What Are Credit Card Convenience Checks and How Are They Used?

What Are Credit Card Convenience Checks and How Are They Used?

If you have an active credit card account, you might be offered or have already received unsolicited credit card convenience checks. A credit card convenience check lets you draw a portion of funds from your available credit limit without swiping your card.

Although convenience checks offer the benefit of using your credit line toward other bills — either as a cash advance or a check-based payment for a purchase — they also come with their fair share of issues. Keep reading to learn more about what a convenience check is and how to get one from a credit card.

Recommended: What is the Average Credit Card Limit

What Is a Credit Card Convenience Check?

Also known as cash advance checks, access checks, or balance transfer checks, credit card convenience checks let you borrow money against your credit card balance. Card issuers offer this option as a way to encourage spending on your card account. You can use these checks to pay bills, borrow money, make a balance transfer, or transfer loans to your credit card.

Recommended: When Are Credit Card Payments Due

Pros of Credit Card Convenience Checks

Convenience checks have downsides, but there are pros to them as well:

•   They let you make purchases when using a credit card isn’t accepted.

•   You can use one to pay off other debt.

•   You can access cash quickly with a convenience check.

•   A convenience check borrows against your existing credit line, so you don’t need to undergo a credit check for a new line of credit.

Cons of Credit Card Convenience Checks

There are also a number of drawbacks of convenience checks to consider before using one. These include:

•   You’ll incur an additional fee each time you use a convenience check.

•   Using a convenience check might activate a higher APR for the check amount.

•   You don’t get a grace period, so you’ll start incurring interest immediately.

•   You’ll have fewer legal protections if your purchase is defective and you need to withhold payment.

•   Your check purchase might not qualify as an eligible purchase under the card’s rewards program.

Factors to Consider Before Getting a Credit Card Convenience Check

Since convenience checks are treated like a cash advance by your credit card issuer, you’ll incur cash advance fees when the funds are drawn from your account. For example, your card issuer or bank might charge a minimum fee of $10 or 3% of the check amount, whichever is greater. Also, if you exceed your available limit and don’t have sufficient funds in your credit card account, you might be charged another fee.

On top of these extra fees, the interest on the check amount accrues immediately at your cash advance APR. Cash advance interest rates are typically higher than the APR charged for swiping your card for purchases at places that accept credit card payments.

If your account is a rewards credit card, purchases or draws using a convenience check are often ineligible for earning rewards. So not only are you paying more money to use the check, you’re losing the benefits of your rewards credit card program.

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

How to Get Convenience Checks From a Credit Card

You’ll often get convenience checks in the mail. If you have an existing credit card account, your card issuer might include the checks in your monthly statement. A card issuer might also mail you a promotional offer with convenience checks inside to encourage you to apply for a credit card.

If you have an existing credit card account but haven’t received convenience checks in the mail, you can request them directly. Contact the phone number printed on the back of your credit card to reach a customer service agent. Make sure to ask about fees you might incur by requesting printed convenience checks, as different types of credit cards carry different fees.

Using Credit Card Convenience Checks

There are many ways to use a convenience check, including:

•   Using it as a cash advance. In this case, you’d write a convenience check to yourself and cash it to access physical currency.

•   Using it to pay off other debts. This could include a loan or other credit card balance. In this scenario, the convenience check acts like a balance transfer vehicle that pays off a third-party credit account. You’ll then repay that balance, plus fees and interest, through your card issuer that provided the checks.

•   Using the checks to pay for goods and services directly. This might come up if you’re dealing with a merchant or vendor that doesn’t accept credit card payments, but accepts checks.

If you decide to use a convenience check, it’s more like a physical check from your personal checking account as opposed to how credit cards work. A convenience check has the same familiar fields as a personal check, including a place to write in the date, payee name, amount, optional memo, and your signature.

How Credit Card Convenience Checks Can Affect Your Credit Score

A convenience check borrows money against your existing credit card line, so your credit isn’t verified when using a check. Since convenience checks let you access your credit line through another method other than swiping or tapping your card, there’s a greater chance to borrow more from your account.

If you borrow large amounts from your credit card account, it can increase your credit utilization ratio. Keeping a high credit utilization ratio can adversely impact your credit score. However, if you repay your balance responsibly and are mindful of your utilization — both key credit card rules to follow — convenience checks can have minimal impact on your credit.

Alternatives to Credit Card Convenience Checks

Although convenience checks are a viable option when you need cash, there are other lower-cost options than turning to your credit card.

Personal Loans

Borrowing a personal loan gives you access to cash at a lower, fixed APR compared to the variable cash advance APR from your credit card. Some lenders also don’t charge fees of any kind for personal loans. However, you’ll need to undergo a credit check and have strong credit for the most competitive rates.

Earning Extra Income

If time is on your side, increasing your cash flow can help you avoid high interest charges and fees for your next large purchase. Consider selling items that are taking up space in your garage, picking up additional shifts at work, or starting a side gig, like tutoring, for some additional income.

Recommended: What is a Charge Card

The Takeaway

A convenience check can be a fast way to access cash in hand or make a purchase when a credit card isn’t accepted. However, the disadvantages of using convenience checks, like costly fees, increased APR, and no grace period, often negate the perks.

