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

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

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

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

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

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

How Does Spare Change Saving Work?

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

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

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


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

The Benefits of Spare Change Savings

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

They can make saving easy and automatic

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

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

Your savings can earn interest

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

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

They can make investing less intimidating

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

There may be extra ways to save

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


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

Disadvantages of Spare Change Savings

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

They may charge fees

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

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

It’s possible to lose money through investments

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

Micro-investing may not be ideal for emergency funds

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

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

You might get hit with an overdraft fee

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

The Takeaway

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

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

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

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

Photo credit: iStock/Nattakorn Maneerat

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

4.60% APY
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

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

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

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

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

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

SOBK0923006

Your borrowing power refers to how much credit you can get based on your financial history, including your credit history and score. Having strong borrowing power is essential if you ever want to get a mortgage, car loan, personal loan, or any other type of financing. It can also help you qualify for loans and credit cards with more favorable rates and terms. What follows are 10 effective strategies to boost your borrowing power and increase your financial opportunities.

How to Boost Your Borrowing Power

Whether you’re interested in borrowing money to make a major purchase or using a personal loan to consolidate high interest debt, here are some simple ways to increase your borrowing capacity.

1. Check Your Credit Reports

Lenders determine how much they will lend you (and if they will lend to you at all) primarily based on your credit score and history. So a great first step is to get copies of your three credit reports, and read each one over carefully. This allows you to see where you stand, as well as check for any mistakes or inaccuracies (like payments marked late when you paid on time or someone else’s credit activity mixed with yours).

You can request free copies of your credit reports from three major credit bureaus — Equifax, Experian, and TransUnion — through AnnualCreditReport.com . If you find any errors, you’ll want to file a dispute with the appropriate credit agency.

2. Be a Responsible Borrower

To show creditors that you are a safe bet, you’ll want to make sure you pay all of your bills on time. Also try to keep your credit card balances low — this impacts your credit utilization ratio (the percent of available credit you are actually using), which has a significant impact on your credit score. To calculate your credit utilization, add up all of your revolving credit balances and credit limits, divide your total balance from your total limit, and multiply that number by 100 (to get a percentage). Ideally, you want to keep credit utilization below 30%.

3. Show Financial Stability

Stability and consistency in your financial and employment history can bolster your borrowing power. Lenders generally prefer borrowers who maintain a consistent residence and have a steady job and a reliable income source. This showcases your reliability as a borrower and boosts your chances of getting approved for loans with favorable terms.

4. Consider a Co-Borrower

If your individual borrowing power is limited, using a co-borrower (such as a spouse or a family member) can significantly enhance your chances of loan approval. A co-borrower is a joint applicant who shares ownership of the loan and responsibility for payments. (This is in contrast to a cosigner, who is only liable for the loan if the primary borrower fails to make payments.) Depending on the co-borrower’s income, they may be able to help you qualify for a higher loan amount, as well as better rates and terms.

5. Shop Around

Lenders vary in terms of how much they loan out, and to whom, so it’s a good idea to explore multiple lenders, including traditional banks, online lenders, and credit unions, and compare loan options before making a decision. Some lenders will allow you to “prequalify” for a loan, which can give you a good idea of how much of a loan they will offer you and at what rate. This only requires a soft credit check and won’t impact your credit score.

6. Pay Down Existing Debt

Reducing your existing debts can have a positive impact on your credit score. Not only that, it enhances your debt-to-income (DTI) ratio, a key factor considered by lenders. Your DTI ratio measures how much of your monthly gross income goes toward debt payments. This gives lenders insight into your ability to make another monthly payment and how large a payment you could handle.

To calculate your DTI, add together your fixed monthly payments (like mortgage/rent, auto loans, credit cards, and other personal loans), then divide that number by your gross monthly income (the amount you earn before taxes and other deductions). As a rule of thumb, lenders prefer a DTI ratio of 36% and under to approve you for a loan.

7. Increase Your Income

Another way to improve your DTI is to increase your income. Even if you have a large amount of debt, a high enough income can often offset it. As long as you have enough money coming in to handle your current debt and take on a new loan, a lender may not cap how much you are able to borrow.

If you have some time before you need to apply for a loan, you might look into ways to bump up your income, such as taking on a side hustle, asking for a raise, or looking for a new job that pays a higher salary. This could help you qualify for a larger loan amount.

