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If you’re like most Americans, you love your plastic and swiping or tapping through your day. In fact, about 84% of Americans have at least one credit card, with the average wallet holding three.

The national love affair with credit cards is built on their convenience, how they provide a line of credit to enable buying things we can’t quite afford to pay for with cash, and those enticing rewards that are often offered.

But the picture is not altogether rosy: As a nation, US citizens have more than $1 trillion in credit card debt. And with interest rates averaging over 20%, that debt can be hard to chip away at.

To help you better understand how credit cards work, how much credit card debt people typically have, and what are smart strategies for paying down credit card debt, keep reading. You’ll learn interesting facts as well as helpful hints.

10 Facts About Credit Card Debt

Ready to learn more about credit card debt, a form of revolving debt? These 10 credit card facts will help you better understand who has how much debt and where difficulties paying the balance typically crop up.

1. More Than Half of Americans Have Outstanding Credit Card Debt

A majority of active credit card accounts carry a balance, according to the American Bankers Association. The specific figure is 56%. This indicates that carrying a balance is a common situation for many Americans, even with the eye-wateringly high interest that’s charged.

Recommended: Tips for Using a Credit Card Responsibly

2. Households with Credit Card Debt Owe an Average of Almost $8,000

American families had an average credit card balance of $7,951, according to calculations using Federal Reserve Bank of New York and US Census Bureau data. In 2013, that figure was $5,508.

Just because this is the norm, it doesn’t mean that it’s ideal: The best-case scenario is to only charge as much as you can afford to pay off in full every month.

3. It Can Take More Than a Decade to Pay Off $7,951 in Debt

Racking up credit card debt takes much less time than getting rid of it. Let’s assume that like the average American, you have $7,951 in credit card debt, as noted above.

At the current average interest rate of 21.19% on existing accounts, with a $150 monthly payment, it would take you 158 months — or 13 years and two months — to pay that off. And you would pay $15,606.40 in interest, or almost twice the original amount you charged!

But the more you can pay each month, the faster you’ll extinguish the debt. In this example, if you increase your monthly payment to $500, you’d pay off the debt in just a year and seven months and only spend $1,465.06 in interest. These scenarios are, however, assuming that you are not accruing new debt and therefore paying off larger credit card bills.

4. Gen Xers Have the Most Credit Card Debt

Ready for more credit card facts? Here is how age and debt intersect. Gen Xers, the generation that includes people born between 1965 and 1980, have the highest average credit card balance: $9,589. Next in line are Baby Boomers, born between 1946 and 1964, who have somewhat less debt — $8,192 on average — than Gen Xers.

5. Alaskans Have the Highest Credit Card Debt

In a state by state analysis of credit card debt, Alaska residents led the pack with $7,324 per person. Those who live in Wisconsin were found to have the lowest at $4,987.

6. 42% of College Students Have Credit Card Debt

The habit of carrying credit card debt unfortunately starts early, with more than four out of 10 college students carrying a balance on their credit cards. Of these, 28% say their debt exceeds $2,000. They say they accumulated that amount due to nonessential purchases, such as impulse buys, Uber rides, or fancy coffees.


💡 Quick Tip: To avoid paying interest, pay off your credit card bill in full and on time each month. Only making the minimum payment each month can lead to paying a lot in interest over time.

7. One in Three Americans Owes More On Credit Cards Than They Have Saved

This may be a scary fact about debt, but one in three US adults owes more on their credit card than they have saved. In fact, 36% say this is the case, versus just 22% a year earlier. That shows a two-sided problem: too much spending and too little saving.

Recommended: Paying Off $10,000 in Credit Card Debt

8. Richer People Have Credit Card Debt Longer

More interesting credit card debt facts: People who earn more than $100K a year are more than two times as likely as lower earners to have credit card debt for five years or longer. Among six-figure earners, 72% say they have had debt for at least a year vs. 53% of those who earn less than $50,000 per year. When considering those who’ve held credit card debt for five years or more, you’ll find that 27% of the high earners vs. 13% of the lower earners are in that situation.

