded expense but allows you to re-focus on the item you already have and appreciate it more.
How Budgeting Can Curb Compulsive Spending
Creating a budget involves looking at where your money is currently going and making sure that your spending aligns with your priorities. There are many different kinds of budgets but one simple framework is the 50/30/20 rule.
The idea is to divide your monthly income into three categories, spending 50% on needs, 30% on wants, and 20% on savings (and debt payments beyond the minimum). This set-up helps curb compulsive spending because you only have so much “fun” money to spend each month. It also allows you to spend money without feeling guilty, since it’s baked into the budget.
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Budgeting and Saving With SoFi
If you like the idea of managing both your spending and saving all in one account, take a look at SoFi.
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.
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FAQ
How do you determine if you should buy something?
A good first step is to determine whether a prospective purchase fulfills a need or is simply something you want. If it fills a need, you can go ahead buy it, as long as you can afford it. If it’s a want, you might next consider why you want to buy it. Also think about whether you may already have something similar, and whether the money might be better spent on something else.
Should a budget include flexibility for impulse purchases?
Yes. A budget will typically allot a certain amount of money just for “fun” each month. This frees you up to make the occasional impulse purchase without feeling guilty or worrying that it will hurt your long-term financial health. In fact, building in flexibility to your spending plan can help you stick with it.
What questions should you ask yourself before buying something?
Some key questions to ask yourself before you make a purchase include:
• Do I need it?
• What do I gain from buying this?
• Do I own something similar?
• If the item was full price would I still buy it?
• How often will I use it, really?
• Could I get it used or for a better price elsewhere?
• Is there a better way I could use this money?
How do you stop impulse buying psychology?
One effective strategy is to establish a waiting time before you make any discretionary purchases. If you see something you want to buy, put the purchase on pause for a week (or more). Tell yourself that if, at the end of the waiting period, you still want the item and can afford it, then you can go ahead and buy it. You may find, however, that by delaying gratification (and the purchase), you lose interest in the item and opt not to buy it after all.
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.
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It’s never too early to start learning smart strategies for managing one’s money. Most teens don’t get a formal education in topics like budgeting, investing, and choosing the right financial institution for their money, which is a missed opportunity.
That’s why it can be especially important for young people to take steps to build their own financial insights and skills. That can mean understanding the right amount to save and spend when earning a salary; what the challenges of managing credit can be; and how to invest money wisely.
This guide covers these aspects of financial literacy and more. Consider it a smart starting point as you build your money knowledge and know-how. Whether you’re thinking about buying your first car, affording college, or starting your own business someday, you’ll learn some of the key steps to bring your financial life into focus.
Why Is Financial Literacy Important for Teens?
Sad but true: Most people are launched into adulthood without being educated on personal finance. What’s more, in many households, money isn’t a topic that’s freely discussed, so kids don’t grow up hearing about how much their parents earn, spend, or save.
These are factors that can make it a challenge to gain financial knowledge and money management skills. However, learning about how to budget, save, invest, and spend wisely when young can set you up on the path to achieve your short- and long-term goals. That’s why you’ll learn some financial tips for teenagers right here.
The sooner you understand your way around money, the earlier you can get on the path to, say, travel around Europe for a summer, manage student loan debt, or even start saving for your dream house.
💡 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.
5 Key Financial Tips for Teens
Making the most of your money as you start on the path to your independent life doesn’t need to be complicated. Here are five important financial literacy concepts for teens.
1. Opening a Bank Account
Financial planning for teens often starts with having a bank account. Not only will a bank account make it easier to cash those birthday checks from Grandma, it also provides a place to monitor money and start saving.
Most bank accounts billed as “teen accounts” are really just joint bank accounts, because teenagers under 18 typically need a parent or guardian to also be an account holder. This makes it possible to open a bank account for a minor.
Although it’s sometimes easier for teens to open an account at the same place their parents bank, it may be worth researching which banks in the area have the best benefits for teenagers specifically. Some points to know:
• The age for opening up an account varies from bank to bank, so make sure to check specifications on the bank’s website beforehand.
