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The United States is more than a little dog crazy: The percentage of households with a canine stands at 45.5%, meaning almost one out of two have a pooch. Owning a dog can be one of life’s great pleasures, whether you choose a tiny Chihuahua puppy or a mega, full-grown Great Dane as your new best friend.

But amid imagining all the cuddles and sloppy kisses, many prospective dog parents aren’t fully prepared for the expense of owning a pet.

This can be an important consideration, given that dog ownership generally requires a significant upfront and ongoing financial investment. Start-up costs tend to run around $2,127, while ongoing annual expenses average $2,489, according to the American Kennel Club.

If you’re considering bringing home a new pooch, here’s key information to know about budgeting for a dog.

8 Costs of Owning a Dog

It’s easy to fall in love with an adorable dog and feel as if you just must make it yours ASAP. But it’s wise to do a little research first about potential bills before you bring home a new pooch. Read on for eight costs that are likely to crop up.

1. Adoption Costs

The cost to adopt a dog varies depending on the organization, dog’s age, and breed, but fees from shelters can range anywhere from $50 to $500. The adoption fee helps cover some of the cost of holding the dog and getting them ready for adoption. At some pet rescues, adoption fees also cover the cost of veterinary services, like a pet physical exam, deworming, spaying or neutering, microchipping, and common vaccinations.

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Adoption vs Buying

Buying a dog from a breeder costs considerably more than adopting one from a shelter. Depending on the type of breed and the location of the breeder, you can expect to pay anywhere from $775 to $4,750.

The purchase price through a breeder typically includes the dog’s first round of shots and deworming. However, other medical costs — such as spaying or neutering and microchipping — are not typically covered by the breeder’s fee.

Recommended: 9 Cheapest Pets to Own

2. Food and Treats

Once you bring home your furbaby, you’ll also need to factor dog food and treats into your spending budget. The cost of feeding a dog can run anywhere from $200 per year for a small dog to $720 per year for a large dog. If you decide to serve your dog premium brands, freshly made food, or a specialized diet, your food costs could be significantly higher — as much as $3,000, possibly more, per year.

3. Toys

Toys may seem like a silly little add-on, but they can play an important role in puppy development and adult dogs’ mental stimulation. Toys can help dogs fight boredom when they are left at home alone and comfort them if they’re agitated. And with toys to gnaw on, dogs may be less likely to turn to shoes for a midday distraction.

One way to save money on pet costs is to keep toys simple. For example, a basic tennis ball will satisfy many dogs. And you can grab a can of three, fun-to-chase tennis balls for about $4. However, you may want to offer your new companion a range of fun things to play with. If so, you might set aside around $100 a year for doggie toys.

4. Pet Sitters or Walkers

If you work outside the home or plan to travel without Fido, it may be a good idea to factor in the cost of a dog walker or pet sitter. You can expect to pay between $24 and $34 for a 30-minute dog walking service. Hourly pet sitter rates can run anywhere $12 to $20 per hour, while the average cost to board a dog is around $40 per night.

It may be helpful to estimate how much outside care you’ll need for your new dog and add it to your budget.

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5. Medical Visits

Dogs need regular medical care, so health expenses are another cost to consider when setting up your budget. Just like humans, dogs need blood drawn to check for diseases, routine vaccinations to prevent disease, and a general physical exam once a year to make sure their health is in working order.

The cost of healthcare for a dog varies widely depending on the type of dog, care provider, and where you live. On average, an annual vet visit can run $50 to $250, but that doesn’t include vaccinations (around $20–$80 per vaccine); medications and supplements ($10-$150 annually), and dental cleanings ($300-$1,500 annually).

6. Pet Insurance

While pet insurance won’t cover routine veterinary visits, it could come in handy if an emergency occurs with the pup. For example, a new dog could eat something that causes it to get sick or develop a bacterial or viral infection.

Many pet insurance plans will cover a portion of medicines, treatments (including surgeries), and medical interventions that aren’t tied to a pre-existing condition. The cost of pet insurance can vary significantly by your pet’s breed, age, and health history. On average, pet insurance for a dog runs around $62 a month.

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7. Incidentals

A lot of smaller expenses can come when you own a dog, such as doggy waste bags and cleaning supplies for pet-related messes. The ASPCA estimates that miscellaneous costs can average around $35 for small dogs, $45 for medium dogs, and $65 for large dogs annually.