8. Don’t Leave Any Income Out

As mentioned above, your income plays a key role in how much you can borrow. So you want to be sure to include all sources of income, including:

•   Monthly salary

•   Alimony

•   Child support

•   Side-gig income

•   Rental income

•   Investment property income

Including all of your income can lower your DTI ratio, increasing your borrowing power.

9. Consider a Longer Loan Term

Generally, the longer your loan term, the lower your monthly payment. A longer loan term — and lower monthly payment — may allow you to borrow more money with less impact on your DTI ratio, giving you eligibility for a larger loan. However, you’ll want to keep in mind that extending the term of a loan typically means paying more in interest over the life of the loan, increasing your total borrowing cost.

10. Consider Offering Collateral

You may be able to borrow more with a secured vs. an unsecured loan. With a secured loan, you put up something valuable (such as property, a vehicle, or a savings account) as collateral. The lender can take possession of this collateral if you fail to pay back loan funds as agreed. This lowers risk for the lender and, as a result, they may be willing to offer you a larger loan and/or a lower rate. If you’re already offering collateral, offering something of more value might boost the amount you’re approved for.

The Takeaway

If you’re thinking about applying for a loan for a large purchase, to consolidate other debts, start a business, or for any other purpose, it’s a good idea to look into ways to improve your borrowing power. You can start doing this right away by reviewing your credit reports, staying on top of your bills, paying down debt, using only a portion of your credit card limits and, if possible, boosting your income.

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.

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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.

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

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SOPL0423017

If you’re buying a new car or a used one, you will likely face the decision of whether or not to purchase an extended warranty.

An extended warranty typically covers the cost of certain repairs after the manufacturer’s standard warranty (which usually lasts three years or 36,000 miles, whichever comes first) expires.

These policies can help you breathe a little easier, knowing that if your vehicle needs a pricey repair in the future, some or all of the cost could be covered.

On the other hand, an extended warranty can be expensive in and of itself and usually don’t cover every possible repair. So it could wind up being a big expense that doesn’t really pay off.

In this guide to extended car warranties, you’ll learn about what these policies do, their pros and cons, and whether one might (or might not) make sense for you.

What is an Extended Car Warranty?

When buying a new car, it likely comes with a manufacturer’s warranty. An extended warranty is an optional plan you can buy to help you pay for the cost of certain repairs your vehicle may need while you own it, after that original warranty expires. You may be able to get an extended warranty when buying a new or used car (the latter may depend on whether the policy is transferable; more on that in a minute.)

•  Extended car warranties, also called extended service contracts, typically cover the price of major repairs or replacements (with exclusions) for a certain number of years or number of miles.

•  The extended warranty usually begins when the manufacturer’s warranty expires, but sometimes the two overlap.

•  While these plans are often offered at the point of sale, you can typically purchase them any time until the original manufacturer’s warranty expires.

•  Extended warranties are also offered by third-party vendors.

If you’re interested in getting an extended car warranty for a new or leased car, it can be worth going online to compare policies from independent providers to see exactly what each one covers, what’s excluded, and how much it costs. This can help you decide which warranty would work best for you and whether it is worth getting.

What Does an Extended Car Warranty Cover?

Just as you may wonder, “What does car insurance cover?” you may be curious to know, “What does an extended car warranty cover?” Exactly what the policy covers will vary with every provider and the type of warranty you choose.

The only way to know for sure is to carefully read the extended warranty policy agreement, but here are some general rules of thumb.

What It Covers

Extended warranties typically cover the major mechanical parts of your car, such as:

•  Engine

•  Transmission

•  Steering

•  Suspension

•  Clutch

•  Air-conditioning

•  Electrical systems, including in-car audio and navigation systems.

So if your engine blows or oil starts leaking, it will likely be covered. Coverage may not be 100%, however, and you may have to pay a deductible before coverage kicks in.

Some policies also offer add-ons like 24/7 roadside assistance, rental car reimbursement, trip interruption service, and tire protection.

What It Doesn’t Cover

Generally, extended warranties won’t cover routine maintenance or damage caused by normal wear and tear, such as:

•  Oil changes

•  Replacing the timing belt (unless it fails before the recommended replacement time)

•  New tires

•  New brakes

•  Windshield wipers.

If an item isn’t listed in the policy, you can assume it’s not covered.

How Much Does An Extended Car Warranty Cost?

Pricing will vary depending on the type of vehicle, what the plan covers, what the deductible is, and the length of the contract. The upfront cost of the warranty can range from $1,000 to $3,000 or more. If you’ve been saving up for a new car, that can be a significant additional expense.

