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Certificate of deposit accounts lock in your money for a certain period and guarantee an interest rate. But sometimes, life happens in the middle of the CD’s term. You have a dental emergency, your car needs new tires, or (yes, please!) a friend offers you a once-in-a-lifetime opportunity to join a trip to Barcelona but you just don’t have cash on hand to afford it. In these and other situations, you may be tempted to crack into a CD.

Should you do so, however, you will likely have to pay an early withdrawal penalty since you aren’t sticking with the agreed-to maturity term (the amount of time the CD was set for). You might forfeit some or all of the interest earned as a result. Read on to learn more about early withdrawal penalties for CDs and how to avoid them.

What Is a CD Early Withdrawal Penalty?

First, what is a CD? In simple terms, it’s an FDIC-insured time deposit. When you open a certificate of deposit account, you’re depositing money for a specific time frame. Depending on the CD, this may be as little as 30 days or as long as 10 years.

As the CD matures, your balance can earn interest. Generally, the longer the term, the higher the interest rate and APY. However, if you take money out before the maturity date, the bank can charge a CD withdrawal penalty.

Federal law sets the minimum penalty for early CD withdrawal at seven days’ interest if you withdraw money within the first six days after deposit. Banks can set the maximum CD withdrawal penalty higher.

The amount you might pay for withdrawing money from a CD early can depend on several factors, including:

•   Maturity term of the CD

•   How long the CD was open before you made the withdrawal

•   The amount of the initial deposit and the amount that’s withdrawn.

Your bank may or may not allow you to make a partial early CD withdrawal. If you’re not able to withdraw a partial amount, you might have to cash out the whole CD which could result in a larger penalty.

How to Calculate an Early Withdrawal Penalty for a CD

You’re probably wondering just how steep a penalty you’d have to pay for early CD withdrawal. Are we talking $5 or 5% of the money invested? More?

Banks are required to provide you with certain disclosures regarding your accounts, including CD accounts. So the first step in calculating what you might pay for a CD early withdrawal penalty is to review your bank’s policy.

Again, this can vary depending on the bank. So, for example, here’s what a few banks charge if you make an early withdrawal from CD accounts. All penalties are deducted from the CD’s principal.

CD Term	CD Early Withdrawal Penalty
1 year	•   180 days’ interest •   3 months’ interest •   Half of interest the money would have earned over entire term or 1% of the amount withdrawn, whichever is greater, plus $25
3 years	•   180 days’ interest •   6 months’ interest •   Half of interest the money would have earned over entire term or 3% of the amount withdrawn, whichever is greater, plus $25

You should be able to find this information readily available on your bank’s website. But if not, you can contact your bank or visit a branch to get more details on the penalties for early withdrawal from a CD. In addition to telling you what the penalty is, the bank should also be able to tell you how the penalty is calculated.

Banks may calculate the penalty for early CD withdrawal based on:

•   The amount withdrawn

•   The entire balance

•   Daily interest or monthly interest.

Calculating a CD Early WIthdrawal Penalty

Want to get a little more granular? Let’s dive into a little basic math to show you how the numbers look. Using Chase as an example, we see that the bank uses the amount withdrawn as the basis for calculating CD early withdrawal penalties. The calculation uses daily rather than monthly interest.

So the formula for calculating the penalty you might pay for an early CD withdrawal would look like this:

Penalty = Amount withdrawn x (Interest rate/365) x number of days’ interest.

So, say you have a 12-month CD that’s earning a 5% APY. You withdraw your initial $5,000 deposit six months prior to the CD’s maturity date. The math would look like this:

$5,000 x (0.05/365) x 180 = $123.29

You could also use an online CD early-withdrawal penalty calculator to figure out how much interest you might forfeit if you decide to withdraw money from a CD ahead of schedule.

Ways to Avoid Early Withdrawal Penalties for a CD

There are some options for avoiding prepayment penalties associated with early CD withdrawals. The strategies you could try include:

•   Withdrawing only the interest earned. Your bank may allow you to withdraw the interest earned on a CD without assessing a penalty. This assumes that you don’t touch the principal amount at all. This could be an attractive option if you need some quick cash but don’t necessarily need or want to withdraw your initial deposit.

