Jan
13
2025

How to Budget on a Fixed Income

By | Budgeting & Goals, money, Money & Life | Comments Off on How to Budget on a Fixed Income

Budgeting on a fixed income can involve carefully reviewing your income and expenses and managing spending to stretch your dollars.

Typically, older adults are the ones living on a fixed income, meaning they receive Social Security payments and/or a pension or rely on retirement savings. They generally receive the same amount each month, though payments may fluctuate slightly due to benefit adjustments or other changes. If you’re living on a fixed income, budgeting can help you avoid overspending and prepare for unexpected expenses. Here are smart strategies to consider.

Key Points

•   Budgeting on a fixed income can involve tracking income and expenses to better understand finances.

•   A detailed budget should include all essential and discretionary expenses, utilizing methods like the 50/30/20 rule.

•   Cost-cutting measures, such as downsizing or limiting discretionary spending, can improve financial stability.

•   Building an emergency fund can provide a cushion for unexpected expenses and enhance financial security when living on a fixed income.

•   Exploring additional income sources, like part-time work, can supplement fixed incomes effectively.

Understanding Fixed Income Budgeting

Living on a fixed income means you know exactly how much money you’re bringing in each month. While your income may be predictable, expenses can be unexpected. You might need, say, a roof repair or want to help with a grandchild’s summer camp costs one year. That’s why a budget for seniors on fixed income can be so important.

Creating a budget will give you a comprehensive understanding of the money you have coming in and going out of your checking account. You can track your spending, set aside money for emergencies, and monitor your monthly bills.

You might also identify areas where you can cut back to cover an unforeseen expense or keep up with inflation.

Assessing Your Financial Situation

Making a budget allows you to assess your financial situation. Along with tracking your income, you’ll want to make a record of all your expenses.

This component of your budget might include:

•  Housing costs (rent or mortgage)

•  Utilities

•  House, car, and health insurance

•  Medical costs

•  Transportation

•  Groceries and dining out

•  Debt payments

•  Subscriptions and services

•  Clothing

•  Travel

•  Savings

•  Gifts and charitable donations

Some of these expenses may fall into the essential category (housing, food, and health insurance, for example), while others may be considered discretionary (such as clothing and travel). If you’ve found yourself financially overextended, consider whether there are any areas where you could cut back.

You might also explore specific types of budgeting methods, such as the 50/30/20 approach to budgeting. This strategy involves allocating 50% of your after-tax income to needs, 30% to wants, and the remaining 20% to savings or additional debt payments.

To help you with this budgeting technique or another one, you could use a spreadsheet, work with an online calculator, download a budgeting app, or create your own budget planner to track your expenses.

Recommended: 50/30/20 Budget Calculator

Creating a Detailed Income Statement

An important step in this budgeting process is delving into your monthly income. Your sources of fixed income could include:

•  Social Security benefits (you may sometimes hear this referred to as OASDI, or Old-Age, Survivors, and Disability Insurance payments)

•  Supplemental Security Income

•  Pension benefits

•  Withdrawals from a 401(k) or 403(b) account

•  Withdrawals from a traditional or Roth IRA

•  Withdrawals from brokerage or other investment accounts

•  Interest and/or dividends from assets

•  Passive income from a rental property or another source

In addition, you may have some earnings from work you do, such as a seasonal or part-time job. Factor that in, too.

Take note of how your income might change, as well. A couple of points to consider:

•  Government benefits like Social Security, for example, undergo an annual cost-of-living adjustment. Also, if you are claiming Social Security benefits but are younger than full retirement age, you might also receive a lower benefit if you’re earning income above the yearly limit (in 2024, it was set at $22,320).

•  If you’re withdrawing money from investment accounts, the amount may fluctuate depending on the performance of the stock market. Although these changes are unpredictable, they’re worth tracking and recording in your budget plan so you can respond as needed.

One of the most common budgeting mistakes is not adjusting the cost of your expenses, so make sure to update your budget as you go. Rent, health insurance premiums, food costs, and more can shift, and it can be important to stay attuned to that.

Cutting Costs and Saving Money

About 40% of older Americans receive income solely from Social Security in retirement, and the average benefit is currently $1,784 per month. This amount can be challenging to live off of, especially when costs are rising due to inflation.

If you’re looking to reduce your spending, here are a few steps you can take:

•  Downsize your home: About half of seniors move into smaller homes after they retire. Downsizing could significantly decrease your housing costs and utility bills.

•  Reevaluate your transportation needs: If you’re spending a lot on car payments and insurance, consider whether you can switch to a less expensive vehicle or swap your car for public transportation.

•  Limit discretionary spending: Shopping, travel, eating out, and streaming services can add up. Review your discretionary expenses to see if you can limit your spending or cut out some costs entirely.

•  Seek out senior discounts: From groceries to movies to museums, find out if you can save with a senior discount. You may be pleasantly surprised to find that some discounts begin well before age 65.

•  Look for assistance programs: If you’re facing financial hardship, you might qualify for assistance. The government may help cover medical costs via Medicaid, for instance, while patient assistance programs can help out with prescription medications. The Supplemental Nutrition Assistance Program (SNAP) program offers assistance for groceries. This BenefitsCheckUp tool from the National Council on Aging can help you find other programs that offer assistance and benefits.