If you need access to credit, consider applying for a SoFi credit card. It offers up to 2% cash back rewards for every dollar spent on eligible purchases. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1 Plus, if you make on-time payments of at least the minimum amount over a 12-month period, SoFi lowers your APR by 1%.

Learn more and get a SoFi credit card today.


Is a convenience check linked to your account?

Yes, convenience checks from credit card companies are tied to an existing credit card account you have with that card issuer. The amount that you write on a convenience check will directly be added to your credit card balance, plus fees.

Can I write a convenience check to someone else?

Yes, you can write a convenience check out to another person or business as a method of direct payment. For example, you can use a convenience check to pay for a utility bill or as rent to your landlord. Keep in mind that this will mean you’ll pay more toward that purchase thanks to fees and a higher APR. Proceed with caution.

Where can I cash a convenience check?

You can cash a convenience check anywhere you’d cash a personal check. Your personal banking institution can cash the check for you, or you can visit a third party like a check-cashing establishment.

What are the disadvantages of using credit card convenience checks?

The biggest disadvantage when using a convenience check from your credit card company is the added fees and interest you’ll pay. Each check incurs a flat fee or a fee based on a percentage of the check amount. Additionally, convenience checks are considered a cash advance, which incurs a higher APR on the borrowed amount. Plus, there’s no grace period so interest starts accruing immediately.

1See Rewards Details at SoFi.com/card/rewards.
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.
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Photo credit: iStock/Ivan Pantic

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How Long to Keep Your Credit Card Statements: What You Should Know

How Long to Keep Your Credit Card Statements: What You Should Know

After reviewing a credit card statement, it might be tempting to just throw it away to cut down on clutter. But sometimes, there’s good reason to hold onto credit card statements.

There’s no hard-and-fast rule regarding how long to keep credit card statements, However, there are some helpful timelines worth keeping in mind for different situations. Keep reading for more insight if you’re wondering how long you should keep credit card statements.

Why Should You Keep Your Credit Card Statements?

It’s fair to wonder, why should I keep my credit card statements and how long should I keep credit card statements? Let’s start with the why.

Aside from your credit card statement balance or current balance, your credit card statements contain some pretty helpful information that can come in handy down the road — especially come tax season. If payments are made by credit card, it’s possible to review old statements to look up business expenses or other write-offs like mortgage, student loan, or tuition payments that you put on your card.

It can also be helpful to keep credit card statements in case someone needs to review them for errors or signs of fraud. It’s easy to miss mistakes when quickly reading a credit card statement while sorting the mail and checking for when credit card payments are due.

Online vs Hard Copy Statements

If you want to avoid holding onto a lot of paperwork, you also have the option to access online statements for your credit card. Credit card issuers may store this information for a while — though they won’t necessarily hold onto old statements forever.

The length of time your records are stored will vary by financial institution. Some credit card issuers only provide the past 12 months of statements, while others hold onto them for up to seven years. In many cases, five years is a common timeline.

If an old statement isn’t appearing online, the account holder may be able to call their credit card issuer and request a copy of an older statement. Still, there’s no guarantee that this will work. It can also cost money to get a copy of an older statement.

Factors That Determine How Long to Keep Credit Card Statements

So, how long should you keep credit card statements? Like the rules around keeping financial documents in general, it depends on each consumer’s unique needs. That being said, a good rule of thumb is to at least hold onto them until it’s time to prepare taxes for the year — especially if you hope to deduct expenses and may need help confirming them.

If someone does use their credit card statements to help them prepare their taxes, they should hold onto them for at least seven years just in case the IRS comes knocking with any questions.

How Long Should You Keep Your Credit Card Statements?

It’s worth noting though that consumers may have different needs than business owners when it comes to holding onto old credit card statements. Here’s a look at how the two groups can answer the question: How long do you keep credit card statements?

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

For Consumers

How long consumers should keep credit card statements depends on how someone uses their statements. In general, it’s wise to keep your credit card statements for 60 days due to credit card rules. Under the Fair Credit Billing Act (FCBA), credit card issuers must receive written notice of any errors within 60 days of them sending the consumer the statement containing the error.

However, it might be smart to keep your statements for longer in the following scenarios:

•   If you use your statements to make deductions on your taxes: In this case, it’s wise to keep statements for seven years. That way, if you’re ever audited by the IRS, you’ll have those statements handy as supporting documentation for deductions.

•   If you decide to dispute charges: If you’re disputing charges on your credit card, it’s best to hold onto the statement in question for 90 days, as that’s how long the dispute process can take.

•   If you want to track your spending: Those looking to learn more about their spending habits and create a better budget may find that holding onto a year’s worth of statements is helpful. That way, they can sit down on January 1 and get a clear picture of how you spent your money in the last year and where you can cut back. This can help with using a credit card responsibly.

•   If you have an extended warranty: It’s also helpful to hold onto statements that contain purchases that came with extended warranties. For example, if someone buys a TV with a three-year warranty, the credit card issuer may offer an extended one-year warranty as a cardholder benefit. Keep that statement at the ready as a proof of purchase in case that extended warranty is needed.