8. Emergency Fund

It can be wise to save up an emergency fund for pet-related expenses. Having a financial cushion helps ensure you can make fast decisions about your pet’s care without worrying about how you’ll afford the bill.

You might set up a dedicated savings account to cover unexpected pet-related costs, with a goal saving between $500 and $1,000 to start. Or you could simply add to your general emergency saving fund. Either way, it’s a good idea to keep your emergency funds in a dedicated savings account, such as a high-yield savings account or money market account, so you’re not tempted to dip into it for everyday expenses.

The Takeaway

More than 45% of US households have dogs as pets, which shows how beloved they are. But before you get a pet, it’s important to know the costs involved (which can add up to thousands per year) and budget wisely. Saving in advance can make adopting and then caring for a dog easier. You might look for a high-yield savings account to help your money grow for this purpose.

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.

FAQ

How much does it cost to buy a new dog?

The cost to buy a dog can vary widely depending on whether you adopt from a shelter or purchase from a breeder. Adoption is generally the more affordable option, with fees running anywhere from $50 to $500. The price for a puppy from a reputable breeder can run $775 to $4,750, depending on the breed’s popularity and rarity.

What is the monthly cost of owning a dog?

The average monthly cost of owning a dog ranges from approximately $64 to $248, depending on factors like size, breed, and location. These costs include food, toys and accessories, pet insurance, and grooming.

Can pet insurance save me money?

Buying pet insurance can be worth it if your pet is young and healthy or you don’t have enough savings to cover an expensive vet bill. However, it may not be a good deal if your pet is older or has health issues and/or you would be able to manage a hefty vet bill if it came up.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

SOBNK-Q425-031

A health savings account, or HSA, is a tax-advantaged account that can be used to pay for qualified medical expenses including copays and deductibles, provided you have a high-deductible health care plan (HDHP).

By using pretax money to save for these expenses, an HSA may be used to help lower overall medical costs. What’s more, HSAs can also be a savings vehicle for retirement that allows you to put away money for later while lowering your taxable income in the near term. Here’s the full story on these accounts and their pros and cons.

Reasons to Use a Health Savings Account (HSA)

Here are some of the key advantages of contributing to and using an HSA.

HSAs Can Make Health Care More Affordable

An HSA is a tool designed to reduce health care costs for people who have a high-deductible health plan (HDHP). In fact, you must have an HDHP to open an HSA.

If you’re enrolled in an HDHP, it means you likely pay a lower monthly premium but have a high deductible. As a result, you typically end up paying for more of your own health care costs before your insurance plan kicks in to pick up the bill. Combining an HDHP with an HSA may help reduce the higher costs of health care that can come with this type of health insurance plan.

Some numbers to note about qualifying for and using an HSA:

•  For the 2025 calendar year, the Internal Revenue Service (IRS) said an HDHP is defined as having an annual deductible of at least $1,650 for single people and $3,300 for family plans. Annual out-of-pocket expenses cannot exceed $8,300 for single coverage and $16,600 for family coverage.

•  For 2025, the maximum contribution limit is $4,300 for individuals and $8,550 for families. For either year, people 55 or older can make an additional contribution of $1,000 per year, which is known as a catch-up contribution.

•  For 2026, an HDHP is defined as having an annual deductible of at least $1,700 for single people and $3,400 for family plans. Annual out-of-pocket expenses cannot exceed $8,500 for single coverage and $17,000 for family coverage.

•  For 2026, the maximum contribution limit is $4,400 for individuals and $8,750 for families. For either year, people 55 or older can make an additional contribution of $1,000 per year, which is known as a catch-up contribution.

HSA contributions can be made by the qualified individual, their employer, or anyone else who wants to contribute to the account, including friends and relatives.

HSA Contributions Stretch Your Health Care Dollars

Contributions are made with pretax money and can grow tax-free inside the HSA account. Because money in the account is pretax — Uncle Sam never took a bite out of it — qualified medical expenses can essentially be paid for at a slight discount.

HSA Funds Can Be Used for Many Health Care Expenses

The money you contribute to your HSA can be used on an array of health care expenses that aren’t paid by your insurance. Rather than dipping into your checking or savings account, you can use an HSA to pay for qualified medical costs. The IRS list of these expenses includes:

•   Copays, deductibles, and coinsurance

•   Dental care

•   Eye exams, contacts, and eyeglasses

•   Lab fees

•   X-rays

•   Psychiatric care

•   Prescription drugs

HSAs Offer Triple Tax Advantages

Another reason to start a health savings account is that putting money into an HSA lowers taxable income. The money contributed by a qualified individual to the account is pretax money, so it will be excluded from gross income, which is the money on which income taxes are paid.