If you purchase a car warranty from a dealer and include it in your financing, you are likely also going to pay interest, which will increase the total cost of the warranty.

You might have to pay a deductible every time you submit a claim, plus kick in money for a portion of the bill.

Pros and Cons of Extended Car Warranties

Whether you should get an extended car warranty or not is a personal decision. It will depend on how reliable the car is and, if you’re buying a used car, how old the car is. It will also depend on how well you would be able to manage if your car encountered a problem that will be costly to fix.

Here are some pros and cons you may want to consider when making the decision.

Pros of an Extended Car Warranty

First, the potential upsides of an extended car warranty.

•   You may save money. If your car needs a very costly repair that’s covered under your extended warranty, you could save money. Instead of paying the entire bill out of pocket, you’d only be responsible for covering the deductible (if you have one) and then the warranty provider would pay for all or most of the rest.

•   It provides peace of mind. If you’re worried about how you would cover a car repair bill, having an extended warranty can make you feel less money stress over something going wrong with your car. If your plan also incorporates roadside assistance, you won’t have to worry about breaking down on the road.

•   It can make your car more attractive to a future buyer. If you plan to sell your car down the road, a transferable warranty can make your car more appealing to prospective buyers.

Con of an Extended Car Warranty

Now, some of the downsides of extended car warranties to consider.

•   You may never use it. Many people who purchase an extended car warranty don’t wind up using it. And if they do, the cost of the repairs they need may be less than the cost of the warranty.

•   There may be overlap. If the coverage period of the extended warranty overlaps with the manufacturer’s warranty, you may end up paying for coverage you’re already getting at no cost.

•   Exclusions and limitations. Every contract comes with fine print that specifies how you can use the warranty. For example, the provider might deny coverage for a problem caused by normal wear and tear or reduce the payout based on your car’s depreciation. You may also be required to take the car to certain auto repair shops to be covered.

Are Extended Car Warranties Worth It to You?

If you are trying to decide whether a car warranty is worth it, here are a few times it may be a good investment.

1. When Your Car Is Unreliable

If you were to buy a car you were leasing and you know it tends to have a certain kind of issue (maybe the A/C is temperamental), then an extended warranty might be a good idea.

2. When You Are Worried About Getting a Big Repair Bill

If you know that you couldn’t handle a large repair bill if you were to receive one, it might be wise to get an extended car warranty. Yes, it will cost you, but it could help you avoid incurring high-interest credit card debt at an inopportune time.

3. When You Are Planning to Keep Your Car for a Long Time

Perhaps you are planning on selling your vehicle and then buying or leasing a car in the next year or two. In that case, it might not be worth it to purchase an extended car warranty.

However, if you are in it for the long haul, so to speak, you might benefit from an extended warranty. Over the years, repairs can inevitably crop up. This kind of policy might help you organize your bills better and afford to pay them.

One point to note: With an extended car warranty, it may be especially important to keep up with the cost of car maintenance. Not maintaining your car properly could lead to the insurance becoming void.

5 Tips for Choosing an Extended Car Warranty

If you decide an extended warranty makes sense for you, it’s a good idea to look at the policy contract closely — this is where you’ll find the fine print that spells out all the rules and exceptions — and not just the glossy brochure or the online advertising.

If the seller won’t show you this info before you sign on the dotted line, it can be wise to take your business elsewhere.

Here are some things you may want to look for in a contract before you sign.

1. Check the Deductible

Look at the deductible: You might have to pay $100 or more out-of-pocket every time you get a repair, before the coverage kicks in. It’s wise to know what you are signing up for.

2. Understand Whether the Policy Is Transferable

This is a consideration if you are thinking of selling your car down in the future. Typically, these contracts aren’t transferable if you sell to a dealer. So if you are thinking you might want to offload your vehicle before too long, definitely weigh this factor.

3. Know How the Service Contract Pays Out

In some cases, you may have to foot the bill and then file a claim to get reimbursed. With this scenario, it’s possible that after you pay for a repair, the claim can be rejected. If this feels like a challenging prospect, you may want to review a variety of extended warranties and see if there is one (or some) that offer a better fit.

4. Delve into the Exclusions and Requirements

You will need to read the fine print to find out what repairs are and aren’t covered and other limitations or restrictions. If, say, you have a particular concern (such as the example above, with a car that has temperamental air conditioning), you will want to make sure you are covered.