•   Requesting a waiver of the penalty due to a crisis. If you are really in a bind, your bank may honor this.

•   Tapping your rainy-day money instead, but this should really only be done if you have the right reason to using your emergency fund.

•   Opening a no-penalty CD account. Banks can offer CDs that don’t charge a penalty for early CD withdrawal. The trade-off is that no-penalty CDs may offer a lower interest rate and APY, so you’d have to consider whether the convenience afforded by no-penalty CDs outweighs earning a higher rate.

•   Building a CD ladder. A CD ladder is a collection of CD accounts, each with varying maturity terms. So you might have five CDs with maturity dates spaced six months apart. The idea is that you can avoid early withdrawal penalties because your next maturity date is always on the horizon.

•   Consider a CD-secured loan. You may find some lenders who offer a CD-secured loan, but review the terms carefully and be sure you can make the payments at a time when money is tight.

Recommended: What Does Private Banking Offer?

When to Withdraw CDs Early

Withdrawing money from a CD early, even if it means triggering an early CD withdrawal penalty, could make sense in some situations. Some examples:

•   If you have an emergency situation with no other cash reserves to rely on and you want to avoid using credit, it may be the best (or only move). For example, say your car breaks down and you need $5,000 to fix it, but you only have $1,200 in your emergency fund. Then paying a CD withdrawal penalty could be worth it. This move would allow you to avoid having to charge the expense on a high-interest credit card or take out a loan.

•   Paying a penalty for early CD withdrawal could be worthwhile if your interest rate is low. You could access the funds and, with what you don’t use up, roll the money into a new CD with a higher APY. You’d have to calculate the amount of the penalty for withdrawing money early and compare that to the interest you could earn with a new CD to decide if it’s worth it or not.

Recommended: 10 Personal Finance Basics

The Takeaway

Investing in CDs can make sense if you want a safe way to earn interest on money you don’t necessarily need for the near-term. But sometimes, you’ll feel you must withdraw money early from a CD, despite the fact that you locked in for a specific term and interest rate. When doing so, you’ll face penalties, which may or may not make this transaction worth it to you. You can also follow a couple of smart money strategies to make sure you avoid triggering early CD withdrawal penalties in the future, because who wants to pay fees unless you absolutely have to?

If you hate penalties and fees, it can be wise to consider all your possibilities in terms of where to keep your money.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What happens if I take money out of a CD early?

If you withdraw money from a CD early, you will likely be assessed a penalty, which is often all or some of the interest earned, and possibly a fee.

Can I write off a CD early withdrawal penalty?

If you wind up paying an early withdrawal penalty, you can deduct the amount from your taxes, even if it’s greater than the interest earned.

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Photo credit: iStock/tolgart

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

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

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

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

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

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

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

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

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.

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

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Yes, it’s that time again: Tax Day is approaching. When April 15th rolls around, it’s the deadline for filing returns.

This isn’t a task you want to leave for the night before. Taxes can be complex, and it can be time-consuming to complete even a fairly simple return. Preparing in advance can be an excellent idea.

Whether you plan to file on your own or use a professional tax service, you will need to gather a number of forms and documents. This checklist will help you pull together the information and paperwork you need to make the process go that much more smoothly.

The Basics of Filing Taxes

In a nutshell, filing your taxes tracks your income, taxes already deducted during the year, any credits and deductions, and other factors that impact what you may owe.

Below, you’ll learn about what documents you need to file your income taxes. The IRS (Internal Revenue Service) collects taxes from any business or individual that receives a regular monthly income. There are currently seven different tax brackets that divide individuals according to their annual earnings.

Of course, each person’s situation is unique, with different earnings, deductions, and circumstances that may impact how much they owe (or get refunded, in some cases). You can explore an in-depth guide to the 2024 tax season for more details, but now, consider the information you’ll need to collect before you can finalize your return.

Personal Information

First things first on your tax prep checklist: Follow this list of tax documents to gather and information to note:

•   Your Social Security or tax ID number

•   If married, you’ll need your spouse’s Social Security or tax ID number and birthdate

•   Any identity protection PINs issued to you or family members by the IRS (Internal Revenue Service)

•   Your bank account number and routing number for the deposit of any refund you may be due or payment you owe, it you choose to pay that way

•   Any foreign residency and reporting details, if that applies to you.