For Business Owners

Similar to consumers, business owners can benefit from holding onto credit card statements for at least a year in order to track business expenses. If referenced for tax purposes, it’s wise to keep credit card statements stored away for seven years to help resolve any future potential tax issues that may arise.

When You Should Keep Credit Card Statements Longer

As mentioned earlier, if someone is going to use their credit card statements to help them prove deductions on their taxes, they’ll want to keep their own copies of their credit card statements (whether they save them on paper or digitally) for seven years. This is generally the longest someone needs to keep their statements for.

Recommended: What is the Average Credit Card Limit

Different Ways to Store Statements

Because credit card statements contain sensitive personal and financial information, it’s important to keep them safe. Here are a couple ways to store them:

•   In a password-protected file on your computer: If someone downloads a digital copy of their statement, they can store them in a password-protected file on their computer.

•   In a safe: If you want to hold onto hard copies, keep them in a locked, fireproof safe to protect them from both theft and damage.

Different Ways to Dispose of Statements

Once someone is ready to dispose of their credit card statements, it’s important to destroy the documents so no one can find them and glean information from them. Here are your options to get rid of your old credit card statements:

•   Shredding or cutting them up: Shredding old documents is ideal, but if you don’t have a shredder, you can cut the statement up into very small pieces using scissors. Then, throw away the various pieces into different garbage cans.

•   Deleting all files: For digital copies, simply delete the files fully from your computer — including any backup copies — once you no longer need them.

Managing Online Statements: What to Know

When it comes to online statements, you can easily save those digitally if you don’t like storing paper documents or if you’ve opted to receive paperless statements. All the cardholder has to do is download their statements and keep them stored in their digital files, ideally with password protection.

Recommended: What is a Charge Card

The Takeaway

How long someone should keep their credit card statements depends on their unique needs. If someone has extended warranties through their credit card issuer, they may keep them for the length of their warranty in case they need a reference. Or, if someone uses the statements to help them with their tax deductions, it can be a good idea to hold onto them for up to seven years in case any questions arise.

Further, holding onto your credit card statements can help you easily see your spending habits and how well your credit card is serving you. Looking for a new credit card? The SoFi Credit Card offers unlimited 2% cash back rewards on eligible purchases, and charges no foreign transaction fees. Cardholders earn 1% cash back rewards when redeemed for a statement credit.1

Learn more and apply for a SoFi credit card today.


How can I get old credit card statements?

If someone didn’t save their old credit card statements, they can look for them in their online account or can call their credit card issuer to request them.

Do you need to keep credit card receipts?

The ideal timeline for how long to keep credit card statements depends on the individual’s needs. It can be a good idea to keep old credit card statements for up to seven years if someone is going to use them for tax purposes. Holding onto them for at least one year is helpful when it comes time to review spending habits and create a budget.

How long should you keep credit card statements with tax-related expenses?

If someone uses their credit card statements to help them figure out tax deductions, they should keep old credit card statements for up to seven years. That way, if the IRS has questions about their deductions, they can have the documentation to back them up.

How can you keep digital credit card statements safely?

If someone downloads a digital copy of their statement, it’s best to store them in a password-protected file on their computer. Once you no longer need the statements, fully delete the files from your computer.

1See Rewards Details at SoFi.com/card/rewards.
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.
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
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.

Photo credit: iStock/Rawpixel

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Differences and Similarities Between Home Equity Lines of Credit (HELOCs) vs Personal Lines of Credit

Home Equity Lines of Credit (HELOCs) vs Personal Lines of Credit

If you’re looking for a tool you can use to borrow money when you need it, you may be wondering which is the better choice: a personal line of credit or a home equity line of credit (HELOC).

In this guide we’ll look at the similarities and differences of these two types of credit lines — both of which function similarly to a credit card, but typically have a lower interest rate and a higher credit limit. We’ll also cover some of the pros and cons of using a personal line of credit vs. a HELOC.

What Is a Personal Line of Credit?

A personal line of credit (LOC) is a revolving credit account that allows you to borrow money as you need it, up to a preset limit.

Instead of borrowing a lump sum and making fixed monthly payments on that amount, as you would with a traditional installment loan, a personal line of credit allows you to draw funds as needed during a predetermined draw period. You’re required to make payments based only on your outstanding balance during the draw period.

In that way, a personal LOC works like a credit card. Generally, you can pay as much as you want each month toward your balance, as long as you make at least the minimum payment due. And the money you repay is added back to your credit limit, so it’s available for you to use again.

You can use a personal LOC for just about anything you like, as long you stay within your limit.

A personal LOC is usually unsecured debt, which means you don’t have to put up collateral. The lender will base decisions about the amount you can borrow and the interest rate you’ll pay on your personal creditworthiness.

Can a Personal Line of Credit Be Used to Buy a House?

If you could qualify for a high enough credit limit — or if the property you want to buy is being sold at an extremely low price — you might be able to purchase a house with a personal LOC. But it may not be the best tool available.

A traditional mortgage secured by the home that’s being purchased may have lower overall costs than a personal LOC and could potentially have tax benefits for the mortgage holder.