This is the case even if an employer contributes to an employee’s account on their behalf. So if you are a single tax filer who earns $80,000 a year and max out your HSA contribution, you will only be taxed on $75,700 for calendar year 2025. If you make any contributions with after-tax funds, they are tax-deductible on the current year’s tax return.

There are other considerable tax advantages that come with HSAs. Contributions can earn interest, or returns on investments, and grow tax-free. This tax-free growth is comparable to a traditional or Roth IRA.

Here’s another HSA benefit: Not only are contributions made with pretax money, but withdrawals that are made to pay for qualified medical expenses aren’t subject to tax at all. Compare that to say, Roth accounts where contributions are taxed on their way into the account, or traditional IRAs where withdrawals are taxed.

Recommended: HSA vs HRA: What’s the Difference?

HSA Funds Are Investable

The funds in an HSA can be invested in ways that are similar to other workplace retirement accounts. They can be put into bonds, fixed income securities, active and passive equity, and other options. You could potentially be investing money in this way for decades prior to retirement.

Using an HSA for retirement might also be a good way to prepare for health care expenses as you age, which can be one of the biggest retirement expenses. According to some estimates, a 65-year-old couple in retirement would need $345,000 or more to cover health care costs over the rest of their lives. An HSA could be a good way to stash some cash to put towards those charges.

If you were to become chronically ill or need help with the tasks of daily living as you age, you might need long-term care at home or in a nursing facility. Medicare does not cover long-term care, but long-term care insurance premiums are qualified expenses and can be paid with HSA funds. Saving in an HSA before these potential costs arise may offset overall spending on health care expenses later in life.

The Money in an HSA Is Yours and Stays That Way

Another advantage of HSAs is that contributions roll over from year to year. In comparison, flexible spending account (FSA) funds, which also allow pretax contributions to save for qualified health care expenses, must be spent in the same calendar year they were contributed, or you risk losing the funds. HSAs don’t follow this same use-it-or-lose-it rule. There is no time limit or expiration date saying you must spend the money you contributed by a certain date.

What’s more, your HSA funds follow you even if you change jobs and insurance providers. It can be very reassuring to know those funds won’t vanish.

Disadvantages of Using a Health Savings Account

Here are some potential downsides of HSAs to note.

You May Not Be Qualified to Open and Contribute to an HSA

You may only open and contribute to an HSA if you are enrolled in a high-deductible health plan, or HDHP. The IRS defines this as having a deductible of at least $1,650 for an individual and $3,300 for a family for calendar year 2025; for 2026, the limits are $1,700 and $3,400, respectively.

If You Have Medicare, You Cannot Have an HSA

Once you enroll in Medicare, you can no longer contribute to an HSA, since Medicare is not an HDHP. If you previously opened an HSA, those funds are still yours, but you can’t continue adding to the account.

Not All Expenses Will Be Covered

There are a number of health care expenses that do not qualify for HSA coverage. These include:

•   Cosmetic surgery

•   Teeth whitening

•   Gym memberships

•   OTC drugs

•   Nutritional supplements

HSAs May Charge Fees

If you decide that a health care savings account is right for you, don’t be surprised if you are hit with fees when you open one. Some of these accounts may charge you every month to maintain the account, especially if a professional is advising you on investments. These fees may be as low as $3 or $5 a month or considerably higher.

You may also be assessed a percentage of the account’s value, with that fee rising as your account’s value increases. It’s important to read the fine print on any account agreement to make sure you know the ground rules.

You May Be Penalized for Early Withdrawal

Also note that if you withdraw funds from your account for something other than a covered medical expense before you turn 65, you could be hit with fees. These withdrawals will typically be subject to income taxes and a 20% penalty.

Recommended: High-Yield Savings Calculator

How HSAs and FSAs Differ

HSAs, as described above, are health care savings accounts for individuals who have a high-deductible health plan. Another financial vehicle with a similar-sounding name are FSAs, or flexible spending accounts. An FSA is a fund you can put money into and then use for certain out-of-pocket health care expenses. You don’t pay taxes on these funds. Two big differences versus HSAs to be aware of:

•   To open an FSA, you don’t need to be enrolled in an HDHP. This is only a qualification for HSAs.