Dependents’ Information

If you have dependents, you’ll want to gather similar details about them, as above. The IRS defines a dependent as a qualifying child (who is either under age 19 or under age 24 if they’re a full-time student), or could be any age if considered to be permanently disabled. A qualifying relative can be a relative (say, a sibling or parent) who, if they have income, does not provide more than half of their own annual support. (One note: A spouse cannot be claimed as a dependent.)

In addition to dates of birth and Social Security or tax ID numbers, you will need records of child care expenses (and providers’ tax ID numbers), if applicable; details of earnings of dependents; and potentially form 8332 relating to custodial agreements for children, as needed. (You’ll learn a bit more about possible family-related tax deductions and credits below.)

Sources of Income

Next on the tax preparation checklist is to gather paperwork about your sources of income. Typically, this means W-2 and/or 1099 tax forms.

•   For full-time employees, this will often be a W-2 form.

•   For those who are self-employed (such as freelance and contract workers), 1099s will be needed. These are forms that document payment of funds from different entities.

•   If, say, you earn money selling items on Etsy or a similar marketplace, you might receive a 1099-K form if your earnings cross a certain threshold.

•   If you are unemployed, you will want to be sure you have a form 1099-G reflecting this.

•   If you have earned interest on your money or dividends on investments, sold investments, then you will want to collect your 1099 forms that track these amounts.

•   You will also need to pull together any 1099 forms that document Social Security or income from a pension, IRA, or annuity.

•   Other forms of income will need to be accounted for as well, including jury duty, prizes, awards, gambling winnings, trust income, passive income (such as earnings on a rental property you own), and royalties, among others.

Types of Deductions

Now that you’ve covered what you earn on the tax document checklist, it’s important to track possible deductions, which can lower your tax burden. Essentially, when you take a deduction, you lower the amount of income that will be taxed.

Many of these deductions will involve 1098 documents. Here are some of the more common tax deductions possible:

•   Medical Expenses: You may be able to deduct some medical expenses, so it’s wise to gather records of how much you paid. If your medical bills exceed 7.5% of adjusted gross income, these can be deducted.

•   Retirement and Investment Account Contributions: Traditional IRA contributions are seen as deductible, as well as some 401(k) contributions, and other contributions, up to certain limits.

•   Mortgage & Property Taxes: Interest on your mortgage, property and real estate taxes may be deductible so gather your paperwork related to homeownership.

•   Charitable Donations: Some types of donations made by individuals and businesses can be deducted.

•   Motor Vehicles: Individuals who use a car strictly for business purposes may be able to take a deduction.

•   Child Care Costs: These may be deductible, so gather receipts and tax ID numbers from providers.

•   Educational Expenses: Student loan interest and other expenses related to your education can be tax-deductible. Depending on the type of loan taken out, some student loans may be tax deductible.

•   Home Office Costs: You can typically claim some of the price you pay for having a home office, as well as other qualifying business expenses.

•   State, Local, and Sales Taxes: Other than wage withholding, you may be able to deduct taxes paid on goods, services, and income on a state or local level.

Tax Credits

Before you wrap up your tax prep checklist, you’ll want to collect any paperwork that could help you snag tax credits. As for deductions vs. tax credits, while a deduction lowers your taxable income, a credit gives you a dollar-for-dollar deduction in your tax liability. So if you can claim a $2,500 credit, that means your taxes owed are reduced by $2,500.

Here, some credits that can help you save on your taxes:

Student Credits

You may want to look into the following:

•   American Opportunity Tax Credit: Up to $2,500 credit for qualifying educational expenses for eligible students during the first four years of higher education

•   Lifetime Learning Credit: Up to $2,000 per year for qualifying tuition and expenses for eligible students

Family and Dependent Credits

Consider whether you are eligible for:

•   Child Tax Credit: Up to $2,000 for a qualifying child under age 17

•   Child and Dependent Care Credit: You may be able to get back some of your expenses towards child or dependent care.

•   Earned Income Tax Credit (EITC): For low- to middle-income workers, the EITC could be from $600 to $7,430, depending on qualifying factors.