Variable interest rates, which are typical with personal lines of credit, might not be the best option for a large purchase that could take a long time to pay off. Your payments could go lower, but they also could go higher. If interest rates increase, your loan could become unaffordable.

If you use all or most of your personal LOC to make a major purchase like a home, it could have a negative impact on your credit score and future borrowing ability. The amount of revolving credit you’re using vs. how much you have available is an important factor in your credit score calculation, and lenders typically prefer this number to be less than 30%.

Recommended: Personal Loan vs Personal Line of Credit

What Is a HELOC?

A home equity line of credit, or HELOC, is a revolving line of credit that is secured by the equity a borrower has in their home.

Lenders typically will allow you to use a HELOC to borrow up to 85% of your home’s current appraised value minus the amount you currently owe. A lender also may review your credit score, credit history, employment history, and debt-to-income ratio (monthly debts ÷ gross monthly income = DTI) when determining your borrowing limit and interest rate.

Recommended: Home Equity Loans vs Personal Loans for Home Improvement

Personal Line of Credit vs HELOC Compared

If you’re comparing a personal line of credit vs. a home equity line of credit, you’ll find there are many similarities. But there are some important differences to keep in mind as well.


Here are some ways in which a personal LOC and a HELOC are alike:

•   They’re both revolving credit accounts, on which loan funds can be borrowed, repaid, and borrowed again, up to the credit limit.

•   Both have a draw period and a repayment period. The draw period can typically be up to 10 years, with monthly minimum payments required. The repayment period may be up to 20 years after the draw period ends.

•   Access to funds is convenient. Withdrawals can be made by check or debit card, depending on how the lender sets up the loan.

•   Lenders may charge monthly fees, transaction fees, or late or prepayment fees on either. It’s a good idea to understand potential fees before closing.

•   Both typically have variable interest rates, which can affect the overall cost of the line of credit over time.


The biggest difference between a HELOC and a personal LOC is that a HELOC is secured by the borrower’s home, while a personal LOC is typically unsecured. That can impact the borrower in a few ways, including:

•   Interest rates and credit limits can vary. In exchange for the risk HELOC borrowers take (they could risk losing their home if they default on their payments), they generally qualify for lower interest rates. HELOC borrowers also may qualify for a higher credit limit.

•   With a HELOC, the lender may require a current property appraisal, which might slow down the approval process and be an added expense.

•   Approval for an unsecured personal LOC is typically based on the applicant’s creditworthiness. That can make the application process easier, because you probably won’t have to do as much paperwork. But you may need a better credit score and meet other financial benchmarks to qualify for a personal LOC than you would for a HELOC.

•   A borrower assumes the potential risk of losing their home if they default on a HELOC. An unsecured personal LOC does not come with a risk of that significance.

Comparing Personal Line of Credit vs. Home Equity Line of Credit

Attribute Personal LOC HELOC
Flexible borrowing and repayment
Convenient access to funds
Annual or monthly maintenance fee Varies by lender Varies by lender
Variable interest rate
Secured with collateral Typically unsecured
Approval based on creditworthiness *
Favorable interest rates ** **
*Credit and income requirements may be tougher for unsecured personal loans than secured loans.
**Interest rates can vary based on several factors. Rates may be lower for a secured personal LOC than for an unsecured personal LOC, and personal LOC rates, in general, are typically lower than credit card rates.

Pros and Cons of HELOCs

A HELOC works much like a personal LOC, so they share many of the same pros and cons. An added advantage of borrowing with a HELOC, however, is that because it’s secured, the interest rate may be more favorable than that of a personal LOC.

Another plus is that a HELOC may offer a tax benefit. If you use the money to buy, build, or substantially improve the home that secures the loan, and you itemize deductions on your income tax return, you may be able to deduct your HELOC interest payments.

The downside is that if you can’t make your HELOC payments, you risk losing your home. Also, if your home loses value and your equity decreases, the lender may terminate the HELOC or lower your borrowing limit.

Pros and Cons of HELOCs

Pros Cons
Flexibility in how much you can borrow and when. Your home is at risk if you default.
Interest charges are based only on the amount borrowed during the billing period. Variable interest rates can make repayment unpredictable and potentially expensive.
Generally lower interest rates than credit cards or unsecured borrowing. Lenders may require a current home appraisal for approval.
Possible tax advantages. A decline in property value could impact the credit limit or result in termination of the HELOC.

Pros and Cons of Personal Lines of Credit

A personal LOC has both advantages and disadvantages when compared to a HELOC, credit cards, and installment loans.

Because you draw just the amount of money you need at any one time, instead of a lump sum, a line of credit can be a good way to pay for a renovation project, ongoing medical or dental treatments, a wedding, or other expenses that might be spread out over time. You pay interest only on the funds you’ve drawn, not the entire line of credit that’s available, which can keep monthly costs down. As you make payments, the line of credit is replenished, so you can borrow the money repeatedly during the draw period. And with an unsecured personal LOC, you don’t have to worry about coming up with collateral.

But there are downsides to be wary of, as well. Here’s a summary of some of the pros and cons of a personal LOC.