Perhaps this statistic suggests that high-earners feel they have the means to handle debt and therefore don’t rush to repay it.

9. Men Have More Debt Than Women

Men have an average of $6,357 in credit card debt, while women have an average of $6,232. Perhaps not a huge difference, but so much for the myth of women shopaholics using credit cards to fill an overflowing closet with shoes.

There are many potential reasons for this difference, but some studies have found that women are less comfortable with debt.

10. There’s a Good Chance You’ll Die With Credit Card Debt

Here’s the last of these debt facts, and it can be a grim one: Nearly three-fourths of Americans are in debt when they die, according to one benchmark study.

And 68% die with credit credit card balances — more than the share who have mortgage debt (37%) or car loans (25%) when they pass away. That’s not exactly a desirable legacy. Although family members don’t generally become responsible for the debt, it may be taken out of the deceased person’s estate.

Why Is Credit Card Debt So Common?

There are many reasons that Americans have so much credit card debt, from rising healthcare and educational costs to lack of emergency savings to a cultural consumerism that encourages people to live beyond their means.

Regarding that last point, you may hear about the phenomenon referred to as Fear of Missing Out or FOMO spending, which is a modern version of “keeping up with the Joneses.” In other words, because your friends, coworkers, or influencers you follow on social media are buying something, you feel you should as well.

Or perhaps part of the problem can be explained by what is known as lifestyle creep. This situation occurs when you earn more money but your spending rises too, so your wealth doesn’t grow. For example, if you took a new, higher-paying job and decided to lease a luxury car or take a couple of lavish vacations, your wealth wouldn’t increase, though your credit card balance might.

Tips on Avoiding Credit Card Debt

Perhaps these facts about debt will motivate you to work on avoiding a credit card balance. If so, the following strategies could help.

•   Review different budgeting methods, and find one that works for you. Many people use the popular 50/30/20 budget rule, for example. Also, see if your bank offers tracking and budgeting tools to help you rein in spending.

•   Gamify savings. You might try sleeping on it rather than making impulse buys to see if the urge to spend passes; it often does. Or go on a spending freeze for a specific period of time or for a certain kind of purchase (say, no dining out in March; no clothing purchases in April).

•   Try buying with cash or your debit card vs. plastic. That will help prevent your debt from snowballing.

•   Consider trying a balance transfer card, which typically gives you a period of zero interest during which time you can pay down what you owe.

•   In terms of a debt payoff strategy, you might investigate getting a personal loan with a lower rate than what your card charges. That could allow you to pay off the plastic debt and then have more manageable monthly payments.

•   Seek help if you are really struggling to get your debt under control. Nonprofit organizations can help you accomplish this.

Opening a Credit Card

Now that you know some facts about credit card debt and ways to pay it off, you may be looking for a new card that better suits your financial and personal goals. Shopping around to compare features, such as interest rates and rewards, can be a wise move.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What are the main causes of credit card debt?

Credit card debt can crop up in a variety of ways. Sometimes it’s because expenses get pricier, whether due to lifestyle creep or inflation. Other times, it’s not being mindful about daily spending and making impulse buys. Given how many Americans have more credit card debt than money saved, it’s a common but challenging issue.

How much does the average person have in credit card debt?

Credit card debt facts reveal different angles on this number. The average American household has $7,951 in credit card debt. Some studies put the individual figure at $5,573.

How serious is credit card debt?

Credit card debt can be very serious. It’s high-interest debt, and it can be difficult to pay off. It can make it hard for individuals to save for their future and can negatively impact their debt to income ratio, which can be an issue when applying for loans.

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

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

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

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If you’ve been denied a personal loan recently or don’t think a personal loan is right for you, you might feel at a loss as to how to cover a large expense or fund a major project.

The good news is, there’s no shortage of personal loan alternatives that suit a variety of situations. Let’s take a closer look.

