What Is a Contactless Credit Card and How Does It Work?

What Is a Contactless Credit Card and How Does It Work?

Amid health and safety concerns during the coronavirus pandemic, the popularity of contactless credit cards soared. This method of payment allows you to use your credit card for a purchase by simply tapping or holding it on the card reader, as opposed to inserting or swiping it.

While you may or may not already be familiar with how to use contactless credit cards, you may be wondering, how do contactless cards work? Here’s a look at the tech that enables contactless credit card payments, as well as the pros and cons and overall safety of using contactless credit cards.

What Is a Contactless Credit Card?

Physically, a contactless credit card looks like a regular credit card, with the bank name and the account number on the front of the card and the ubiquitous magnetic stripe on the back of the card. However, contactless credit cards allow cardholders to “tap and pay” instead of inserting or swiping their card in a merchant payment machine.

This enables a consumer to make a purchase at a retail location without ever having to physically touch a payment device, which is why contactless payments increased during the pandemic.

What Does Contactless Payment Mean?

The term contactless payment more broadly refers to a form of payment that involves no touch. You can make a contactless payment using a credit card as well as a debit card, gift card, mobile wallet, or wearable device.

Regardless of the form, contactless payments rely on the same technology to make a payment without needing to swipe, enter a debit or credit card PIN, or sign for a transaction.

How to Know If Your Credit Card Is Contactless

Major credit card providers like MasterCard and Visa offer contactless cards. You can determine if your credit card is contactless-capable by looking for a contactless card symbol on the back of your card. This symbol looks like a WiFi symbol flipped on its side, with four curved lines that increase in length from left to right.

Even if your card has this symbol on it, you’ll also want to check that the merchant has contactless readers. You can figure this out by looking for that same symbol on the card reader or asking the merchant directly.

How Contactless Credit Cards Work

Like other credit cards, contactless credit cards have small chips embedded in them. But instead of requiring you to insert the card, this chip emits electromagnetic waves that transfer your payment information when you place the card close to a payment terminal that accepts contactless payments.

You don’t actually even need to tap your contactless credit card to pay — all you have to do is place your card within a few inches of the payment terminal. This will initiate payment.

You might then have to wait a few seconds while the transaction processes. The terminal will usually give a signal when the transaction is complete, such as by beeping or flashing a green light.

Technology That Enables Contactless Credit Card Payments

Instead of inserting a credit or debit card into a merchant payment terminal, contactless credit cards rely on radio frequency identification technology (RFID) and near-field communication to complete a retail transaction.

The “no touch” concept is driven by a contactless card’s short-range electromagnetic waves, which hold the cardholder’s personal data, including their credit card account number. This information is then transmitted to the merchant’s payment device. Once the device grabs the airborne card information, the transaction can be completed and the purchase confirmed.

Pros and Cons of Contactless Credit Cards

Like most consumer finance tools, contactless credit cards have their upsides and downsides. Here’s a snapshot of the pros and cons to note:

Pros

Cons

Convenient to use Not always available overseas
Secure Low transaction limits
Increasingly offered Not always reliable
Better for merchants

Pros

These are the main upsides of contactless credit cards:

•   Convenient to use: Contactless credit cards are extremely convenient to use once you get the hang of how credit cards work when they have this feature. All a user has to do is wave their contactless credit card in front of the card reader, and the deal is done in a matter of seconds. Plus, you can avoid touching any surfaces in the process.

•   Secure: With data thieves regularly on the prowl, “tap and pay” and “wave and pay” technologies are highly protective of a consumer’s personal data. All of the data is stored on a password-protected, fully-encrypted computer chip embedded inside the card, making it difficult for a financial fraudster to steal a user’s personal information.

•   Increasingly offered: The availability of contactless payments has increased in recent years, and many brand-name companies now offer the option. Companies may even offer discounts and loyalty point details that are immediately added to a consumer’s account at the point of sale.

•   Better for merchants: Companies that offer contactless credit/debit card payments also benefit from “no touch” card technology. Aside from superior operational capability and faster transactions, merchants get a better customer experience and formidable fraud protection from contactless payment technology, with no extra cost. That’s because merchants pay the same transaction processing fee with contactless payments as they do with regular credit card transactions.

Recommended: Tips for Using a Credit Card Responsibly

Cons

Of course, there are downsides to contactless credit cards as well:

•   Not always available overseas: Contactless payments may not work abroad, given the recent expansion of a new card payment technology. Additionally, consumers may be charged foreign transaction fees when they do use contactless payments overseas, depending on the specific country’s credit card payment laws.

•   Low transaction limits: Contactless card users may find they can’t cover large transactions, like a laptop computer or king-size bed. That’s because merchants may issue those limits until they’re convinced contactless payments (like any new technology) are completely safe, secure and free of any fraud threats. In the meantime, contactless card-using consumers can always use the same credit card to make a big purchase by using “chip and sign” or “chip and swipe” card technologies.