Pros and Cons of Personal Lines of Credit

Pros Cons
Flexibility in how much you borrow and when. Variable interest rates can make repayment unpredictable and potentially expensive.
Interest charges are based only on what you’ve borrowed. Interest rates may be higher than for a secured line of credit or secured loan.
Interest rates are typically lower than credit cards. Qualification can be more difficult than for secured credit.
You aren’t putting your home or another asset at risk if you default. Convenience and minimum monthly payments could lead to overspending.

Alternatives to Lines of Credit

As you consider the pros and cons of a HELOC vs. a personal LOC, you also may wish to evaluate some alternative borrowing strategies, including:

Personal Loans

A personal loan is an installment loan, which means a borrower receives a lump sum of money from the lender and makes fixed monthly payments, with interest, until the loan is repaid.

Most personal loans are unsecured, so the interest rate and other terms are determined by the borrower’s credit score, income, debt level, and other factors.

You lose some flexibility because the credit limit doesn’t replenish as you make payments, and you’ll owe interest from day one on the full amount that you borrow. But if you’re using the loan to make a large purchase, to consolidate debt, or to pay off one big bill, it may make sense to borrow a specific amount and budget around the predictable monthly payments.

Personal loan interest rates and other costs can vary significantly depending on the lender, the borrower, and the terms of the loan. You can use a loan comparison site to check multiple lenders’ rates, or you can go to the lenders’ individual websites to find a personal loan interest rate that’s a match for your goals.

Auto Loan

If you’re getting a personal loan to buy a car, you may want to consider the pros and cons of an auto loan. An auto loan is an installment loan that’s secured by the car being purchased, so qualification may be easier than for an unsecured personal loan or personal LOC.

Most auto loans have a fixed interest rate that’s based on factors like the applicant’s creditworthiness, the loan amount, and the type of vehicle that’s being purchased.

If you buy a vehicle using an auto loan, you won’t receive the lump sum payment ahead of time, as you would with a personal loan. Instead, you’ll be given an approval letter, and the funds will go directly to the dealer or online shopping platform you’re working with.

Down the road, if you think you can get a better interest rate — perhaps because interest rates have gone down or because you’ve improved your credit score — you can always look into refinancing your auto loan with a personal loan or personal LOC.


A mortgage is an installment loan that is secured with the property you purchase with the loan funds.

There are many different types of mortgage loans, and terms can vary substantially depending on the loan and lender you choose. You’ll likely need a down payment to get the loan, and buyers typically pay closing costs equal to a percentage of the purchase price.

A mortgage may have a fixed or adjustable interest rate. An adjustable-rate mortgage typically starts with a lower interest rate than its fixed-rate counterpart, which can be appealing to buyers. But the rate can fluctuate over time, based on the underlying benchmark interest rate or index it’s tied to. With a fixed-rate mortgage, the interest rate stays the same for the life of the loan.

Your ability to qualify for the mortgage terms you want may depend on your creditworthiness, your down payment amount, and the value of the home you plan to buy.

Credit Cards

A credit card is a revolving line of credit that may be used for day-to-day purchases such as groceries, gas, online shopping, or automatic payments on recurring bills.

Convenience can be one of the best things about using credit cards, but it can also be one of the worst. You can use them almost anywhere to pay for almost anything. But it can be easy to accrue debt you can’t repay.

Because credit cards are unsecured in most cases, interest rates can be higher than for other types of borrowing. And if you miss payments or make late payments, the credit card issuer may increase your interest rate. Making late payments or using a high percentage of your credit limit also can have a negative effect on your credit score.

If you manage your credit cards wisely, however, they can have some useful benefits, including cash-back rewards, travel points, and other perks. And if you have solid credit, you may be able to qualify for a low- or no-interest introductory offer that can be a helpful strategy for financing a purchase if you can pay the balance in full before the promotional period ends.

Credit card issuers typically base a consumer’s interest rate and credit limit on their credit score, income, and other financial factors.

Student Loans

If you’re borrowing money specifically to pay for college expenses, it’s a good idea to start by filling out the Free Application for Federal Student Aid (FAFSA®), to see what types of federal student financial aid are available to you. Federal student loans typically offer lower interest rates and more borrower protections than private student loans or other lending options.

But if the federal student financial aid you’re eligible for isn’t enough to cover your education costs, it could be worth comparing what private lenders might offer. Student loan need-to-knows might include interest rates, flexibility of terms, fees, application process, and any benefits for qualifying borrowers.

The Takeaway

A line of credit can be a useful tool for borrowers whose costs are spread out over time, the way they often are when you’re planning and paying for a wedding, a home renovation, or medical treatments. Both HELOCs and personal LOCs can have advantages for borrowers, especially those who don’t want to pay interest from day one on a lump-sum loan that may be more money than they need.

If you’re comfortable putting up your home as collateral, a HELOC may be the right choice for you. But if you aren’t a homeowner, or if you’d prefer not to secure the line of credit with your home, a personal LOC may be a better fit.

If a line of credit isn’t the right option for you, a Personal Loan may be something to consider. An unsecured personal loan from SoFi has low fixed rates, no fees, and terms that will fit a variety of budgets. You can check your rate in just one minute without affecting your credit score.*

Check your rate on a SoFi Personal Loan.


