SoFi

You may wonder if anyone balances their bank account manually anymore given how many aspects of personal finances have become electronic.

Today, paychecks are deposited digitally, automatic bill pay whisks money from one account to another, and smartphones enable check deposits anytime, from anywhere.

Nevertheless, tracking withdrawals and deposits via a checkbook ledger and tallying up amounts can have value.

Monitoring your checking account in this way can help you identify errors or fraud. It can reveal charges and fees you may not have known you were being assessed. It can also put you in better touch with your money and your spending. All those things are definitely positives.

This guide will help you learn the step-by-steps for balancing your checkbook as well as its benefits.

What’s The Purpose Of Balancing Your Checking Account?

Back in the not-so-distant past, most people who had a bank account received a paper statement once a month in the mail.

On the first few pages, the statement listed the past month’s transactions — checks that had cleared, deposits that had posted, ATM and other withdrawals — along with the account balance as of the day the statement was printed.

On the back page, there was a reconciliation worksheet. There, account holders could add or subtract anything that was missing on the statement (deposits or withdrawals that hadn’t yet posted) to be sure the balance they thought they had actually matched the one the bank was reporting.

While some considered the process of balancing or monitoring a bank account tedious and frustrating, others diligently did the math every month.

Times have changed. Though financial institutions are legally required to mail those old-school statements to customers who want them, most have been touting the benefits of going paperless for years. Plus, customers now have 24/7 access to their account information using a website or an app.

Many banks also will provide a monthly online statement with the same data as the old paper statement, usually in the same or a similar format. They’ll even send a notification when the statement is ready.

But since this requires taking the time to log on, review the numbers, check for errors, and maybe do some math, many people procrastinate or simply skip regular account reviews. This can be especially true if they have multiple bank accounts.

But monitoring and balancing a bank account still plays an important role in responsible money management.

People – and Institutions – Sometimes Make Mistakes

Even if you are a fastidious record keeper, logging every cash withdrawal, bill payment, and deposit into a paper ledger, spreadsheet, or app, we all make mistakes from time to time.

Maybe an ATM receipt went missing or bill payment was forgotten or recorded incorrectly. By reconciling an account regularly, these little mistakes can be quickly fixed. This will allow you to have an accurate picture of your account, and help avoid overdraft charges and/or bounced checks.

Banks also can make errors. Duplicate charges are rare, but they can occur. Automatic payments may occasionally go awry. And it’s possible for deposits to land in the wrong account.

Even though the mistake might be the bank’s fault (because of human or technical error), it’s up to the account holder to bring it to someone’s attention — either by calling or writing to the financial institution.

In most cases, the Electronic Fund Transfer Act (EFTA) gives an account holder 60 days after receiving the bank statement with evidence of an error to challenge a problem with a direct deposit, ATM use, phone transfer, and other transactions.

But the time frame for reporting other bank errors may vary — rules may differ from bank to bank. Consumer advocates advise making contact as soon as possible upon spotting a mistake.

Reviewing an account regularly can help limit a consumer’s liability.

It also can be a good idea to check on vendor charges. Reviewing debit card, pay-by-phone, and even recurring automatic charges on a bank statement every month can help catch small errors before they become bigger problems.

A bank statement can provide the official documentation needed to dispute the charge with the vendor or financial institution.

Scammers Hope People Aren’t Paying Attention

Every time a person makes an ATM withdrawal, pays for gas with a debit card, or places an order online, there’s a chance someone is out there, waiting to steal their identity and their money.

Scammers sometimes start by making small purchases and, if no one seems to notice, bump up the spending to a more serious level.

Consumers who check their accounts regularly may have a better chance of spotting fraud faster, limiting their own liability and helping the bank deal with potential problems.

Reconciling Regularly Can Help Manage Automatic Payments

Automatic bill payments are convenient and can help an account holder avoid late payments (and late fees).

But the downside is that those bills might not get the same attention as those we have to make some effort to pay ourselves every month by check, phone or online. Ready or not, the money comes out of the bank account as scheduled, and if the account is low on the payment date, it can lead to bounced checks and overdraft fees.