5. Check Where You Can Go for Repairs

Manufacturer-backed contracts typically require that you go to a dealer. Third-party vendors may have restrictions on where you can take your vehicle, or they may let you choose the repair shop. It’s wise to see what options are available and which extended car warranty best suits your needs.

Recommended: Budgeting for Beginners

Third-Party Extended Car Warranties

Typically, you will have a choice between an extended car warranty from the original equipment manufacturer (or OEM) and one that comes from a third party.

The OEM will be the car brand, such as Toyota or Ford? What exactly is a third-party extended car warranty? It means that a company that is not the car brand is offering you this policy. It might be an insurance or a warranty company.

Third-party policies are similar to and possibly less expensive than OEM ones, but look carefully at these points. Third-party coverage can be more restrictive and limited:

•  Are there limitations regarding what is covered?

•  Do you have your choice of where your car will be repaired, or will the policy dictate that?

•  Does the policy specify that OEM parts must be used, or could any type be used?

•  What is the deductible?

•  Will you have to pay for repairs out of pocket and then be reimbursed?

By sizing up these factors, you can find a policy that suits you best.

Recommended: Is it Smart to Buy Your Leased Car?

The Takeaway

An extended warranty could add thousands of dollars to the purchase of a car but can, in some circumstances, offer additional protection that makes it a wise buy. However, your circumstances will play a key role in whether an extended car warranty is worth it.

If you would have trouble covering the cost of a major repair and/or worrying about car expenses keeps you up at night, the cost of one of these contracts might be worth the peace of mind it can bring.

If you’re buying a vehicle with a reliable track record, however, it might make sense to skip the warranty and, instead, set aside the money you’d spend on it, and then use the funds for needed repairs.

If you don’t end up using all of it for your car, you can keep saving it or use it for something else.

FAQ

Do you really need a car warranty?

Nearly all cars come with a warranty that lasts 36 months or 36,000. Whether to get an extended warranty can depend on how much you want that peace of mind, whether you feel you couldn’t afford a major repair otherwise, and if you feel your car is unreliable.

Is it worth it to get an extended car warranty?

Whether an extended car warranty is worth it depends on your personal situation and your car. If your car tends to need a fair number of repairs or if you plan on owning it for a long time, or if you worry you wouldn’t have funds available for repairs, it can be a wise move. But if you don’t like paying for a policy you may never use, it may not be a good fit.

What are the disadvantages of an extended warranty?

In terms of the cons of an extended warranty, consider that it will probably cost at least $1,000 or more and have a deductible. It may have limitations about what is covered, it may not stipulate that original equipment manufacturer (OEM) parts be used, it may not allow you to pick where the repair is done, and you may have to pay out of pocket and then get reimbursed.

Photo credit: iStock/Pekic

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.

SOBK0723045

Paying yourself first is a personal finance strategy in which you prioritize saving money before you spend it. Doing so may mean you transfer funds into a savings or investment account before bills, such as housing and loan payments, get taken care of.

By paying yourself first, you can help build wealth and achieve money goals, whether that means accumulating the down payment on a house or being able to pay for your child’s education. It can also be a way to avoid overspending.

If this “pay yourself first” strategy sounds good, read on to learn tips for making it a reality by budgeting well and using tools such as automatic transfers.

Why Would You Pay Yourself First?

It may help to know that plenty of financial planners believe in this approach, as it can help you build a nice nest egg. Here’s a few ways paying yourself first can help you financially.

To Save Consistently

The beauty of this approach is that it focuses on consistent, prioritized savings and investment, along with a frugal mindset, which could give you the freedom to ultimately put your money where it matters most to you.

To Prepare for the Future

Everyone has unique savings and investment goals, and it’s helpful to be clear about your own — then you could use those goals as motivation to consistently pay yourself first.

To get started, it could help to brainstorm how much you’d like to save and what you would do with that money.

You might, for example, want to put a certain amount of money aside for things like a downpayment on a house or to help your children attend college. Or you may want to travel.

To Stay Motivated

Because some of the bigger financial goals may take a while to achieve, it could help to also have shorter-term goals to stay motivated to save.

Your shorter-term goal, for example, might be to put enough away in savings to cover a month’s worth of expenses — and then three months, and then six months. Or you may want to save to buy a new car. Paying yourself first can make meeting those shorter-term goals more doable.

