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You may have seen personal loans advertised as starting at a certain interest rate or annual percentage rate (APR). But when you check your personal loan interest rate, you may find that what is offered to you is significantly higher. Why is that?

The average personal loan interest rate is dependent on several factors, including the amount borrowed, credit history, and income, among others. Average interest rates for personal loans may also differ depending on the type of the loan. Here are some factors that may affect the personal loan interest rate you’re approved for.

Average Personal Loan Interest Rates By Credit Score

The APR for a personal loan is calculated by looking at several factors, including the requested amount, the applicant’s income history, and the reasons for borrowing. One of the biggest factors, however, is an applicant’s credit score. In general, the higher a borrower’s credit score, the lower the loan interest rate they will be offered.

Here’s a look at average personal loan interest rates for different credit scores.

Credit Score	Average estimated APR
Excellent credit (720 to 850)	11.30%
Good (690-719)	15.60%
Fair (630-689)	22.30%
Bad (300-629)	25.20%

Factors That Can Lower Personal Loan Interest Rates

One thing to know about personal loans is that your unique credit profile will likely affect the interest rate offered to you. Here’s a look at some ways you may be able to qualify for a lower personal loan interest rate.

Improving Credit Score

Improving your credit score can, potentially, be one way to qualify for a personal loan with better rates and terms. Some strategies that can help you strengthen your credit profile include:

•  Checking your credit report It’s a good idea to get copies of your credit reports (you have three — from Equifax, TransUnion, and Experian) and make sure that your personal information — e.g., name, address, phone number, Social Security number — is correct in each one. Also look for any erroneous public record information, such as lawsuits or bankruptcies filed that you were not a part of, and any errors or inaccuracies in the credit accounts section. You can dispute any errors with the credit reporting agency.

•  Lowering your credit utilization ratio Your credit utilization ratio — the amount of debt you have compared to the amount of credit available to you — plays a large part in credit score calculation. Paying down your debt will lower this ratio.

•  Avoiding late payments Late payments can have a large and lasting impact on your credit score. If there are any late payments in your history, you may be able to minimize their impact by creating a record of on-time payments moving forward. Setting up autopay for debt payments is one way to make sure those payments are made regularly and on time.

Secured Versus Unsecured Personal Loans

How a personal loan works depends on the type of personal loan you choose. As you research loan options, you may come across options for secured and unsecured personal loans.

What’s the difference between a secured and unsecured personal loan?

•  A secured personal loan requires the borrower to pledge collateral to guarantee the loan. This collateral is something of value that the borrower owns, such as a car, investments, or a savings account. If the borrower cannot or does not make the loan payments, then the lender can seize that collateral to recoup its losses.

•  An unsecured personal loan, also called a signature loan, is backed by the borrower’s estimated creditworthiness. If the borrower can’t pay back the loan, the lender can’t take any of their property or valuables to recoup its loss. The lender can, however, take other steps to recoup its loss, such as suing the borrower, which may affect the borrower’s credit score and future financial options.

Personal loans are commonly unsecured loans. However, some lenders offer secured personal loans, which can allow borrowers with fair credit to qualify for a loan or get a better rate than they otherwise would with an unsecured loan.

Income and Employment Status

Your income and employment status may affect the rate you’re offered on a personal loan. Lenders generally see borrowers with solid, steady income as lower risk and, therefore, offer them lower rates. If you’re a freelancer, independent contractor, or business owner, you might need additional paperwork to prove your income than you would if you work a W-2 job.

If your income is irregular, having a creditworthy co-applicant may help you get approved for more favorable interest rates. Asking someone to be a co-applicant is a big commitment, though, and having a conversation about all that it entails can help alleviate any concerns of both parties.

Factors That May Increase Personal Loan Interest Rates

Lenders must assess how risky an unsecured loan might be and the likelihood of the loan being paid back. To do that, they look at the applicant’s credit history, employment status, and loan amount requested, among other factors. Here are some things that may lead a lender to think a loan is more risky — and potentially offer a higher rate to the borrower.

Credit Score

An applicant’s credit score is one factor that affects the personal loan interest rate they might be approved for. In general, the lower the applicant’s credit score, the higher the rate of interest they will be offered. Improving your credit over time may make it possible to qualify for a loan with a lower interest rate.