•   The money put in an FSA account, if not used up by the end of the year, is typically forfeited. However, there may be a brief grace period during which you can use it or your employer might let you carry over several hundred dollars. With an HSA, however, once you put money in the account, it’s yours, period.

The Takeaway

Health savings accounts, or HSAs, offer a way for people with high-deductible health plans to set funds aside to help with health care expenses. The money contributed is in pretax dollars, and it brings other tax advantages. What’s more, funds in these HSAs can roll over, year after year, and can be used as a retirement vehicle. For those who have high-deductible health plans and qualify, an HSA can be a valuable tool for paying medical expenses and enhancing financial health, today and tomorrow.

An HSA can be part of a plan to manage your money better.

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.

FAQ

What are the benefits of using an HSA?

The benefits of using an HSA include being able to pay for qualifying medical expenses with pretax dollars, which can save you on health care spending and lower your taxable income. In addition, the money is investable, and it stays with you; you don’t face a “use it or lose it” end-of-year situation.

What are the disadvantages of an HSA?

One disadvantage of a health savings account, or HSA, is that it’s only available to those with a high-deductible health plan. Also, you can face a penalty if you withdraw funds for non-medical expenses before age 65, and the money in an HSA can only be used on certain expenses.

What if you withdraw money early that you’re saving in an HSA?

If you withdraw funds from an HSA for non-medical expenses before age 65, you typically face a 20% penalty.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

SOBNK-Q425-013

Ever forgotten a bill and been hit with a costly late fee? Automatic bill pay can take care of your payments for you, saving you from that headache. Once it’s set up, funds are debited from your bank account or charged to your credit card automatically, which can save you time, stress, and (potentially) money. Still, there are some downsides to consider before you turn everything over to automation. Below, we explore what automatic bill payment is, its pros and cons, and how to use it effectively.

What Is Automatic Bill Payment?

Automatic bill payment is a service that allows you to schedule recurring payments to be made automatically, typically from your bank account. Instead of manually paying each bill, the system deducts the amount owed on a preset date (usually the bill’s due date), which ensures your payments are made on time. In some cases, you may have the option to set up automatic bill payment using your credit card.

You can establish automatic bill payment in one of two ways:

•  Through your bank: Many banks offer a service called “bill pay,” which allows you to set up and manage all of your payments from one account dashboard.

•  Directly with the payee: You can set up “autopay” through a company, creditor, or service provider by providing them with your bank account or credit card information and authorizing them to make recurring withdrawals from your account.

However you set up automatic payments, it’s important to remember that, once activated, automatic payments continue until you modify or cancel them.

Advantages of Automatic Bill Payment

Automatic bill payment can simplify your financial life. Here’s a look at some of its biggest advantages.

Convenience and Time Savings

One of the most obvious benefits of autopay is convenience. Instead of remembering specific bill due dates, logging in to different websites, or sending paper checks through the mail, automatic payments allow you to “set it and forget it.” Having all your payments managed in the background saves time, which can free you up to focus on other financial goals, like saving or investing.

Avoiding Late Fees

Missing a due date then scrambling to make the payment isn’t only stressful — it can cost your money. Many lenders and utility providers charge late fees if you make your payment late. The rules and grace periods for late payments vary by company, but credit card issuers will often charge a fee if you’re as little as one day late paying your bill. Automatic payments solve this issue by ensuring bills are paid on time, every time.

Improved Credit Score Management

Payment history is the most important factor in your credit scores, accounting for 35% of your FICO® score. Automating bills like credit cards, mortgage payments, and car or student loans helps establish a consistent on-time payment record, which can have a positive impact on your credit profile over time.

Automatic bill payments can also help you avoid late or missed payments, which can negatively impact your credit. Once a creditor reports a late payment to the credit bureaus, it appears on your credit report and will stay there for seven years from the date you missed the payment.

Disadvantages of Automatic Bill Payment

While autopay offers clear benefits, it’s not without drawbacks. Automation can sometimes create new problems if not managed carefully. Here are some disadvantages to keep in mind.

Potential Overdrafts or Insufficient Funds

Autopay only works if you have enough money in your account. If you forget a payment is coming up and don’t have enough funds to cover it, your bank may temporarily cover the transaction and hit you with an overdraft fee (which average around $27).