Account holders who check their statements regularly may find they’re more aware of and prepared for the amount and timing of their autopay charges. They also might find they’re ready to dump or reduce the cost of some of the services and subscriptions they’ve been paying for every month or year.

Reviews May Offer Insights into Spending and Saving Behaviors

Reviewing their bank statements may help those who need or want to take more control of their spending to see exactly where their money is going every day, week, or month.

Regularly scheduled reconciliations enable people to see exactly how much they’re spending every week on nonessentials, such as in-app purchases or happy hours. This kind of information can help people budget more effectively and help bring them closer to their savings goals, such as a downpayment on a home.

Identifying Unnecessary Fees Can Save Money

Bank fees can eat away at a bank balance so slowly, an account holder might not even notice. The average monthly fee for a checking account now runs around $12. An out-of-network ATM withdrawal fee currently averages more than $4. Overdraft fees are typically $35 a pop.

Those charges can quickly add up — but if it’s all laid out there in black and white on a statement, it might be harder to ignore how much money is slipping away every month. (It also might provide more motivation to find a way to avoid those fees in the future.)

Recommended: ATM Withdrawal Limits — What You Need To Know

How to Balance Your Checking Account

Of course, account holders can always check on their available balance by using an ATM, or by logging into their account online or with an app. But that’s just a snapshot — and the picture could change in just a few minutes, depending on what transactions hit the account throughout the day.

By reconciling your records with your monthly online or paper statements on a regular basis, account holders can dig into the details of where their money is going, and be confident they aren’t missing any mistakes or paying fees or bills they aren’t aware of.

•   Start by gathering the receipts and records for any spending and deposits for the period chosen. (If you use a check register, grab that. If you write your purchases down in a notebook or use software or a spreadsheet, use those. If you collect ATM receipts, pull that pile together, too.)

•   Match those records with the bank statement. If you missed something the bank has listed and you’re sure it’s accurate (an ATM fee, for example, or a birthday check you deposited and forgot about), add it to your records.

•   Take the statement balance and subtract payments that are in your records but haven’t yet cleared the bank, and add in any deposits that haven’t yet been posted.

•   The amount you come up with should match with the balance you have in your register/notes/spreadsheet. If it doesn’t, you may have to do a closer check to see what you might have missed or if your math is a little off.

•   If you’re confident that the bank made a mistake or you notice anything else askew, contact the bank by phone, email, messaging, or in-person right away to let them know about the inconsistency.

The Takeaway

With so many other tech tools available to help track saving and spending, reconciling a bank statement every month may seem unnecessary or even archaic.

But the process can serve as an important backup and safeguard, especially for those who have multiple accounts, or who have turned over certain financial tasks (deposits, withdrawals, bill-paying, and budgeting) to automation and apps. It can also help you avoid unnecessary fees and spot mistakes or fraud.

It might even point the way toward better budgeting and money management, and help you reach your short- and long-term financial goals sooner.

Looking for Something Different?

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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

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

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

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

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOBK0823021

If you wonder how banks make money, here’s the answer: They do so by charging money for providing services as well as financial products. Among the ways they profit are by collecting interest on loans and assessing fees for banking services.

Here, you’ll learn more about how banks make money, the different kinds of banks that offer services, and the kinds of fees you may pay as a customer. By knowing these details, you’ll be better able to choose the right financial institution for you and probably hold onto more of your cash.

What Exactly is a Bank?

In general, a bank is a financial institution licensed to receive deposits and make loans. Some banks also offer financial services, such as safe deposit boxes and currency exchange.

There are several different types of banks, and though they all generally provide similar services, each type has a few unique traits that can make it especially useful for certain types of customers and goals. Here are some of the most common types of banks.

Retail Banks

Traditional banks that serve the general public, such as Wells Fargo, Bank of America, and Chase, are retail banks. Their focus is to help people manage their personal wealth.

Retail banks are generally easily accessible, often having hundreds of branches across the country and they provide the most basic of financial services for regular use.