Debt-to-Income Ratio

Debt-to-income (DTI) ratio refers to how much debt someone has in relation to how much income they have. To calculate your DTI, you add up your monthly debts (including mortgage payments, car payments, and credit card payments) then divide that number by your gross monthly income. DTI ratio is expressed as a percentage. In general, the higher your DTI ratio, the riskier you may seem to lenders. Each lender sets its own DTI ratio requirement.

Unemployment

A personal loan application will ask for proof of income, usually in the form of W2s or tax returns from prior years. The lender wants to know that a borrower has a steady source of income. If a loan applicant is unemployed, it may be harder — but not impossible — to have a loan approved.

Recent Bankruptcy

Bankruptcy will appear on an applicant’s credit report and can make it challenging to be approved for a personal loan. Applying with a cosigner can make it easier to be approved for a personal loan after recent bankruptcy. But keep in mind that if you are unable to repay the loan, your cosigner would be responsible for the debt.

Is a Personal Loan the Right Choice for You?

Individual circumstances really determine whether a personal loan is the right choice for any one person.

•  A personal loan can be a good option for people who want to consolidate high-interest debt, like that of credit cards, to save money. For this method to be successful, it’s important to discontinue using the credit cards to accumulate more debt.

•  Having a fixed interest rate and steady payment amount can be helpful when using a personal loan to cover a big purchase. A personal loan is installment debt with a payment end date, in contrast to the revolving debt of a credit card.

•  A personal loan is still debt and increases a person’s overall debt load, so it can be a good idea to have a sense of how you’ll repay it. Making late payments or failing to repay the loan can negatively affect your credit score.

SoFi Personal Loan Interest Rate Range

SoFi personal loan rates are fixed, and competitive in comparison to other lenders. Specific interest rates are dependent on several factors, including an applicant’s credit history, credit score, income, and loan amount, among others.

A personal loan rate calculator can be a helpful tool to estimate your personal loan rate and will not affect your credit score. Your offered rate may vary slightly when you officially apply for a loan, but an estimate can give you a good benchmark for comparison.

The Takeaway

Personal loan interest rates vary depending on an applicant’s financial circumstances but can also vary by lender, so it can make sense to shop around for rates. If your credit profile is not as strong as it could be, you may want to work on improving your credit before applying for a personal loan. This can help increase your chances of loan approval, as well as your odds of getting approved for a loan with a favorable interest rate.

Checking your rate for a SoFi Personal Loan is an easy, online process that takes just one minute, and won’t affect your credit score. With no fees required and terms to fit a variety of budgets, an unsecured personal loan from SoFi may be a financial tool that will work for your unique needs.

See if a personal loan from SoFi is right for you.

FAQ

What is a good interest rate on a personal loan?

A good interest rate on a personal loan is considered anywhere from 5.99% to 9.00% APR. However, you generally need excellent credit (750 or above) to get an interest rate under 8.00% APR.

Is 10.00% a good personal loan rate?

Yes. If you have good to excellent credit (690-plus), a 10.00% APR is considered a good personal loan interest rate. It exceeds the average personal loan rate for borrowers with excellent credit, which is 11.30%.

Is 12.00% a good personal loan rate?

Yes, a 12.00% APR is considered a good personal loan rate if you have good credit (690 to 719). It beats the average personal loan interest rate for good credit, which is 15.60%.

Which bank has the lowest interest rate on personal loans?

According to Forbes Advisor, the best low-interest personal loans are currently available from LightStream. SoFI, PenFed, U.S. Bank, and Wells Fargo.

What is a personal loan interest rate?

A personal loan’s interest rate is the cost you pay each year to borrow money expressed as a percentage. The interest rate does not include fees charged for the loan. The annual percentage rate (APR) of a personal loan is the cost you pay each year to borrow money, including fees, expressed as a percentage. The higher the APR, the more you’ll pay over the life of the loan.

When comparing personal loan interest rates, you want to look at APRs to make sure you are comparing the loans apples to apples. A loan with a higher interest rate and low or no fees can actually turn out to be a better deal than a loan with a lower interest rate and high fees.

What is the interest rate on a $40,000 loan?

The interest rate on a $40,000 personal loan will depend on the lender, the loan’s term, and the creditworthiness of the borrower. The APR can range anywhere from 4.60% to 35.99%.

What is a good interest rate for an unsecured personal loan?

A good interest rate for an unsecured personal loan can range anywhere from 7.99% to 9.00%. However, you will likely need to have excellent credit to qualify.

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Photo credit: iStock/alexsl

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

​​Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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 .