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Building an Emergency Fund

After years of saving for retirement, you might think your savings days are behind you. However, having an emergency fund can be a crucial lifeline if you run into a big surprise expense, especially when you’re living on a fixed income.

Consider setting up a high-yield savings account and automating the deposit of a portion of your income into it each month. With a high-yield bank account, your savings will be accessible when you need to withdraw them and earn a competitive interest rate when you don’t.

Planning for the Future

Although you may be living on a fixed income, it’s wise to keep an eye on how your financial needs can shift. Those who are retired or semi-retired may want to consider the following:

•  Long-term financial planning: The specific amount of income you receive could rise or fall in the years ahead. Consider how adjustments to your cost of living might impact your Social Security benefits, for example, or how much longer you plan to work if you have a part-time job.

•  Healthcare considerations: If your expenses increase due to healthcare needs or other factors, consider whether you can take larger withdrawals from your retirement account or set up another income source. Investors may look into rebalancing their portfolios to ride out a volatile stock market.

•  Estate planning basics: Estate planning may also be top of mind as you get important documents in order and consider how your assets will be handled in future years. All of this planning can become complex, so you might consider working with a financial advisor.

The Takeaway

Budgeting on a fixed income can help you stabilize your finances and achieve peace of mind. By tracking your income and expenses, you’ll have a clear understanding of the money you have coming in and going out each month. You might also identify areas where you can cut costs, as well as monitor your progress toward building an emergency fund, paying off debt, or reaching another financial goal.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

How can I save money on a fixed income?

Learning how to make a budget can help you save money when living on a fixed income. You can use your budget to identify your recurring expenses and cut any non-essentials you find. You might also consider downsizing your home, swapping out your car for a less expensive vehicle or public transportation, and seeking out senior discounts and deals.

What if my fixed income doesn’t cover all my expenses?

If your fixed income doesn’t cover all your expenses, you can try reducing your spending, increasing your income, or both. You might also explore assistance programs from the federal government, your state, or a local organization.

Are there government assistance programs for fixed income individuals?

There are government assistance programs for fixed income individuals on both the federal and state level. The Supplemental Security Income program provides payments to disabled, blind, or elderly individuals, for example, while the Low Income Home Energy Assistance Program (LIHEAP) can help low-income individuals pay for heating and cooling their homes. The SNAP program offers grocery assistance to low-income individuals.

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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Jan
13
2025

Should I Open a Backup Bank Account?

By | Budgeting & Goals, Financial Topics, Life & Career | Comments Off on Should I Open a Backup Bank Account?

A backup bank account is a secondary account that can be used for a variety of purposes, such as added security and better financial organization. Opening a secondary account can also be a great way to tap additional banking perks, like a sign-up bonus or a higher interest rate, being offered by a different institution.

That said, it’s not always a matter of “the more, the merrier.” Multiple bank accounts can make it harder to keep track of your income and expenses and result in unwanted bank fees. Read on to understand the pros and cons of having a backup bank account so you can decide what’s best for you.

Key Points

•   A backup bank account is typically a checking or savings account that is secondary to an account holder’s primary account.

•   Backup accounts can assist in organizing finances, establishing emergency funds, and accessing perks from different banks.

•   Managing multiple accounts can be overwhelming and may complicate financial management or result in added fees.

•   Other potential drawbacks of backup accounts include spreading finances thin and increasing security concerns.

•   It’s important to consider whether backup accounts will enhance your financial wellness and, if so, to choose the option with the benefits you need most.

Understanding the Concept of a Backup Bank Account

A backup bank account is an account that is typically secondary to your main bank account. It could be held at a different institution or the same one where you already have an account. You might use a backup account to hold your emergency funds, manage secondary income, or combine the benefits of online banks (like higher interest rates) with those of a traditional bank (such as easy cash deposits).

Benefits of Having a Backup Bank Account

Opening a backup bank account offers a number of advantages. Here are some to consider.

Increased Financial Security

If you keep a sizable amount of cash on deposit in the bank, you might open a backup account to boost your insurance coverage. The Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) cover up to $250,000 per depositor, per insured institution, in the rare event of a bank or credit union failure. One way to insure more than $250,000 in deposits, is to open accounts at more than one institution.

Having a second account can also serve as a back-up should your primary account become temporarily inaccessible due to technical glitches, identity theft, or fraud. This separation can limit the impact of any problems or security breaches and enable you to continue your banking activities without any disruption.

Access Additional Perks

A backup account allows you to enjoy extra perks and services that may not be available with your primary account. For example, some banks offer higher interest rates, sign-up bonuses, cash-back rewards, or fee-free options for specific account types. By strategically choosing a backup bank that offers additional benefits, you can potentially boost your earnings or reduce your banking costs.

Emergency Fund Access

Having a backup bank account can be a good way to protect yourself financially in emergency situations. Financial advisors often recommend having an emergency fund equal to three to six months’ worth of basic living expenses. If you try to stash that away in your primary savings account, you may find that the money has a way of getting spent instead of sitting there for a rainy day.