• Valid identification like a student ID, driver’s license, passport, birth certificate, and/or social security card is also required for account owners when opening a teen checking account.
• In some cases, a parent or guardian must be present to open the account, but some banks do offer the opportunity to open an account online. This will often require uploading the same documents to prove your identity.
• Some banks also offer parental controls, setting withdrawal and debit card limits, or even text alerts about account activity. Before opening an account, it may be worth considering what is most important and beneficial — definitely talk it over with a parent or legal guardian.
• Learning about any fees or minimum balances from the bank is also important step in personal finance for teens. Make sure to ask the right questions in person or check out the bank’s fee structure on their website. Ideally, you might want an account with no fees and the ability to earn a bit of interest (many checking accounts pay no interest). You are typically more likely to find such offers at online vs. traditional banks.
• Having a bank account means access to making deposits and withdrawals, plus online banking tools that can help with money management.
A word about debit cards: A teen checking account typically offers access to a debit card, which allows account holders to take out cash from ATMs and use the card for purchases in stores or online.
And since a debit card takes money directly out of the checking account for payments, it may help to download the bank’s mobile app, if available. This can help with checking account balances and, at some banks, setting up alerts if the account falls below a certain balance.
A bank account is a great first step in learning money management, whether it’s using a debit card, checking balances, transferring money, or setting up a direct deposit for paychecks. Especially with a new job, a weekly or bi-weekly paycheck comes with learning more financial responsibility. With a personal bank account, teens can pick up crucial financial skills before turning 18.
And, at many banks, once someone does turn 18, the account can turn into a standard checking account, which they can either choose to keep or leave for a new banking institution. (Important note: There may be new fees, so it’s important to keep an eye on what those might be.)
2. Budgeting For Teens
Another financial tip for teenagers involves learning how to balance income and expenses. Making a simple budget can help keep things on track. Whether it’s keeping tabs on a monthly allowance or income from a part-time job, knowing how much money is spent versus how much money gets made is a key part of money management. Plus, a budget can show how much money is available to save every month.
Many banks with mobile or online banking offer simple budgeting tools, such as categorizing money into simple buckets like “spendable” or “set aside.” One pretty practical budget suggestion is the 50/30/20 method. This helps to simplify spending categories: rather than trying to decipher every transaction and having hundreds of small budgets for individual items, the 50/30/20 method just divides monthly income into thirds.
• 50% of income would be put toward necessities, such as bills and other regular spending that’s hard to do without. For teens, this might mean car-related expenses, like insurance and gas, or a monthly cellphone bill. If 50% seems like a lot — especially if parents are still paying for big expenses like groceries and housing — consider putting an extra 10% into savings or other financial goals for now.
• 30% would be allocated for day-to-day spending, like going out to eat with friends, entertainment, shopping, and other fun activities.
• The remaining 20% would be allocated for financial goals, usually savings or debt payoff. Maybe this can be the start of a college fund, or saving up for a big purchase in the future?
3. Smart Savings
In tandem with having a budget, learning how to save money is an important part of financial planning. Opening both a checking and savings account may make it simpler to put money away.
Since a debit card is only tied to a checking account, that’s like an added buffer from the money in a savings account. Plus, learning to regularly transfer money into a savings account can help create healthy money habits.
When you have a regular paycheck, one of the simplest ways to save more is to set up direct deposit to divide the funds between a checking and savings account. If 20% automatically goes directly into savings, it requires little extra thought each pay period.
Automating your savings in this way takes away the need to manually transfer money. This can help eliminate any mental gymnastics surrounding the desire to spend money in your checking account immediately — it’s like it was never there in the first place.
Plus, in an emergency, a connected savings account can help prevent overdraft fees. If college is in the plans, saving now could mean taking out fewer loans in the future.