Credit Card

A credit card offers you a line of credit that can be used for a variety of purchases. You can borrow up to a set credit limit, and each month that you carry a balance, you’ll owe at least the minimum payment. Credit cards are generally seen as a better option for smaller, everyday purchases, while a personal loan may make more sense for larger, more expensive items, such as a house or car.

Using a credit card responsibly can be a good way to establish your credit history, so long as you make timely payments each month. And some cards may come with perks, such as rewards points or travel rewards.

On the downside, if you don’t pay off the full balance of your credit card each month when it’s due, then your balance will accrue interest. (And credit cards typically have higher interest rates than personal loans.) If you continue to make charges on the credit card while only making minimum monthly payments, then it will take you even longer to pay off the balance. To find out how much interest you’ll pay on any balance, you can use a credit card interest calculator.

Applying for one credit card can ding your credit score by just a few points. But applying for multiple cards at once could raise red flags for lenders and can drag down your credit score.

Pros

•   Can tap into funds as needed and repay as you go

•   Can build credit as long as you make on-time payments

•   Some cards come with perks such as rewards points and travel-related benefits

Cons

•   Can have higher interest rates than personal loans

•   May take you longer to pay off the balance if you only make the minimum payments

•   Applying for too many cards at once may hurt your credit

Recommended: Personal Loan vs. Credit Card

Personal Line of Credit

A personal line of credit is a type of revolving credit line that can be used for many different things. Like credit cards, a personal line of credit has a maximum credit limit, and borrowers are required to make a minimum monthly payment. Once the debt is repaid, money can be withdrawn once again. Personal lines of credit may be secured, which require collateral, or unsecured, which do not require collateral.

When comparing a personal line of credit vs. a personal loan, you may discover that a personal line of credit allows you to access money over time instead of all at once. This level of flexibility may reduce interest charges, because you’re only taking out the money you plan on using right away. And generally speaking, the interest rates on a personal line of credit tend to be lower than those on a credit card.

However, it can be difficult to qualify for an unsecured line of credit with a good interest rate, as they’re more risky for the lender. Plus, the flexibility of a line of credit could make it easy for borrowers to take on more debt or take longer to pay off what they owe.

Pros

•   Typically has a lower interest rate than credit cards

•   Funds can be used for a variety of purposes

•   You can access funds as you need them

Cons

•   May be difficult to qualify for an unsecured line of credit with a good interest rate

•   Can be easy to take on more debt or take longer to pay off the balance

Recommended: Personal Line of Credit vs. Credit Cards

Home Equity Loan

If you’re a homeowner and meet certain requirements, you may have the option to take out a home equity loan. This means you’re essentially borrowing against the equity you’ve built in your home.

Like a personal loan, funds from a home equity loan are disbursed in one lump sum, and you owe monthly payments for the life of the loan. Your home secures the loan, and because of that, lenders tend to offer a lower interest rate than they would on most unsecured loans. Interest rates are usually fixed.

It’s worth noting that repayment begins right away, and if you fall behind on your payments, you risk losing your home. In addition, the loan amount is set, so if you need more money, you’ll need to apply for another loan.

Pros

•   Low interest rate

•   Can borrow large amounts of money

•   Funds can be used for a wide variety of purposes

Cons

•   Risk losing your home if you fall behind on payments

•   Repayment begins immediately

•   Loan amount is set

Home Equity Line of Credit (HELOC)

Like a home equity loan, a home equity line of credit (HELOC) is secured by the equity you’ve built in your home, and your home is used as collateral.

One of the main differences is that a HELOC offers a revolving line of credit, which means you can tap into funds as needed and only pay interest on what you borrow. There are usually low or no closing costs involved with a HELOC, and the interest rate is likely to be variable.

There are some potential drawbacks to keep in mind when comparing HELOCs vs. personal lines of credit. For starters, you may have to pay closing costs on the loan amount, though some HELOCs come with low or zero fees. Your interest rate will likely change with the federal funds rate, which means that over time, your monthly payment amount may fluctuate. Also, if you fail to make payments and the loan goes into default, you risk losing your home.