Instead, you might want to open a secondary savings account earmarked specifically for building your emergency fund, then set up small recurring transfers from your checking account. This can be a relatively simple and painless way to build up your cash reserves. Then if you get hit with a major home or car repair, or an unexpected medical bill, your secondary account can save the day.

Easier Money and Budget Management

Having multiple bank accounts can also make it easier to manage your finances. For example, you might open a second checking account to separate earnings from a sideline or freelance business. This can help with budgeting, accounting, and tax preparation. Or, you might use one checking account for essential expenses (like rent, utilities, and groceries) and another for discretionary (a.k.a., “fun”) spending. This setup provides a clear breakdown of your budget, making it easier to track spending and avoid overspending in specific categories.

Similarly, having multiple savings accounts can help you reach your savings goals. You might have one savings account earmarked for a downpayment for a home and another for your next vacation. Having this type of separation can make it simpler to see how you are progressing towards your short-term goals.

For some couples, it can be helpful to have a joint account to pay for shared living expenses, along with secondary individual accounts that offer each partner a degree of financial independence and privacy.

Recommended: How to Open a Bank Account for Someone Else

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Potential Drawbacks to Consider

There are also some potential downsides to backup bank accounts. Keep the following in mind as you consider if additional accounts are right for you.

Account Confusion

Ever notice how the more streaming platforms you have, the harder it can be to keep track of which shows you’re watching where? In a similar vein, more bank accounts can mean more things to get jumbled: account numbers, passwords, balances, fees, and more.

You might forget which account you’re using for autopay, for example, and wind up overdrafting. Or, you might accidentally send your payment for a house-sitting gig to your primary checking account instead of the secondary one. In other words, having multiple accounts can require additional organizational moves to stay on top of your money.

Spreading Finances Thin

Another potential con to having different types of bank accounts is that it can divide up your wealth in ways that may not serve you well. For example, some bank accounts require a minimum balance to avoid monthly fees. If your funds are split between multiple accounts, it could be harder to meet that minimum.

In addition, some financial institutions offer savings accounts with tiered interest rates; these accounts pay different rates of interest depending on the amount of funds held in the account, and the rate increases with the size of the account. If you transfer some of your funds on deposit into a backup account elsewhere, you might lose out on the APY you were counting on.

Recommended: APY Calculator

Security Concerns

While financial institutions work hard to achieve top-notch security, bank fraud does occasionally happen. The more accounts you have, generally the greater the risk of phishing scams or data breaches, as each account/institution represents a potential security vulnerability. Having multiple accounts also means keeping track of multiple login details; if these are not securely managed, it increases the risk of unauthorized access.

To secure your accounts from hackers, you’ll want to use strong, unique passwords and enable two-factor authentication on all accounts. Also be sure you never share your account details with people you don’t know or click on links in potentially fraudulent emails or texts. Regularly monitoring your accounts for suspicious activity can also help you catch and respond to security concerns promptly.

How To Choose the Right Backup Bank Account

If you do opt for a backup bank account, you’ll want to consider what will best suit your needs. Some factors worth mulling over:

•   Account fees: You’ll want to look for accounts with low or no fees, especially if you plan to use the account infrequently. Many online banks offer fee-free accounts, which can be a great option for a backup account.

•   Interest rates: If you’re opening a backup savings account, consider one with a high-interest rate to maximize savings. Some online savings accounts offer competitive rates that can make a significant difference in long-term savings growth.

•   Accessibility: Evaluate how easy it is to access your funds in the backup account. Consider whether the bank offers convenient options like online banking, a mobile app, or ATMs in your area. For emergency funds, quick and easy access is essential.

•   Perks and rewards: Compare perks like sign-up bonuses, cash-back rewards, or other incentives when choosing a backup bank. Some banks offer attractive benefits that can add value to your account and make opening a second account more worthwhile.

•   Account types: Consider what type of account would best suit your needs. If your backup account is for budgeting, a checking account may be most appropriate. For emergency funds, a high-yield savings account is often a better fit.

•   Bank reputation: Research the bank’s reputation and customer service quality. Reading customer reviews can give you insights into the bank’s reliability, responsiveness, and online banking experience.

The Takeaway

Backup bank accounts have several upsides: They can help you organize your finances and reach your goals; they may help grow your money; and they can enhance your financial security. However, there are also some potential disadvantages to contend with, such as the risk of confusion among your accounts, spreading your money too thin, and possibly increasing some safety risks. By considering these pros and cons, you can decide if a backup bank account is the right next step for you.

Whether you are considering opening a primary or backup account, take a look at all that SoFi offers.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

What are the main reasons to open a backup bank account?

One common reason for opening a backup bank account is added financial security. Should your primary account become inaccessible due to technical issues or fraud, you’ll still have access to funds. A backup account can also help you better organize your finances. For example, you might open a second checking account to separate your personal and business finances, or a backup savings account to keep your emergency funds separate from other savings. This structure can help you keep track of spending and savings more effectively.

Can having multiple accounts affect my credit score?

Banks typically don’t report your banking activity to the credit bureaus, so having multiple bank accounts won’t directly impact your credit score. However, if any of your accounts are linked to overdraft protection (a form of credit) and you miss payments on those accounts, it could impact your score. Your bank could send your overdue payment to a collections agency, and the collections agency would report your unpaid debt to the credit bureaus. To avoid potential issues, you’ll want to avoid overdrafts and properly manage any credit-linked accounts to protect your credit rating.