Commercial or Corporate Banks

These banks specialize in providing financial support and assistance to small and large-scale businesses. Many also have retail divisions as well.

Where a standard retail bank might only be able to provide small personal loans, commercial banks often have the capacity to provide larger and more substantial loans, as well as other services, to help support new and expanding business ventures.

Online Banks

These are institutions that provide financial services just like any other bank, except they do not maintain any actual storefronts. To apply for an account with an online bank, such as Ally, SoFi, or Synchrony, applications must be submitted online and the entire banking experience is primarily conducted remotely via an internet browser or app.

Because online banks generally don’t have the expenses that come with maintaining a storefront, they can often offer higher interest rates and lower fees than many brick-and-mortar banks.

However, because they don’t have storefronts, you typically can’t make cash deposits.

Central Banks

In many countries, banks are regulated by the national government or central bank. In the U.S., the Federal Reserve System is the central bank of the U.S. It consists of 12 Federal Reserve banks that stretch across the country.

These central banks are responsible for implementing monetary policy, maintaining the stability of the financial system, controlling inflation, and providing financial services to banks and credit unions. The Federal Reserve banks are essentially banks for other banks, as well as the government.

Investment Banks

Morgan Stanley and Goldman Sachs are examples of investment banks. These banks specialize in managing some of the largest and most complex types of commercial transactions, such as merger and acquisition activity, initial public offerings, or financing large infrastructure projects like building bridges. Investment bankers often work on deals that involve raising capital and acquisitions.

How do Banks Make Their Profits?

With the wide variety of financial products and services that banks offer, they create many opportunities for revenue. Those revenue streams generally fall into one of three categories:

Interest

One of the primary sources of income for banks and financial institutions comes from interest collected on the various loans that they offer.

Banks use the money from their clients’ checking and saving accounts to offer loan services. They then charge interest on these loans (based on the credit history of the borrower and the current federal funds rate). Banks then profit from the net interest margin. That’s the difference between the higher interest income charged for their loans and the lower interest paid out to clients on their bank accounts.

Interchange Fees

When people use their bank-issued credit and debit cards at a store, that store typically pays a processing fee, known as an interchange fee.

These fees are paid by the merchant’s bank to the consumer’s bank for processing a card payment. This fee is to help ensure security, payment, fraud protection and a speedy transfer of funds, and is typically a small flat fee plus a percentage of the total purchase.

Interchange fees help explain why some establishments maintain minimum purchase amounts for credit or debit card purchases.

Banking Fees

Banks typically bring in a significant amount of their money by charging customers fees to use their products and services. Banks may charge fees to create and maintain a bank account, as well as to execute a transaction. They may be recurring or one-time only charges.

All banks should be upfront about all of their fees and disclose them somewhere accessible to their customers. You can often find a bank’s fee schedule online or in the documents you received when you opened your account.

It can be a good idea to learn about the types of fees that your bank charges in order to avoid or minimize fees and also catch any errors. If fees seem unreasonably high, you might also decide to switch to a different bank or financial institution that charges less.

Some of the more common bank fees include:

Service fee: A monthly fee charged for keeping an account open.

Account maintenance fee: A monthly fee charged for managing an account.

Withdrawal limit fee: Charged when a customer exceeds the maximum number of monthly withdrawals allowed on a savings account.

ATM fee: Charged when withdrawing funds from an ATM terminal outside of your bank’s network.

Card replacement fee: Charged when a lost or stolen debit or credit card is reissued.

Overdraft fee: Applied when a customer’s bank balance falls below zero. Interest can also accrue on the overdrawn amount, as the bank may see this as a short-term loan.

Non-sufficient funds (NSF) fee: Charged when a customer makes a transaction but doesn’t have enough money in their account to cover it. The transaction “returns” or “bounces,” and the bank charges the customer an NSF fee.

International transaction fee: Charged when making a debit card purchase in a foreign currency or withdrawing foreign currency from an ATM.

Cashier’s check fee: A fee for purchasing an official check from your bank.