A Look at Spending

If saving enough money to meet your goals seems out of reach, then it might help to take an honest look at your spending habits. Maybe you find yourself making impulse purchases when you’re feeling stressed. If so, know that you’re not alone when indulging in some retail therapy.

If you only rarely indulge in impulse shopping, and the dollar amounts are within your means, then this isn’t likely to cause significant harm. But, if this becomes a habit, crossing over into compulsive spending, then this could have a serious impact on your financial well-being. Consider the following:

•  If you believe that you’re not achieving savings goals because of overspending, then it could make sense to address that issue first. It might help to identify your emotional triggers and then avoid shopping during those times.

•  If you aren’t yet sure what those triggers are, track impulse purchases and reverse engineer when you’re more likely to spend too much. You may notice it happens after a long day at work or when you’re worried about something.

•  As another strategy, if you’re not sure whether something fits into your budget, you could wait a couple days before making a buying decision or call a friend when you’re feeling the urge to shop.

•  Another potential challenge: FOMO spending — based on the fear of missing out. Many people admit to feeling pressured by others to spend money on purchases they didn’t need, just to keep up with their friends, coworkers, or even influencers on social media.

•  If that feels familiar to you, there are strategies to help conquer FOMO spending. You can brainstorm free alternatives to high-cost plans a friend might suggest. When is a local art museum, for example, offering a free community day? What movie can you get from the library and invite friends to watch with you? What about a hike in the local park system?

•  If you find that FOMO kicks in when you have your credit or debit card handy, you might want to only carry cash when you go out to your favorite restaurant, bar, or shop. And if ads and posts on social media cause you to want to shop, you could reduce your time on Instagram, Facebook, Twitter, and the like.

•  Another strategy: If you’re tempted to put a discretionary purchase on your credit card, you could use a credit card interest calculator to see how much interest you might really pay on that impulse buy. The amount might shock you and cause you to put the item down and walk away.

Budgeting Overview

Before you can really know how much money you can pay yourself first, you might need to be confident in your budget. Although the word “budget” can have a negative connotation, it’s really a way to take control of your money to make sure you’re saving and spending in a way that meshes with your wants and needs, dreams, and goals.

By tracking your spending for a period of time, say 30 days (or more), you might get a sense of where your money is going. You could create a list of your monthly expenses, including your rent or mortgage payment, car payment, credit card payments, student loan payments, and more.

You might also consider listing what you pay for your utilities, cell phone, groceries, and so forth, along with discretionary purchases, in order to see a more complete picture of monthly costs.

Ideally, when you add these up, you’ll be spending less than what you earn, and you could use that information to help determine how much you can potentially deduct from your paycheck and put into savings or investment accounts.

If you discover that you’re not currently living within your means, or that you aren’t able to save as much as you’d like, then one good idea is to see where you can trim expenses. You may also consider ways to grow your income, whether that means asking for a raise or picking up a side gig.

Based on this information, you can set up a monthly budget. One budget strategy is the 50-30-20 budget. In this budget, you allocate your take-home pay into three categories; needs (50% of your take-home pay), wants (30% of your take-home pay), and savings (20% of your take-home pay). Allocating your money with this budget offers flexibility so that you can save and spend on the things that are most important to you.

How to Start Paying Yourself First

Let’s look at a few steps you can take to make paying yourself first a priority.

Create an Emergency Savings Account

As a first step in paying yourself first, it may make sense to create an emergency savings account if you don’t already have one or if it needs an extra infusion of cash.

That way, if your car or HVAC system breaks down or you have unexpected medical bills, you’ll have cash to help address the situation without simply relying on high-interest credit cards or other forms of debt.

Conventional wisdom suggests an emergency account that contains three to six months’ worth of basic living expenses, put into an account that’s accessible at any time.

Then you could move on to saving for other short- and long-term goals, including but not limited to saving for retirement.

When trying to determine how much money you should pay yourself first in the beginning, one idea is to start with a small amount and then incrementally increase it until you reach your goals.

Or it might make sense to determine how much you’ll need for your goals and reverse engineer how much you’ll need to put away to reach them in a certain time frame.

Also, if you receive a bonus or inherit money, you could consider putting all of the additional money into a savings or investment account. You could do the same if you get a raise.

Eliminate Unnecessary Expenses

If you are looking to kickstart your savings and build it up fast, there are several strategies you might consider. You may choose to review your expenses and get rid of unnecessary ones.