What features should I look for in a backup bank account?

Which features to look for in a backup bank account will depend on your particular needs and wants. Perhaps a sign-up bonus is attractive to one person, while another wants to go with the account that offers the lowest fees or highest interest rates. Some people might choose to have their primary account at an online bank and use a traditional bank for their backup one, or vice versa.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 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 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBNK-Q424-007

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Jan
13
2025

How To Save Money and Lower Your Cell Phone Bill

By | Budgeting & Goals, Financial Topics | Comments Off on How To Save Money and Lower Your Cell Phone Bill

In 2024, the average U.S. monthly cell phone bill dropped from $156 in 2023 to $141, according to J.D. Power. While a price decrease is a good thing, that is still a significant outlay for many.

Fortunately, with over 100 mobile carriers available in America, competition for customers can be stiff. Some companies have started offering more plans and deals that can help customers cut costs, encouraging customers to stick around longer and attracting new ones, too. Plus, there are other ways to economize on your cell phone bill.

Since mobile phones can be indispensable, consider the following ways you might lower your bill.

Key Points

•   To lower a cell phone bill, analyze current data usage to determine if a less expensive plan suffices.

•   It’s possible to negotiate with providers for better rates by expressing willingness to switch carriers.

•   Consider smaller carriers for potentially lower rates and suitable plans.

•   By connecting to wifi, data use and charges can be minimized.

•   Other ways to lower a cell phone bill include opting into autopay to receive discounts from some carriers or investigating friends and family plans.

Analyzing Your Current Cell Phone Usage

The average U.S. mobile service user consumed about 19 GB of data monthly in 2023, and this number keeps growing, according to Ericsson’s Mobility Report. In fact, by 2029, estimates reveal that U.S. mobile users will likely use about 59 GB per month.

Even though many mobile providers offer unlimited data, you may be among those who are wasting money if you’ve opted for that kind of plan. It can be a wise move to check your data usage since some consumers can meet their data needs with 5 GB or less per month. If you fall into that category, you might save money by avoiding a pricey unlimited plan.

Note: In your phone’s data settings, you’ll often find figures in megabytes (MB) and gigabytes (GB). A megabyte is 1 million bytes, and a gigabyte is about 1,000 megabytes in binary terms or 1,024 megabytes in computing terms.

•   iPhone users can check mobile data by going to: Settings > Cellular > Cellular data

   A list of your apps (whether they are social media, shopping, or news platforms or budgeting apps) will pop up, showing how much data each app is using.

•   Android users can look at their mobile data by going to: Settings > Network & Internet > Internet > Settings

   At the top of the screen, you will see how much data you’re using. At this point, you may also want to set up data alerts to notify you when you’ve reached your data limit for the month.

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Comparing Plans and Carriers

Pricing and coverage can vary with each mobile provider. That’s why it’s always a good idea to shop around and compare your options. This way, you can find a plan that fits your needs and works with your budget.

But remember, as much as you want to plump up your checking account, price isn’t the only factor worth considering. Here are a few other things to think about when looking for the best plan:

•   Coverage: One of the main reasons people have cell phones is to stay connected anytime, anywhere (or as close to that as possible). If the coverage isn’t good, you might miss calls or be unable to contact someone in an emergency. Check the company’s coverage map to make sure they offer strong service where you live.

•   Perks: Some cell phone providers offer extra benefits, like additional hotspot data, discounts on streaming services, or free international calling.

•   Discounts: You might qualify for special discounts if you’re a veteran, teacher, or work at a certain company. Be sure to ask the provider what discounts might be available to you.

•   Customer service: It’s also important to choose a carrier with efficient and reliable customer service. If you have an issue with your phone, the last thing you want is to be stuck on hold for hours. Check verified customer service reviews, as some companies may not provide great support.

Negotiating With Your Current Provider

As the saying goes, it never hurts to ask: If you’re happy with your current provider, you can try asking for a lower price or any new discounts you might qualify for. That can be a quick and simple way to cut costs.

Another option is to mention that you’re considering switching to another company, whether you have received offers for lower pricing or found deals for less when searching online. This often leads to being connected with someone who can help you negotiate a better deal. Whether you’ve been a long-time customer or are thinking about switching, mobile carriers may offer discounts, free upgrades, or special rates to keep you.

Exploring Alternative Cell Phone Services

While AT&T, Verizon, and T-Mobile are among the big names in the U.S., there are plenty of other mobile providers available that may better suit your needs and budget. Here are some alternatives:

•   Boost Mobile

•   Consumer Cellular

•   Cricket Wireless

•   Google Fi Wireless

•   Mint Mobile

•   RedPocket Mobile

•   Spectrum Mobile

•   Straight Talk

•   Ting Mobile

•   US Mobile

•   Visible by Verizon

Recommended: How to Get Caught Up on Late Payments

Tips for Reducing Data Usage and Costs

To help you lower your cell phone bill, here are several tips to avoid data overages and extra costs.