In fact, this thinking can be applied to any money goal, whether it’s a new phone, car, or a big post-graduation trip. Saving now can make it easier to achieve later.
💡 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.
4. Being Cautious With Credit
Financial tips for teens are full of dire warnings about the perils of credit cards. But learning early on how credit cards work and how to manage credit is also part of mastering money management. Building credit now may open more doors in the long run.
For example, establishing a positive credit history can help make it more likely to successfully secure a loan for a car or rent an apartment down the road.
One way for teens to start is to get added as an authorized user on a parent’s credit card. The authorized user gets the benefits of the credit card and building credit history without the responsibility of being the primary cardholder and making payments.
However, since late payments may impact both credit scores, teens can also set up an arrangement to pay off any debt incurred using the card each month.
In fact, it’s getting harder for people under the age of 21 to get a credit card, because federal law under the Credit CARD Act of 2009 requires credit card issuers to verify that the applicant has the following before a credit card is issued:
• A cosigner’s signature. The cosigner can be a parent, guardian, etc. as long as they are able to pay the applicant’s debt from the card.
• Official financial information proving that the applicant can repay the debt on their own.
The submitted application must be written. And if a person under 21 is approved for a card, they can’t get a credit limit increase without written approval from the cosigner.
Eventually opening an individual credit card without a cosigner, of course, means a lot more financial responsibility. Paying a credit card in full each month, as opposed to carrying a balance, is an important financial habit to get the hang of, as paying in full each billing cycle means the cardholder won’t pay interest on a balance and it can help build credit score.
Until then, an authorized user receives a separate credit card in his or her name, but there may be no need to even use the card. Just having it issued can help build credit if the main cardholder is keeping up with their payments. As credit builds, it’s smart to monitor credit reports and scores for errors or fraud. It might be a good idea to start monitoring credit through a free site like FreeCreditReport.com .
5. Setting Up a Side Hustle
If a part-time job or summer gig isn’t an option just yet, whether due to age, school work, or other restrictions, there are other options for earning extra cash. One of the benefits of a side hustle is being able to bring in income. And any income, however small, could help build good personal finance habits like budgeting and saving.
For ideas, look to needs in the community, such as assisting older adults with technology, babysitting, tutoring, or lawn care. Helping on a moving day, walking dogs, or washing cars are also great ways to step up from a beginner’s lemonade stand.
You might also consider your hobbies: Do you paint landscapes in your free time? Make jewelry? You could possibly sell your work to bring in some cash.
For those nearing college and looking for a part-time or entry-level job, it may be worth considering a company that offers tuition support or reimbursement for their employees.
Building smart financial planning skills now may make it even easier down the road when starting a full-time job — with budgeting and saving.
Can You Invest as a Teenager?
Many teenagers are curious about investing and how they might build wealth that way. Here are a few things to know if you’re wondering how to invest as a teenager:
• If you are under age 18, you cannot be the sole owner of a standard brokerage account.
• With adult supervision, you may open what is known as a custodial account. This means that the adult oversees the account while you are under 18. When you turn 18, you can likely take over control of the account with the adult’s approval.
By collaborating with an adult in this way on investments, you can learn the basics and begin to experiment. The conventional wisdom is that, the younger you are, the more risk you can afford to take with investing, since you have time to recoup any losses and ride out the ups and downs of the market.
Just do keep in mind that investment does have inherent risk, as your portfolio isn’t insured the same way money in the bank is.
Once You Are Old Enough to Invest, Where Do You Start?
If you are old enough, here’s how to invest as a teenager. Keep these tips in mind:
• Do your research. There is plenty of information about investing available online, via apps and classes, in books, on podcasts, and beyond. Find reputable resources and educate yourself on how to invest money as a teen. This can include both principles of investing as well as different kinds of investments to consider.
• Set goals. When you begin investing, it’s wise to figure out your goals, and you may indeed have more than one. Perhaps you want to invest in the short-term to help generate money to pay back student loans. And maybe you also want to begin saving to start a business when you are 35. Those different goals and timeframes can influence how you invest.