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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Divorce can be emotionally and financially challenging, and one of the biggest concerns people have is how to finance the process. From filing and attorney fees to establishing separate households, the costs can quickly add up.

Knowing how to pay for divorce is particularly tricky because most people don’t necessarily plan for a divorce and, as result, likely don’t have a special bank account where they’ve been saving up for a divorce. This can leave you feeling stuck in a tight corner.

For anyone scratching their head and wondering how to pay for a divorce, we have some answers. Here’s a look at how you can cover the cost of divorce while still keeping an eye on your long-term (post-divorce) financial health.

How Much Does Divorce Cost?

We’ll start with the crummy news — getting a divorce, already a difficult experience, is also expensive. While the cost varies depending on where you live and the complexity of the divorce, the average cost of a divorce in the U.S ranges between $15,000 and $20,000. That said, a simple DIY divorce could run a lot less (as little as $200). A complicated divorce (with disagreements around child custody or dividing up property), on the other hand, could run well over $100,000. Gulp.

Factors that can affect the cost of a divorce include:

•   The state where the divorce takes place

•   Whether the couple lives in an urban or rural area

•   Whether it is contested or uncontested

•   Whether or not you hire professional legal help

•   The complexity of the couple’s finances

•   Whether or not there are child custody issues involved

How Do I Pay for My Divorce?

Ideally, every individual, couple, and family would have some emergency money set aside to cover unforeseen events. While many aren’t thinking the money would be for a divorce, that could qualify as an unexpected expense.

If you don’t have much, or any, rainy day savings, here are some steps that can help you manage the cost of your divorce.

•   Create a budget A good place to start is to assess your financial situation and create a realistic budget for your divorce. Take a look at your income, expenses, and any debts you may have. This will help you determine how much you can allocate towards your divorce costs, find areas where you may be able to cut costs, and develop a strategy to finance your divorce.

•   Negotiate with your spouse If possible, see if you can reach an amicable agreement with your spouse regarding the division of assets and paying expenses. This can help reduce legal fees and minimize the overall cost of the divorce process.

•   Explore mediation Mediation is a cost-effective alternative to traditional divorce litigation. A neutral mediator helps facilitate discussions between you and your spouse, allowing you to work together to reach mutually agreeable solutions. Mediation can often be less expensive and less time-consuming than going to court.

Borrow From Friends and Family

If you need some financial assistance to cover the costs of your divorce, reaching out to friends and family is one option to consider. Loved ones who understand your situation may be willing to lend you money to help you through this challenging time.

You’ll want to approach borrowing from friends and family with caution, however. You want to be sure that you’ll be able to pay the money back and clearly communicate that you intend to repay the money. Also be sure to discuss any expectations or terms, and ensure that the arrangement is legally documented to avoid misunderstandings or strain on personal relationships.

Recommended: Am I Responsible for My Spouse’s Debt?

Is a Personal Loan a Good Option to Pay for Divorce?

Another option to finance your divorce is to consider a personal loan.

Personal loans are often unsecured (meaning you don’t have to put up an asset as collateral) and can be used for a variety of purposes, including legal costs. They can provide you with the necessary funds to cover divorce-related expenses while allowing you to make manageable monthly payments over a fixed period, typically three to five years.

If you have good to excellent credit, a personal loan can be a better choice than using a credit card for your divorce costs, since rates are typically lower. A personal loan may also allow you to borrow a larger amount than your current credit card limit allows. Personal loans also come with fixed monthly payments, which can be easier to budget for.

Before applying for a personal loan for your divorce however, you’ll want to consider the annual percentage rates (APRs) and repayment terms offered by different lenders. Be sure to carefully assess your ability to repay the loan to avoid adding further financial stress during and after the divorce process.

Putting Your Financial Health First

While it’s crucial to address the immediate financial challenges of a divorce, it’s equally important to prioritize your long-term financial health. Here are some tips to help you navigate this process.

•   Protect your credit Divorce can have a significant impact on your credit score. To minimize the impact, you’ll want to be sure to close joint accounts and establish individual accounts. Be sure to also monitor your credit report regularly to ensure accuracy and address any issues promptly.

•   Update legal and financial documents It’s a wise idea to review and update your will, insurance policies, retirement accounts, and other legal and financial documents to reflect your new circumstances. You’ll also want to update beneficiaries and ensure your assets are distributed according to your wishes.

•   Focus on rebuilding After the divorce, take steps to rebuild your financial stability. Set financial goals, create a savings plan, and consider ways to increase your income or reduce expenses. Building a solid financial foundation will help you regain control of your life and prepare for the future.