•   Not always reliable: Contactless credit card transactions aren’t always reliable, as sometimes the payment won’t go through even though a reader indicates that it accepts contactless payments. This could cause someone to have to resort to swiping their card instead to complete the transaction.

Recommended: What is a Charge Card

Guide to Using a Contactless Credit Card

When using a contactless credit card, the transaction is enabled and completed in three key steps: look, tap, and go.

1.    Look. The consumer checks for a contactless symbol on a merchant’s payment device (this will look like a WiFi signal tipped on its side).

2.    Tap. After being prompted by the payment device, the consumer will wave the credit card an inch or so over the payment device, or actually touch (tap) the credit card on the payment terminal. This is why the process is sometimes referred to as credit card tap to pay.

3.    Go. Once the wave or tap is executed, the payment device picks up the transaction, confirms the credit card payment, and completes the transaction.

Be mindful that if you carry multiple contactless credit cards, you may want to keep those cards away from a terminal that accepts contactless payments. This will help ensure the correct credit card is being charged. Instead of holding your wallet or purse over the payment terminal, take out the specific card you’d like to use instead.

Recommended: When Are Credit Card Payments Due

Are Contactless Credit Cards Safe?

Contactless payment cards basically offer the same anti-fraud protections as any card that relies on a credit card chip.

This is because the chip in contactless credit cards creates a one-time code for each merchant transaction. Once the payment is confirmed and the transaction is approved, the code disappears for good. That makes it virtually impossible for a financial fraudster to steal a consumer’s personal data, as they can’t crack the complicated algorithmic codes financial institutions use with chip-based payment cards.

Additionally, a contactless card is equipped with electromagnetic (RFID) shielding, which helps keep card information from being “skimmed” by data thieves. In turn, this removes another data security threat from the credit card transaction experience.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

Contactless credit cards are emerging as an effective payment technology that’s gathering steam among consumers and retailers alike. Thanks to the tech that enables contactless credit card payment, these credit cards allow you to simply wave or tap the credit card within range of a payment terminal that accepts contactless payments. You can figure out if a payment terminal — and your credit card — offer contactless payment as an option by looking for the contactless payment symbol.

If this is a feature that interests you, it might be worth looking out for when picking a credit card that works for you.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.1



Take advantage of this offer by applying for a SoFi credit card today.

FAQ

Are there extra charges for using contactless credit cards?

No, there are no extra charges for using contactless credit cards. This is true for the consumer who’s tapping their card as well as for the merchant accepting contactless payments.

What are the risks with contactless credit cards?

While contactless credit cards generally offer enhanced security, there is the risk of a thief skimming cards in your wallet by using a smartphone to read it. However, the thief must be within very close range to do so. Perhaps the easiest way for a thief to get ahold of your information is by stealing your physical credit card, which is a risk with any type of credit card.

Where can I use my contactless credit card?

You can use your credit card at any retailer that has a terminal accepting contactless payments. You can determine if a card reader will take your contactless credit card by looking for the contactless payment symbol.

What happens if I lose my contactless credit card and someone else uses it?

If your card is stolen or lost, contact your credit card issuer immediately. Check your recent credit card transactions for any fraudulent activity, and make sure to report that information to your credit card issuer.


Photo credit: iStock/milan2099

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.

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.

1See Rewards Details at SoFi.com/card/rewards.

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.

1 When you elect to redeem rewards points as cash deposited into your SoFi Checking and Savings account, as a statement credit to a SoFi Credit Card account, as fractional shares into your SoFi Invest account, or as a payment toward your SoFi Personal Loan or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per 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.

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Guide to Safety Deposit Boxes

Even if you don’t have a safety deposit box, you are probably familiar with how they can be used to stash valuable papers and possessions out of reach, at a bank, for safekeeping. You’ve probably seen movies in which precious jewels or stock certificates are tucked away in these containers. In real life, they can provide a layer of security that many people find valuable.

But you may wonder, “Do I really need a safety deposit box?” Keep reading to learn:

•   What is a safe deposit box and what does it do?

•   What should and should not be kept in it?

•   What are the benefits and disadvantages of having a safety deposit box?

•   Should you ever share access to a safety deposit box with someone else?

What Is a Safety Deposit Box?

A safety deposit box (also known as a safe deposit box) is a secure locked box, usually made of metal, that’s used for storing important documents or irreplaceable items. A safety deposit box generally comes with two keys, one for you and one for the bank.

You can probably rent one of these boxes at a bricks-and-mortar branch of your bank or credit union. The boxes usually resemble drawers that slide out and are secured in an inner vault. They are designed to protect your valuables against theft, natural disasters, and even terrorism.