If you don’t have overdraft coverage, the bank will decline any payment that exceeds your available balance and may charge a non-sufficient funds, or NSF, fee (often around $18). And since the payment didn’t go through, you may also get hit with a late fee from your provider or creditor.

To minimize this risk, you may want to align your payment dates with your income schedule or keep a small “cushion” balance in your checking account to cover automatic deductions.

Errors/Fraud May Go Overlooked

Because automatic payments happen behind the scenes, it can be easier to miss incorrect or unauthorized charges. Companies can and do make billing errors. If you’re not looking at your monthly statement, you could be overcharged for services or get hit with incorrect fees without realizing it. It’s also possible that a fraudulent transaction could go unnoticed until it’s too late to dispute it.

To avoid this issue, it’s important to monitor your bank and credit card statements to catch mistakes and potential bank fraud early, even after automation.

Forgotten Subscriptions

If you rely solely on automatic payments, you may go months without realizing you’re paying for things you no longer use, such as streaming services, gym memberships, or free trials you meant to cancel. Over time, these forgotten payments can add up to a significant sum, and put a strain on your monthly budget. This is another reason why it’s important to continue reviewing your bank and credit card statements each month.

How to Set Up Automatic Bill Payment

Setting up automatic bill payment is relatively easy, but the process differs depending on whether you do it through a company or with your bank.

To set up autopay directly with the service provider, you typically need to:

1.   Log in to your account online or through the app.

2.   Look for an option like “Payment Settings” or “Billing Preferences.”

3.   Add a payment method.

4.   Select the payment amount (such as minimum amount due, full balance, or a set amount) and payment date.

5.   Review and confirm your settings.

To set up bill pay with your bank, the steps usually include:

1.   Log in to your online or mobile banking account.

2.   Navigate to the “Bill Pay” or “Pay Bills” section.

3.   Add the payee (many banks have a list of common billers you can select from to simplify the process).

4.   Set the payment amount and frequency.

5.   Select the date you want the payment to be processed.

Example of Automatic Bill Payment

As an example of automatic bill pay, let’s say your gym charges $65 a month, but offers a $5 discount if you sign up for autopay. You agree and enter your bank account details in your online gym account. The gym automatically bills on the 15th of each month, so you can’t customize the payment date. Now, $60 is automatically deducted from your account each month — no reminders needed. However, it’s still smart to check your bank activity regularly and cancel autopay promptly if you end your membership.

The Takeaway

Automatic bill pay is a valuable financial tool for anyone seeking convenience, organization, and peace of mind. It can help you save time, avoid fees, maintain a strong credit profile, and reduce stress related to money management.

However, it’s not completely hands-off. Automation generally works best when paired with good financial habits, such as monitoring your online accounts, budgeting carefully, and reviewing statements for errors and unexpected charges.

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.

FAQ

Do automatic payments hurt your credit?

Automatic payments, like manual payments, could hurt your credit if you pay your bills late or experience insufficient funds.

What is the difference between bill pay and ACH?

Bill pay usually refers to sending funds electronically. One common way that funds may be transferred (but not the only way) is via the Automated Clearing House network, which is known as ACH.

What is the safest way to set up automatic payments?

The safest way to set up automatic payments is to do so through your bank or credit card; it’s not recommended that you use your debit card as you’ll have less protection if there’s a problem. Also, check your balance and statements carefully to make sure you have enough money in the bank to cover your autopayments and also scan for any incorrect or fraudulent transactions.

Should I use autopay for utilities?

Whether you should use autopay for utilities depends on your situation and financial habits. If you know you’ll be able to cover the amount every month, it could be a real convenience. However, utility costs can sometimes fluctuate greatly, like the cost of heating a home in winter, which might cause pricing spikes and lead to your overdrafting. You want to be sure you can always afford to cover bills that are on automatic bill payment.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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.

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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If you have imperfect credit or a limited credit history and need to finance an automobile purchase, you may qualify for a subprime auto loan. These loans are relatively risky for lenders to take on, so they may carry less favorable interest rates, and lenders may require you to provide additional information about your finances.

Here’s a close look at what subprime loans are, how they work, and the potential risks of accepting one.

What Are Subprime Auto Loans?

The definition of a subprime auto loan is a loan given to borrowers with poor credit or those who have no or limited credit history.

A borrower’s credit is largely represented by their credit score — a three-digit number ranging from 300 to 850. Higher scores represent good credit, while lower scores represent poor credit.