Pros

•   Only borrow what you need

•   Lower initial interest rates than unsecured loans

•   Repayment terms can be flexible

Cons

•   Can lose your home if the loan goes into default

•   Variable interest rates

•   Can be upside-down on your mortgage (i.e., you owe more on your home than what it’s worth)

Retirement Loan

Also known as a 401(k) loan, a retirement loan is a type of loan where you borrow from your retirement account and pay yourself back over time with interest. You can typically borrow against a 401(k), 403(b), or 457(b) retirement plan.

Per IRS guidelines, you can borrow up to $50,000 or 50% of your account balance, whichever is less. Unless you’re putting the money toward buying your primary residence, you have five years to repay your loan and need to make quarterly payments.

Pros

•   Don’t have to go through a lengthy application process

•   Doesn’t impact your credit

•   Loan repayments are automatically taken out of your paycheck

Cons

•   Can’t borrow more than $50,000

•   Missing out on compound interest and growing your retirement funds

•   If you file for bankruptcy, you’re still on the hook for paying off the loans

Peer-to-Peer Loan

Also known as social lending or crowd lending, a peer-to-peer loan (P2P loan) is a financing model where individuals borrow from others through an online platform. In turn, the financial institution is cut out of the picture, and individuals can borrow from individual investors or lenders.

The main draw for lenders is that they might earn more on the interest than if they put their money in a savings account. Borrowers might be eligible for lower interest rates or less-strict lending criteria. What’s more, the funding process is often quicker than going through a bank — an application may be approved within minutes and funds disbursed within a few business days.

Pros

•   Flexibility in how funds can be used

•   Speedy funding process

•   May qualify with fair credit

Cons

•   Often have origination fees (up to 8% of the loan)

•   Might have a higher interest rate

•   Might have late fees

Salary Advance

If you have an urgent financial need or personal emergency, you might be able to get part of your future paycheck now. In essence, it’s a loan from your employer, with the expectation that you’ll pay it back.

Your company might charge a fee or interest rate to cover the extra paperwork and accounting. However, it could be a solid way to pay for an emergency, provided you know the terms, restrictions, and what a salary advance entails.

Pros

•   Easy repayment methods (i.e., funds are automatically deducted from your paycheck)

•   Can provide easy, quick access to funds

•   Interest rates may be lower than other types of loans

Cons

•   Not offered by all employers

•   May need to meet eligibility requirements, such as a minimum number of years of employment and no previous paycheck advance requests

•   Might get complicated if you leave your job and haven’t repaid the advance

•   Smaller-than-usual paychecks could make it more difficult to make ends meet

Mortgage Refinance

A mortgage refinance is when you’re swapping your current mortgage for a new one. There are different reasons why this route might be attractive for you, such as locking in a lower interest rate or a lower monthly payment. With a cash-out refinance, for example, you replace your existing mortgage with a new mortgage for more than the previous balance. You receive the difference in cash.

Pros

•   You can receive a tax break if funds are used for home improvements

•   Can have relatively lower interest rates than other types of financing

•   Can stretch out your repayment period

Cons

•   Can risk foreclosure if you aren’t able to keep up with payments

•   Will need to pay closing costs

💡 Quick Tip: In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.

Small Business Loan

If you plan on using a personal loan for business-related reasons, you might consider a small business loan instead. There’s no shortage of financing for small businesses, and lenders include banks, credit unions, online lenders, P2P platforms, and loans backed by the Small Business Association (SBA).

The requirements, loan amounts, and options might vary widely among lenders and loan types. But in general, lenders will look at your personal credit score, finances, and debt-to-income ratio. You’re also often required to provide a business plan.

