What Is the Principal Amount of a Loan?

What Is the Principal Amount of a Loan?

A personal loan can be a helpful financial tool when someone needs to borrow money to pay for things like home repairs, a wedding, or medical expenses, for example. The principal amount of a loan refers to how much money is borrowed and has to be paid back, aside from interest.

Keep reading for more insight into what the principal of a loan is and how it affects repayment.

Loan Principal Meaning

What is the principal of a loan? When someone takes out a loan, they are borrowing an amount of money, which is called “principal.” The principal on a loan represents the amount of money they borrowed and agreed to pay back. The interest on the loan is what they’ll pay in exchange for borrowing that money.

Does a Personal Loan Have a Principal Amount?

Yes, a personal loan does come with a principal amount. Whenever a borrower makes a personal loan payment, the loan’s principal decreases incrementally until it is fully paid off.

Recommended: What Is a Personal Loan?

Loan Principal vs Loan Interest

The loan principal is different from interest. The principal represents the amount of money that was borrowed and must be paid back. The lender will charge interest in exchange for lending the borrower money. Payments made by the borrower are applied to both the principal and interest.

Along with the interest rate, a lender may also disclose the annual percentage rate (APR) charged on the loan, which includes any fees the lender might charge, such as an origination fee, and the interest. As the borrower makes more payments and makes progress paying off their loan principal amount, less of their payments will go towards interest and more will apply to the principal balance. This principal is referred to as amortization.

Loan Principal and Taxes

Personal loans aren’t considered to be a form of income so the amount borrowed is not subject to taxes like investment earnings or wages are. The borrower won’t be required to report a personal loan on their income tax return, no matter who lent the money to them (bank, credit card, peer-to-peer lender, etc.).

Recommended: What Are the Common Uses for Personal Loans?

Loan Principal Repayment Penalties

As tempting as it can be to pay off a loan as quickly as possible to save money on interest payments, some lenders charge borrowers a prepayment penalty if they pay their personal loan off early. Not all charge a prepayment penalty. When shopping for a personal loan, it’s important to inquire about extra fees like this to have a true idea of what borrowing that money may cost.

The borrower’s personal loan agreement will state if they will need to pay a prepayment penalty for paying off their loan early. If a borrower finds that they are subject to a prepayment penalty, it can help to calculate if paying that fee would cost less than continuing to pay interest for the personal loan’s originally planned term.

How Can You Pay Down the Loan Principal Faster?

It’s understandable why some borrowers may want to pay down their loan principal faster than originally planned as it can save the borrower money on interest and lighten their monthly budget. Here are a few ways borrowers can pay down their loan principal faster.

Interest Payments

When a borrower pays down the principal on a loan, they reduce how much interest they need to pay. That means that each month as they make a new payment, they reduce their principal and the interest they’ll owe in the future. As previously noted, paying down the principal faster can help the borrower pay less interest.

Personal loan lenders allow borrowers to make extra payments or to make a larger monthly payment than planned. When doing this, it’s important that borrowers confirm that their extra payments are going towards the principal balance and not the interest. That way, their extra payments work towards paying down the principal and lowering the amount of interest they owe.

Shorten Loan Term

Refinancing a loan and choosing a shorter loan time can also make it easier to pay down a personal loan faster. Not to mention, if the borrower has a better credit score than when they applied for the original personal loan, they may be able to qualify for a lower interest rate, which can make it easier to pay down their debt faster. Having a shorter loan term typically increases the monthly payment amount but can result in paying less interest over the life of the loan and paying off the debt faster.

Cheaper Payments

Refinancing to a new loan with a lower interest rate may reduce monthly loan payments, depending on the term of the new loan. With lower monthly scheduled payments, they may opt to pay extra toward the principal and possibly pay the loan in full before the end of the term.

Other Important Information on the Personal Loan Agreement

A personal loan agreement includes a lot of helpful information about the loan, such as the principal amount and how long the borrower has to pay their debt. The more information the borrower has about the loan, the more strategically they can plan to pay it off. Here’s a closer look at the information typically included in a personal loan agreement.

Loan Amount

An important thing to note on a personal loan agreement is the total amount the borrower is responsible for repaying.

Loan Maturity Date

A personal loan’s maturity date is the day the final loan payment is due.

Loan Interest Rates

The loan’s interest rate and APR should be listed on the personal loan agreement.

Monthly Loan Payments

The monthly loan payment amount will be listed on the personal loan agreement. Knowing how much they need to pay each month can make it easier for the borrower to budget accordingly.

The Takeaway

Understanding how a personal loan works can make it easier to pay one-off. To recap: What is the principal amount of a loan? The principal on a loan is the amount the consumer borrowed and needs to pay back.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What is the principal balance of a loan?

The principal balance of a loan is the amount originally borrowed that the borrower agrees to pay back.

Does the principal of the loan change?