There is no one definition of a subprime score. For example, the Consumer Financial Protection Bureau defines subprime as credit scores between 580 to 619. On the other hand, Experian®, one of the three major credit reporting bureaus, defines subprime scores as running between 580 to 669.

As a general rule of thumb, borrowers with scores less than 650 are less likely to qualify for traditional auto loan financing than those with higher scores. However, due to the qualifications of subprime loans, you can still qualify for a car loan with a low credit score, such as 650 or below.

How Do Subprime Auto Loans Work?

Lenders see borrowers with low credit as at risk for defaulting on their loans. As a result, subprime loans are a risky move for creditors. To help offset some of this risk, subprime loans often carry higher interest rates than traditional auto loans, and in some cases, additional fees.

Subprime lenders may ask to see additional documentation to help establish your financial stability. For example, they may ask to see bank statements, pay stubs, and tax forms before they’ll approve your loan.

How Does Credit Score Affect Subprime Auto Loans?

The three major credit reporting bureaus — TransUnion®, Equifax®, and Experian® — collect information about your payment history from your creditors into your credit report. Your credit score is important because it is a synthesis of this information in a single number.

If you have a long history of working with creditors and paying your bills on time, you will likely have a higher credit score. If you are prone to making late payments, missing payments, or you’ve defaulted on a loan, you likely have a lower score.

The Fair Isaacs Corporation (FICO®) is one of the companies that produces credit scores. It rates credit scores according to the following:

•  Poor: 300 to 579

•  Fair: 580 to 669

•  Good: 670 to 739

•  Very Good: 740 to 799

•  Exceptional: 800 to 850

The higher your credit score, the more likely you are to qualify for new credit with favorable terms and lower interest rates. The lower you score, the harder it will be for you to secure new credit.

Recommended: What Does a Lemon Car Mean?

What Is the Maximum Loan Amount I Can Get With a Subprime Auto Loan?

Subprime lenders may have a more rigorous approval process; however, that doesn’t mean that they’ll have maximum loan limits. In fact, the amount that a lender is willing to loan you is at their discretion and will depend on your personal financial situation, your creditworthiness, and the amount of risk they’re willing to take on.

If you can only qualify for a subprime auto loan, it’s important to be realistic about what kind of car you want to buy. Don’t aim for the priciest vehicle you get with a subprime loan. Rather, be sure to choose one that fits your budget and for which you will be able to make on-time monthly payments.

Recommended: How Many Car Payments Can I Miss Before Repo?

The Risks of Subprime Auto Loans

Before signing up for a subprime auto loan, be sure to understand the potential drawbacks.

Interest Rates

Subprime auto loans tend to carry much higher interest rates than their traditional counterparts. Consider that in the first quarter of 2025, the average prime auto loan rate for a new car was 6.70%, while the average subprime rate was 13.22%.

Higher interest rates can significantly increase the amount you pay for your vehicle. Consider this example: If you want to buy a $30,000 vehicle with 10% down and interest rate of 6.89% over 72 months, you’ll end up paying $4,475 in interest over the life of the loan. However, that same vehicle with a 12.85% interest rate will cost you $8,793 over the life of the loan.

Fees

In addition, subprime loans may be subject to higher fees, including procession and origination fees, prepayment penalties, and service contracts.

Repossession

The risk of default is higher for people with subprime loans. If you can no longer make loan payments, your lender may repossess your car, selling it to recoup some of their losses. Default and repossession can hurt your credit score, making it more difficult to secure a loan in the future.

Recommended: What Are Small Car Loans?

Examples of Subprime Auto Loan Interest Rates

Understanding the auto loan interest rates available to subprime borrowers as well as borrowers with other interest rates can help you understand how much the total cost of your vehicle will be when you’re wondering when to refinance a car.

It may be worth it to do what you can to improve your credit score — by paying off debts and paying bills on time — to qualify for more traditional rates.

Here’s a look at first quarter 2025 average interest rates by category, according to data from Experian.

Refinance a Subprime Auto Loan

If a subprime auto loan is all you qualify for, know that you aren’t necessarily stuck with it forever. You may have the opportunity for a subprime auto refinance.

When you refinance an auto, you replace your old loan with one — hopefully one with a lower interest rate. Look into a refinance if you build your credit and you can qualify for a lower rate, or when interest rates drop.