What online subscriptions and streaming services are you paying for? Are you using them? If you review an entire month’s worth of debits from your account, how many do you see that are discretionary, ones you could live without?

Once you’ve eliminated some expenses, consider adding that combined dollar amount to the money you’re sending directly to your savings account. Even if the amounts, overall, are small, over time they can really add up.

Set Up Autopay

Sometimes, if you owe a monthly payment to a company, they’ll give you a discounted rate if you set up autopay and have your payment automatically deducted from your account. This could help to assure the company that the bill will be paid on the due date. Meanwhile, you could benefit from a discount and the convenience of not having to manually pay the bill each month.

This may help you avoid late fees, as well, but you might want to be cautious. If you don’t have enough money in your account on the day the bill is due to be deducted, you might be charged additional fees, such as an overdraft fee by your bank.

Automate Your Savings

Automating your savings can be just as useful as automating your bill pay. Ways to automate your savings include, setting up direct deposit, funneling a set amount to your savings each month, and taking advantage of employer programs like a 401(k) and any employer match offered to employees.

Consider a Spending Fast

What about going on a spending fast? You might, for example, pick a day or two of the week when you don’t spend any money outside of what it takes you to get to and from work.

You could also consider other cost-saving ideas like packing your lunch, skipping the stop at the coffee shop, and getting your book from the library on the way home, not from the bookstore. Besides saving you money on your “fasting” days, employing these strategies may help you to pay more attention to discretionary spending on the other days.

Review Your Bank Accounts

Also, you might want to review your bank accounts. Are you getting as much interest as you can, given the wide gap between what different financial institutions pay? Could you earn more interest with your funds in an account at an online bank vs. traditional bank? What fees does your bank charge? Have you shopped around to see if you could get a better deal?

Stick to the 30-Day Rule

Here’s another strategy you may want to consider as a tool to help with overspending: the 30-day rule. It has two parts and, combined, the rule might help you save money more quickly. In the first half, if you’re tempted to buy anything outside of what’s necessary to meet basic needs, then you write down what you want to buy, how much it costs, where you saw it, and the date.

Then, give yourself 30 days to think about whether you really want to buy this item. If, after 30 days has gone by, you still want to make that purchase, you could price shop it and then buy the item.

As an added twist, take the amount of the item and put those dollars in your savings account. Then, when 30 days have passed, decide whether you’d be happier having more money in your savings or with making this purchase.

If it’s the former, then you have more savings built up. If you still want the item, you could withdraw the money from your savings, rather than putting it on a credit card.

The Takeaway

Paying yourself first is a great way to prioritize saving, especially if you find yourself tempted to make unnecessary purchases often. Taking some time to think about your financial goals, reevaluating your spending habits, and prioritizing your savings, can help you get to a more secure place financially.

Having the ability to track your spending and savings may be one key to help in creating an effective plan to pay yourself first. Reviewing your checking and savings accounts might help you determine if better options are available to boost your financial health.

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

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

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

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

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

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

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

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

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

SOBK0923008

One of the biggest student loan myths out there is that borrowers can’t combine federal student loans and private student loans into one refinanced loan.

It’s understandable why people may think that, since this wasn’t always an option. And consolidation through the Department of Education is only available for federal student loans.

But now you can choose to combine federal and private loans. So it’s important to understand whether combining federal student loans and private student loans is right for you.

Can I Consolidate Federal and Private Student Loans?

Yes, you can combine private and federal student loans by refinancing them with a private lender.

Through this process, you actually apply for a new loan (which is used to pay off your original loans) and obtain one with a new — ideally lower — interest rate.

Why would you want to do this? In addition to the advantages of loan consolidation (like having one, simplified monthly payment), refinancing student loans at a lower interest rate may lead to lower monthly payments. Note: You may pay more interest over the life of the loan if you refinance with an extended term.

Before you refinance federal student loans, there are a couple of things to think about. Here’s an easy decision tree to help you understand whether private student loan consolidation and refinancing federal loans is right for you:

Federal Student Loan Interest Rates

Some people assume that federal loans always offer the best rates, but this isn’t necessarily true.

Depending on loan type and disbursement date, new federal student loan interest rates are reassessed annually, every July. For the 2023-2024 school year, interest rates on new federal student loans range from 5.50% to 8.05% . Interest rates on federal student loans are determined by Congress and are fixed for the life of the loan.