The original loan principal does not change. The principal amount included in each monthly payment will change as the amortization period progresses. On an amortized loan, less principal than interest is paid in each monthly payment at the beginning of the loan and incrementally increases over the life of the loan.

How does loan principal work?

The loan principal represents the amount borrowed. Usually, this is done in monthly payments until the loan principal is fully repaid.


Photo credit: iStock/cagkansayin

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

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

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How to Write a Check: A Step-by-Step Guide

The basic steps of check-writing sound pretty straightforward: Fill out the date, amount, payee name, and add your signature.

There are, however, right and wrong ways to complete this process. And, despite the current age of online banking, there may still be times when you need to write checks and want to do so correctly. Make an error, and your check may not be cashed, which can lead to hassles and fees.

By learning the simple step-by-step process, you can fill out a check properly when you need to.

1. Date the Check

First things first: Write today’s date on the space provided in the upper right-hand corner of the check. Putting the date on your check will provide evidence of when you wrote the check.

You can also postdate a check and request for the recipient not to deposit the amount until on or after that future date.

filling out date on a check



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2. Add the Recipient’s Name

In the line, “Pay to the order of,” write the name of the individual or company you are paying. Be sure to double check the spelling of the person’s name and the official vendor name to avoid any payment mishaps.

You can also make a check out to “cash,” but this poses a security risk. If you or the payee loses the check, anyone who finds it will be able to cash it. You can also write a check to yourself if you need to transfer funds from your checking account to another personal account.

adding recipients name to check

3. Write the Payment Amount in Numbers

Write the dollar and cents amount in the rectangular box, located to the right of the payee line. (Example: $156.99.) It’s essential to write the payment amount clearly for the ATM or bank worker.

filling in payment amount on check

4. Write the Payment Amount in Words

To help prevent error or fraud, write the check amount out in words on the line provided.

How to Write a Check with Cents

To write a check with cents, you’ll express the cents amount as a fraction. For example, $156.99 would read as “One hundred and fifty-six and 99/100.”

How to Write a Check with No Cents

If the dollar amount is whole ($156.00), it should read “one hundred and fifty-six and 00/100.” A banker or ATM will check that your numerical amount matches the spelled-out amount.

Recommended: What Is an Outstanding Check?

writing payment amount on check

5. Sign the Check

One of the biggest mistakes check writers make is forgetting to sign the check. Neglecting to do so makes the check invalid and uncashable. Be sure and write your signature on the bottom right-hand line of the check.

adding signature to a check

6. Add a Memo

Adding a note in the memo line on a check is optional, but it’s a good idea. Doing so will help you remember why you wrote the check in the first place: “July 1st rent” or “Beyoncé tix reimbursement.”

Some payees may require additional information which you can put on the memo line on the bottom-left corner. The IRS, for example, will ask you to write your Social Security number on your check.

adding a memo to a check

Example of Writing a Check

Now that you’ve read about writing a check, here’s what a properly filled out one looks like:

example of a filled out check

Tips for Filling Out Checks

The steps on how to write a check are pretty clear. But there are additional tips that can help protect your account and ensure a successful transaction.

Use a Pen

Protect your money. Always fill out a check in ink — preferably blue or black ink for easier readability. Using a pencil is a recipe for theft. You don’t want your payee and dollar amounts being erased and rewritten (aka an altered check).

Don’t Sign a Blank Check

Don’t sign your name on the bottom of the check until it is completely filled out. If a check has your signature, but no payee name or dollar amount, you are leaving yourself wide open for any thief with a pen to fill in the blanks.

Keep Your Signature Consistent

Maintaining a consistent signature can help a bank teller or ATM detect signs of identity fraud. You’ll be better able to prove someone other than you signed your check if you have clear signature samples.

Save a Copy of Your Check

Having a copy of your check can act as proof of payment. You can take a picture of it with your cell phone. Some banks will issue checkbooks with carbon copies—a duplicate check attached to the back of a paper one. If you press down hard enough, your writing will transfer onto the duplicate check.

Recommended: Overdraft vs Non-Sufficient Funds Fees: What’s the Difference?

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How to Protect Your Accounts When Writing Paper Checks

After mailing or handing over a check, it’s wise to keep tabs on its path and your bank account. Here are some smart moves that can help keep your records straight.

Record the Payment

Most checkbooks come with a check register — a place to record your check usage and current bank balance. It’s important to dot down:

•   The check number

•   The date you wrote the check

•   The payee information

•   The dollar amount

Doing so will help you balance your checkbook and avoid ending up with a negative balance.

Monitor for Fraud or Lost Checks

Having a record of your checks will help you avoid overdraft fees and keep track of any outstanding checks that payees have yet to cash. When you receive your monthly statement, compare it against your check register to catch any suspicious activity.