Rental fees typically vary by the box’s size and by the financial institution. Yearly costs can range from about $15 to $350. If you lose your key, you may have to pay $30 or more to replace it. You don’t necessarily need an account at a bank to keep a safety deposit box there, though some banks offer lower rental rates to customers who hold accounts there.

Recommended: How long does it take to open a savings account?

What Is the Purpose of a Safety Deposit Box?

How do safety deposit boxes work and what might you need one for? If you have valuables you want to protect, these containers are, as the name suggests, a safe place to store them. Here are examples of the kinds of important items to store in the box:

•   Birth and death certificates

•   Marriage and divorce records

•   Citizenship papers

•   Property deeds and mortgage documents

•   Adoption paperwork

•   Military records, including discharge papers

•   Car titles

•   Savings bonds

•   Stock shares

•   Important data stored on USB drives

•   Heirloom jewelry, stamp and coin collections, or keepsakes.

The value of a safety deposit box is that banks and credit unions are generally more secure than your home, which could potentially be burglarized, flooded, or endure a fire. What’s more, putting your valuables in a safety deposit box also means you know exactly where they are and you don’t need to tear the house apart hunting for where you might have tucked them away.

When you need to access something, such as your birth certificate, you would go to the bank, prove your identity and ownership of the contents, present the key, and a staffer unlocks the box. You can usually sit in private to review the contents and remove items or add more.

How Safe Is a Safety Deposit Box?

In most cases, a bank is a safer location than a house or apartment, which could be broken into or could be compromised by, say, flood or fire. How a safe deposit box works is by being a damage-proof container in a solid building that has superior security.

However, some experts say safety deposit boxes could be safer, especially if a banking location changes ownership. Be aware if this happens during the course of your box rental. You may want to monitor your valuables by visiting the bank in person to be sure your box is properly registered under your name and address.

Beyond that, know that the bank does not insure the value of the contents in the box. See below for more details on that.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning up to 4.50% APY on your cash!


What Should You Not Use a Safety Deposit Box For?

If you might need access to something quickly, don’t leave it in a safe deposit box. Banks and credit unions are usually not open seven days a week and might close for the day before you finish your work day. What happens if you get sick and need your health care proxy forms? Or what if you need to leave the country unexpectedly and realize you put your passport in your safety deposit box? Lack of access could create serious problems.

The following are items you might need access to ASAP, so do not store them away from home:

•   Living will

•   Health-care proxy papers

•   Passport

•   Any important document you have only one copy of and might need to produce, say, when traveling, proof of legal guardianship.

In addition, most banks and credit unions prohibit the storage of the these items in safety deposit boxes:

•   Firearms, other weapons, and ammunition

•   Explosives or hazardous materials

•   Illegal substances, such as drugs

•   Alcohol

•   Perishable items

•   Cremated remains.

Are Possessions Insured With a Safety Deposit Box?

Items held in a safety deposit box are not insured by the bank. If you have a costly heirloom diamond bracelet, for instance, contact your home insurance company and have the bracelet (and other treasures) specifically insured on your policy.

You might also want to make copies of and safely store any documents you put in your safety deposit box for reference purposes. For instance, you might need information from your birth certificate vs. the original document itself when filling out a form and not want to make a trip to the bank

Recommended: How old must you be to open a bank account?

Benefits of a Safety Deposit Box

Safe deposit boxes can be an important way to protect your valuables. Here are some of the upsides of renting one:

Contents are protected against natural disasters and theft

If your home were flooded, had a fire, or another bit of “crazy weather” occurred, or a burglar broke in, your important papers and possessions would be safe.

Less chance of losing track of valuable items at home

When trying to stash away important documents, like the deed to a property, or a special item, like your grandmother’s engagement ring, there’s the risk that you’ll hide it so well at home, you’ll have trouble finding it again. This is simply not an issue when you store things in a safety deposit box.

More secure than a home safe

A safe deposit box is typically a better, more theft-proof bet than a home safe, which could be taken away or broken into during robbery.

Convenience and peace of mind

What if, in a worst-case scenario, you were to be incapacitated or die? A safety deposit box can be where family members would naturally look to find documents and items you want them to have.

Recommended: How much money do you need to open a bank account?

Disadvantages of a Safety Deposit Box

Now that you know the pros of having a safe deposit box, here are some cons to consider:

Only the owner has access to the contents

Part of what makes a safety deposit box so secure is the limited access. But there could be a number of scenarios in which you want someone else to have access. In this case, you might want someone else close to you to have official access. Or it can be wise to tell a trusted relative, friend, or the attorney managing your estate where the key is kept in case of emergency.

Limited hours

If you need to get something from a safety deposit box, you must do so within the bank or credit union’s business hours, which may not align with your schedule perfectly.