• Opening a brokerage account. Once you are old enough, you will have a choice about the sort of account you open and how it is managed. Whether you want to work with a financial professional or try robo advising, spend time understanding the pros and cons of your options.
When you make a decision, you’ll be ready to invest money as a teenager, but it doesn’t have to be set in stone. You can shift gears and try other methods as well.
Making Smart Money Moves With SoFi as a Teen
While SoFi doesn’t offer bank accounts for minors, take a look at what we offer for when you are of legal age to open an account. Or, if you are age 15 or older, see if you might be added as an authorized user to an adult’s account.
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 should high school students know about financial literacy?
It is important for high school students to learn about opening bank accounts, budgeting, saving, managing credit wisely, and bringing in income.
How can a 16-year-old invest money?
A 16-year-old typically cannot open their own brokerage account. However, they can open a custodial account with a trusted adult.
How would you invest $1,000 as a teenager?
A teenager typically cannot invest money on their own; they would have to open a custodial account with a trusted adult. Then, they would have to identify a goal for the funds (to generate income ASAP? To grow slowly for use later in life?) and select the right kind of investments.
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.
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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People shop for all kinds of reasons — to acquire the things they need or want, to browse stores for new and interesting finds, and (sometimes) for the little thrill that comes with snagging a great deal.
For some people, however, shopping crosses the line into unhealthy territory. If you tend to hit the stores every weekend, spend the majority of free time planning for and making purchases, and/or have have tallied up some major debt as a result of your frequent shopping, you may actually be addicted to shopping.
Known as oniomania or Compulsive Buying Disorder (CBD), shopping addiction is a behavioral disorder that involves compulsive buying as a way to feel good and avoid negative feelings like stress and anxiety. Like other types of addictions, a shopping addiction can take over as a preoccupation that leads to problems in other areas of your life.
Read on to learn some of the signs of being a shopaholic and ways to curb the habit.
4 Shopaholic Symptoms
People who are addicted to shopping often get a sense of emotional relief right after buying something. They also tend to spend more time and money on shopping than they can afford, and many get into financial problems — such as large amounts of credit card debt — as a result of their overspending.
Below are four signs that you may be addicted to shopping.
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1. Experiencing a Rush of Excitement When You Buy
Shopaholics generally shop not because they really need something but rather for the sense of euphoria they experience when they’re shopping.
Similar to a drug addiction, compulsive shoppers will often experience a “high” or an adrenaline rush from the act of purchasing something. The brain then associates shopping with this pleasure and the person wants to try and recreate that feeling over and over again.This pattern can be used by a shopaholic to fill an emotional need or override a negative emotion.
2. Experiencing Post-Shopping Regret
Unfortunately, the high shopaholics experience is typically short-lived and later gets replaced by negative feelings, including shame, remorse, and guilt.
Shopaholics will often feel guilty after spending money, whether they splurged on something expensive or snagged something on clearance. Despite any remorse that follows, though, they tend to be good at rationalizing any purchase if they’re challenged.
Buyer’s remorse can force a shopaholic back into a negative cycle, since they know shopping is a surefire way to chase away negative feelings, at least temporarily.
Though shopaholics enjoy shopping, they often don’t care all that much about their purchases when they get home or when their online orders arrive in the mail. In fact, the items they purchase often end up unopened and shoved in the closet or under the bed.
Those living with a shopping addiction can actually develop hoarding tendencies as they accumulate more goods than they need and yet continue buying.
4. Concealing Shopping Habits
Shopaholics will often try to conceal their shopping habits from their spouses, family members, coworkers, and friends. This is often due to feelings of shame and/or the fact that they are shopping and spending money at the expense of their job or loved ones.
Normal Shopping vs Compulsive Shopping
If you enjoy shopping and make the occasional splurge, does that mean you are a shopaholic? Not necessarily. There are several distinct differences between normal shopping and compulsive shopping. Here’s a side-by-side comparison of normal shopping versus compulsive shopping.