This can reveal a check that might have been cashed for a different amount than what you filled it out for. This could indicate a kind of fraud called “check washing,” in which a criminal gets a hold of your check, erases information, and fills it out to themselves.

Or you might spot that a check hasn’t been cashed in a timely manner, indicating that it’s a lost check, worth following up on.

Check Your Available Balance

You don’t want to write a check for more money than you currently have, so keep an eye on your bank balance to avoid bouncing a check. Whether you have a traditional or online checking account, you should be able to easily monitor this on your financial institution’s website or app.

Consider Automated Payments

While checks can still have their time and place in your financial life, online and mobile banking can make it easy to pay bills and otherwise send funds to other accounts. This can be accomplished quickly, easily, and securely by automating your finances.

For example, instead of writing paper checks, you could set up recurring transfers to pay bills online every month or make one-off payments as needed. These actions can be done safely and simply, and they eliminate the need for envelopes and postage stamps, too.

Recommended: ACH vs Checks: Key Differences

The Takeaway

It’s possible that check payments could eventually become a thing of the past. Until then, it’s important to know how to write a check and avoid making little errors that could result in big headaches.

Most bank accounts come with checks, but that’s not the only feature to consider when shopping for a new account.

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

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

FAQ

What makes a check invalid?

Banks can refuse to cash a check due to a missing signature, insufficient account funds, invalid or illegible account numbers, or if too much time has passed since the check was dated (typically six months).

Can someone steal your identity with a check?

It is possible for criminals to use the information on your check — your name, your address, your routing number — to steal your identity. They might be able to apply for loans in your name or open bank accounts.

Where is the bank routing number on a check?

The bank routing number is at the bottom of the check, to the left. Just to the right of it is your account number, and then at the far right, the check number.

Who signs the back of a check?

The payee endorses the back of the check in order to make a deposit or cash it.


Photo credit: iStock/payphoto

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a 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.

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

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

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

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

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


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

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

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Charge Card vs Credit Card: What’s the Difference?

Charge Card vs. Credit Card: Understanding the Key Differences

Though the terms may be used interchangeably, there are major differences: With a credit card, you can either pay your full monthly bill or a portion of it. With a charge card, no matter how much you owe, you’re expected to pay the monthly bill in full.

That’s not the only thing that sets these cards apart. The two also vary in their accessibility, flexibility, spending limits, and costs. If you’re wondering if a charge card vs. a credit card is a better fit for you, read on to understand their key differences, which can help you decide.

How Charge Cards Work

In some ways, a charge card is much like a regular credit card. When you use it to make a purchase, you’re borrowing money from the card issuer. And when you pay your bill, you’re paying the card issuer back.

But there are several things about the way charge cards work that make them very different from traditional credit cards. And because of the way they work, there are benefits and risks of charge cards to consider.

As mentioned above, a charge card holder’s obligation to pay the bill in full each month is probably the most important distinction. Because you don’t have the option of carrying forward a balance, you won’t pay any interest. But if you don’t pay the balance in full by the due date, you could be subject to a late fee and restrictions on your future card use.

Another thing that makes a charge card unique is that there’s no pre-set credit limit. This offers charge card holders some added flexibility, but it doesn’t mean you can go out and spend as much as you want any time you want — even if you’ve stayed current with your charge card payments.

A transaction still may be declined if it exceeds the amount the card issuer determines you can manage based on your spending habits, account history, credit record, and other financial factors. To avoid any confusion, card holders can contact their charge card issuer before making a major purchase to ask if the amount will be approved.

Recommended: When Are Credit Card Payments Due

How Credit Cards Work

Because they’re more common, you may be more familiar with how credit cards work than you are with charge cards. With a traditional credit card, card holders are given a preset credit limit that’s based on their income, debt-to-income ratio, credit history, and other factors.

Once your account application is approved and you receive a card with a unique credit card number, you can use your card as much or as little as you like — as long as you stay within that limit.

Each month when you receive your billing statement, you can decide if you want to repay the full amount you owe or make a partial payment, but you must make at least the minimum payment that’s due. And if you carry forward a balance, you can be charged interest on that amount. (Similar to your spending limit, interest rates are typically based on a cardholder’s creditworthiness.)

A credit card is classified as “revolving credit” because there’s no set date for when all the money you’ve borrowed must be repaid. As long as you make at least your minimum payments on time and stay within your credit limit, the account remains open, and you can use the available credit over and over again.

Differences Between a Charge Card and Credit Card

Here’s a side-by-side look at some key differences between charge cards and credit cards:

Charge Card vs. Credit Card
Charge Cards Credit Cards
Full payment required every billing cycle Can carry a balance, but must make minimum monthly payment
Can be difficult to find and qualify for Many options available, even for those with not-so-great credit
Accepted by most U.S. vendors (but less so overseas) Widely accepted in the U.S. and worldwide
No interest charged, but can expect a high annual fee May avoid annual fee, but interest accrues on unpaid balance
Known for prestigious rewards programs Many cards offer rewards, often without an annual fee
No hard spending limit Hard pre-set spending limit

Payment Obligations

With a charge card, you’re required to pay what you owe in full when you receive your monthly billing statement. With a credit card, on the other hand, you can make a full or partial payment, but you’re only required to make a minimum monthly payment.