Connect to a Trusted Wifi Network

Instead of using up your mobile data, try connecting to local wifi. This can help lower internet charges on your phone bill and often provides a faster, smoother experience. Just make sure you’re joining a trusted network — unsecured ones can put your personal information at risk from hackers.

Note: Be especially careful using public networks for financial transactions. Whether you do traditional or online banking, you don’t want to be conducting transactions across anything but a secured and trustworthy network.

Set Up Autopay

Some carriers may offer discounts when you set up autopay, since it automates the process and can require less work all around. You link your debit card or bank account to your cell phone bill’s payment portal. Each month, your payment is automatically processed by the due date, so you don’t have to lift a finger and can avoid late payments as well.

Switch Off Auto Cloud Backups and Syncing

Cloud backups and syncing services like Google Photos, Dropbox, and iCloud can help keep the files on your phone and other devices up to date. But these services can use up a big chunk of your data if you’re not careful. To avoid this, go into the settings on your phone and adjust them as needed so your device only backs up or syncs when you’re connected to wifi.

Share a Plan

Another plan for saving money: With a family or group plan, you can essentially split the cost of your cell phone bill with others. Whether it’s family or friends, you can share data, messages, and talk time. You can even add someone who’s a roommate or coworker to your plan. Check with your provider to see what group plans they offer.

Hold Off on an Upgrade

It may feel like every few months phone manufacturers come out with the latest and greatest versions of your phone. While it’s tempting to snap up a device with all the newest bells and whistles, waiting to upgrade can save you a lot of money. For example, upgrading every year might cost you $1,000, when your current phone is working just fine.

If you are ready to upgrade, be sure to bring your old phone with you. Many carriers offer trade-in deals where they refurbish your phone and give you credit toward a new one.

Make Sure Your Address Is Up-To-Date

If you move (or are planning on moving in the near future), make sure your phone provider has your correct address listed when you head to your new place. Here’s why: Your mobile provider typically uses your address to figure out the taxes and fees you owe. If you don’t update it, you might end up paying more on your next phone bill. (There is, of course, a possibility that your taxes and fees might go up when you move.)

The Takeaway

If you’re looking to lower your cell phone bill, there are several tactics to try. Among other moves, you might compare carrier and plan options, minimize your data usage, and/or negotiate with your carrier to bring down costs.

Then, if you need a place to stash any money you’ve saved, see what SoFi offers.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Can I lower my bill without changing carriers?

Yes, it can be possible to lower your bill without switching providers. One way to do so is to call your mobile carrier and let them know you’re thinking about switching. They may offer you a better rate to keep you as a loyal customer. Another option is to check your plan. If you’re paying for more data or other features that you don’t need, downgrading your plan could help you save some money.

How often should I review my cell phone plan?

The Federal Communications Commission recommends reviewing your mobile phone bill each month. This way, you can spot any suspicious activity. Plus, it’s a good time to see if your data usage matches up well with the plan you are paying for. If not, it might be time to call your service provider to adjust your plan accordingly or switch to a new carrier.

Are family plans always cheaper than individual plans?

Family plans may or may not be the cheapest option when compared to individual plans. While some carriers offer discounts for adding more lines to your plan, there could be other charges involved that make the cost higher per person than an individual plan. It can be a smart move to compare the costs of each plan and see if a family plan is truly a better deal.

Photo credit: iStock/Jacob Wackerhausen

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 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 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

SOBNK-Q424-006

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Jan
13
2025

How to Shop and Eat Organic Food on a Budget

By | Budgeting & Goals, Financial Topics | Comments Off on How to Shop and Eat Organic Food on a Budget

Organic food tends to be more expensive than non-organic food. One reason is that organic food, which is grown without synthetic herbicides, pesticides, fertilizers, or bioengineered genes (GMOs), costs more to produce. Other factors include the cost of certifying that foods are organic as well as the lower yield of organic crops. There’s simply less of it available: According to the Organic Trade Association, certified organic products now make up 6% of total food sales in the country, and demand can drive up prices for limited supplies.

Despite the higher cost of an organic diet, eating organic on a budget is possible with a little extra effort spent on planning and shopping. Here’s a look at how to identify truly organic food, where to buy it, and how to make an organic food lifestyle doable on a budget.

Key Points

•   Organic food tends to be pricier than non-organic since it can require more expensive production and have lower yields.

•   Buying locally at farmers markets and community-supported agriculture (CSAs) can reduce costs by eliminating transportation expenses.

•   Shopping seasonally and planning meals in advance can reduce the cost of organic groceries.

•   Buying in bulk, using coupons, and shopping at discount stores, can help lower the cost of organic foods.

•   Growing your own organic produce is a cost-effective way to enjoy organic fruits and vegetables, especially for items that are expensive in stores.

Understanding Organic Labels and Certifications

Knowing what food is genuinely organic can be confusing because of the various labels and certifications used for food products. The United States Department of Agriculture allows food that meets certain organic standards to display the USDA organic seal. Farms that produce food under this seal are inspected regularly to make sure they adhere to organic standards. Here are the basic standards for various types of food:

•   Produce and grains: Produce and grains are produced using natural fertilizers, eco-friendly pest control, and protected soil and water.

•   Meat, dairy, and eggs: The animals used to produce these food items must be allowed to roam freely outdoors. Farmers must adhere to animal welfare standards, and no growth hormones or antibiotics can be used.