Recommended: Budgeting Tips for Life After Divorce

The Takeaway

Financing a divorce can be a challenging task, but with careful planning and consideration, it is possible to navigate this process successfully. Key steps include assessing your financial situation, exploring various options such as negotiation and mediation, and, if needed, borrowing from friends and family or getting a personal loan to help cover the costs of the divorce.

If you are thinking about taking out a loan to finance a divorce, a SoFi unsecured personal loan could be a good option. SoFi personal loans offer competitive, fixed rates and a variety of terms. Checking your rate won’t affect your credit score, and it takes just one minute.

See if a personal loan from SoFi is right for you

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

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

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Debt isn’t always due to having made financial missteps. The most cautious, savvy savers among us can see their plans quickly undone by unexpected costs. Medical debt is among the most unexpected and urgent costs anyone can have. The question of how to pay for medical bills can cause enormous stress when there’s no money in the bank to pay hospital and doctor expenses, up front or later on.

There’s no question that medical bills can go from tedious to terrifying fast. Fortunately, if you feel unable to afford medical bills, there are strategies to find relief.

Make Sure the Charges Are Accurate

If you haven’t already, go through each bill line by line to make sure you received the services and medications listed. Mistakes happen — providers can make billing and coding errors, and insurers sometimes deny coverage — so don’t just accept what you see.

It’s important to be prepared to make some phone calls, maybe even write some letters, if you can’t get answers or satisfaction. Yes, your insurance company and service provider should be figuring out all of this for you, but if they don’t, it will be up to you to do so.

You’ll probably find yourself talking to a different person every time, so making a note of each person’s name and the date and time that you spoke will help make your records more complete. Ask for a supervisor if you aren’t getting the help you need.

Don’t Ignore Your Bills

You may have run out of ideas when thinking about how to pay medical bills you can’t afford. But pushing those medical statements into a drawer so you don’t have to look at them is not the answer.

If the billing statements have started to accumulate — or worse, a collection agency is calling — it can be tempting to ignore the situation altogether. But those paths of least resistance can lead to negative consequences.

If your debt goes to collection, that record can stay on your credit report for up to seven years. And to recoup what is owed, the owners of the debt may opt to sue you. If they win their court case, they could garnish your wages or place a lien on your property.

Don’t Use Credit Cards to Pay Off Your Bills

So what to do if you can’t afford medical bills? Even if you’ve decreased your medical debt through negotiation or by having billing mistakes removed, you’ll have to pay the portion of the remaining balance you’re responsible for.

If you have enough available credit on a credit card, that’s one way to pay a medical bill — but unless it’s a very low-interest card, it probably isn’t an ideal option.

•   Interest will accrue each month until the balance is paid in full, which will increase the total amount paid.

•   If you miss a payment or make a late payment, your next billing statement will include a late-payment fee and accrued interest.

•   And if your payment becomes 60 days past due, your interest rate may go up.

Medical Credit Cards

Some providers might offer a medical credit card as a way to manage your payments. That’s not the same thing as a payment plan, so be cautious before signing on. The card may come with a no-interest promotional rate that allows you to make payments without interest for a designated period of time, but you’ll likely be required to pay the full balance by the end of the promotional period or you’ll be charged interest retroactively.

That’s because the interest is typically deferred, not waived, on medical credit cards. And even if you’re just a wee bit short of making full payment, the penalty could be significant.

Balance Transfer Credit Cards

Financial institutions tend to make balance transfer credit cards sound like the answer to every financial problem, but keep in mind that if you can’t pay off the balance within the designated introductory period, your account will revert to the annual percentage rate (APR) you agreed to when you signed up.

Ask Your Provider or Hospital for a Discount

If the costs are, indeed, all yours to pay and you just don’t have the money, you still may be able to get some help.
Nonprofit hospitals are required by federal law to have a written financial assistance policy for low-income patients. The law does not require a specific discount, nor does it specify eligibility criteria, but nonprofit hospitals are required to offer such financial assistance and make their patients aware of it.

Some states also require nonprofit hospitals to offer free or discounted medical services to patients with certain income levels.

With nonprofit or for-profit hospitals, you may be able to work out a payment plan, which, for medical debt, is often interest free. If you’re able to pay the bill, just not all at once, this could be an option to consider.