Even if you’re waiting for a refund that hasn’t yet shown up as a credit on your statement, you’ll be expected to pay the full amount of your charge card bill. With a credit card refund, you’ll just have to make sure you pay at least the minimum amount on your current bill.

Availability

If you’re looking for a new card, you’ll find there are far more credit cards available than true charge cards these days. Even American Express, the only major card issuer that still offers charge cards, has gone with a more hybrid approach.

American Express still offers cards that don’t have a preset spending limit. But those cards now come with a feature that — for a fixed fee — allows a card holder to split up eligible large purchases into monthly installments.

There also are some fuel cards, typically geared toward businesses, that are true charge cards.

Credit cards also are generally easier to qualify for than the charge cards that are available. Even if you have a poor or limited credit history, you may be able to find a secured or unsecured credit card that suits your needs.

Acceptance

Whether you shop local most of the time or hope to use your card as you travel the world, you may want to look at the acceptance rates of charge cards vs. credit cards.

Your card may not do you much good if you can’t use it where you like. American Express says its cards can now be accepted by 99% of the vendors in the U.S. that accept credit cards. If you aren’t sure your favorite local boutique or grocer will accept a particular card, you may want to ask or look for the card’s network logo in the store window.

If you plan to use your card overseas, you may want to check ahead on the acceptance rate in that country and also find out if you’ll have to pay a foreign transaction fee. Charge cards tend to have a lower rate of acceptance overseas.

Costs

If you’re trying to decide between a charge card vs. a credit card, how much a credit card costs compared to a charge card — both in interest charges and fees — could be an important consideration.

Interest

You can find a full explanation of how your card issuer calculates interest in your card’s terms and conditions. But as noted above, if you carry forward a balance on your credit card, you can expect to pay interest on the outstanding amount.

According to the Federal Reserve, the average credit card’s annual percentage rate (APR) is currently around 22.8%. Your rate may be higher or lower, depending on your creditworthiness.

You may not have just one interest rate associated with your account either. Your account may have a different APR for purchases, for example, than for credit card cash advances or balance transfers. Or you might have a lower, introductory APR for the first few months after you get a new card. If, over time, you miss payments or make late payments, the card issuer also could decide to raise your APR.

Because you don’t carry a balance with a charge card, you don’t pay interest. But if you pay off your credit card balance by the due date every month, you also won’t have to worry about accruing interest on a credit card account.

Annual Fees

You won’t pay interest with a charge card, but you may end up paying a significant annual fee just to own the card. (The annual membership fee for an American Express Platinum Card, for example, is currently $695.)

Some credit cards also charge annual fees, but you can find many that don’t.

Rewards and Perks

You may decide it’s worth paying a higher annual fee to enjoy the extra benefits some charge cards offer. American Express, for example, has a reputation for offering its card holders prestigious perks, including travel and retail purchase protections, early access to tickets for concerts and other entertainment events, and special offers from partner merchants.

However, plenty of credit cards also come with special benefits, such as cash back rewards, travel rewards, retail discounts, and more. And many of those card issuers don’t charge an annual fee.

Both charge card and credit card issuers also occasionally offer generous welcome or sign-up bonuses to new card holders, so that might be another benefit worth looking at when you’re searching for a new card.

Before you sign up for any card to get the perks it offers, though, it can be a good idea to step back and assess whether it’s worth paying a higher annual fee (or accruing interest on a balance you can’t pay off) to reap those rewards.

Spending Limit

With a credit card vs. a charge card, you’ll know exactly how much you can spend, because your credit card will come with a pre-set limit. You can go online or use an app to check your credit card account at any time to see how much available credit you have.

Charge cards don’t have hard spending limits. But that doesn’t necessarily mean you can use your card to buy a car or take a trip around the world. Your card issuer may decline a charge if you’re spending more than it thinks you can afford.

How Card Choice Can Impact Your Credit Score

When it comes to what a charge vs. credit card can do for (or to) your credit score, there are few things you should know.

Inquiries

Whether you’re applying for a charge card or credit card, you can expect the card company to run a hard inquiry on your credit. This could temporarily lower your credit score, but usually only by about five points.

Payments

Whether you use a charge card or a credit card, paying your monthly bill on time is critical to building and maintaining a good credit record.

Payment history makes up 35% of your FICO® credit score, so consistency is key. If your payment is 30 days or more past due and your card issuer reports it to the credit bureaus, that negative news could remain on your credit report for up to seven years. And it could come back to haunt you when you try to borrow money to buy a car or house.