•   Adoption Credit: If an adoption was finalized in 2023, the adoptive parents may be eligible for a federal tax credit of up to $15,950.

Homeowner Credits

•   Home Energy Tax Credits: You might be able to take a credit of up to 30% on the costs of clean, renewable energy systems/equipment for your home, up to a limit.

Missed Deadline Penalties

Here’s another reason to prioritize this tax preparation checklist: If you don’t have your documents gathered and your return prepared, you might file late…or not be filing at all.

There are various penalties involved when you do not file any tax returns or miss the deadline. The IRS has procedures and regulations around missing any deadlines, and how penalties can impact future tax filings.

These penalties include:

1.   A 5% levy on taxes owed per month for every month missed after the April 15th deadline for missing the tax deadline.

2.   After the 60 days late mark, a minimum penalty kicks in of $485 or 100% of the taxes owed, whichever is less.

3.   A 0.5% levy on any taxes owed, if you fail to pay, even if you’ve filed before the initial deadline.

4.   A 25% penalty levy regulated by the IRS due to overdue taxes and filing.

Interest also accrues on unpaid taxes, adding to the cost. Since all of this can cost you money and create considerable stress, it’s a good idea to get a headstart to you have your tax prep documents together and can file on time.

The Takeaway

Filing taxes can be complicated and require gathering various forms and figures. It’s wise to start early and collect information related to your income, dependents, and possible deductions and credits.

Additionally, being prepared in advance to receive any refunds or make any potential subsequent tax payments is important. It can be wise to have a checking and savings account that earns you interest while making it simple to track your cash.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

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Photo credit: iStock/simpson33

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

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

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

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

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

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

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

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.

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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There are plenty of budgets out there that promise to help you manage your money more efficiently, and some of them can get quite complicated. That’s why many people opt for the 70-20-10 budget rule. It’s a simple, percentage-based formula that can help you get and keep your personal finances in good order.

This system can help you get better acquainted with what you earn and where it goes, while tracking your daily spending (that’s the 70% of your after-tax earnings) plus debt repayment and saving (the 20% and the 10%). These aspects of the 70-20-10 budget are part of its appeal, and it can guide you to better money habits. Read on to learn how it works and can be adapted for your particular needs.

What Is the 70-20-10 Rule?

The 70-20-10 rule is a way to allocate your monthly income into three categories:

•   Living expenses

•   Debt repayment and short-term savings

•   Investing and donations.

Using these categories can help organize the way you think about your income — how it comes in, and importantly, how it goes out. It’s a simple and often very successful way to get a personal budget in place.

Note: If it sounds very familiar, it’s worth noting that there is also the 50/30/20 budget rule, a slightly different spin on budgeting that also works with easy-to-calculate percentages. To see a breakdown using this method, check out the 50/30/20 rule calculator.

Now, take a closer look at each of the three components of this budget tool.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure online banking app.

70% for Living Expenses

Living expenses are exactly what they sound like — expenditures you need or want to make each month. To see how much of your post-tax dollars go toward these costs every month, you’ll do a little math. You’ll add up the monthly payments that cover essentials such as housing, utilities, food, childcare, and medical expenses.

It also includes expenditures made only once or twice a year, such as auto or home insurance premiums or yearly car tune-ups. In those cases, you simply figure the total paid for the year, divide by 12, and add that number to the monthly figure.

For the purposes of the 70-20-10 rule budget, living expenses also include discretionary spending on things like shopping, entertainment, travel, gym memberships, and other non-essential items.

To get started, scan through a couple of months of your bank statements, credit card, utility, medical, housing, insurance, and cable and internet bills to see how you’re tracking. Use the common living expenses listed below as a guide.