Pros

•   Longer repayment terms

•   Flexible business-related uses

•   Typically have better interest rates

Cons

•   Slower financing times

•   Rigorous documentation requirements

•   Might need to provide collateral

The Takeaway

There are pros and cons of personal loans, so if you decide to explore other funding options, rest assured there’s no shortage of personal loan alternatives. Examples run the gamut from home equity loans and HELOCs to personal lines of credit and credit cards and more.

By knowing what’s out there and weighing the advantages and disadvantages of each, you’ll stand a stronger chance of figuring out what is best suited for your needs, preferences, and situation.

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

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What alternatives to personal loans are the most popular?

The most popular options for personal loans are credit cards, retirement loans, home equity loans, home equity lines of credit (HELOCs), peer-to-peer loans (P2P), and a cash-out refinance.

Each option has its pros and cons and different lending requirements. And each may be better suited for specific borrowers.

Why would you need to use an alternative to a personal loan?

You might need a personal loan alternative if you don’t qualify for a traditional personal loan, or, if, after doing your research, you’ve found that it isn’t the best option for your needs.

Can you use personal loan alternatives even if you have a personal loan?

Yes, you can use personal loan alternatives if you currently have a personal loan. However, if you have multiple loans, it’s important to ensure you can keep up with the payments.

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Photo credit: iStock/zamrznutitonovi

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

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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

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When shopping around for lending options for a major project or immediate financial need, a personal loan might be on your list. And besides the interest rates and terms, the loan amount is a large determining factor in which option you decide to go with.

So how much can you get for a personal loan? Whether you’re looking for a large personal loan or a small one, the lending criteria is the same. Let’s take a look at how much lenders typically offer, what factors play into the size of a personal loan that you can get, and when it makes sense to get a personal loan.

How Much Do Lenders Offer?

How much can you get for a personal loan? Amounts vary by lender, but typically start as low as $600 and go as high as $50,000. Some lenders, including SoFi, offer personal loans up to $100,000.

The amount you actually get approved for depends on a handful of criteria, which we’ll dig into below.

Recommended: Can I Increase My Personal Loan Amount?

What Determines How Big of a Personal Loan You Can Get?

The amount a lender offers and the amount you qualify for aren’t always one and the same. There’s a handful of financial and credit criteria that can impact the loan amount, rates, and terms. Let’s look at the main factors:

Credit Score

In general, the higher your credit score, the larger the loan amount, the more favorable the terms and interest rates. On the flip side, the lower your credit score, the smaller the loan amount, and the less favorable your terms and interest rates.

Lenders usually have credit score requirements. The minimum required credit score for a personal loan varies but can start at 580. To get the best terms and rates, you usually need a credit score of at least 640.

Recommended: Can a Personal Loan Hurt Your Credit?

Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is your monthly debt payments divided by your gross monthly income. It’s expressed as a percentage. For example, let’s say your monthly income (before taxes, withdrawals, and other deductions are taken out) is $5,000, and your total debt obligations are $2,000. In that case, your DTI is 40%.

For the most part, lenders would like to see a DTI no higher than 35% to 40%. But if you have a high credit score, you might get approved with a slightly higher DTI.

Lender Amount Limits

The amount you can borrow may be limited by how much funding you can receive from your lender. Let’s say your credit is stellar, you have low DTI, steady employment, and a good income. But if the lender’s max personal loan amount is $50,000, then the most you can potentially borrow is $50,000.

Applying as An Individual or Jointly

If you’re applying for a personal loan with another applicant and their credit is strong, you might be eligible to borrow more money. However, not all lenders let you apply jointly, so you’ll want to check beforehand.

Income and Employment History

How much you can borrow also depends on your income and employment history. If you bring in a certain amount of money and have steady work for the last few years, that could boost the approval amount.

Some lenders may give more weight to your income and employment history. In turn, you might be able to get a higher loan amount with a lower credit score and a higher debt-to-income ratio.

Collateral

Not all personal loans require you to provide a valuable asset, such as your home or car, to back up the loan. But if you’re looking into a secured loan, you might be able to get a higher max amount on your personal loan than if you went the unsecured loan route.