Utilization

Credit utilization (the percentage of your available credit that you’re currently using) makes up 30% of your FICO score, so it’s important to keep your credit card balances well under the assigned limit.

To maintain or positively impact your credit score, the general rule is that you should try not to exceed a 30% credit card utilization rate. If you’re using up a big chunk of the pre-set limit on your credit card, it could have a negative effect on your score.

Because charge cards don’t have a pre-set credit limit, it can be difficult to determine if a card holder is at risk of overspending — so neither FICO or VantageScore include charge card information when calculating a person’s utilization rate.

This can have both pros and cons for charge card holders. The advantage, of course, is that you don’t have to worry about negative consequences for your credit score if you spend a lot in one month using your charge card. On the flip side, though, if you have a large amount of available credit that you aren’t using, it won’t do anything to help your score.

Choosing Between Credit Cards and Charge Cards

Deciding whether to apply for a credit card vs. a charge card may come down to evaluating the benefits you’re hoping to get from the card and assessing your own spending behavior. Here are some questions you might want to ask:

•   Does the card offer unique, valuable perks you think you’ll use?

•   If there’s a high annual fee for the card, does it fit your budget and are the card’s perks worth the cost?

•   Do you have enough money, discipline, and organization to ensure your bill is paid in full every month? Or could there be times when you’ll want to make a partial or minimum payment and carry forward a balance?

•   Is your credit score good or excellent? If not, you may have more options and a better chance of qualifying if you apply for a credit card instead of a charge card.

•   If you think you’ll pay off your card’s balance every month, would a credit card still be a better fit because of the rewards, low or no fees, and wider acceptance from vendors?

Also keep in mind that you don’t necessarily have to choose. In fact, you could benefit from owning both a charge card and a credit card. You may find there are reasons to have both types of cards in your wallet.

Recommended: Charge Cards Advantages and Disadvantages

The Takeaway

The terms charge card and credit card are often used interchangeably, but they are not the same thing. A charge card must be paid off every month, so there’s no interest to worry about — but there may be a high annual fee to pay. A credit card allows the user to make a minimum monthly payment and carry forward a balance, but the interest on that balance can add up quickly.

Each individual user must decide which is the better fit for their needs. And a card’s benefits vs. its costs may be a deciding factor.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is a credit card easier to get than a charge card?

Because these days there are more companies issuing credit cards, it may be easier to find one that suits your needs and has qualifications you can meet — even if you have a poor or limited credit history. There are very few charge cards available anymore.

Does a charge card build credit better than a credit card?

Both a credit card and a charge card can help or hurt your credit score, depending on how you use it.

When do credit cards charge interest?

Most credit cards come with a grace period, which means the credit card issuer won’t charge you interest on purchases if you pay your entire balance by the due date each month. If you fail to pay the entire amount on your statement balance, however, or if you make your payment after the due date, interest charges will likely appear on your next monthly statement.


Photo credit: iStock/9dreamstudio

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.

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

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What to Do When You’re Running Out of Money

There’s no feeling in the world quite like running out of money before your next paycheck hits — and it’s not a good sensation. It can have you feeling stressed and unsure of your options.

But, the truth is, when you’re running out of money, you still have ways to move forward. There are also steps that’ll help prevent the problem from cropping up again.

Here, you’ll get a closer look at what happens when you’re running out of money, what options you have, and how to avoid this situation recurring.

Key Points

•   Running out of money before payday can be stressful, but there are ways to manage and prevent it.

•   Excessive spending on fixed and living expenses often depletes funds quickly.

•   Creating a tailored budget helps control finances and prevent overspending.

•   Essential bills should be prioritized, and unnecessary spending should be cut.

•   Exploring additional income sources and government benefits can provide financial relief.

Reasons for Running Out of Money

In order to fix a problem, we first have to understand why it’s happening. That means it’s time to take a good, hard look at your finances to learn why you’re running out of money in the first place. Here are some common causes.

Spending Too Much on Fixed Expenses

Major budget line items, like a rent or your car payment, can take a serious chunk out of the funds you have available for everything else. Although trading in your car for a bicycle or enlisting a roommate might seem like huge changes, they can also make huge differences in your financial life.

Spending Too Much on Living Expenses

Where and how you live can make a big difference in your personal finances. A person who lives in a small town with a couple of roommates will probably be able to stretch their paycheck a lot further than someone who has their own place in a major city where the cost of living is significantly higher.

Also, people vary: According to the USDA’s monthly estimates, a single adult might spend as little as about $275 to as much as $450 or more per month on groceries. Finding ways to cut down on non-fixed living expenses, like groceries, can pack a big punch in terms of not running out of cash before your next pay day.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

Spending Too Much on Discretionary Purchases

Don’t beat yourself up: We live in a world in which we’re the subject of constant advertisement. (According to some estimates, we see as many as 10,000 ads each day.) So it makes sense that we often grab that new pair of boots or book a quick weekend getaway. However, making a habit out of treating yourself or making impulse purchases can wreak havoc on your bank account.