Normal Shopping
Compulsive Shopping
No addictive or compulsive component
Resembles addictive behavior
Purchases are needed and used
Purchases are often not needed and go unused
Typically isn’t followed by negative emotions
Often followed by guilt, remorse, and shame
Does not lead to financial problems
Continues despite negative financial consequences
No secrecy involved
Secrecy is often involved
Occasional splurges
Frequent overbuying
Treating Compulsive Shopping
If you feel you have a shopping problem, don’t despair. It’s never too late to address the issue and regain control of your spending. Here are some strategies to try.
Understanding Your Triggers
Consider keeping a journal of how you feel when the shopping urge hits: Are you bored? Angry? Anxious? Do you feel the desire to buy new things after you spend time with a certain person, spend time on social media, or watch certain shows on TV?
Tracking your triggers can provide insight into what drives you to want to shop and how you can better manage (or avoid) those triggers in the future.
Overcoming any addiction typically requires learning alternative ways of handling the stress of everyday life. You might come up with a list of non-shopping activities you find relaxing and enjoyable, such as calling a friend, watching a movie, reading, going for a walk, listening to music, or engaging in a hobby. You can consult your list when you get the overwhelming urge to shop. This can help you break the cycle of using shopping as a way of trying to feel better about yourself.
Another way to deal with impulsive or compulsive shopping is to establish a waiting time before you make any purchases. If you see an item you want to buy, put the purchase on pause for a week (a 30-day pause is even better). Tell yourself that If, at the end of the waiting period, you still want the item, and can afford it, then you can go ahead and buy it. You may find, however, that by delaying the purchase, you lose interest in the item and opt not to buy it after all.
Seeking Expert Help
If you think you may be addicted to shopping and can’t seem to get a handle on it on your own, it can be worth seeking professional help.
A mental health professional may be able to help you understand the emotional roots of your compulsive shopping and offer strategies to help you overcome the problem. In some cases, medications like selective serotonin reuptake inhibitors (SSRIs) can help alleviate underlying mental health problems that could be contributing to a shopping addiction.
You might also benefit from financial counseling, particularly if your shopping behavior has left you in debt. A financial advisor can help you set up a spending budget that allows you to pay off expensive debt, while also building — or rebuilding — your savings.
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Letting Your Savings Grow With SoFi
You can manage both your spending and saving all in one account with a SoFi Checking and Savings 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 are the signs of being a shopaholic?
Signs that your shopping habit has crossed the line into an addictive behavior include:
• You shop primarily to feel happy or to relieve stress.
• You often buy things you don’t need or can’t afford.
• You’re always thinking about things you plan to purchase.
• You often obsess or stress over shopping for a specific item.
• You often feel regret or guilt about things you’ve purchased.
• You have a closet full of unopened or unused items from previous shopping sprees.
• You hide your shopping habits from others.
• Your financial situation is suffering because of your shopping.
What is the root cause of shopping addiction?
Negative feelings, such as stress, anxiety and loneliness, are often the underlying causes of shopping addiction. Shopping can provide a distraction from these unpleasant emotions and help you feel more in control. It can also elicit a kind of psychological “high,” which is why compulsive shoppers often seek this behavior out again and again.
How do you cure a shopping addiction?
People who are addicted to shopping often respond well to various treatments, including:
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.
Shopping is part of daily life and often a fun experience (glossy stores, cool new items to try, and a way to fill a rainy afternoon), but it can impact your budget in some not so wonderful ways. That’s where smart purchasing habits come into play.
If you know some clever ways to rein in overspending and snag good deals, you can help ensure that shopping doesn’t blow your budget. In fact, if you learn how to shop smarter, you may be able to avoid excessive credit card debt, save regularly, and reach your financial goals.
Habits like comparison shopping, using coupons and discount codes, and knowing how to hit the pause button can all contribute to improving your buying style. Here, you’ll learn nine effective strategies to try that won’t leave you feeling deprived.