Housing

•   Rent or mortgage and property tax

•   Utilities

•   Maintenance

•   Insurance

Transportation

•   Car payments

•   Maintenance

•   Gas and tolls

•   Parking

•   Public transportation costs

•   Taxis and ride shares

•   Auto insurance

Childcare

•   Day care

•   After-school programs

•   Tuition

•   Babysitting

•   Clothes, personal care, and related expenses

Insurance

•   Health insurance premiums (if not deducted from your paycheck)

•   Auto and home insurance premiums

•   Life insurance premiums

•   Disability income insurance premiums

Food

•   Groceries

•   Takeout and restaurants

Health

•   Deductibles, copays, and coinsurance

•   Medical and dental appointment costs not covered by insurance

•   Prescriptions and over-the-counter drugs

•   Eyeglasses and contacts

Entertainment

•   Concert, theater, and movie tickets

•   Paid streaming and podcast services

•   Books

•   Travel

Pets

•   Food, equipment and accessories, and toys

•   Flea and tick prevention/other medications

•   Vet bills

•   Pet insurance

Personal

•   Clothing/shoes/accessories

•   Hair care and other grooming

•   Toiletries/cosmetics

•   Gym membership

If your monthly number hits the 70% mark or less, congratulations. You’re living within your means. For most people, however, this first calculation will likely exceed 70%. More on what to do when that happens below. For now, keep looking at the big picture of tallying your 70-20-10 numbers.

20% for Saving and Debt Repayment

Next, you want to calculate how much it will take to hit the 20% goal of saving and debt repayment. (If you don’t have debt, hooray; you can zoom straight to saving. But many people need to use this bucket to pay off debt and save.)

If you have credit card debt, you’ll likely want to focus all or part of this 20% on paying that down so you can avoid the high interest payments. If you have college debt, the monthly repayment amount should be included here in the 20% category.

Once that’s done, you’ve cleared the decks for other savings, whether for an emergency fund (aim for three to six months’ worth of expenses) or a near-term goal such as a vacation or down payment for a home.

Depending on what and why you are saving, different kinds of savings accounts may make sense. Consider these smart options to get extra benefits:

•   High-yield savings accounts make sense if you need your money liquid (accessible) but want to earn more interest than the current rate on traditional savings accounts. Online banks vs. traditional banks often offer the best rates.

•   A certificate of deposit (CD) is another option. These accounts lock up your money at a specific interest rate for a period of time, usually from six months to a few years. What’s nice is you know how much money your money will earn, but keep in mind, if you pull your money out early, you’ll typically face penalty fees.

•   Money market accounts (MMAs) combine some aspects of a savings account with features of a checking account. You’ll earn interest on your savings (possibly in the ballpark of high-yield accounts), and you may be able to access funds via debit card or checks.

Once you’ve taken a look at your savings/debt picture, you’ll determine how best to handle the 20% rule. Depending on the size of your debts and your living expenses, you may need to temporarily allocate more or less funds to this category. More on that below.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress toward your financial goals.

10% for Donation or Additional Savings

The remaining 10% can be allocated to investing in your future, usually for retirement. Contributions to an IRA, 401(k) 403(b), self-employed retirement savings vehicles, or other long-term, tax advantaged savings plan can be best for this category. This is money that you won’t need in the short term, so it can be invested more aggressively than the savings in your 20% category.

In addition, part of this allocation can go to charitable donations. Perhaps there’s a cause you want to support, from animal rescue to medical research, or you like to donate to your college; it’s your call.

Example of the 70-20-10 Budget Rule

In terms of calculations, say your monthly income after taxes is $6,000. Here’s how that money would look on the 70-20-10 budget plan.

•   For living expenses, you would multiply 6,000 x 0.70, and see that you have $4,200 of after-tax dollars for housing, utilities, food, entertainment, and all the other items listed above.

•   For savings, you would multiply 6,000 x 0.20, or $1,200 to put toward savings and debt.

•   Lastly, you would multiply 6,000 x 0.10, and see that you have another $600 to put toward additional savings and/or donations.

Here’s the math: $4,200 + $1,200 + $600 = $6,000.

How to Customize the 70-20-10 Rule to Fit Your Needs

The beauty of the 70-20-10 plan is its simplicity — and flexibility. Once you create a budget this way, you can customize the allocations within reason to meet your own needs and financial goals over time. Creating a budget can give you peace of mind, because you’ll know you are taking care of your financial health. Here, a few tips for increasing your likelihood of success in following this plan:

Include Side Hustle Earnings and Windfalls

Bonuses, tax refunds, money from side hustles and other income should be factored in later, as they are earned; don’t consider them as part of your base income. The bulk of the extra income can be designated toward the area most in need of attention, such as paying off credit card debt or boosting emergency savings. But do feel free to set aside a small percentage of those earnings as a reward for your hard work and have some fun with it.