Be sure you understand the pros and cons of refinancing an auto loan. For example, while you may lower your interest rate, one disadvantage of refinancing is that fees can add to the cost of refinancing. In some cases, the cost of fees can cancel out the gain you’d receive from a lower rate.

In terms of how soon you can refinance your auto loan, you can refinance almost immediately, but you may want to wait until your finance situation improves.

The Takeaway

If you have poor credit or you’re working on building credit for the first time, you may only qualify for a subprime auto loan. Be sure to consider the risks, and if buying a car isn’t pressing, consider doing what you can to build your credit score before applying for an auto loan again. That way, you may qualify for lower interest rates and end up paying less over the life of the loan.

If you do end up with a subprime loan, you won’t necessarily be stuck with it forever, as you can always consider refinancing.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What is considered a subprime auto loan?

Generally speaking, subprime loans are offered to borrowers with credit scores of about 650 or less.

What is the maximum loan amount with a subprime auto loan?

There is no set maximum, but loan amounts will vary by lender depending on your creditworthiness and their willingness to assume risk.

What is the average subprime auto loan rate?

The average subprime auto loan rate for a new car is 13.22%, according to data from credit reporting bureaus Experian.

Photo credit: iStock/Pawel Kacperek

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOALR-Q325-118

If you need access to a set of wheels for a short period of time, say for a temporary job assignment, school, or a family situation, a short-term car lease may be a good option. Leasing a car for one or two years can be less costly than a long-term car rental and offers more convenience than Ubering everywhere.

However, short-term car leases tend to cost more than traditional car leases and don’t allow you to build any equity in a car.

Keep reading to learn more on how short-term car leases work, pros and cons of short-term car leases, and alternatives to consider.

Should I Lease a Car Short-Term?

If you only need access to a car for a year or two, a short-term car lease is worth considering. It can also be a good way to test out a new car before you commit to buying it. Just keep in mind that the shorter the lease, generally the higher the monthly cost will be. If you only need a car for six months or less, your best bet may be a long-term car rental.

Recommended: Long Term Auto Loans

How Long Are Short-Term Car Leases?

What constitutes a short-term lease will vary, but in general, it’s anything under 24 months. Some car dealerships, however, may consider anything under 36 months to be a short-term lease. A traditional lease is usually 36 or 48 months.

How Do Short-Term Car Leases Work?

When you lease a vehicle, you sign an agreement in which you get the use of the car for a certain period of time in exchange for monthly payments. At the end of the period, you can return the car to the dealer, or in some cases, you’ll be offered the opportunity to buy it.

One of the chief benefits of a lease is that you don’t have to worry about selling the car when you’re done with it. Also, in many cases, the contract includes some repairs and maintenance, such as oil changes.

The shorter the lease, however, generally the more expensive it will be. Leases that are less than one year may be particularly pricey because the value of a vehicle depreciates most dramatically in the first year. Plus, any one-time fees will need to be paid within that year, rather than spread out over a longer lease period.

Short-term car leases are available through franchised car dealerships, but can be much harder to find than traditional car leases, so it’s a good idea to call ahead to make sure that they offer the term you want.

Recommended: 8 Tips for Negotiating a Car Lease

Pros and Cons of Short-Term Car Leasing

Here’s a quick look at the pros and cons of short-term leases:

Pros of Short-Term Car Leasing

There are a number of benefits to getting a short-term car lease. These include:

Potentially Less Expensive Than a Long-Term Rental

If you need a car for a year or more, leasing is typically a cheaper option than renting a car. However, the cost advantage will vary depending on exactly how long you need the car and where you are located. For example, if you’re in a city like New York or Los Angeles, where rental cars are in high demand, renting could turn out to cost more than leasing. However, if you’re in an area with relatively cheap rental car rates, the gap between leasing and renting may close.

Less Costly Than Buying a New Vehicle Every Three Years

If you’re someone who always likes to be behind the wheel of a new car with the latest technology and safety features, a short-term lease can be a good fit. The monthly payments for an auto lease are usually lower than for a loan on a new car.

Recommended: Leasing vs. Buying a Car: What’s Right for You?

Cons of Short-Term Car Leasing

While there are certainly advantages to short-term leases, there are also some drawbacks you’ll need to consider. These include:

Prime Credit Is Typically Required

In order to get the best leasing terms, you generally need good or excellent credit, also known as a prime credit. From a lessor’s perspective, the higher your credit score, the more likely you are to be able to make your monthly payments. Lower credit scores don’t automatically disqualify you from a short-term car lease; they may simply result in higher monthly payments to offset the increased risk for the dealer.