•  Packaged goods: Packaged goods cannot contain genetically-modified organisms (GMOs), they must be traceable from farm to store, and they cannot include artificial colors, flavors, or preservatives.

Organic food producers who sell less than $5,000 a year in organic food do not have to be certified. They can label their food as “organic;” however, they cannot use the official USDA organic seal.

Some foods may use the term “natural,” but this is not the same as organic. According to the Food & Drug Administration (FDA), the term “natural” means that nothing artificial or synthetic (including all colors) has been included in or added to the food.

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Smart Shopping Strategies for Organic Foods

Organic food is more expensive than traditional food for many reasons, as noted above. According to the U.S. Food and Agriculture Organization (FAO), one reason is that there is a limited supply of organic food, which pushes up the price. Another reason is that farmers have additional production costs (particularly labor) and don’t benefit from economies of scale in many cases.

But if you’re trying to track your spending and economize, here are some ways to enjoy organic food without blowing your budget.

Eat Less Meat

In one recent year studied, the price of organic beef averaged $9.26 per pound, which was a premium of $3.66 per pound or 67% versus conventional meat, according to Iowa State University quoting the USDA Agricultural Marketing Service. Meat is expensive to start with, but with those premiums added on, organic meat can be a luxury. There are other good options, however, for protein in your diet.

Why not eat more beans and rice? Beans and rice when eaten together provide complete protein, and even their organic versions can be a lot cheaper than animal-derived proteins. That in turn can help pad your savings account since your food bill can decrease. What’s more, beans can be considered one of the healthiest foods you can eat, according to the Mayo Clinic.

Shop at Discount Stores

You don’t have to go to a high-end organic grocery store to get organic food. Aldi, Lidi, Trader Joes, and other less expensive stores carry organic products. The same holds true for many wholesale club stores, like Costco. You may find shopping online for organic foods can save you money as well.

One more tip: Consider buying generic store brands of organic foods, whether that’s peanut butter or coffee beans, because these tend to be cheaper than the bigger, well-known brands.

Request Coupons

Companies know that garnering customer support and their goodwill will boost their reputation, and many distribute coupons to encourage that support. Start couponing by searching online to see what’s available; some organic companies will offer them in return for an online review.

Buy In Bulk and Shop According to the Seasons

Buying food that is in season is usually a smart move. What you’ll purchase will likely be at its peak nutritionally, and the prices are reasonable because the supply is more plentiful. If you buy in bulk, you may be able to store food and use it later. Blueberries, for example, can be bought in bulk when in season and divided into single servings and frozen. You could buy squash when it is in season and make soups and stews that can be frozen and later thawed for a quick oven-ready meal. Or stock up on apples in the fall and then store them properly (known as overwintering them) so they last through the winter and into the spring.

Buy Frozen Organic Food

Frozen organic food, like its non-organic counterpart, is usually cheaper than its fresh counterpart. (Fresh food can be pricier since it needs to be transported and delivered quickly before it spoils.) An additional advantage is that frozen organic food lasts longer than fresh organic food, which means less waste. Nutritionally, frozen fruits and vegetables are usually just as nutritious as fresh fruits and vegetables, according to research published in The Journal of Agricultural and Food Chemistry.

Buy Local at Farmers Markets and CSAs

When eating organic while watching how much you spend on groceries, shop from a local producer or farmers market. The food may be cheaper because the transportation costs are virtually eliminated for the producer.

Programs such as community supported agriculture (CSAs) support local food growers. How it works: Consumers buy a share or membership in a local farm, usually at the beginning of the growing season. They then receive a weekly share of the farm’s produce during the harvest season. The food is seasonal, locally grown, and often delivered to the shareholder’s doorstep.

Recommended: 39 Passive Income Ideas

Meal Planning and Prep for Budget-Friendly Organic Eating

Meal planning can help you to eat organic food while on a budget (so can using an online grocery budget calculator). Planning ahead can help you choose lower-cost items that you can stretch across different meals, and you’ll be more likely to buy just what you need.

It might take 30 minutes to sit down each weekend and map out your meals for the week. Write down what you’ll have for breakfast, lunch, and dinner, pay attention to how you can use affordable organic foods in those dishes, and from that, write out your shopping list.

Try to use seasonal ingredients since they are usually economical. For example, when tomatoes are in season in the summer, you can plan meals like pasta with fresh tomatoes or make large quantities of tomato sauce and store it for later use. This can be a great way to save on groceries.

By planning meals and buying seasonal produce, you might find that you are eating healthier and saving more money in your bank account.

Growing Your Own Organic Produce

Growing your own produce is a great example of how to eat organic and healthy on a budget. You don’t need a 50-acre farm; even a small plot can provide more than you need. Some points to keep in mind:

•   Growing produce (organic or not) requires work: You have to buy tools, prepare the soil, buy and plant seeds, weed, and water. You’ll also need to educate yourself about the principles of organic gardening. You may also have disappointments when your fruit and vegetables don’t grow as you would like or get gobbled up by birds and other critters. However, if you enjoy gardening, this can be a great way to pursue a relatively inexpensive hobby, get some exercise, and grow your own organic food.