Can you use a personal LOC to purchase a home?

If you qualify for a high enough credit limit — or if the property you hope to buy is being sold at an extremely low price — you might be able to purchase a home with a personal LOC. But a mortgage or other option with a lower and fixed interest rate may be a better solution.

What happens if you don’t use your home equity line of credit?

Having a HELOC you don’t use could give your credit score a boost if it improves your credit utilization ratio (the amount of revolving credit you have available vs. how much you’ve used).

Does a HELOC actually increase your mortgage payments?

The HELOC is a separate loan from your mortgage. The two payments are not made together.

*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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.

Photo credit: iStock/KTStock

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What Is an ACH Routing Number? And Where Can I Find It?

Guide to ACH Routing Numbers

You’ve probably seen the phrase “ACH routing number” on your bank statement, and wondered what exactly it is anyway. It shouldn’t be as hard to figure out as Wordle, so let us explain: An ACH number is a nine-digit number sequence that banks and credit unions use to move funds electronically within their financial network.
Since ACH numbers play a vital role in banking, let’s take a closer look. Here, we’ll share more detail about these important digits:

•   What an ACH routing number is

•   Where to find an ACH number

•   How an ACH number differs from an ABA number

•   When to use an ACH number.

What is an ACH Routing Number?

An ACH number is an ID code that banks use. It’s an important bit of data that directs funds being sent electronically between financial institutions. You might think of it as akin to GPS coordinates that get money where it needs to go.

The acronym ACH stands for the Automated Clearing House network and enables money to move across a network of thousands of institutions, quickly and securely. ACH numbers were developed in the 1970s, when the volume of checks threatened to slow down the banking system. This was the beginning of a big shift towards electronic banking. Today, the ACH network is a major financial hub, akin to the Grand Central Station or LAX of money transfers.

Note the word “clearing” in “automated clearing house.” An ACH routing number helps clear funds for quicker transfer. How fast is an ACH transfer? It often happens the same or the next business day. That tops paper checks, which can take longer to mail, deposit, and clear.

Here are a couple of examples of how ACH numbers ease your daily life: A bank uses an ACH routing number when you authorize autopay for a loan or service provider; that’s an ACH debit. When your employer puts your pay directly into your bank, that’s an ACH credit. Both of these can be seamless, speedy transactions.

Recommended: What is ACH and How Does it Work?

How to Find Your ACH Routing Number

Let’s say you want to sign up to pay your homeowner’s insurance automatically every month, or you need to enroll in a P2P app to send the money. You may not be certain about what those required ACH digits are. To find your bank’s ACH number, you have a couple of options, which we’ll share with you here. It’s actually quite easy to find them once you know where to look.


Banks typically print the ACH routing number right on your check. You may be used to simply calling it your bank’s routing number. It’s the nine-digit number sequence at the bottom, next to your account number.

Bank Phone App or Bank Website

Many banks provide account details, including routing numbers, right on their phone apps and websites. Log in with your user ID and password, click on your bank account, and search for details. (But please, don’t do this at, say, a bustling coffee shop, where your connection may be public.)


Another simple way to find your ACH routing number is to use your search skills. Put “ACH number” and the name of your bank into a search engine, and you should be able to find it. Keep in mind that some large banks may have multiple regional ACH numbers; make sure you are snagging the one associated with your location.

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What is an ABA Routing Number?

An ABA (American Bankers Association) routing number is the first number sequence that appears on the bottom left of your paper checks. It identifies your bank, which likely holds very many accounts, while your account number indicates your personal financial product. ABA numbers have been around for over 100 years, facilitating check processing.

Given that your ABA routing number identifies your bank, you may find that it’s the same if you have both checking and savings accounts at a single financial institution. Your account numbers will differ, but that routing number is constant.

ABA vs. ACH Routing Numbers: The Differences

So, you may ask, how are ABA and ACH routing numbers different? The truth is they are likely the very same number. Strictly speaking, the ABA number is used in processing transactions with paper checks, while ACH digits are used in electronic funds transfers. It’s a vital code as money is moved electronically (often in batches) among financial institutions. But today, by and large, ABA and ACH numbers are one and the same.

Use Cases

Let’s look at how the ABA vs ACH routing number might be used in your typical banking life. Yes, they are probably the same string of digits, but here’s how it may help to think of them:

•   To set up a payroll direct deposit or, for instance, a monthly automatic debit of your mortgage payment, you will need to provide the ACH number, because these are electronic transactions.

•   If you were making a one-time payment to, say, a doctor’s office, and they asked you the account and routing number of the check, you would look at the bottom of your paper check and read them off those digits.


ABA numbers have been in use since 1910, which was quite a different era. These digits allow for checks to draw funds from one account and deposit them in another. More than a half century later, in the late 1960s, a group of California banks banded together to find a speedier alternative to check payments. They launched the first ACH in the U.S. in 1972; that was a key milestone in the evolution of electronic banking.

Numerical Differences

In the past, ABA and ACH numbers were slightly different, with the first two digits varying. Today, they are typically identical. Your bank’s ABA routing number and ACH routing number are likely to be the same.