An important note: If not already evident, this budget technique works best for those with a steady income, who are on a payroll. If you are freelance, a gig worker, or seasonal employee and your income is variable, this may not be the best technique for you.

Adjust the Percentages When Needed

After tracking your spending and making possible cuts, you may find you still can’t fit living expenses into the 70% category. Maybe you are just starting your post-grad life, earn a lower income, or live in an area with a high cost of living.

Don’t stress out over this! If you have limited funds and lots of bills, you may have to allocate a bit more to that category and put less in short-term savings until that next raise or other income spurt comes through.

Protect the 10%

A quick note for people with lots of credit card debt: Those hefty bills are a sign that you may be spending more than your income level allows. You’ll probably do better with the 70-20-10 budget if you increase the paying debt/savings percentage to higher than 20% till your debt is lower. Take steps to reduce discretionary spending, perhaps even more than you have already.

In addition, you may find you need to make more drastic cost-cutting moves too, such as finding an apartment with less expensive rent or ditching the expensive car payments and switching to mass transit. The goal is to get costly debt under control so you can start saving for your priorities and peace of mind.

Prioritize High-Interest Debt

Whenever you find the need to adjust percentages, it may be best to avoid tampering with the 10% investing for the future allocation. The sooner you start saving for retirement, the more that money will add up over time. By the same token, older people who may need to catch up on retirement savings may want to increase this 10% allocation. One of the reasons the 70-20-10 plan can be successful is that it helps you balance both short-term needs with long-term financial planning.

If you do make percentage adjustments, be sure to continue to track expenses so you can see when you can readjust allocations back to the original 70-20-10 plan.

The Takeaway

The 70-20-10 budget formula divides your after-tax income into three buckets: 70% for living expenses, 20% for savings and debt, and 10% for additional savings and donations. By allocating your available income into these three distinct categories, you can better manage your money on a daily basis. You can also take steps toward achieving your financial goals in the short- and long-term.

As you establish a budget that works for you, don’t forget to find the right banking partner.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

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

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

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

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

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

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

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

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

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Imagine this: After spending 12 long years of education, it’s finally time to head to college. But hang on, because there’s a catch — tuition is much higher than you thought, and the school didn’t offer an academic scholarship.

One alternative for students can be to find a non-academic scholarship and keep pushing toward that dream. Here are tips on finding non-academic scholarships to help pay for a college education.

What Is a Non-Academic Scholarship?

Scholarships are one type of financial aid available to students that don’t need to be repaid and are typically awarded based on merit — that is, being especially knowledgeable or skilled in one area. Grants, which also do not need to be repaid, are typically awarded based on need and not based on academic or athletic merit. For example, Pell Grants are federal grants awarded to undergraduate students who exhibit exceptional financial need.

Scholarships can be awarded for many different reasons, including academic achievement. However, just because someone isn’t an A+ student doesn’t mean they can’t qualify for a scholarship. There are non-academic scholarships that are based on athletic or artistic achievement, community involvement, extracurricular activities, and more. Students may just need to put in a bit of legwork to find ones they qualify for and apply.

Recommended: Finding Free Money for College

Where to Find Non-Academic Scholarships

Often, the first step in getting a scholarship is to find it. Here are a few places to start your search.

School Counselor’s Office

High school students can check in with their high school counselor to see about any non-academic scholarship they may know about. The office may have a list of options available to students, and, because they may know the student, their skills, and their future aspirations, they may be able to hone in on the right scholarship for them.

School counselors may also have helpful information on navigating the financial aid process. One piece of the funding puzzle may be undergraduate loans if scholarships don’t cover all of the costs. Students may consider private student loans after exhausting federal aid, including federal student loans. This comprehensive private student loan guide dives into more detail.

College Admissions Website

If a high school student has already been accepted to school, they may check in with the college’s admission website. There, they could find a list of potential scholarships offered directly by the school. Students should also reach out directly to the admissions office or future academic counselors for assistance.