•   It can be smart to grow the foods that are most expensive in the stores. Herbs like basil, parsley, oregano, sage, etc. are a good choice. They are also fantastic ingredients for tasty meals. Fruits and vegetables that can be cheaper to grow yourself are cucumbers, lettuce, peppers, tomatoes, yellow squash, and zucchini.

   Foods that are notoriously difficult to grow are artichokes, carrots, onions, and sweet potatoes. These foods often require a particular climate, amount of light, or type of soil.

There’s nothing tastier than fresh produce from your own garden, and, with a bit of effort, it can be part of your plan to eat organic on a budget.

Recommended: Guide to Depositing a Check

The Takeaway

Many people opt for organic food for health and environmental reasons, but it can be pricey. The key to eating organic food on a budget lies in planning and preparation. Smart strategies include buying seasonal produce and building meals around those foods. Researching which stores offer cheaper organic foods, buying in bulk, and seeking out coupons can also bring down the cost.
If you’re trying to save money and grow your wealth, having the right banking partner can be an important factor.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Are organic foods always more expensive than conventional options?

Organic food is usually more expensive than conventional food because organic farming practices typically involve higher costs and must meet strict regulations. Locally grown organic food might be cheaper because the producer will not have to pay for transportation.

How can I save money on organic meat and dairy?

If meat and dairy are among your staples, you can usually save money by buying organic options locally and in bulk. With meat, you can then portion it out and freeze it for future use. Also watch for sales, and ask for coupons from organic food producers.

What are some affordable organic staples to keep in my pantry?

Shopping organic on a budget is easier and cheaper if you buy food in bulk that can be stored. Examples of organic staples to keep on hand when eating organic on a budget can include dried and canned beans, brown and white rice, whole grain pasta, oats, lentils, quinoa, dried herbs, peanut butter, olive oil, dried fruit, and canned tomatoes. These foods are the basis for healthy meals and are less perishable items, like produce.

Photo credit: iStock/supersizer

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 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 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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Jan
13
2025

Paying Bills with a Prepaid Card

By | Budgeting & Goals, Debt Payoff, Financial Topics | Comments Off on Paying Bills with a Prepaid Card

Some people choose to pay their bills with a prepaid card, such as a gift card or a reloadable prepaid debit card. This can help with budgeting, since you can set a specific amount of money that goes on your prepaid card. In addition, you don’t have to worry about overdrawing your bank account and can avoid racking up high-interest credit card debt. However, these cards can come with fees and other downsides.

Here, learn how this financial product works so you can decide if paying bills with a prepaid card is right for you.

Key Points

•   Prepaid cards function like debit cards but use funds loaded onto the card vs. drawing on a checking account.

•   Non-reloadable prepaid gift cards and reloadable prepaid debit cards are available.

•   Prepaid cards aid in budgeting by allowing spending limits and help avoid overdraft fees.

•   Fees such as activation, inactivity, and monthly maintenance charges may apply to prepaid cards.

•   Prepaid cards are generally accepted where the card network is accepted, but some merchants may not accept them.

Understanding Prepaid Cards

There are a few different types of prepaid cards, and while they share some similarities, it’s important to understand how they differ.

What Are Prepaid Cards?

Prepaid cards are similar to debit cards, but rather than drawing on your checking account, they pull from funds loaded onto the card. These cards are typically issued by a major processing network without a credit check.

The fact that these cards often use Visa, Mastercard, or American Express processing networks and have the company’s logo on them is why you may sometimes hear them referred to as “prepaid credit cards,” but they don’t offer a line of credit or potentially accrue interest as standard credit cards do. Rather, using a prepaid card usually means that you can use your card anywhere that the processing network on your card is accepted, up to the balance available on the card.

How Prepaid Cards Work

There are a few different kinds of prepaid cards, and they work in slightly different ways.

•   Prepaid gift card: You can buy these prepaid gift cards online and in person at many major retailers. Prepaid gift cards come in different amounts, and usually have a small activation fee that you’ll have to pay in addition to the face value of the gift card. Once you purchase and activate your prepaid gift card, you can use it anywhere that the processing network (Visa, Mastercard, etc.) is accepted. Once you have used up the value of the gift card, it is considered empty and you can’t add funds to it.

•   Prepaid reloadable card: With a prepaid reloadable card (sometimes referred to as a reloadable or prepaid debit card), you can add money to your card at any time, either through a cash deposit, direct deposit of a paycheck or government check, a tax refund, or other ways. You may also be able to reload it by transferring funds from an online bank account or by adding cash at some banks, ATMs, or retail locations. Many prepaid reloadable cards also allow you to pay bills online in addition to using your prepaid card online or at a retailer.

Recommended: High-Yield Savings Account Calculator

Benefits of Paying Bills With a Prepaid Card

There are pros and cons of prepaid debit cards. Here’s a look at some of the benefits of paying bills with a prepaid card.

Budgeting and Spending Control

One of the best reasons to use a prepaid card to pay your bills is the ability to set limits which can help as you work to make a budget and stick to it. You control the amount of money that is on a prepaid card, which means that you can control how much you spend. Prepaid cards could also be part of a plan to avoid high-interest credit card debt because you are only spending the cash amount on the card vs. drawing against a line of credit.