Stop payment fee: Applied when requesting that a bank stop payment on a pre-written check from your account.

Wire transfer fee: Charged for electronically transferring funds from one bank to another.
Paper statement fee: A fee for providing monthly bank statements in the mail rather than digital statements online.

Credit Unions vs Banks

Are you wondering about the difference between a credit union vs. a bank? A credit union is a nonprofit, member-owned financial institution that, like a bank, makes loans and offers checking and savings accounts.

Members purchase shares in the credit union, and that money is pooled together to provide a credit union’s services. Individuals interested in banking with a credit union must fit specific eligibility requirements (sometimes regional, employment-related, or requiring direct relation to an existing member) and apply for membership.

Unlike a bank (which is a for-profit business), a credit union returns its profits to members, which means it may have lower fees and better interest rates on savings accounts and loans than traditional retail banks.

Because they are often smaller entities, however, credit unions tend to provide a limited range of services compared to banks. They may also have fewer locations and ATMs.

Recommended: Alternatives to Traditional Banking

The Takeaway

To make a profit and cover their operating expenses, banks typically charge for the services they provide.

When a bank lends you money, for example, it charges interest on the loan. When you open a deposit account, such as a checking or savings account, there are typically fees for that as well. Even fee-free checking and savings accounts often come with some fees.

It can be wise to take a second look at the fees outlined in your banking contract in order to get ahead of any surprise charges down the line. And to look for a fee-free bank if you are getting hit with fees.

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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

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

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

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

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBK0823020

You may have heard that you should spend three months’ salary on an engagement ring. But that rule of thumb (formulated and advertised by the diamond industry) is now considered pretty outdated.

Instead, it can be a good idea to consider not only your income, but also your savings, current debt, living expenses, partner’s preferences, other costs involved in planning the wedding, and (bottom line) what you feel comfortable spending.

How you plan to pay for the ring can also impact how much you can afford to pay for it. Options include saving up and paying cash, using a credit card, financing the ring through the jeweler, or using a personal loan. And, each payment avenue has its pros and cons.

What follows are some guidelines that can help you figure out how much you should spend on an engagement ring, along with options for covering the cost.

The Average Cost of an Engagement Ring

According to The Knot’s 2022 Jewelry and Engagement Study, the average cost of an engagement ring is around $6,000.

While that number may represent the average, the amount couples actually spend on a ring varies widely. In The Knot’s study, roughly one-third of respondents spent between $1,000 to $4,000 on their engagement ring, and 8% shelled out less than $1,000.

Why do rings vary so much in price? The cost of an engagement ring depends on a number of factors, including the size and quality of the stone, where the gem was sourced, how the gem is set, and the type of metal chosen (such as yellow gold, white gold, or platinum). There may also be markups that come along with a popular brand name.

Diamond engagement rings, sourced from a mine, tend to be the most expensive choice. But there are many other, less costly options, such as lab-grown diamonds, moissanite (a lab-grown gem that looks like a diamond), and semi-precious gemstones (such as tourmaline, morganite, and aquamarine).

Whether you’re in the market for a large, eye-catching dazzler or a more dainty design, the good news is that these days there are ways to accomplish almost any look for a range of price points.

Recommended: How to Plan a Wedding

How to Pay for an Engagement Ring

While paying in cash can be the simplest (and often the cheapest) option, it may not be feasible for all couples. Below are some other payment options that you may want to consider, along with their pros, cons, and potential costs.

Financing an Engagement Ring Through Your Jeweler

Many jewelers offer financing options, but just because you’re buying from a jeweler does not mean you have to use the financing they offer. It can be a good idea to take note of the following:

•   Promotional offers Some jewelers offer a 0% introductory interest rate during a set period of time. But after that period of time, interest rates may be very high.

•   Down payment requirements Some jewelers may require a certain percentage down payment prior to financing.

Financing through a jeweler directly may make sense if you’re confident you can pay back the loan prior to the end of the promotional period. As with any loan, it’s likely that there will be a credit check prior to being approved for financing.