Not Earning Enough

If you’ve cut back in every way that feels comfortable (and perhaps even some ways that do not) and still feel you’ve run out of money, the answer may be to increase your income. While starting a side-hustle can make a dent, finding a better-paid full-time job or making a career change might be a more sustainable course of action.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!


Tips for When You’re Running Out of Money

Once you’ve figured out exactly where your monetary life is going awry, you can take concrete steps to make your personal finances better. Here are some ways that can help you get off the paycheck-to-paycheck roller coaster.

Create a Budget That Fits Your Needs

As you’ve doubtless noticed by now, if you don’t make a plan for your money ahead of time, it pretty much develops a mind of its own and walks away. Creating a budget is exactly the anecdote to this problem: planning ahead for where your money is going. And don’t worry, it doesn’t have to be tedious or boring.

Using one of the many online apps built for this purpose or a plain old pencil and paper, start the process:

•   List your monthly income at the top, and then deducting your fixed living expenses. (Think: rent or mortgage payment, insurance, any car payments or other loans you pay.)

•   Next, budget for living expenses whose amounts can change (like utilities and groceries.)

•   It’s also a good idea to set aside at least a little bit of your money each month towards your savings goals, which is an objective that you can boost when you open a high-yield savings account.

•   Finally, the rest of the money is yours to do with as you please, so be sure to budget for items and activities that are meaningful to you. You can have just about anything you want on a budget, just not everything.

Pay Your Most Important Bills

The next idea for what to do when you’re running out of money: Know how to handle bills that are threatening to go unpaid.

Not being able to pay your bills is indeed a sad and scary circumstance, but it’s not actually the end of the world. Stay calm, and prioritize. Important bills to put first include:

•   Housing

•   Health insurance and healthcare expenses

•   Food

•   Utilities.

Keep in mind, too, that you might be able to negotiate with your creditors or put your student loans in forbearance. Either way, it’s worth the phone call to find out.

Spend Money on Essentials Only

When money is (very) tight and you’re scraping the bottom of the bank account barrel, it’s not the right time to splurge on any fun extras.

Until you can build up a bit of a cushion (even a $1,000 emergency fund is better than none at all), limit your spending to only the essentials: the stuff you need to live. It may feel like a sacrifice today, but you’ll thank yourself in a few weeks when you’re breathing easier.

Limit Borrowing and Taking Out Loans

When you’re out of money, there are plenty of companies who are happy to give you some… in exchange for even more money they’ll expect you to pay them (aka interest).

As tempting as it is to borrow money or take out a loan when your well has run dry, in the long run, it can exacerbate the problem. So if you’re already in dire financial straits, it may actually be a bad time to take out a loan.

Use Credit Cards Sparingly

Similarly, you want to avoid racking up interest charges by breaking out your plastic when money is tight. Credit card debt is high-interest debt and can be a real challenge to pay off. Whenever possible, pay for items with cash or a debit card.

Also consider a balance transfer credit card if you already have an amount of credit card debt that is making you uncomfortable. It can give you a period of low or no interest that can help you pay down your balance.

Make Time to Make Extra Income

As mentioned above, your problem might be improved by earning more. Picking up a side gig, like driving for Uber or selling crafts on Etsy, is one road forward. Training and applying for a more lucrative career could be another path through this tough time.

Look at Government Benefits

Nobody should have to forego medical care, food, or shelter because of their financial situation. That’s why government benefits like the SNAP program (previously known as food stamps) and low-cost health care options exist.

Specifics vary by state, but your local government website should have details available and phone numbers to call. If your income is under a certain threshold, you may qualify for programs that can make it a lot easier to budget what you’re earning on other needs.

Downsize When Possible

Moving or changing your favored mode of transportation are big life changes, for sure… but they can also make big changes in your financial life, for the better. If you downsize your cost of living, you won’t have to struggle quite so hard to pay for it, which could be well worth the sacrifices.

Sell Items You Don’t Need

Selling things you don’t need can help you downsize and line your pockets with some extra change in the short term. You could have a yard sale, offer them on eBay or another online platform, or see if a local second-hand store will purchase them, among other options.

Take Care of Yourself

No matter how dire your financial circumstances get, don’t neglect your personal needs. Going outside for a walk, sitting down to eat nutritious foods, and talking to loved ones are imperative for your mental and physical well-being, and none of them are exorbitantly expensive. In addition, you might look into low-cost or no-fee financial counseling from a nonprofit to help you pull through this challenge.

Managing Finances with SoFi

You’ve just learned ways to cope when you’ve run out of money. Also make sure that the funds you do have are easily managed and earning some interest to help your cash grow.

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


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

FAQ

What options are available if I can’t afford to pay my bills?