Tip: One way to budget by using prepaid cards is to have several different prepaid cards, one for each category in your budget. That way you can more easily limit how much you spend in any one category.

No Credit Check or Approval Required

Unlike a traditional credit card, there is no credit check or approval required to buy a prepaid debit card. You simply buy the card, pay any activation fee that is required, and the card is available for use. That can make paying bills with a prepaid card an attractive option for people with no credit or those with poor credit.

It’s worth noting that activity on these prepaid debit cards isn’t reported to the credit bureaus, and you therefore cannot build credit with prepaid debit cards. However, they could help you avoid negative situations, such as increasing your credit utilization ratio, which might harm your score. (Secured credit cards, however, which require a down payment as collateral to borrow against, may help build credit.)

Avoiding Overdraft Fees

Another benefit of paying bills with a prepaid card is that you can avoid overdraft fees. Unlike a debit or credit card, with a prepaid card, the amount of money on your card is fixed. And if you try to make a purchase for an amount that is higher than is on your card, your purchase will likely not be approved.

While that can be frustrating, it does mean that you can avoid overdraft fees which can occur if, say, you have set up utility bill autopayments but don’t have enough cash to cover the amount one month. These fees can be as high as $35 or $40 a pop, so it can make good financial sense to dodge them.

Potential Drawbacks of Using Prepaid Cards

While there are benefits to paying your bills with prepaid cards, there are also some possible drawbacks as well.

Fees and Charges

While you can avoid overdraft fees by using prepaid cards, there are some fees and charges that you might incur. Many prepaid cards charge an activation fee that you pay when you purchase a card. These are often between $1 and $10. Also, some cards also charge an inactivity fee, if you don’t use the card in a certain time period, and/or a monthly maintenance fee. Make sure you understand any fees and charges on your prepaid card before buying and using one.

Limited Protections and Fraud Liability

Another potential downside of using a prepaid card as compared to a credit card is that credit cards typically have better purchase and fraud protection. When you use a prepaid card, you may be giving up some of those protections.

It’s worth knowing that many prepaid debit cards, however, now offer protections similar to those of standard debit cards linked to a checking account. Check the card’s terms to see what coverage you may have. You may need to register the card to access these benefits.

You also need to be aware that there is not always a way to register a prepaid gift card or create an account. So if you lose your prepaid gift card, there may not be a way to get that money back. Guard your prepaid cards like you would cash.

Acceptance Issues

Most gift cards or prepaid debit cards are issued by a major processing network such as Mastercard or Visa. That means that those cards are usually accepted anywhere that network is accepted. However, you may find some situations where a store or online retailer may not accept a prepaid gift card as valid payment for some types of purchases. (For instance, if a merchant has had issues with declined transactions using this type of card, they may not accept them.) Consider checking with your retailer to see if your card will be accepted before planning on making a major or time-sensitive purchase with a prepaid card.

Recommended: Passive Income Ideas to Help You Make Money

Setting Up Bill Payments With a Prepaid Card

You can use some prepaid debit or prepaid credit cards to set up your bill payments. For example, your prepaid card typically will come with a 16-digit card number, similar to a debit or credit card. Simply use that number when you are setting up your bill payments. You’ll just want to make sure that you have enough money on your card to pay your bill. This is especially true if you are using a reloadable card for recurring payments.

Managing Your Finances With a Prepaid Card

It is possible to pay your bills and manage your finances using prepaid cards. This can be a good option for someone who doesn’t have a checking account or doesn’t want or can’t use credit cards. If you do decide to manage all (or most) of your finances using prepaid cards, you’ll likely want to get a reloadable prepaid card. That way you don’t have to continually buy new cards as your funds run out — instead, you can just add funds onto your existing reloadable card.

Recommended: How to Deposit a Check

The Takeaway

Prepaid cards are typically issued by one of the major card processing networks such as American Express, Mastercard, and Visa. You can either buy prepaid gift cards, which generally are loaded with a set amount and can’t be reloaded, or reloadable prepaid debit cards. Reloadable cards allow you to add additional funds to the card as needed. There are both advantages and disadvantages to using prepaid cards to pay bills, so make sure you understand both the pros and cons before deciding to pay bills with a prepaid card.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Can I pay any type of bill with a prepaid card?

Most prepaid cards are processed by a card network such as Visa or Mastercard. So you can typically use your prepaid card anywhere that network is accepted. However, some bills are not payable with this kind of card, so you may have to make other arrangements. Check with the intended payee to see what options may be available.

Are prepaid card transactions secure and safe?

Prepaid card transactions are generally processed by the card processing network that is indicated on the card itself (usually Visa, Mastercard, or American Express). As such, these transactions are as safe as any other transactions that are on the same network. Just keep in mind that these cards may not have much protection if they are lost or stolen, so guard them carefully.

What happens if I run out of funds on my prepaid card?

What happens if you run out of funds on your prepaid card depends on what type of prepaid card that you have. Many prepaid cards work more like gift cards in that they have a certain amount of money loaded onto them, and when that money runs out, the card has no value. However, some prepaid cards are reloadable, meaning that you can add additional funds onto the card and continue to use it.

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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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