Mileage Limits

When you lease a car, you usually have a yearly mileage limitation, since high mileage lowers a car’s resale value. These limits typically range between 12,000 and 15,000 miles per year. If you go over your limit, the dealership will often charge you a fee that allows them to recoup the lost value.

It may be possible to negotiate higher mileage on a leased vehicle, but you will likely have to pay more per month.

Set Terms

With a short-term lease, you will be limited to the time period stated in your contract. If you end up needing the car for less time, you will have to cancel your contract and could end up having to pay a high termination or cancellation fee. Should you realize you need the car for longer than the term of the lease, you may have to sign up for a pre-set car lease extension, such as six months or a year.

Recommended: Guide to Lease Disposition Fees

Short-Term Car Leasing Options

Lease deals under three years aren’t always easy to find. Fortunately, there’s more than one way to get a short-term car lease. Here are some avenues to consider.

Taking Over Someone’s Lease

You can take over someone else’s car lease through companies that facilitate lease transfers. If the car has been leased for a year, monthly payments may be lower, and some fees may already be paid. Make sure to check for restrictions like mileage limits or other conditions from the original lease.

Ending a Lease Early

Another option is to get a traditional lease and then get out of your car lease early. You could do this through the dealership, which will likely involve paying a contract termination or cancellation fee. Or, you could post your lease on one of the sites listed above to find another person to assume it and relieve you of the monthly payment.

Long-Term Car Rental

Many car rental companies offer long-term rentals. The max is often 11 months, but if you need a car for longer than that, you could get a couple rentals in succession. Extended car rentals typically offer lower daily rates than weekly or daily rentals, and don’t require a credit check. Car rentals also offer more flexibility than leases.

Recommended: Can You Extend a Lease on a Car?

Alternatives to Short-Term Car Leasing

The trade off to the flexibility provided by leasing is that you can end up paying more money, yet never build equity in the vehicle. Here are some alternatives to short-term leasing you may want to consider.

Getting a Car Loan

One alternative is to get a loan to purchase a used car — one that is known to hold its resale value — and then resell it when you no longer need it. When you finance a car, you’ll take out a loan for the price of the vehicle and repay it in monthly installments with interest. Downpayment, terms, and interest rates will be determined by your credit score. The higher your score, generally the better your terms and the lower your interest rate.

Recommended: Smarter Ways to Get a Car Loan

Refinancing a Car Loan

If you already have a car and a loan, you may want to consider keeping your current car, but refinancing it to make the payments more affordable. When you refinance a car, you pay off your old loan with a new one, ideally with better terms or a lower interest rate. The benefits of refinancing your car include making monthly payments more manageable and/or reducing the total cost of the loan.

Good times to consider auto loan refinancing are when interest rates drop and/or you’ve built your credit score. Even if you have to drive or ship your car to a temporary location, it could be a more cost-effective solution than getting a short-term lease.

Recommended: How Much Does It Cost to Refinance a Car?

Buying a Car in Cash

Buying a used car in cash is often the cheapest way to purchase a vehicle, since it eliminates the need to pay any interest. Paying in cash also gives you some negotiating power with the dealer — they know you are a serious buyer and both they and you know what your limit is, providing a ceiling at which you’ll simply walk away from a deal.

The Takeaway

If you need a car for less than three years, you may want to consider getting a short-term lease. This allows you to drive a new vehicle and can be less costly than a long-term car rental. However, short-term auto leases tend to be more expensive (and are harder to find) than traditional car leases.

Alternatives to a short-term car lease include buying a used car that will hold its value then reselling it when you no longer need it, and refinancing a car you already own in order to make your payments more manageable.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

How long is a short-term car lease?

It typically lasts anywhere from six to 24 months, though some dealers may consider leases up to 36 months to be short-term.

What are the benefits of a short-term car lease?

A short-term car lease may come out cheaper than a long-term car rental. It also gives you the opportunity to drive a new car with the latest technology and safety features.

Is short-term car leasing a good idea?

A short-term car lease can be a good option if you only need a car for a year or two. For longer stretches, you may want to consider buying a car or refinancing a car you already own.

Photo credit: iStock/FG Trade Latin

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

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

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

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