If you can’t afford to pay a credit card bill, auto loan, or student loan payment, consider calling your creditor or lender and asking about ways to negotiate the payment amount or file for forbearance. Debt consolidation loans are another option if your debt is spiraling out of control, but they should be approached with caution.

Which budgeting methods are helpful for people that are running out of money?

One popular budget is the 50/30/20 budget rule, which says, of your take-home pay, to allocate 50% towards the musts in life, 30% to the wants, and 20% to savings and additional debt payments.

Should I contribute to my retirement fund if I don’t have the money?

As important as it is to save for a comfortable retirement, if you don’t have the money to live today, it’s hard to be focused on the money you’ll need to live tomorrow. If you’ve made all possible budget cuts and still don’t have any money to contribute to your retirement fund, so be it for the present. Consider using “windfalls” like your tax refund, bonuses, or birthday gifts to pay into your retirement accounts when they show up.


Photo credit: iStock/miniseries

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


SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a 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.

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

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

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

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

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


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

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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14 Side Hustles for Couples Who Want to Make Extra Income

If you and your significant other are interested in making some extra cash without sacrificing time together, you might consider a joint business venture. Side hustles for couples allow you to meld forces and level up your earning power. It can also strengthen your relationship and help you achieve your shared financial goals.

Whether you’re looking to save for a special occasion or a major purchase, or just want to increase your cash flow, here’s a look at 14 of the best side hustles for couples.

Key Points

•   Couples can combine resources and skills to start side hustles, potentially increasing their income.

•   Joint ventures like real estate investing or starting a food truck can be profitable.

•   Online platforms facilitate side hustles such as reselling items or renting out cars.

•   Service-based side hustles like pet-sitting or home improvement can utilize complementary skills.

•   Digital ventures like blogging or social media can grow into significant income sources over time.

Benefits of a Side Hustle

There are a number of advantages to starting a side hustle as a couple versus pursuing your own solo gigs. Working together allows you to:

•   Combine resources to cover the startup costs like equipment, materials, and supplies

•   Potentially earn twice (or more) than you could alone

•   Work nights and weekends without sacrificing time together

•   Tap into complementary skills and talents

•   Discover new things about your partner

•   Ease the stress of managing a business

•   Balance the workload

•   Increase your ability to communicate and work together

•   Test the waters on a passion that could potentially lead to a larger couple’s business venture

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.60% APY, with no minimum balance required.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!


14 Side Hustles for Couples

To get started with a couple’s side hustle, you’ll want to consider your combined interests, passions, skills, resources, and availability. To help you brainstorm ideas, here’s a look at sidelines that can work well for couples looking to combine forces.

1. Investing in Real Estate

If you and your mate are interested in real estate and understand the market, you might team up to invest in rental properties, which can generate passive income.

Partnering up to invest in real estate gives you more capital to work with. Plus, if you are co-borrowers on a mortgage, it could potentially help you get a loan with a better interest rate if it lowers your debt-to-income ratio. Once you invest in real estate together, you can divide up property management, maintenance, and repair tasks based on your skills and availability.

2. Reselling Items

A relatively simple way to earn extra income as a couple is by reselling items you already own and no longer need, or things you snag for low prices at estate sales, yard sales, or through online marketplaces. Working as a team can be useful with reselling, especially if you buy and sell larger items locally. To maximize your earning potential, you may want to zero in on a specific type of item you want to resell, such as clothing, furniture, or collectibles.

3. Pet-Sitting

Is one of you a people person and the other more of an animal lover? You might combine forces with an in-home pet-sitting business. One partner can focus on bringing in business, communicating with clients, and scheduling, while the other can take charge of providing personalized care, feeding, walking, and attention to your furry clients.

If having pets in your home doesn’t appeal, you might start a neighborhood dog-walking service. This will allow you to get some exercise and spend time together, while also bringing in some extra income.

Recommended: 19 Tips to Save Money on Pets

4. Rent Out Your Car

If you each have a car and one sits idle most of the time, you might consider monetizing it by listing it on a car sharing marketplace, such as Turo or HyreCar. These peer-to-peer car-sharing services make it easy to rent out your car when you’re not using it to make some extra income. Turo claims that the average annual income generated by renting out one car is $10,516.

Before signing up, however, you’ll want to make sure you understand all the legal details, such as protection plans, auto insurance coverage, liability insurance, and rental service agreements.

5. Cleaning and Home Improvement

If you and your mate enjoy maintaining and fixing up your home, you might consider offering your services to others. Perhaps you’re handy around the house while your partner excels at housekeeping tasks or interior painting. You might combine forces by offering a range of services. You can get clients by advertising in your local area or could list your services with a platform like TaskRabbit, Thumbtack, or Care.com (though known for babysitting, the site now also includes housekeeping).