Offering collateral and getting a secured loan means you could get a bump in your personal loan amount. Remember, not all lenders offer secured personal loans. If a lender does offer both secured and unsecured loans, you can compare quotes from the same lender for either option.

Loan Purpose

A lender might only allow you to use the loan for certain purposes. For instance, some lenders specialize in credit card debt consolidation loans. Lenders that offer greater flexibility might have limits on how much you can borrow depending on the loan purpose.

For example, the limit on using the loan proceeds for childcare expenses and large purchases might be different than if you’re planning to use the funds toward a major home improvement project.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi Personal Loans come with no-fee options, and no surprises.

Calculating How Much You Can Borrow

Determining how much you can borrow requires you to know your financial situation, how much you’d like to borrow, and what you can reasonably afford to pay off on a regular basis.

To start, jot down the repayment term and rate you anticipate receiving. If you get prequalified, that can give you a fair estimate on your loan amount.

Next, you’ll want to figure out the following numbers:

•   Income before taxes.

•   Additional income you get on a regular basis (i.e., rental property income, alimony, disability benefits).

•   If you’re filing jointly, you’ll also need to include the other applicant’s income.

•   Tally up your existing debt. This might include credit card debt, other personal loans, a car loan, or student loan debt.

That can help you figure out how much you can afford for your monthly payment.

How to calculate your borrowing power

If you’re mulling over the possibility of debt consolidation, you can use a handy personal loan calculator to gauge how much you’d save on interest or how much your monthly payment will be lowered by rolling over your existing debt to a new one.

Otherwise, you can punch in basic numbers, such as the loan amount, interest rate, and repayment term, to figure out what your monthly payment shakes out to.

Recommended: Pros and Cons of Personal Loans

Does a Personal Loan Make Sense?

Personal loans do have the word “personal” in them. So whether it makes sense for you to take out a personal loan depends on your unique situation and circumstances.

Here are some scenarios where getting a personal loan might be a good idea:

•   You need a large sum upfront. If you need a chunk of cash for a big-ticket purchase or to fund a home improvement project, a large personal loan can provide you with the money to cover a purchase.

•   You have a good credit score. The higher your score, the higher the loan amounts, and the better your rates and terms will most likely be.

•   You’re using the funds for something you really need. If you need the money to cover a financial shortfall, unexpected emergency, or much-needed home remodeling project, it could be a sound move to take out a personal loan.

•   You need the money quickly. The processing and funding times for a personal loan can be a lot faster than other funding choices, such as a home equity loan or HELOC.

•   You want to consolidate high-interest debt. If you qualify for a lower interest rate, lower monthly payments, and more flexible repayment terms, it could make financial sense to take out a debt consolidation loan.

Now, let’s walk through instances when a personal loan may not make sound financial sense:

•   You can’t keep up with monthly payments. If you’ve looked at your situation, do the math, and realize that you’ll have a hard time staying on top of your monthly payments, then a personal loan might not be the right choice for you at the time.

•   You have time to save for your major purchases and goals. If you aren’t in a financial pinch and don’t need the money right away, you might be better off saving instead.

•   You don’t need to take out a large amount of money. Unless you have good reason to take out a sizable amount of cash, then it probably doesn’t make financial sense to get a personal loan. Other options, such as a personal line of credit, might be a better move.

Alternatives to Personal Loans

If you’re on the fence about taking out a certain type of personal loan, know that other options exist. Here are other routes to take:

Credit card. If you’re already shouldering a lot of credit card debt and are paying a lot in interest fees, this might not be the best choice for you. But if you need to borrow a small amount — and can reasonably pay off your balance in a short amount of time — then a credit card provides easy access to funding.

Personal line of credit. Don’t need a lump sum upfront and anticipate needing to tap into funds for different purposes? Then a personal line of credit, which is similar to a credit card, might be a better fit.