Lost key

If you lose the key to your safe deposit box, you will have to expend effort to get a new one and pay for it as well.

Limited size

Safety deposit boxes are typically the size of a small desk drawer. If you have a considerable number of items you want to store securely, these containers may not be big enough. You might rent a larger one at a higher fee.

Recommended: What can someone do with your routing number?

Can Safety Deposit Boxes Be Jointly Shared?

Safe deposit boxes can be jointly shared, just as you can open a joint bank account with someone. In both of these cases, it’s key that the person you share ownership with is trustworthy and reliable. It should likely be a relative or someone you have known for a long time. Both of you ought to be on the same page about why the contents are in the box; when or if they should be removed; and which people are entitled to them.

Alternatives to Safety Deposit Boxes

If you are looking for an option to a safe deposit box, here are a few other ways to store important, valuable items:

Personal home safes

Fire-rated home safes are available from many retailers (Amazon, L.L.Bean) as well as office supply stores, like Staples. They are available with keypads or keys for access. While these add a layer of security, there is the chance that a thief would try to get away with the whole safe or find a way to break into them.

Private safe deposit box companies

These are not banks or credit unions but private companies that rent secure spaces. They may be an expensive option. A small storage box can cost $400 a year or more. To find one of these businesses, search online.

Banking With SoFi

For stashing vital papers or valuable possessions safely, a safe deposit box at a bricks-and-mortar bank or credit union can be a wise move. This secure container can safeguard items that could otherwise be stolen, damaged by a flood or fire, or be lost.

When it’s time to stash your money securely, however, take a look at SoFi. When you open an online bank account with direct deposit, you’ll earn a competitive APY and pay zero account fees. That means your money could grow that much faster. And, since we’re an online bank, we’re open 24/7 for your convenience.

Better banking is here with up to 4.50% APY on SoFi Checking and Savings.

FAQ

How much do safety deposit boxes cost?

The fee to rent a safety deposit box generally ranges from $15 to $350, depending on size and the financial institution.

What can I use instead of a safety deposit box?

For alternatives to a safety deposit box, consider a fire-rated personal home safe (which may not be as secure as storing items at a bank) or a space rented at a private vault company, which may cost more than working with a bank or credit union.

Are safety deposit boxes anonymous?

Safety deposit boxes are not fully anonymous. You need an ID or Social Security Number to open one, so they could be tracked to your name.


Photo credit: iStock/AlexSecret

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


SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% 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 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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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ETFs vs Index Funds: Differences and Similarities, Explained

While most exchange-traded funds, or ETFs, are passively managed just like index funds (meaning they track a certain market index), these funds have different structures, which can have a significant impact on investors.

Index funds are a type of mutual fund, which means they are less transparent, liquid, and tax efficient compared with ETFs. Exchange-traded funds shares, for example, trade on exchanges throughout the day, similar to stocks — while index funds do not. Owing to disclosure regulations, index ETFs are also more transparent than index mutual funds.

Here’s what else you need to know before you decide whether to invest in an index fund vs. an ETF.

An Overview of Index Funds

In order to understand some of the similarities between index funds and ETFs, both of which adhere to passive investing strategies (though a small fraction of ETFs are actively managed), let’s start with what a market index is and how it works.

What Is an Index?

A market index tracks a representative sample of securities in a particular sector or asset class. For example, the S&P 500 index tracks the performance of the 500 largest companies in the U.S., while the Russell 2000 index tracks small-cap domestic companies. Typically, the index is weighted according to the size of the companies.

Most indices are used as benchmarks to measure the performance of assets in a particular sector. Meaning: large-cap U.S. mutual funds might measure their performance against the S&P 500 index as a benchmark.

You can’t invest in an index, but you can invest in funds that track the index.

So index funds or index ETFs that track the S&P 500 seek to mimic the performance of that benchmark by investing in the same large-cap U.S. companies that are in the index, and giving them a similar weight in the fund.

The same goes for funds that track any other benchmark, whether that’s the Nasdaq 100 Index (which includes 100 of the largest domestic and international non-financial companies), or the MSCI World Index (mid- and large-cap global companies), or one of the many bond indices. Index funds and ETFs simply track the performance of the index, thus they are passively managed.

What Is Passive Investing?

As noted above, an index fund mirrors the performance of its index, which is known as passive investing. An actively managed fund, however, follows the strategy of an active management team. So active investing is a strategy where human portfolio managers pick investments they believe will outperform the market — whereas passive investing relies on a formula to mirror the performance of certain market sectors.

There are thousands of mutual funds available to investors, and the vast majority of them rely on active strategies. In 2021, there were over 6,600 actively managed funds, and about 500 passively managed (index) funds in the U.S., according to Statista.