Negotiate

Negotiating medical bills is possible and often successful. Be prepared to meet with someone in the provider’s financial or billing department. When you’re worried about how to pay off hospital bills, making an appointment to meet someone in person can be a smart move — this is someone who might have the authority to reduce at least some of your balance, and they might offer other options for how to pay medical bills you can’t afford.

You may have to show paperwork proving your current income (a tax return or paycheck) and you should come with an amount in mind that you’re comfortable paying either in a lump sum or over time.

Finding Additional Help Paying for a Medical Bill

Government Benefits

Medicaid and the Children’s Health Insurance Program (CHIP) help to insure families who can’t afford health insurance or can’t get it through their employer. Both programs are joint federal/state programs, but may be called by different names in different states. To apply, you’ll need to provide accurate information about your income and any government benefits you already receive.

Recently, several government agencies jointly issued a rule banning surprise billing and balance billing. This ban, which already applied to Medicare and Medicaid billing, is being extended to employer-sponsored and commercial insurance plans.

•   Surprise billing happens when a patient is seen by a provider who, unknown to the patient, is not in their insurance network of covered providers and bills for their services at an out-of-network rate.

•   Balance billing is when a provider bills the patient for the remainder of a medical bill after the patient and the patient’s insurance company has paid their respective portions.

State Sponsored Programs

Each state has a program to help with medical bills and costs. Search by state on the State Health Insurance Assistant Programs site for details. Some states do offer programs other than Medicaid or CHIP, but it might take some research to find the right fit for your situation.

Private Assistance Programs

Some nonprofit financial assistance programs help pay certain medical expenses for specific conditions, such as cancer, leukemia, and others. There are also organizations that provide financial assistance with general medical costs like copays, deductibles, or prescriptions.

Medical Loan

Another solution for how to pay for medical bills may be an unsecured personal loan, which might have a lower interest rate (depending on the rate you’re approved for) and more flexible repayment terms than a credit card.

One advantage of a personal loan for medical expenses is that it might give you some leverage when you’re trying to negotiate a medical bill. You may be able to negotiate a discount for a lump-sum payment rather than stretching out the payment over time.

Some disadvantages of using an unsecured personal loan to pay medical bills are you’ll still have to pay interest on the loan, and loan approval may be difficult if you have poor credit.

The Takeaway

Taking a step back and looking at all your options is the best way to get started figuring out how to pay medical bills you can’t afford. You can often deal with these sometimes unexpected costs by using multiple methods and resources: checking your bill for accuracy, negotiating the balance due, and seeking out financial assistance if you can’t afford to pay what is owed.

If a personal loan is an option you choose, consider a SoFi Personal Loan. An unsecured personal loan from SoFi has competitive, fixed rates and a variety of terms. The loan application can be completed online, and you can find your rate in just a few minutes.

Check out SoFi Personal Loans to help pay for medical debt

FAQ

How long do I have to pay a medical bill?

Typically, doctors, hospitals, and other healthcare providers give a billing statement with a due date, often within 30 days. However, payment terms can vary, depending on insurance coverage, individual agreements, and local regulations.

If you’re unable to pay the bill in full by the due date, it’s a good idea to contact the healthcare provider or billing department to discuss possible payment arrangements or ask about financial assistance programs that may be available.

What is the minimum monthly payment on medical bills?

The minimum monthly payment depends on the provider and agreed terms. Some providers allow payments based on affordability, while others set a fixed amount or percentage of the total balance.

What happens if you don’t pay your medical bills?

Initially, the healthcare provider may send reminders or contact you to request payment. Late fees or interest charges may be applied to the outstanding balance. If the bill remains unpaid for an extended period, the healthcare provider may transfer the account to a collection agency. The collection agency will then pursue the debt, which can include phone calls, letters, and reporting the delinquent debt to credit bureaus.

Do medical bills affect your credit score?

Unpaid medical bills can potentially impact your credit, but not right away. Health care providers typically don’t report to credit bureaus, so your debt would have to be sold to a collection agency before it appears on your credit report. Generally, this doesn’t happen unless your bill is 60, 90, or 120+ days past due.

Even after your bill goes to collections, the consumer credit bureaus give you a full year to resolve your medical debt before the collection account is added to your credit history. And, if the unpaid bill is under $500, they won’t add the account to your credit report and it won’t impact your score.

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

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

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.

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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A certificate of deposit (CD) can be a useful tool for saving money for an upcoming goal. The downside is that you need to wait until the CD matures in order to access your money. If you withdraw some or all of your funds early, you typically get hit with a hefty penalty fee.