As the school year nears, you may consider checking in with your college’s financial aid office to see if they can guide you to unclaimed scholarships.

Scholarship Listing Websites

There are several scholarship search tools out there that roundup available scholarships to students, including destinations like FastWeb or CollegeBoard. Here, students can sift through hundreds of available scholarships and find help with the application process, as well.

Professional Associations and Clubs

Another place to find scholarships includes professional associations and clubs, such as churches, your parent’s employers, local businesses, minority groups, and more.

A quick Google search on professional organizations in your chosen field of study can lead to scholarships, too. Most are free to join and include fields such as marketing, engineering, graphic arts, law, and more.

Friends and Family

Sure, it may not seem as obvious, but merely asking around for scholarship opportunities can’t hurt. Students should reach out to their network and let everyone know they are on the hunt for financial assistance. Someone may know of a specific scholarship that could be the perfect fit for the student.

Connect With the Community

Explore connections with local religious groups, business, and other organizations. Having an existing connection can potentially improve an applicant’s chances of securing a scholarship. Plus, students may face less competition when they apply for more local scholarships.


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Types of Non-Academic Scholarships

Need a little help thinking about what type of non-academic scholarship may fit? Here are a few types of scholarship ideas to get students started.

Talents

Have a unique talent? There’s probably a scholarship available for it. For example, you can find scholarships for duck calling, dancing, drawing, and much more.

Athletics

Each year, there are more than 180,000 athletic scholarships awarded to students. Scholarships are available for a wide variety of sports to both men and women, including volleyball, tennis, swimming & diving, skiing, lacrosse, golf, fencing, and more.

Heritage

Students may also find non-academic scholarships based on their heritage. Students from minority groups may find additional opportunities, including scholarships for African American or Hispanic students.

Some scholarships may be available through churches, while others can be found on websites like College Board. There, students of various backgrounds can search for a suitable match.

Interests

Students can apply to non-academic scholarships based on their various interests, too. For example, those interested in cars can apply for the National Corvette Club scholarship. Those students that love to cook can apply for the AAC Culinary Scholarships for High School Seniors .

Know a student who spends their Sundays completing The New York Times crossword puzzle in pen? Have them apply to the Crossword Hobbyist Crossword Scholarship . No matter the interest, odds are there is a scholarship out there for it.

Area of Study

Future and current college students may be able to find a scholarship that suits their future area of study. Students hoping to become their own CEOs can apply for The National Association for the
Self-Employed ’s Future Entrepreneur Scholarships, which helps promote “entrepreneurial thinking among aspiring business students.”

Again, if there’s an area of study, odds are there’s a scholarship available for it.

Area Code

Students looking for a non-academic scholarship can search for regional scholarships on many online databases. SoFi runs a state-by-state grant and scholarship database, so you can take a look at what is available in your area.

Other sources for regional or location-based scholarships may include local nonprofits and businesses.

Other, Outlandish Options

There are scholarships available for less obvious reasons, too. One of the more famous wacky scholarships is the Stuck at the Prom Scholarship Contest sponsored by Duck brand duct tape. Each year, the company awards a $5,000 scholarship to a teen who designs and wears a dress or tuxedo made out of their duct tape.

How to Get a Non-Academic Scholarship

There are thousands of non-academic scholarships available each year. In order to get a non-academic scholarship, you should first look for scholarships in line with your talents and career interests. From there, you can look to local businesses, friends and family, and your community to find other non-academic scholarships.

And finally, do a Google search for non-academic scholarships you think you may qualify for. There are scholarships available for almost every type of person and every interest, including scholarships for minorities, scholarships for people who dance, religious scholarships, first-generation scholarships, and more.

Tips for Finding & Applying for Non-Academic Scholarships

If you’re hoping to find and apply for non-academic scholarships to help pay for college, there are a few things you can do to increase your chances of getting one.

Start Early

Starting your search early is one of the best things you can do to land a scholarship. Since many scholarships come from the school you’re attending, it’s recommended to fill out the FAFSAⓇ as soon as possible. Some grants and scholarships offered by schools are on a first-come, first-served basis.

It’s also a good idea to start your search early so you can make sure you can meet all the deadlines for the scholarships you hope to apply for. Many will require essays, and the sooner you know which scholarships you want to apply for, the sooner you can get your essays completed and submitted.