Buying an Engagement Ring With a Credit Card

Putting a large purchase like an engagement ring on your credit card can be a simple solution at the moment, but may become a financial headache in the future. Here are some things you may want to consider before getting out the plastic.

•   Interest rate If you put the engagement ring on a card with a relatively high interest rate and don’t pay it off right away, the ring will end up becoming significantly more expensive over time. Also, keep in mind that many credit cards have a variable interest rate, which means the interest rate at the time of purchase could go up.

•   Credit-utilization ratio A large purchase like an engagement ring can mean using a significant percentage of credit available on your card. Having a high credit-utilization ratio may negatively affect your credit score.

•   Rewards and protections Some buyers like putting large purchases on credit cards because of the consumer protections offered by the card. They also may want to take advantage of the rewards offered by the credit card company. Those rewards, however, may only be worth it if you can pay the amount back in full at the end of the billing cycle or during a 0% interest promo rate.

Using a Personal Loan to Finance an Engagement Ring

A personal loan is another avenue for engagement ring funding. A personal loan from a bank, credit union, or online lender may have a lower interest rate than a jeweler financing program. Personal loans also typically have significantly lower interest rates than credit cards.

A personal loan also works differently than jeweler financing and credit cards. With a personal loan, you’ll get the money in your bank account and can then pay the jeweler as though you were paying in cash. You then pay back the loan (plus interest) in monthly amounts set out in the loan agreement.

Here are some things you may want to consider before using a personal loan to pay for an engagement ring.

•   Interest rate In many cases, a personal loan interest rate is fixed, meaning it doesn’t change after the agreement has been signed. This means that you know exactly how much you will need to pay back for the length of the loan.

•   Loan terms You may have an option to pick the length of the loan. Shorter loans may mean you’re paying less interest over time but have larger monthly payments.

•   Loan costs There may be fees associated with the loan, including an origination fee when the loan begins and a prepayment penalty if you pay off the loan before the end of the agreed-upon term.

•   “What if” scenarios Some lenders provide temporary deferment for people facing financial hardship, such as a job loss.

Recommended: Engagement Ring Financing Options

The Takeaway

Spending three months’ salary for an engagement ring is a long-standing tradition, but these days there is no one-size-fits-all formula for how much you should spend on an engagement ring. Ultimately, it’s a personal decision and will depend on your current and predicted income, current debt, expenses, savings, and preference.

If paying for an engagement ring upfront in cash isn’t feasible, you may want to look into different financing options and compare their pros, cons, and costs.

Your jeweler may offer financing, for example. Or, you may be able to take advantage of a credit card that has a 0% or low introductory interest rate and pay the balance off before the rate goes up.

Another option is to take out a personal loan. You may be able to find one that offers a more competitive interest rate than other ring financing options. You might also be able to fold in other upcoming costs as part of a wedding loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

Photo credit: iStock/ljubaphoto

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOPL0623007

Sure, savings accounts can be a good place to stow extra cash and build wealth. You’ll typically earn interest, helping your money grow and boosting your progress towards your financial goals.

However, unlike checking accounts, you usually can’t spend straight from a savings account. What’s more, you may find that there are limitations on the number of withdrawals or transfers you can make from out of your savings account.

If you want to avoid getting entangled with savings account rules and restrictions or triggering fees, here’s advice. Read on to learn the ins and outs of spending money from a savings account.

How Does a Savings Account Differ From a Checking Account?

You might think the main difference between a checking account and a savings account is how you view them–namely, one is for now, and one is for later. But the bank also views these two accounts very differently. Here’s a closer look at how savings accounts work vs. checking accounts.

•  Savings accounts typically earn interest while checking accounts which generally earn zero or very little interest.

•  Savings accounts may come with cash transfer and withdrawal limits. A federal rule called Regulation D used to limit certain types of transactions from a savings account to no more than six per month.

•  In the wake of the coronavirus pandemic, the Federal Reserve lifted this rule to allow people to have easier access to their savings. Many banks, however, still enforce the six-per-month cap on savings account transactions.