If you’re in a pinch and need cash quickly, however, you may be able to get a CD loan. Also known as a CD-secured loan, this is a type of personal loan that uses the value of a CD account as collateral. CD loans are offered by some banks and credit unions. Typically, the lender needs to be the same institution that holds your CD.

Here’s a closer look at how CD loans work and how they stack up against unsecured personal loans.

What Is a CD Loan?

A CD loan is a type of personal loan that is secured by the money you have in a CD. Since the collateral lowers the risk for the lender, these loans can be easier to qualify for and have lower interest rates than unsecured loans. However, if you don’t repay the loan, the bank can take the money out of your CD to cover their losses.

Of course, to get a CD loan, you need to have a CD, which is a type of savings account that pays a fixed interest rate over a set amount of time, or term. You must leave the money untouched for the CD term, which can range from three months to five years. If you withdraw your funds before the end of the CD’s term, you usually have to pay an early withdrawal penalty. CDs generally pay a higher annual percentage yield (APY) than regular savings accounts. And the longer the CD’s term, usually the higher the APY. Similar to other types of savings accounts, CDs come with FDIC protection, up to the applicable limits.

How Do CD-Secured Loans Work?

If you take out a CD loan, the lender will charge interest. So you’ll be earning interest on the CD but paying interest on the CD-secured loan. In some cases, a bank or credit union will set the minimum annual percentage rate (APR) on their CD loans at 2% over the CD rate. So if your CD pays 3%, your CD loan rate would start at 5%. Your actual rate would depend on your credit and the term of the loan, among other factors.

How much you can borrow with a CD-secured loan depends on the lender. Often, you are able to borrow up to 100% of the value of your CD principal. The term of the loan can generally be as long as the term of the CD.

While you can typically access money in a CD if absolutely necessary and pay a penalty, that may no longer be the case if you get a CD loan. Typically, the funds being used as collateral are sealed even in the event of an emergency.

Who Might CD Loans Be Right For?

The idea of paying interest on a loan backed by an interest-bearing CD may seem counterintuitive. However, there can be some logical reasons for taking out a CD-secured loan. One is that you may be able to build your credit by taking out a CD loan and then making a series of on-time payments on the loan. More common ways to do that include getting a secured credit card or becoming an authorized user on another person’s credit card. But if those options aren’t available, and you have a CD, you might use a CD loan for that purpose.

Another reason you might opt for a CD loan is that you need access to your funds for an emergency before it matures. However, you’ll want to first check what your CD’s early withdrawal penalty is. It might be cheaper and easier to simply break open a CD early and pay the penalty. However, if the penalty would be more than what you’d pay in a CD loan’s fees and interest, you might consider a CD loan.

Before taking out a CD loan, it makes sense to weigh the pros and cons.

CD Loan Pros

•   Lower interest rates CD-secured loans often have lower interest rates compared to credit cards and unsecured personal loans, making them an attractive option for borrowers seeking lower borrowing costs.

•   Building credit CD loans offer an opportunity to establish or improve your credit history if you currently have limited or no credit.

•   Retaining CD benefits Despite using the CD as collateral, you can still earn interest on the deposited amount.

•   Fast access to funds If you apply for a CD loan with the bank or credit union that holds your CD, you can often get approved quickly and receive funds within a day or two.

•   Good for those with bad credit Borrowers with poor credit often qualify for CD-secured loans.

CD Loan Cons

While CD loans have their benefits, there are also some drawbacks to keep in mind.

•   Frozen funds The funds in the CD are tied up as collateral, limiting access to the money until the loan is repaid.

•   Potential loss of CD If you default on the loan, the lender can seize the CD, resulting in the loss of the deposited funds.

•   Limited loan amount CD loans are typically limited to a percentage of the CD’s value, which might not meet your full borrowing needs.

•   Fees Your bank may charge fees, such as an origination fee, for issuing you a CD loan.

•   Hard to find CD loans aren’t as common as other types of personal loan, so your bank or credit union may not offer them.

CD Loan vs Personal Loan

While CD-secured loans and unsecured personal loans have some similarities, they also have some significant differences.

With both types of loans, you get a lump sum of money up front and can then use those funds for virtually any type of expense. Both also typically offer fixed interest rates and a set repayment term so payments are easy to predict and budget for.