Even though the number of index funds is much smaller, these funds track a wide range of benchmarks, which naturally has an impact on index fund returns. A fund that tracks a corporate bond index versus a fund that tracks an index of biotech stocks will typically have different returns.

What’s the Differences Between an ETF and Index Fund?

When picking ETFs, however, bear in mind that the world of ETFs is the opposite of mutual funds: the majority of ETFs are passively managed; i.e. they are index ETFs.

Only about 2% of ETFs are actively managed, owing to rules about transparency for these products.

That’s why many actively managed ETFs rely on a certain fund structure that allows for less transparency. These are called active non-transparent or ANT ETFs.

So: ETF vs. index fund, what are the primary differences?

How an Index Fund Works

Index funds are mutual funds. They are a collection of stocks, bonds, or other securities that are bundled together into a single unit (the mutual fund). Some may invest in large-cap stocks; some in ESG companies; some in tech; some in international companies, and so on. Most investors own more than one type of mutual fund in their portfolio, and you can also own more than one type of index fund.

Like any other type of mutual fund, index fund shares can be traded only once per day. You can put in the order in the morning, but it won’t go through until the market closes. This means the price you anticipated when you entered the order to buy or sell isn’t necessarily what you’ll get.

💡 Recommended: Learn what actively managed ETFs are and how they work.

How an ETF Works

An ETF is an exchange-traded fund, so its wrapper — or structure — is not the same as a traditional mutual fund. While an exchange-traded fund is also a basket of securities, shares of these funds can be traded on exchanges throughout the day, just like stocks. As a result, ETF shares are not only more liquid from a cash standpoint, they are also more fluid.

Mutual fund shares vs. ETF shares are relatively fixed. ETFs can generate more shares, depending on investor demand. But because an ETF is listed on a stock exchange, a sale can go through any time the market is open. An investor can get real-time pricing information with relative ease by checking financial websites or calling a broker. That’s a plus for investors and financial professionals who like the idea of making moves based on market conditions.

When trading ETFs, bear in mind that the expense ratio of ETFs is generally lower than most mutual funds. And owing to the way shares are created and redeemed, ETFs can be more tax efficient.

ETFs can offer that flexibility and more transparency: Investors can review holdings daily and monitor portfolio risk exposures more frequently than with indexed mutual funds.

Similarities Between ETFs and Index Funds

As noted above, ETFs and index funds are both pooled investments, like baskets that include dozens, sometimes hundreds of securities in a single package. This helps provide investors with diversification within the fund that can help mitigate risk and may improve performance. In addition, these two fund types share some other similarities.

Cost

ETF vs. index fund — which is cheaper? The cost per share varies widely, of course, but when it comes to expense ratios of these funds the two are increasingly competitive. Time was when ETFs fees were far lower, but now many index funds have ultra-low expense ratios.

Still, many ETFs no longer charge brokerage fees or commissions, which cuts out a cost that many mutual funds still charge. Mutual funds also tend to have higher administrative costs.

Diversification

Both ETFs and index funds can offer investors the potential to add diversification to their portfolios.

ETF vs Index Fund: Pros and Cons of Each

There’s no cut-and-dried answer to whether ETFs are better than index funds, but there are a number of pros and cons to consider for each type of fund.

Transparency

By law, mutual funds are required to disclose their holdings every quarter. This is a stark contrast with ETFs, which disclose their holdings each day.

Transparency may matter less when it comes to index funds, however, because index funds track an index, so the holdings are not in dispute. That said, many investors prefer the transparency of ETFs, whose holdings can be verified day to day.

Pricing

Because a mutual fund’s net asset value (NAV) isn’t determined until markets close, it can be hard to know exactly how much an index fund costs until end of day. That’s partly why mutual funds, including index funds, allow straight dollar amounts to be invested, as well as purchasing shares. If you buy an index fund at noon, you can buy $100 worth, for example, regardless of the share price.

ETF shares, which trade throughout the day like stocks, are priced by the share, so you always know how much you’re paying for an ETF.

This pricing structure also allows investors to use stop order or limit orders to set the price they’re willing to buy or sell.

Taxes

ETFs are generally considered more tax efficient than mutual funds, including index funds.

The way mutual funds are structured, there can be more tax implications as investors buy in and out of an index fund, and the cost of taxes is shared among different investors. ETF shares are redeemed directly for cash, so if there are capital gains, you would only owe them based on your ETF shares.

How Do Investors Find the Right ETF?

Choosing between ETFs vs. index funds typically comes down to cost and flexibility, as well as understanding the tax implications of the two fund types. While both ETFs and index funds are low-cost, passively managed funds — two factors which can provide an upside when it comes to long-term performance — ETFs generally have the upper hand when it comes to taxes.