9 Tips for Building Better Buying Habits
Here are nine tips for building better, more mindful purchase habits.
1. Having a Financial Goal in Mind
Motivation is a wonderful tool. To kick off better consumer habits, you may want to think about what your financial aim is and what you want to save money for in the first place.
This could be as small as wanting to save money for the perfect new handbag or to go to a hot new restaurant for an omakase dinner.
Or, it could be something much larger like saving for a vacation, a wedding, a home, or even for retirement somewhere down the line.
Having a financial goal might make it easier for you to sidestep an impulse purchase or spend money on something you don’t actually need.
To double-down on this habit, try writing down any and all financial goals in a notes app, diary, or even on a piece of paper. Then, stick it in your wallet or mobile phone case so it’s with you wherever you go. Tempted to tap or swipe your way to an impulse purchase? Check that note, and think twice.
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2. Giving Every Purchase — Big or Small — a Little Time
Sometimes all it takes to reverse a buying decision is to just sit and think about it for a second. Is this new dress really all that great, and will it be worn more than once? Do you truly need a new mobile phone just because a flashy new model was released? Here are some tactics to try to decide whether or not to buy:
• Try the “take a walk” method, which is to literally leave a store, go for a walk, and think about the item a bit more. This way, the initial adrenaline rush and excitement can wear off just a bit so you can clearly consider the purchase with fewer emotions attached.
Then, come back, look at the item again. If it still elicits butterflies, then it could be worth the purchase. If not, that’s great. Confidently walk away.
• Want to take this habit to the next level? Try the 30-day rule. Just as the name implies, those looking to purchase anything nonessential must put the product back on the shelf and step away for a full 30 days. Put a note in your calendar, and if you still want the item after a month, you can then buy it (finances permitting), knowing it will bring them a little more joy.
Here’s one more trick to try when using the 30-day rule. Over the 30 days, try saving little by little to purchase the item. At the end of the month, if you decide that product is no longer needed, that cash could be put right into savings.
If taking a walk isn’t an option, try a different method for forging better consumer habits. It may be time to come up with a personal spending mantra. This could be a saying like “Keep the memory, get rid of the object,” or Marie Kondo’s question, “Does this spark joy?”
You can briefly focus on your mantra before making any purchase. This can help determine if that object really deserves to take up space in your life and in your monthly budget.
4. Learning to be a Comparative Shopper
Shopping around can be another way to improve your purchase habits. You never have to settle for the first price tag you see. Spending wisely can mean finding a better deal, often with just a quick online search.
To become a great comparative shopper, you can start small by investigating prices on everyday purchases like groceries. Try looking up a price comparison for milk between high-end grocery stores versus the neighborhood grocer vs. a discount store. Then, think about monthly expenses like the internet, cable, telephone bills, and even things like gym memberships or subscriptions.
Can you find a better price for any of these items or negotiate the price down? Could you wait for a sale to kick in? Go for it, and save along the way.
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5. Falling in Love With Coupons and Discount Codes Again
Another better buying habit to adopt: Take a minute when shopping to find a few coupons to use in physical stores and discount codes to use online.
Here’s how to coupon for beginners: Look online. There are a number of coupon websites such as RetailMeNot, Coupons.com, and The Krazy Coupon Lady that can help shoppers hunt down a few discounts when they need them.
There are also services like Honey, which is an extension you can add to your dashboard that will automatically scour the web for discount codes and plug them right in at checkout.
Long story short, don’t settle for the first price.
A hole in a sweater, a scratched coffee table, and a tiny crack in a dish can be enough to send some people hunting for an entirely new item to replace the old.
However, rather than tossing something just because it’s a little worn, it’s can be wise to learn how to give things a new life. Or, find an expert who can.
For example, rather than buying all new shoes just because the tread is a little worn down, try bringing them to the local cobbler (aka shoe repair). They may be able to replace the thread for a fraction of the price of new shoes. This same idea goes for big-ticket items too.