Read the Fine Print

Make sure to read the fine print of all scholarship applications. This will ensure you won’t miss any deadlines or important information regarding the scholarship.

Showcase Your Personality

When applying for scholarships and writing essays, it’s important to showcase your personality through your written word. Most non-academic scholarships are fun, so feel free to express yourself and make it so your application stands out from the rest.

Proofread Your Application

Proofreading your application is a great way to catch any grammar errors or application mistakes prior to submission. If it comes down to you and one other candidate, you don’t want to miss out because of easy grammatical errors you could have caught by simply proofreading your application beforehand.

Don’t Give Up

And finally, keep searching and applying for scholarships until you receive the amount of money you’re hoping for. Scholarships can be competitive, so don’t get down on yourself if you’re struggling to get one. Instead, keep the momentum going by continually searching and applying for new opportunities as they arise.

The Takeaway

Non-academic scholarships can be awarded based on talent, skill, interest, and more. Some scholarships may even be regional or location based. To find non-academic scholarships, consult with your guidance counselor, your college’s financial aid office, local business and nonprofits, and online scholarship databases.

If scholarships and federal financial aid aren’t enough to cover college costs, private student loans can help fill in the gaps.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

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SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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

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

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Your bank account number is a series of digits that identifies your account. Each account has its own unique number issued by the bank, and you’ll need to know it in order to carry out a number of financial transactions, such as transferring money between accounts or setting up direct deposit.

Here’s a closer look at what a bank account number is and how to keep yours safe.

How Many Digits Are in a Bank Account Number?

Each bank assigns numbers to accounts based on a proprietary system, and the numbers can be up to 17 digits long, but are typically between eight and 12 digits.

In use since the 1960s, bank account numbers are used by financial institutions to help them differentiate among the many accounts that they hold for customers. You get one when you open a bank account, and each account has a different account number, even if the account holder is the same.

For example, if you hold multiple bank accounts at a single institution, the bank account numbers keep them distinct. That might mean you have a checking and a savings account at a bank or you have two savings accounts earmarked for different purposes at a bank, for instance.

What Is a Bank Account Number Used For?

A bank account number is a unique identifying number which, along with the routing number (indicating which bank holds the account), can be used to direct funds into and out of a customer’s account.

For example, when you write a check, the account number tells the receiving bank where to draw funds from. When you sign up for direct deposit, the account number directs your paycheck to the right place.

Is a Bank Account Number the Same as a Debit Card Number?

A bank account number and a debit card number are not the same, even if they relate to the same account. The account number identifies only the account.

The debit card number is a separate, different set of digits that is used to pull funds out of your bank account. You might think of it as a code that shares information about the bank identification number (the issuer), a set of digits that indicate your bank account (but doesn’t repeat your account number), and a numeral that signifies whether your card is valid.

Recommended: How Do Banks Make Money?

How to Protect Your Bank Account Number

Your bank account number is an important piece of confidential information. What can someone do with your bank account number? Because you need it to conduct transactions with your bank, hackers and criminals looking to commit identity theft or fraud could find it useful. Keeping this number confidential is important, so here are ways to protect it – and your security.

•   Keep paper checks, which have your bank account and routing number printed on them, in a secure place. Shred used or void ones.

•   If you are doing an online or mobile banking transaction involving your bank account number, be sure you have a strong password and are using a private and secure internet connection. Avoid doing banking while using a public connection at, say, a hotel or cafe.

•   Only enter your bank account number on secure websites, meaning ones that start with “https” and may show the little lock icon.

•   Monitor your checking account and other accounts carefully, and keep an eye on your bank statements. Look out for purchases or money transfers that you don’t recognize or that you didn’t make, and alert your bank about any unusual activity.

Recommended: How to Avoid ATM Fees

The Takeaway

Your bank account number is akin to a fingerprint: uniquely yours. It’s a valuable piece of information you’ll need for any number of banking transactions. It’s also information you should protect as best you can by carefully disposing of paper checks and statements and practicing secure banking online.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

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Photo credit: iStock/filadendron

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

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

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

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

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

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

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

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

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