If taxable gains are a concern for you, ETFs may be a more tax-efficient option vs. index funds, which are structured such that gains are dispersed among shareholders. Also consider the tax structure of the container: i.e. are you holding the fund in a taxable portfolio, or a tax-deferred retirement account?

Once your goals are clear, selecting an ETF is easy when you set up a brokerage account with SoFi Invest. You can explore ETFs from the secure SoFi app at your convenience, and invest in ETFs in a taxable account or an IRA. SoFi also enables you to trade stocks, IPO shares, crypto, and more. Whatever your aims are, SoFi can get you started on your investing future.

Download the SoFi app to get started.

FAQ

Is it better to choose an ETF or an index fund?

ETFs and index funds each have their pros and cons. ETFs tend to cost less and be more tax efficient, and you can trade ETFs like stocks throughout the day. If you’re interested in more of a buy-and-hold strategy, an index fund may make more sense.

What are the similarities between an ETF and an index fund?

All index funds, and about 98% of ETFs, are passively managed — meaning, they track a certain market index. In addition, both ETFs and index funds tend to be much cheaper to own, versus their actively managed counterparts.

What are the differences between an ETF and an index fund?

ETFs generally cost less, are more transparent, and more tax efficient compared with index funds.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected]. Please read the prospectus carefully prior to investing. Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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.

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ACH vs Check: What Are the Differences?

ACH vs Check: What Are the Differences?

Nowadays there are plenty of options for moving money around, and two of the most common, ACH and checks, have some key differences. Both of these popular payment methods are convenient and secure, so it can be hard to know which one to choose. But in your financial life, there will probably be times when one is a lot better suited to your needs than the other. Don’t worry, we’re going to walk through everything that’s important to know about ACH payments and checks to help you use the right method.

Keep reading for a breakdown of ACH vs. check, the pros and cons of each, and how they stack up. Then you’ll totally understand the differences between the two.

Recommended: What is Liquid Net Worth

What Is ACH and How Does It Work?

An ACH transfer (named after the Automated Clearing House network) is an electronic banking transaction that is processed through the ACH network. The network is a major financial hub, made up of around 10,000 institutions. Through the ACH network it is possible to process the following transactions:

•   Direct debits

•   Direct deposits

•   Direct payments

•   Electronic checks (eChecks)

•   Electronic funds transfers (EFTs)

Businesses and consumers have the option of using ACH transfers to make direct payments (known as ACH debit transactions) or direct deposits (ACH credit transactions). Some financial institutions even make it possible to schedule and pay bills electronically via ACH transfers. You are probably familiar with ACH transactions when you set up autopay on an account, whether its a utility bill or your gym membership.

You may wonder how long ACH transfers take. Because they are electronic, ACH transfers can clear banks in a matter of a few business days as long as there are enough funds in the account. However, there are times where ACH transactions will take longer. This is especially common if a transaction is suspected to be fraud.

However, for something like a direct deposit of a paycheck, ACH can be quite quick. When the payment hits your checking account, it’s immediately available. You don’t have to run around with a paper check that needs to be deposited. That can make a big difference between getting paid by ACH vs. a check, for sure.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning up to 4.50% APY on your cash!


Pros and Cons of ACH

Like any financial tool, ACH transfers have some advantages and disadvantages worth considering. Here’s a closer look at some important pros and cons.

Pros

Cons

•   Free. Most ACH transfers are free

•   Errors can be reversed. You can sometimes request a transaction reversal for ACH transfers if an error occurs

•   Simple and straightforward. Convenient form of payment allowing you to pay without cash

•   Fees can apply. May need to pay a fee to expedite bill-pay services or to make a transfer to an outside bank

•   Slow timeline. Can take up to three days for a transfer to go through

•   Potential roadblocks. Daily transfer limits apply

What is a Check?

A check is a payment method that involves making a payment using a paper check that has the payment amount and the payee’s bank account information on it. Once someone writes a check, the recipient can cash it and receive the funds.

Pros and Cons of Using a Paper Check

Checks are one of the most basic and time-honored financial tools at your disposal. They allow you to move money around without paying a fee, and they are a secure way to do this. What’s more, checks create a paper trail with proof that funds have been received.

But they can wind up costing you, they can take longer than you might expect, and sadly, there are scams that prey upon those who use checks. Let’s see what some of the pros and cons of using a check to make payments or to receive payments are in chart form.

Pros

Cons

•   No fees. Electronic payments can come with fees but there are no fees associated with checks.

•   Safe way to send money. Cash can be lost or stolen. If a check is lost or stolen, the person who finds it will have a hard time cashing it thanks to handy security features.

•   Proof of payment. Checks have a paper trail confirming proof of payment.

•   Check scams exist. Check scams can be dangerous and easy to fall for.