The Takeaway

An ACH (automated clearing house) number is a routing code: nine digits a bank uses to transfer funds electronically in a fast-paced web of banks. The ACH system has been used for decades and makes life easier by keeping transactions safe and speedy. While ACH numbers used to be different from ABA routing codes (the kind traditionally used on checks), today these two strings of digits are usually exactly the same. To find your ACH number, just look at your checks, your bank’s app or website, or use a search engine. It’s that easy!

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Which routing number do I use to transfer money?

To transfer funds domestically, you’ll use the ACH routing number and your account number. International wire transfers, however, may require different codes.

What is the difference between ACH and direct deposit?

ACH is a system of moving funds electronically between banks. Direct deposit is a specific kind of transaction that uses this ACH network. It allows your employer to send your paycheck directly into your bank account.

Should I use ACH or the wire routing number?

Which routing number you use will depend on the kind of transaction you are conducting. If you are moving money around domestically, the ACH and wire routing number may be the same; check with your bank. If, however, you are wiring money to a foreign account, you will probably need to use SWIFT codes instead to complete the money transfer.

Do I use my ACH number for direct deposit?

Yes, you need to provide your employer with your ACH number as well as your bank account number to set up direct deposit.

What is ABA on a wire transfer?

When you arrange a wire transfer, the banks involved will need to use a routing number. If this is a domestic transfer of money, your ABA/ACH routing number may or may not be used; check with your bank to be sure. A different wire routing number might be required. If you are sending or receiving money internationally, a SWIFT code will be used instead. These codes help ensure the funds get to the right account.

What does ABA stand for?

ABA stands for the American Bankers Association, an industry organization.

What is the difference between the ABA and wire routing number?

These may be the same nine-digit number. The ABA code is the series of numerals on your check, next to your account number. You can check with your bank representative or with its app to see if the wire routing number is the same or if you need a different series of numbers. A wire routing number will usually be different when you are sending funds internationally; in that instance, you’ll need your bank’s SWIFT code.

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Understanding Purchase Interest Charges on Credit Cards

More than 175 million American households have at least one credit card, and Americans pay about $120 billion per year in credit card interest and fees — about $1,000 per year for each household.

These numbers take into account all types of interest that might be charged on credit cards — balance transfers or cash advances, for instance — but purchases likely make up the majority of most credit card balances. If you don’t pay your credit card balance in full every month, you’ll owe purchase interest.

What Is Credit Card Interest?

Credit card interest is what you’re charged by a credit card issuer when you don’t pay off your statement balance in full each month. Card issuers may charge different annual percentage rates (APRs) for different types of balances such as purchases, balance transfers, cash advances, and others. You may also be charged a penalty APR if you’re more than 60 days late with your payment.

An interest charge on purchases is the interest you are paying on the purchases you make with the credit card but don’t pay in full by the end of the billing cycle in which those purchases were made. The purchase interest charge is based on your credit card’s annual percentage rate (APR) and the total balance on that card — both of which can fluctuate.

Taking a closer look at your credit card balance and interest rate can help you figure out the best way to pay it off. Here’s some information about how purchase interest charges work and, in general, how interest works on a credit card.

How Does Credit Card Interest Work?

Credit cards charge different APRs on purchases, cash advances, and balance transfers. The cardmember agreement that was included when you first received your credit card outlines the different APRs and how they’re charged. This information is also included in brief on each monthly billing statement, or you can contact your credit card issuer’s customer service department for this information. Another place to find how interest works on various credit cards is through the Consumer Financial Protection Bureau, which maintains a database of credit card agreements from hundreds of card issuers.

Some credit cards offer an introductory 0% interest rate. But once that promotional period ends, paying your balance in full each month is how you can avoid interest charges.

For example, you get a new credit card with a $5,000 available credit limit and 0% interest for three months. You use the credit card to buy a new computer that costs $3,000 and a designer dog house for your poodle that costs $1,000.

For each of the three interest-free months you pay only the minimum balance due. But since the full balance hasn’t been paid, your fourth statement will include a purchase interest charge. That is the interest you now owe because you did not pay off your credit card statement balance in full.

Credit card interest is variable, based on the prime rate, and banks typically calculate interest daily. A typical interest calculation method used is the daily balance method.

•   The bank will calculate the daily periodic rate, which is the APR divided by 365.

•   To each day’s balance, the bank will add any interest charge from the previous day (compounded interest) and any new transactions and fees, then subtract any payments or credits. This is the new daily balance.

•   The daily periodic rate is multiplied by the daily balance each day.

•   At the end of the billing cycle, each day’s balance is added together, resulting in the amount of interest owed.

•   If the amount owed is less than the minimum interest charge shown on the credit card’s fee schedule, the bank will charge the minimum.

You can make a payment toward your balance due at any time — you don’t have to wait until the due date. Since interest is commonly calculated daily, making multiple smaller payments rather than one large payment on the due date is one way to decrease the amount of interest you might owe at the end of the billing cycle. This can be a good strategy to use if you don’t pay your credit card bill in full each month. You’ll still owe some interest, but it may be less.

What is a Purchase Interest Charge?