Some borrowers — particularly those with established credit and a strong, stable income or who can find a cosigner with similar qualities — may be able to qualify for a private student loan with a rate lower than a federal loan. For example, grad school borrowers who have higher-interest-rate unsubsidized federal Direct Loans and borrowers with federal Direct PLUS loans may also be able to qualify for a private loan with a lower interest rate than those federal loans. Undergraduates are likely to find lower rates with federal student loans — without a cosigner or credit check.

When you apply to refinance, private lenders evaluate things like your credit history and credit score, in addition to other personal financial factors, in order to determine the interest rate and terms you may qualify for. This applies when you consolidate private student loans as well.

This means if you’ve been able to build credit during your time as a student, or your income has significantly improved, you may be able to qualify for a more competitive interest rate with a private lender when you refinance. (If you aren’t interested in or don’t qualify for student loan refinancing, a Direct Consolidation
Loan from the Department of Education might be worth a look — but you can’t combine federal and private loans into a Direct Consolidation Loan.) Private student loan consolidation is a different matter.

To get an idea of how much refinancing could potentially reduce the cost of interest on your loans, take a look at SoFi’s student loan refinancing calculator.

Federal Student Loan Benefits

When you refinance a federal student loan with a private lender, it becomes a private student loan. This means that the loan will no longer be eligible for federal benefits and protections.

Before you contemplate the idea of refinancing, consider taking a look at your loans to see if any of these federal loan benefits and programs apply to you — or whether you might want to take advantage of them in the future. Here are some to consider:

Student Loan Forgiveness

There are a few forgiveness programs available for borrowers with federal student loans. For example, under the Public Service Loan Forgiveness Program (PSLF), your Direct Loan balance may be eligible for forgiveness after 120 qualifying, on-time payments if you’ve worked for an eligible public sector entity that entire time.

Pursuing PSLF can require close attention to detail to ensure your loan payments and employer qualify for the program. The qualification requirements are clearly stated on the PSLF section of the Federal Student Aid website .

Similarly, the Teacher Loan Forgiveness Program is available for teachers who work in eligible schools that serve low-income families full time for five consecutive years. The total amount forgiven will depend on factors like the eligible borrower’s role and the subject they teach. The Federal Student Aid website has all the details of this program.

These forgiveness programs can be beneficial for people who choose careers in public service or education.

Income-Driven Repayment Plans

There are also a number of federal loan repayment plans that can ease the burden for eligible borrowers who feel their loan payments are higher than they can afford.

Under the student loan repayment plans and the other income-driven repayment options, monthly payments are calculated based on a certain percentage of the borrower’s discretionary income.

President Joe Biden’s Save on a Valuable Education (SAVE) Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers.

But if your income is over a certain threshold, you likely won’t benefit from these programs.

And if you do qualify but you’re at the high end of the spectrum, your slightly lowered payments may come at a disproportionate price in the form of accumulating interest. Although the Department of Education says that if you make your monthly payment under the SAVE plan, your loan balance won’t grow due to unpaid interest.

Deferment or Forbearance

Life can be unpredictable — sometimes that means borrowers might have difficulty making payments on their student loans. When this happens, borrowers with federal student loans may qualify for deferment or forbearance.

President Biden proposed a federal student loan debt canceling of up to $20,000 for qualified loan holders but it was struck down by the Supreme Court in a ruling released in late June 2023.

The three-year-long pause on federal student loan payments due to Covid-19 lockdowns ends in the Fall of 2023. Student loan interest will resume starting on Sept. 1, 2023, and payments will be due starting in October.

For borrowers who can’t make payments, the DOE created a temporary on-ramp period through Sept. 30, 2024. This on-ramp period protects borrowers from having a delinquency reported to credit reporting agencies. And it prevents the worst consequences of missed, late, or partial payments.However, payments are still due, and interest will continue to accrue.

Also, there are ongoing deferment and forbearance options that allow borrowers to temporarily pause payments on their federal student loans in the event of economic hardship.

The biggest difference between the two is that with forbearance, the borrower is responsible for paying the interest that accrues on the loan during this time. Forbearance can have a major financial impact on a borrower, as any unpaid interest will be added to the original loan balance. With deferment, the borrower may or may not be responsible for paying the interest that accrues.

The type of loan you hold will determine whether or not you qualify for deferment or forbearance. Both options can be potentially helpful tools to borrowers going through a short period of financial difficulty, but both have important considerations .

Refinancing Your Student Loans

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.