•   Checks cost money. Typically, you don’t pay a fee when you use a check, but it costs money to buy checks, and depending on your situation, you might have to pay a fee to cash a check at some locations.

•   Processing delays occur. Paying by cash, credit, or electronic transfer can occur more quickly than paying by check.

ACH vs Check: The Differences

Now that we’ve examined both separately, let’s look at what the difference is between ACH and checks side by side. It’s important to note that both have their own unique set of advantages and disadvantages, but overall stack up against each other fairly evenly. Much of the choice about which to use will depend on your particular circumstances and preferences. Here’s the difference between ACH and checks.

ACH

Check

•   For the most part, ACH transfers are free unless a rush fee or a fee for transferring to an outside bank applies.

•   It is sometimes possible to request a transaction reversal for ACH transfers if an error occurred.

•   ACH payments are fairly simple and easy to conduct.

•   ACH transfers can take a few days to clear.

•   There are no fees associated with checks, but consumers do have to buy the checks to be able to use them.

•   Checks offer a safe way to make payments. Even if they are lost or stolen it’s hard for anyone other than the recipient to cash them.

•   Checks provide a conienvent paper trail that cash payments lack.

•   Checks can take several days to clear.

Recommended: Average Savings by Age

Which Should You Consider Using?

There’s no right or wrong answer when it comes to choosing a check over an ACH transfer. Both have unique advantages and disadvantages. Consider these scenarios:

•   Because it’s possible to set up recurring ACH transfers, that can be a much more convenient option if someone wants to schedule ongoing payments such as rent or bills.

•   Checks, which are very secure and convenient, may be a better fit for one-off payments such as paying the babysitter or a hairdresser.

As you see, the decision depends on what best suits your needs for a particular transaction.

The Takeaway

It’s worth understanding the difference between check and ACH payment options. Both ACH transfers and checks offer benefits. They are very secure, can transfer money within a few days, and provide easy ways to make payments. Neither is better than the other; they’re just different. Which one is the “best” will often depend on the unique preferences of both parties involved in the transaction. You may well find yourself toggling between the two during your everyday financial life.

While you’re thinking about which kinds of payments work best for you, consider this great way to bank better with SoFi. Our linked checking and savings accounts, when opened with direct deposit, offer an easy way to help your money grow. You’ll earn a super-competitive APY, pay no account fees, and get access to your ACH paycheck up to two days early.

Better banking is here with up to 4.50% APY on SoFi Checking and Savings.

FAQ

Is an ACH payment a check?

No, ACH payments are an electronic transfer processed through the Automated Clearing House network, which is a network made up of around 10,000 financial institutions. A check is a different kind of payment, using a paper document and being processed in a different way.

Is ACH better than checks?

Not necessarily. Whether or not an ACH is a better payment method than a check depends on the unique preferences of the two parties involved in the payment. That being said, generally ACH payments are free whereas it costs money to buy checks for use.

Is ACH cheaper than checks?

When it comes to check vs. ACH costs, ACH payments can be cheaper than checks in some cases, but not always. ACH payments are free, whereas consumers generally need to buy checks to use for payments. However, you may run into fees when doing an ACH payment.

Is ACH safer than a check?

Both checks and ACH transfers are very secure, but ACH payments are known to be more secure, thanks to the extra layers of protection in place due to encryption that occur during the transfer. Both checks and ACH transfers do require that the identity of the recipient be verified before the transaction can complete. Fraud and mistakes can occur for both payment types.


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


SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% 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 8/9/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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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What Are Income Verification Documents for an Apartment Application?

Income verification documents, which are typically requested when you’re applying to rent a home or apartment, are documents that prove you have a job and are earning an income.

A landlord requests these documents to ensure that you’re earning enough to cover your rent payments each month. The income verification paperwork requested may vary from landlord to landlord, and the documents may also differ, depending on your specific career situation. The landlord is simply doing their due diligence to make sure you can afford the rental.

How to Show Proof of Income to Rent an Apartment

There are a number of ways that prospective renters can show proof of income to a prospective landlord or property management company. The types of documents you need to produce will likely depend on the specific request from the landlord.

Generally, there are a few standard income verification documents that landlords and property managers are looking for:

•  Pay stubs

•  Tax returns or W2 forms

•  Bank statements

•  A letter from your employer

Typically, a landlord will request two forms of income verification. Often, your pay stubs and tax forms will suffice as proof of income. But in some cases, you may need to submit several months’ worth of bank statements. You might even need to ask your employer to write you a letter to assure the landlord that you have a job and do have income.

Recommended: How Much Should I Spend on Rent?

How to Show Proof of Income if You’re Self-Employed

If you’re self-employed, the process can be more complicated. You may need to submit 1099 tax forms, or your personal tax returns showing regular and steady income going back a couple of years. Depending on the nature of your self-employment, you may have business tax returns, such as a Schedule C if you own and run a small business, that you can use to verify your income.