Peer–to-peer loan. If you’re struggling to qualify for a personal loan with a traditional lender, you might have better odds of getting approved for a peer-to-peer (P2P) loan. Instead of being funded by a financial institution, P2P loans are funded by individuals who serve as investors and are loaning the money. The lending criteria for P2P loans tend to be less stringent than traditional loans.

Home equity loan or home equity line of credit (HELOC). If you’re a homeowner who has built equity in your home, you could qualify for a home equity loan or home equity line of credit (HELOC). Because you are offering your home as collateral, you typically can qualify for higher loan amounts. Plus, home equity loans or HELOCs tend to have less stringent lending criteria.

If possible, consider waiting to take out a personal loan until you’ve worked on building your credit, reduced your debt loan, are earning a higher income, or have a more stable employment history.


💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

The Takeaway

How much of a personal loan you can get depends on a handful of factors, such as what’s available from the lender, your credit score, debt-to-income ratio, and employment history. Plus, it’s important to get your head around what you can reasonably afford to pay each month.

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

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What is considered a large personal loan?

Most lenders offer a maximum personal loan amount of $40,000 to $50,000, and some lenders, including SoFi, offer lending amounts of up to $100,000. But just because a lender offers that doesn’t mean you’ll get approved for it. You’ll also want to be mindful about not taking on more than you need.

How much is too much to ask for a personal loan?

There’s no specific number that constitutes “too much” for a personal loan. That said, an amount might be considered too high if you don’t have a good reason to take out that much money and if you aren’t able to afford the monthly payments.

Does the size of a personal loan affect a credit score?

As your personal loan payments are reported to the three major credit bureau agencies, the size of your personal loan can impact your credit. Your payment history is the largest contributing factor, but loan size can also influence your score.

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Photo credit: iStock/Ridofranz

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

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

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Automatic payments from your bank account can be a convenient way to pay your bills and subscription charges on time. But the day may come when you need to know how to stop automatic payments on a debit card. This could involve changing your account settings, revoking authorization, or contacting your bank.

Canceling your automatic payments with certain vendors and financial institutions can occasionally be a hassle. And sometimes, if you’re not paying attention, months can go by without you realizing that recurring fees are still being deducted from your account.

Here, you’ll learn four effective ways to stop automatic payments when the time comes to do so.

4 Ways to Stop Automatic Payments

If you’re someone who tends to forget to pay bills in a timely manner, automatic payments attached to your debit card can be a financial lifesaver.

Automatic transfers or ACHs (automatic clearing house) can transfer money from your checking account on a specific date to a business, without any checks being written or credit card interest charges being incurred. This method can be used to cover a myriad of life’s expenses, including the cost of a gym membership, cell phone bills, and your favorite streaming services.

But there are some downsides to automatic payments being applied via your debit card. Maybe you accidentally signed up for recurring payments? Perhaps that monthly shipment of protein shakes was initially exciting, but now you’re sick of drinking strawberry-flavored liquids for lunch. Nobody wants to get stuck paying for something they don’t want.

If you want to keep autopay withdrawals from happening, you’ll need to know how to stop recurring debit card payments. Failure to do so can result in a drain on your bank account, and your sanity.

Federal law grants you the right to cancel an automatic debit card payment, or stop ACH payments, even if you previously permitted them. There are generally no fees or penalties for canceling an automatic payment preference.

Here are 4 tips on how to cancel an automatic payment.

1. Turning Off Automatic Payments in Your Account

These days, most utility companies and vendors invite you to automate your finances. When you create an online account, they will encourage you to sign up for automatic payments. This makes it more likely that they will receive your money in a timely fashion and it may allow them to cut down on monthly billing efforts. It also can make it easier for you to stop an automatic payment.

Your automatic payments can usually be set up and terminated simply by switching an option in your settings. Sign in with your username and password and select “opt out of automatic payments” in your personal account. This action is typically performed in the “billing and payment” section in the site menu. If you need help, a customer service representative can often guide you via online chat or over the phone.

Once you’ve turned off your automatic payment feature, it might be wise to document the event. Take a picture of a confirmation message and note the date.