Unlike a personal loan, however, a CD-secured loan can be hard to find. Also with a CD loan, you need to put your savings on the line to secure the loan. With an unsecured personal loan, you don’t need to provide any funds or personal assets as collateral, making them accessible to borrowers without a CD or other assets.

CD loans also tend to have lower interest rates than unsecured personal loans due to the collateral, while personal loans tend to offer more flexibility in loan amount and repayment terms.

Recommended: Typical Personal Loan Requirements Needed for Approval

The Takeaway

CD loans can be a viable option for someone who has a certificate of deposit and needs access to funds while keeping their deposited amount intact. The lower interest rates and potential credit-building opportunities make CD loans attractive for some borrowers.

However, these loans aren’t widely available and the cost of the loan could potentially exceed the CD’s early withdrawal fee. Also, you could lose the money in your CD if you have difficulty making payments. It’s crucial to weigh the pros and cons, consider your personal financial goals and needs, and compare loan options before deciding on the best borrowing solution.

If you’re interested in exploring personal loans, SoFi could help. SoFi’s unsecured personal loans offer competitive, fixed rates and a variety of terms. Checking your rate won’t affect your credit score, and it takes just one minute.

See if a personal loan from SoFi is right for you.

FAQ

Where can I get a CD loan?

CD loans are typically offered by banks and credit unions. It’s best to start by contacting your current financial institution to inquire about their CD loan options. They can provide you with specific details about their loan terms, interest rates, and application process. Typically, you need to take out a CD loan from the same institution that holds your CD.

What are CD loan interest rates?

CD loan interest rates vary depending on the lender, current market conditions, and your qualifications as a borrower. Rates tend to be lower than those of unsecured personal loans, since the loan is backed by the funds in the CD.

Some banks and credit unions will set the minimum annual percentage rate (APR) on their CD loans at 2% over the CD rate. So if your CD pays 3%, your CD loan rate would start at 5%. Your actual rate would depend on your credit and the term of the loan, among other factors.

Do you get money back from a CD loan?

When you take out a CD loan, you do receive money from the lender. However, it’s important to note that the funds received are borrowed money that you are obligated to repay, typically with interest. The funds from the loan are separate from the funds you have deposited in a certificate of deposit. The CD itself remains intact and continues to earn interest, but it is held as collateral until the loan is repaid. Once the loan is fully repaid, you regain full access to your CD and any interest it has earned during the loan term.

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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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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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Swiping and tapping a credit card can certainly make life easier, from buying a cup of coffee on the go to ordering (after much research) a new couch online. But knowing the right time to pay your bill can require a bit of time and thought. Sometimes, the due date is not so clear. And you may wonder whether to pay on that date or before.

With this guide, you’ll learn how to find your due date plus the ins and outs of paying your bill. You’ll also get some smart insights and tips on managing your credit card responsibly.

When to Make a Credit Card Payment

There are many different kinds of credit cards available. Once you have one or more in your wallet, you can enjoy the ease of paying with plastic and possibly earning some credit card rewards.

But how do you find your credit card due date? Unlike other sorts of bills, credit cards aren’t always due on a regular date like the first of the month. The exact due date will vary depending on your credit card billing cycle, and may fall on a seemingly random date.

To find your credit card due date (because paying on-time is part of using a credit card wisely), you can check your billing statement. The due date, along with the minimum payment due, will likely appear close to the top of your written statement.

You can also find due date and payment information in your online account, if you’ve created one; these digital portals also often make it simple to make online payments.

If you don’t have access to either a paper or digital billing statement, you can call the customer service number on the back of your card and ask a representative when your payment is due. Most cards also allow you to make payments over the phone, either through an automated system or with a live customer service agent.

How to Pay Your Credit Card on Time — and Why it’s Important

To pay your card on time, you’ll pay at least the minimum amount listed by the credit card payment due date. Generally, the cutoff time is 5pm on the day the payment is due, but you may want to reach out to the issuer directly to get exact details.

That said, it may be a better idea to avoid cutting it so close, if you can help it. You can make your credit card payments before the due date typically, both online and by phone. Doing so can help ensure the payment has time to post to your account before the cutoff.

Paying your credit card on time will help you avoid paying late fees, for one thing — which, when added to interest payments, can make your credit card debt spiral.

But on-time payments can also help build your credit history since they’re reported to the major credit bureaus, and your payment history (including timeliness) accounts for around 35% of your FICO® score.