You can also use bank statements from your business bank account to show a landlord that you have income. The documents required will likely be similar to those you need when applying for self-employed personal loans. Ask the landlord what will work best for them so you will know exactly what documents you should present.

How to Show Proof of Income for Side Hustles

You may have a side hustle—perhaps you make and sell crafts online, for instance—and that’s similar to owning a small business. And you should be reporting the income you make from your side hustle to the IRS on your tax return. By presenting your tax return to a landlord, you can prove that you’re making side hustle income.

If you’re working for a ridesharing app or food delivery service, the company should be sending you a tax statement with your annual earnings so that you can report them on your tax return. You can always show a copy of that tax statement to a prospective landlord.

Why Proof of Income is Important

Proving your income is important when you rent an apartment—or apply for credit, for that matter—because it shows that you have money coming in every month, and are able to fulfill your financial obligations. In other words, it shows the property owner that you can make your rent payments.

Recommended: What is The Difference Between Transunion and Equifax

Understanding Rent-to-Income Ratio

Along with proving your income, you need to make sure that your rent is not eating up too much of your paycheck. That’s where the “rent-to-income ratio” comes into play. It calculates the percentage of your total income that you’re spending on rent.

The general rule of thumb is that you shouldn’t spend more than 30% of your gross monthly income on housing costs. Depending on where you live, those costs may be a higher or lower percentage of your income, but try to aim for around 30%.

To figure out your rent-to-income ratio, divide your total annual earnings by 12, which gives you your monthly earnings, and multiply that number by 0.3 (or 30%). The result is how much you can afford to spend on rent per month.

Annual earnings ÷ 12 x 0.3 = How much you can afford to pay for rent

For example, let’s say you earn $50,000 a year. Divide that number by 12 and multiply it by 0.3 and you get $1,250. That’s what you should aim to spend on rent each month. Depending on where you live, you may need to spend more, but that figure gives you a ballpark of where you should be in order to have enough money to pay for your other expenses and hopefully, contribute to your savings as well.

Recommended: Should I Sell My House Now or Wait

How to Best Prepare to Pay Rent

When you are approved by a landlord to rent an apartment, you’ll need to plan and prepare to pay your rent on time and in full every month.

That means having your finances in order. First, you should have a checking account set up. Typically, you’ll pay your landlord by check or through an online portal and either way, you’ll need a bank account in order to do this. You may be surprised to learn that more than 6% of U.S. households (or more than 14 million people) don’t have a bank account. Fortunately, it’s easy to open an account if you don’t have one.

💡 For help, here’s what you’ll need to open a bank account.

Next, make sure that you’re properly budgeting for your rental expenses. You want to make sure that you have enough money in your account to cover the rent when your landlord cashes your check. This budget planner app can help.

There are other expenses that can go along with renting an apartment or home that you may need to pay. Here are a few you should be aware of:

•  Utility bills

•  Renters insurance

•  Parking, maintenance, and fees for amenities such as a gym or pool

Finally, know the terms of your lease. It’s common for rent to go up once a lease expires, which you may discover when you go to re-sign or renegotiate the rent. Unfortunately, renting is not like a fixed-rate mortgage when you have a monthly rate locked in. So don’t be surprised if the costs of staying in your apartment go up after your lease expires.

The Takeaway

Income verification documents offer proof to a landlord or property management company that you have enough money coming in every month to pay the cost of an apartment or home rental. Typically, pay stubs, tax returns, and bank statements are the only forms of documentation you need. However, if you are a small business owner, you may be required to produce additional documents. The good news: Once you are approved to rent, you can start the process of moving in.

Before you rent a home or apartment, it’s a good idea to make sure your financial house is in order, and SoFi Insights can help. You can track your money all in one place, keep tabs on your spending, and save for goals like rent.

With SoFi Insights, you’ll always know where your finances stand.

FAQ:

Can you rent an apartment with no income?

It is possible to rent an apartment with no income, though it likely will be quite difficult. In this instance, having a high credit score can help, because it shows you have a track record of paying your expenses. A healthy savings account can also be useful to prove you have money in the bank.

Can proof of income for an apartment be faked?

It is possible to fake proof of income for an apartment by using online tools to create fake pay stubs and other documents. This constitutes fraud and is illegal, but it does happen.

Is proof of income different for a student?

Yes, it can be, yes. If a student has no income because they are studying full-time, they may need to get a co-signer like a parent or guarantor in order to secure a lease.


Photo credit: iStock/Anna Kim

SoFi’s Insights tool offers users the ability to connect both in-house 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. 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 provided to you is a Vantage Score® 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.

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