•  Savings accounts don’t usually come with debit cards that can be used to make purchases with money from that savings account. Only a few banks offer this service.

Can You Write a Check From a Savings Account?

Typically, you can’t write checks from a savings account. Of course, it’s always possible to transfer money from a savings account to a checking account and then write a check from there.

If you want to save money and have the ability to write a check with the money you save, you may want to consider opening up a money market account.

Money market accounts are a type of savings account that often pay a higher interest rate than traditional savings accounts and generally include check-writing and debit card privileges.

However these accounts often come with minimum monthly balances, and falling below the minimum can trigger fees. Like other savings accounts, money market accounts may limit transactions to six per month (which includes writing checks and debit card payments).

How to Spend (and Save) With a Savings Account

To take advantage of the interest you’re earning on your savings, and avoid triggering penalty fees or the closure of your account, you may want to keep these savings account spending tips in mind.

Keeping Track of Your Withdrawals

It can be a good idea to find out what your bank’s policy is regarding monthly transactions from savings. Many institutions are sticking with the standard limit of six “convenient transactions” per month, while some are allowing more, such as nine transactions per month.

Convenient transactions include money transfers you make online, by phone, or through bill pay. Transactions, including ATM withdrawals and those that you make in person at the bank, do not typically count towards the monthly cap.

Paying Bills From Your Checking Account

Scheduling automatic bill payments from your savings account may put you over the savings withdrawal limit. It can be a better idea to have automatic bill payments or recurring transfers come out of your checking account.

Withdrawing Money Only for Large Expenses

If you withdraw money from your savings account for everyday spending, it can reduce the amount of interest you earn, and make it harder to reach your savings goals.

It can be wiser to only touch your savings when it’s necessary to cover an emergency expense or a large purchase (ideally, one you’ve been saving up for).

Building Your Savings

A savings account can help you work towards your financial goals, such as creating an emergency fund, making a downpayment on a home, or going on a great vacation. In some cases, you may even want to have different savings accounts for different goals.

To help achieve those goals faster, you may want to set up an automatic transfer from your checking account into your savings account on the same day each month (perhaps after your paycheck gets deposited). It’s perfectly fine to start slowly. Even small monthly deposits will add up over time.

Maximizing the Interest You Earn

The higher the interest rate, the faster your savings will grow. That’s why it can be worthwhile to do some research into which institutions and which types of savings accounts are paying the highest rates.

Some options you may want to look into include: A high-interest savings account, money market account, certificate of deposit (CD), checking and savings account, or an online savings account.

The Takeaway

Savings accounts generally aren’t designed for making frequent transactions. Instead, their main purpose is to provide a safe place to store money for the medium- to long-term. This is one of the key differences between checking and savings accounts.

Savings accounts still allow you to have access to your money, of course. To avoid exceeding transaction limits, you can visit the bank in person or use the ATM to make withdrawals or initiate transfers (since these transactions typically don’t count towards transaction caps).

To make the most out of your savings account, you may also want to look for an account that pays a higher-than-average interest rate.

Open a SoFi Checking and Savings Account

Another savings option you may want to consider is opening a checking and savings account, which can combine the best features of each kind of financial vehicle.

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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

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

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

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

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

SOBK0823019

Whenever you collect change – maybe in a cup by the front door–you likely already know the benefits of spare change savings.

You generally don’t miss the coins you drop into your collection each day. But once you get around to putting the whole pile in the bank (or a coin machine), you could end up with a few hundred bucks.

Today, spare change saving or “round-up” apps make the process even simpler. They automatically calculate the difference between the amount you charge on your debit or credit card and the next dollar amount. They then divert that virtual change into a savings account.

Spare change savings (also known as “micro-saving”) can be a great way to kick start your savings and also help you start automating your finances. However, not all spare change apps are created equal.

Some of these apps charge fees, which can quickly erode your savings. And some actually invest your savings, which may not be ideal if you’re saving for a short-term goal, such as building an emergency fund or buying a car.

Here are some key things you may want to keep in mind when choosing a spare change savings app.