2. Revoking Authorization from Companies

If you can’t turn off your autopay option through an online account, you may have to contact the company directly and revoke the automatic payment authorization. Some vendors will email or mail you what’s known as a “Revoke Authorization” form.

Once you’ve received the Revocation of Authorization form, fill it out, and keep a copy for yourself before emailing or mailing it back. That way, if the automatic payment charges continue, you’ll have evidence of cancellation to show to your banking institution.

3. Calling Your Bank or Credit Union

Another way to stop automatic payments from your debit card is to contact your bank directly. They may ask you to pen a letter to formally revoke authorization, stating that the company and dollar amount is no longer allowed to be electronically debited from your checking account.

Your bank may also have a Revoking Authorization form you can fill out online or in person. Once the form has been processed, any further attempt by the company to withdraw funds can be dealt with by your bank.

4. Issuing a Stop Payment Order

Instead of filing a form to revoke authorization, you could issue a stop payment order. A stop payment order gives your bank or credit union permission to block a company or vendor from taking money from your account. This process could be done over the phone, in an email, or in person. Some banks may charge a fee for this service.

Keeping an Eye On Your Bank Account

It is possible, even after taking actions to cancel your automatic payments, that you may still see funds being withdrawn from your bank account. While this is frustrating, you may have to contact the vendor or your bank a second time. It’s a good idea to frequently check your bank account to be sure the automatic payments have stopped. Regular check-ins can be part of managing your checking account in a big-picture way too.

Dealing with Unauthorized Automatic Payments

Paying attention to your bank account can also help keep your online accounts safe. Your bank may even alert you to fraudulent charges — automatic payments being made without your consent for things you never signed up for.

Should You Consider Closing a Bank Account?

It’s good to know how to cancel all automatic payments that seem suspicious. One surefire way to avoid recurring fraudulent charges is to close your bank account completely. But this is a drastic measure that could cost you more time and fees.

Instead, contact your bank or credit union. In many cases, they will credit you for the false debit, block the vendor from making future attempts, and suggest further security measures.

Recommended: How to Switch Banks

Should You Cancel Your Debit Card?

If a company keeps making erroneous or unauthorized automatic payments, one way to put a stop to it is to cancel your debit card and receive a new one. In the cases of fraudulent charges by an unknown vendor, your bank will strongly suggest this in order to protect you.

Knowing When to Give Bank Authorization

In order to effectively stop an automatic payment before it happens, be sure and issue the Revoke Authorization form or stop payment order at least three business days before the automatic payment is due, to give your bank time to process the request.

Remember, stopping an automatic payment doesn’t mean you don’t owe money for products received or services rendered. You’ll have to cancel the service agreement completely, or be on top of paying what you owe by the due date through online payments, mailing a check, or other arrangements.]

The Takeaway

Automatic payments from your checking account are a simple and popular way to pay what you owe on time. They can help you avoid late fees and a trip to the mailbox. If you have an online account, you can discontinue an auto payment with only a few clicks. In most cases contacting the company or vendor directly can also get the job done, or you can ask your bank for help. No one can force you to continue automatic payments against your will, and the control of your bank account is in your hands.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.30% APY on SoFi Checking and Savings.

FAQ

How much does it cost to stop an automatic payment?

There are typically no fees when you stop an automatic payment option in your online account or if you do so by contacting a vendor directly. However, a bank might charge a processing fee for issuing a stop payment request.

What happens if you close a bank account with automatic payments?

If you close a bank account, companies and vendors will no longer be able to automatically deduct monthly payments tied to that account. You will have to make other arrangements to pay what you owe or discontinue any service agreements.

Will getting a new debit card stop recurring payments?

Yes. A new debit card comes with a new number. You will have to contact companies with your new card information to continue automatic payments.

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Photo credit: iStock/vorDa
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SoFi members with direct deposit activity can earn 4.30% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.30% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.30% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 10/8/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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

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