Sometimes also known as a finance charge, an interest charge on purchases is simply interest you pay on your credit card balance for purchases you made but didn’t pay in full. If you don’t pay off your balance each billing cycle, a purchase interest charge for the unpaid amount then becomes part of the total balance you owe.

For example, let’s say you owe $1,000 on a credit card, and because you did not pay that $1,000 in full you were charged a purchase interest charge of $90. You now owe $1,090, and then the next month’s purchase interest charge will be calculated based on a balance of $1,090.

This is called compound interest and can lead to a cycle of credit card debt. The interest charges continue to accrue if you’re not paying your balance in full every month.

How Do You Get Rid of a Purchase Interest Charge?

For a temporary reprieve from paying an interest charge on purchases, you might look for a credit card that has an introductory 0% APR. Some credit card issuers offer introductory rates for anywhere from 12 to 18 months for qualified applicants. If you make a plan for paying off the balance before the promotional period ends and you’re diligent about sticking to it, you could forgo paying interest on purchases made during that period.

Some people might choose this strategy rather than taking out a personal loan for a specific purchase. If you’re sure you can pay the balance in full while the APR remains at 0%, it could be a good strategy.

The only sure way not to pay a purchase interest charge is to pay your credit card balance in full each month.

Different Types of Credit Card Interest

Interest charges on purchases are just one type of interest charged on a credit card. Other transactions and fees may apply and must be disclosed to credit card applicants. The information can be found in a credit card’s rates and fees table, often referred to as the “Schumer Box” after legislation introduced by Sen. Chuck Schumer as part of the Truth in Lending Act. The APR for purchases is typically at the top of the list, with others below.

•   Balance transfer APR: If you transfer a balance from one credit card to another, this is the rate you’ll pay on the amount of the transfer. You’ll also be charged interest at this APR on any balance transfer fee your card issuer might charge you.

•   Cash Advance APR and fee: Cash advance APRs tend to be much higher than purchase APRs, and there’s typically no grace period — interest starts accruing immediately. Like a balance transfer fee, you’ll be charged interest on a cash advance fee, too.

•   Penalty APR: If your credit card payment is more than 60 days late, your credit card issuer may increase your APR. If you make the next six consecutive payments on time, the card issuer must reinstate your original APR on the outstanding balance. But they are allowed to keep the higher penalty APR on any new purchases.

In addition to interest charges, there may also be fees charged. All of these fees could potentially accrue interest at their respective rates if the credit card’s balance is not paid in full by the payment due date.

•   Annual fee: Some credit cards charge an annual fee to the card holder.

•   Balance transfer fee: A fee of 3% to 5%, typically, on the amount transferred.

•   Cash advance fee: The greater of a flat dollar amount or a percentage of the cash advance.

•   Foreign transaction fee: A percentage of each transaction amount, in U.S. dollars.

•   Returned payment fee: Having insufficient funds in the bank account used to pay your credit card bill could result in a returned payment fee.

•   Late payment fee: Payments made after the statement due date will incur a late fee of at least $29 and not more than $40.

Where Can I Find My Credit Card’s Interest Rates?

There are several places you can locate your credit card’s interests rates and fees.

Anytime you receive a solicitation for a credit card, which is basically an advertisement, the credit card issuer is required by law to disclose the card’s possible interest rates and fees, as well as how interest is calculated. Since the recipient of this advertisement hasn’t been approved for the credit at this point, these numbers are estimations.

If you are going through a prequalification process for a credit card, the issuer should be able to provide you with more specific APRs so you can decide if that card is a good financial tool for you.

After you’ve been approved, the credit card issuer will mail you a packet containing your physical credit card and detailed information in a cardmember agreement. It’s a good idea to read this document thoroughly so you’re aware of all possible APRs and fees you could be charged.

If you access your credit card account online, you can also find this same detailed information on the card issuer’s website. You can call the card’s customer service telephone number for the information.

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The Takeaway

If you’re one of the many people who carry a credit card balance, knowing how much interest you’re paying on different types of charges is important. Interest charges on purchases are likely the most common interest charges, and the amount of interest you may pay can add up quickly.

To keep from paying interest on purchases at all, it’s important to pay your credit card balance in full each month. If you don’t, you’ll accrue interest, which compounds and can create a debt cycle.

Since credit card interest rates tend to be higher than other forms of credit, you may be considering paying off your credit cards with a financial tool that has a lower interest rate. A SoFi Personal Loan might be just the financial tool you’re looking for. With fixed, competitive rates and terms to fit many budgets, an unsecured personal loan from SoFi could make it easier to pay down your credit card debt. Instead of the recurring debt of a credit card, a personal loan has a payment end date so you’ll be able to plan for your financial future.

3 Personal Loan Tips

  1. Before agreeing to take out a personal loan from a lender, you should know if there are origination, prepayment, or other kinds of fees. If you get a personal loan from SoFi, there are no fees.
  2. If you’ve got high-interest credit card debt, a personal loan is one way to get control of it. But you’ll want to make sure the loan’s interest rate is much lower than the credit cards’ rates — and that you can make the monthly payments.
  3. Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

Learn more about how a personal loan from SoFi can help you get out of credit card debt.

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