Consider keeping a maintenance calendar for things like a car’s oil changes, a home’s roof inspections, and more. That way, things will always stay in tip-top shape for longer, and you may, say, save money on your car or home repair costs.
7. Understanding Shopping Triggers
To create better spending habits, it can be worthwhile to take a bit of time to self-reflect and discover why you like to spend money in the first place.
• Do you suffer from FOMO (fear of missing out), spending and buying things because friends, family, or a favorite influencer is sporting it on social media?
• Do you shop when bored, as a way to add excitement to an otherwise dull day?
• Do you tend to shop when you are feeling sad or stressed? Retail therapy is a common way to lift a mood, but it can have an impact on your financial standing.
It can be important to delve into why you shop. That insight can then help you so you avoid triggers that could lead to overspending.
Doing so could also help you rein in habits that make you a compulsive or impulsive shopper.
8. Getting in on the Financial Buddy System
Here’s another tip for improving purchasing behavior. Everything’s better with friends — and that includes developing better spending habits. Here’s an example of the power of pairing up:
• According to one landmark study by researchers at the University of Aberdeen, Scotland, people who work out with a friend are more likely to hit the gym more often than those who choose to work out alone.
That lesson can easily be applied to finances too. Find a trusted friend or family member who can offer advice or simply understanding and support as you cultivate better shopping habits.
Make a pact to call one another every time either of you needs a second opinion about making big purchases or when you need someone to talk you out of an impulse buy.
9. Knowing Where Money Is and Where It’s Going
A major part of creating better buying habits is understanding where your money stands and where it’s going. Don’t shy away from making a personal budget. Tracking apps (perhaps provided by your financial institution) can help in this effort too.
Monitoring your checking account will also help you get in touch with your spending habits. Some people find checking in every couple of days a good move.
These moves can reveal patterns that you might be unaware of and also help you see where you might cut back on expenses. That, in turn, can free up some funds so you feel better about splurging when the opportunity arises.
Smart Buying Habits Last a Lifetime
Establishing smart purchasing habits like these can set you up for a lifetime of living frugally but without deprivation. If you learn how to get the best possible deals on a daily basis and rein in overspending, you will likely be in a better position to reach your goals.
That might mean watching your retirement fund grow steadily, avoiding high-interest credit card debt, or knowing you’ll be able to afford the down payment on a house in a few years time.
Once you get in the groove of improving your habitual buying behavior, you may also feel less money stress and a greater sense of financial control.
Watch Out for Lifestyle Creep
Another way to embrace better purchasing habits is to be on the lookout for what is known as lifestyle creep. This happens when, as you earn more, your expenses rise, so building wealth is a challenge.
For example, if you change jobs and get a nice salary bump, you might decide to swap your current car lease for a pricier luxury car. After all, you deserve it, right? And you might book a trip to celebrate your new position as well. Moves like these can quickly eat up your raise and then some.
Celebrating within reason is of course part of life (and a good one, at that). However, doing so extravagantly and on an ongoing basis can wind up preventing you from reaching your financial goals.
Smart Buying Habits Can Help You Save
By focusing on improving your purchasing patterns, you can likely save more money. It can be wise to bank with a financial institution that not only helps your cash grow but also offers tools to help you track your spending and save smarter.
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 are smart buying habits?
Smart shopping habits can include budgeting, comparison shopping, avoiding impulse buys, couponing, and putting a pause on spending.
How do you change your buying habits?
Changing your buying habits can involve recognizing your shopping patterns and triggers (such as impulse buying when bored or trying to keep up with friends) and then adopting new behaviors. This might mean comparison shopping, buddying up with a friend who is also trying to save, and unsubscribing from retailer emails that can lead to overspending.
What are buying habits?
Buying habits refers to the way a person purchases, such as whether they have a budget or usually shop online or in-store. It might also include whether they make a list or tend to make impulse purchases and if they use discounts and coupon codes or not.
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.
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