How Does Spare Change Saving Work?

The philosophy behind spare change savings is “little and often.” Every time you spend money, whether it’s on gas, groceries or dining out, an app rounds up that purchase and saves the change for you.

Spare change savings apps typically connect to your credit and/or debit card, take the virtual change from your linked checking account, and put the money into a savings account. For instance, if you buy a sandwich for $5.80, the app will automatically transfer 20 cents from your checking account into a savings account. It’s one way to automate your finances.

Some spare change apps put your money into a traditional savings account or a checking and savings account. Others invest your money in small portfolios, based on your risk tolerance and financial situation. There are also spare change apps that use saved funds to pay off debts that you designate, such as credit cards or student loans.


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

The Benefits of Spare Change Savings

There are a number of potential benefits to spare change savings. Below are some of the reasons you may want to try using one of these apps.

They can make saving easy and automatic

One of the biggest advantages of spare change savings is that it’s automatic. You don’t have to remember to bring your change to the bank or transfer money from checking to savings after you get paid in order to save money from your salary. And, unlike the change jar, the money saved is out of sight and out of mind.

If you’re struggling to save money, setting up a spare change savings app can help jumpstart the process and make it relatively pain-free.

Your savings can earn interest

Unlike the piggy bank method, a spare change app can put your savings into an account that can earn interest and help your money grow over time.

Some spare change savings apps, known as “micro-investing” apps, will offer users the opportunity to invest their money in stocks, bonds, and/or exchange-traded funds (ETFs). This involves risk, but if these investments do well, your savings could grow considerably.

They can make investing less intimidating

Micro-investing apps can make it easier to get started with investing, even if you currently don’t know anything about it. Generally, they’ll recommend a portfolio based on your goals and time horizon, turning your spare change into an investment on a small scale–a good way to experiment.

There may be extra ways to save

Some spare change savings apps partner up with other brands that will kick in a percentage of every purchase you make to your savings account. For example, if an app partners with Macy’s or Apple, every time you make a purchase from one of those retailers, a small percent of the total you spend would get added to your savings account (in addition to the round-up amount taken from your checking account).


💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

Disadvantages of Spare Change Savings

There are some potential downsides to spare change savings apps. Here are a few drawbacks you may want to consider before signing up for one of these apps.

They may charge fees

Some spare change apps charge monthly (and other) fees for using their services. Before signing up for an app, it’s a good idea to read the fine print and look into what, if any, fees you may be charged and how often.

Even if the fees are small, they could quickly eat into your savings, especially since the dollar amounts you’re putting away are small.

It’s possible to lose money through investments

If you choose to put your spare change savings into investments, there is some risk involved. Depending on market fluctuations, your money could grow. On the other hand, you could potentially lose some or all of your savings.

Micro-investing may not be ideal for emergency funds

If you go with an app that invests your savings, you may not be able to access the money immediately, which could be an issue if you’re faced with a financial emergency.

Another potential problem is that if your account is down in value at the time you need to withdraw the money, you would have to take a loss instead of waiting for market conditions to improve.

You might get hit with an overdraft fee

If your checking account is close to zero after you make a transaction, and then the spare change app rounds-up the transaction and withdraws additional funds, you could end up overdrafting your account. This could result in getting hit with a hefty overdraft fee.

The Takeaway

While each spare change app functions slightly differently, they all revolve around the same basic concept: You save small increments of cash that you likely won’t miss. The money gets put into a savings account. You can then use the money to work toward your savings goals.

Spare change apps aren’t for everyone, however. If you’re living paycheck to paycheck and at risk of overdrafting your account, these apps may not be ideal for you. And if you don’t yet have an emergency fund built up, you may not want to choose an app that invests your savings.

On the other hand, if you’re looking for creative ways to jumpstart your financial goals, a spare change app (with low or no fees) may be the tool you’re looking for. Just make sure you have a savings account for that spare change to go into.

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.

Photo credit: iStock/Nattakorn Maneerat

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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.

4.60% APY
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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

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

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

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

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

SOBK0923006