The Grace Period

It’s helpful to understand that practically all credit cards offer a grace period: the time between your statement closing date and the due date in which the purchases you’ve made during that billing cycle do not accrue interest. (Not accruing interest can be a very good thing; the current average interest rate on new credit card offers hit 20.51% as of the middle of 2023.)

By law, if offered the grace period must be at least 21 days. This means you get a three-week window to pay your card off in full without being responsible for any finance charges. (This may not be true in the case of balance transfers or cash advances, and interest may accrue immediately.)

But it’s possible to use a credit card on a regular basis without paying interest. All you have to do is pay it off on time and in full each and every month.

Recommended: Guide to Lowering Your Credit Card Interest Rate

Paying Your Credit Cards on Time

Even if you only have one or two credit cards, chances are you have a lot on your plate in any given month.

Between making rent, shelling out your car payment, and actually keeping the job that lets you pay for all this stuff, keeping tabs on your credit card due dates may feel like just another task in a long list of chores. (It’s true: Adulting is hard.)

What Happens If I Pay Late?

Life happens, and sometimes many people pay their credit card late, whether due to an oversight or lack of funds. Typically, when you miss a payment deadline on your credit card bill, here’s what can happen:

•   You may be assessed a late payment fee. These usually range from about $15 to $35 per instance.

•   Your credit card issuer could raise your interest rate to what is known as a penalty rate. In most cases, the issuer must give you 45 days notice. The penalty rate is something you are likely to want to avoid, as it can be around 27% to 30%.

•   Your late payment can be reported to the big three credit reporting bureaus and show up on your credit history. A pattern of late payments could translate into your having to pay more to borrow in the future or even being denied credit.

Can I Change My Credit Card Bill’s Due Date?

Some credit card issuers will allow you to change your statement due date. Check with your issuer to see if they offer this; be aware that there may be a cap on how many times a year you can do so.

Changing your credit card bill’s due date can be a helpful move. You might be able to shift it to better sync up with your payday or at least move the date so it’s not, say, right at the same time as when rent is due.

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

Benefits of Paying Your Credit Card Early

Here’s another angle on paying your credit card: Instead of thinking about the damage that can be done by paying it late, look at the benefits of paying your bill early. The pros include:

•   Paying your credit card bill early may help establish and secure your credit score.

•   It helps free up your line of credit. It’s wise to keep your card’s balance at 30% of your limit at the very most. It’s a financially healthy move to make, and it could free up your available line of credit for an upcoming large purchase.

•   Paying your bill early lowers the amount of interest you will accrue. That means you owe less.

•   The sooner you pay off bills, the sooner you get out of debt, which is a desirable thing for most people.

•   By paying a bill early, you know it’s taken care of and you don’t have to worry about forgetting to send funds to your card issuer.

Tips for Managing Your Credit Card Bill

If you’re new to having a credit card or find yourself facing challenges managing your credit card usage, consider these helpful strategies:

•   Prioritize paying your bill when (or before) it’s due. That will be a positive step in your use of credit and minimize the interest and charges that can accrue.

•   Review your credit card bill every month. Not only will this help you get a handle on your spending, you can identify any incorrect charges or ones that might indicate fraudulent activity.

•   Try to pay more than just the minimum every month. Also educate yourself about what that minimum is. It’s not a helpful recommendation; it’s the lowest possible limit you can pay on the bill.

•   Work to keep your credit utilization ratio low; no more than 30% at most can be a good guideline.

•   If you are feeling as if your credit card debt is too high and/or you feel you need help eliminating it, it may be a smart financial move to take out a personal loan to pay off a credit card fully. Depending upon the term length you choose, you may end up saving money if the interest rate you’re offered is lower than the one offered by the credit card.

Or you could consult with a no- or low-cost credit counselor on solutions to your situation.

The Takeaway

Credit cards have many benefits, but it can be important to stay on top of your payments so your debt doesn’t accrue and your credit score is maintained. Understanding when your credit card payment is due, by looking at your statement or contacting your card issuer, is a smart move. It can also be wise to request your due date be moved, if possible, to better sync up with your cash-flow needs.

Looking for a new credit card? Consider a rewards card that can make your money work for you. With the SoFi Credit Card, you earn cash-back rewards on all eligible purchases. You can then use those rewards for travel or to invest, save, or pay down eligible SoFi debt.

With the SoFi Credit Card, you can earn cash-back rewards, apply them toward your balance, redeem points into stock in a SoFi Active Invest account, and more!* 

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Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

The SoFi Credit Card 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.

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

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

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