6. Babysitting

Babysitting can be another lucrative side hustle for couples, especially since there is currently a childcare shortage. If you and your partner enjoy children, you might offer to look after kids in the evenings or weekends to allow parents to catch up with chores or errands. If you’re considering the prospect of starting a family in the near future, babysitting can give you experience while earning some extra cash.

To get clients, you might post your services on a local parent group or sign up with a platform like Care.com or Sittercity. To charge a higher rate, consider getting certified in CPR or offering special activities for the kids.

7. Starting a Food Truck

Are you and your partner big foodies? Maybe one (or both) of you loves to cook and you’ve always dreamed of owning your own food business together. If so, a food truck might be a good place to start. It requires lower overhead costs than opening a restaurant and allows you to travel to where the crowds are, rather than waiting for them to come to you.

You’ll need a fair amount of capital to get going (for the truck, equipment, supplies, POS machine, etc.). And since you’re serving food and beverage, you’ll also need to get the necessary permits and adhere to regulations. But the time and money you invest could pay into a lucrative side business.

Recommended: How Much Does It Cost to Start a Business?

8. Blogging

If you and your mate enjoy writing and have expertise in a particular area (such as travel, food, interior design, or fashion), you might consider starting a blog together. You can tap your shared passions and knowledge to produce engaging content, collaborate on articles, and expand your audience together.

While it won’t provide a revenue stream overnight, blogging is a low-cost side hustle that may become lucrative if you can build up a large following. Bloggers generally earn money through ads (which pay per view or click) or affiliate sales (if you promote a product or service and a visitor clicks on the link and completes a purchase, you get paid a commission).

9. Becoming Virtual Assistants

If you both have strong organizational skills and are looking for a way to make extra money while working from home, you might look into becoming virtual assistants. This sideline involves providing administrative support to businesses remotely, such as email management, scheduling, data entry, and booking travel. If you each have different strengths, you might divide up the tasks based on skill/preference, or each pick different types of clients.

To get started, you may want to use a virtual assistant app, such as Fiverr and Upwork; these platforms can help you market your services and manage gigs and payments. But because apps often take a considerable cut, you may want to eventually break out on your own and create a website that markets your virtual admin services.

10. Delivering Items to People

Side hustling by way of delivering food and groceries allows you and your significant other to work your own hours and make money just by driving. Working as a delivery duo also enables you to pick up and deliver items more efficiently than working solo (no parking necessary for quick pick-ups and drop-offs).

You might deliver groceries using a platform like Instacart or Shipt or deliver food via DoorDash or UberEats. Generally all you need to get started is to have a driver’s license and a car, download the app, and set up an account. Once you’re approved, the apps will alert you to new delivery jobs and you can and your partner can choose to work when you want to.

11. Renting Your Home Out to Others

If you have a spare room, basement, or guest house, or you travel often, you might consider renting part or all of your home to travelers as a couple. You can easily make extra monthly income this way by booking through Airbnb. How much will depend on your location, size of your home, and amenities.

To start your side hustle as an Airbnb host, you’ll need to create a profile and listing on the site and have it verified. You and your partner can then collaborate on guest communication, cleaning, and ensuring a comfortable, and welcoming experience for your guests.

12. Charging Public Scooters

If you live in an area that has public scooters, you might be able to earn extra cash as a couple by charging them. Many companies (such as Lime, Bird, and Spin) hire independent contractors to collect, charge, and distribute their electric scooters in different areas around the city. If you and your honey are game, you’ll need to sign up on the app and complete a short training session. Once approved, you will receive a charger kit with all the necessary tools and equipment to get started.

Recommended: How to Earn Residual Income

13. Social Media Monetizing

Similar to blogging, monetizing your social media can be a lucrative couple side hustle, depending on the number of followers you have and their level of engagement. If you and your partner have managed to establish yourself as social media influencers, you may be able to earn money running ads before and after your video content and/or through brand partnerships and affiliate links.

Popular couple accounts include couples working on a major home renovation project, building a business together, sharing their journey to reach a certain goal or overcome a struggle, or spreading positive messaging. You can also offer information and useful tips around a particular topic.

Recommended: How To Make Money Even With No Job

14. Offering Lessons

If you and your mate have a particular skill or talent, such as academic, musical, sports, gardening, or fine arts expertise, you might consider starting a tutoring or personal instruction business together. This is a flexible side hustle since you can offer in-person or virtual lessons, market your services to children and/or adults, and choose to work daytime or evenings. Plus, the start-up costs are typically minimal. Apps like Wyzant, Skooli, and TakeLessons.com can help you market your services and manage gigs and payments.

The Takeaway

By brainstorming side hustle ideas with your significant other, you may be able to find synergies that can take your freelance business to the next level. Combining forces also allows you to work together toward your shared financial goals.

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

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

FAQ

Is it beneficial to have a side hustle with your significant other?

Starting a side hustle with your significant other offers multiple benefits. These include combining your resources to cover the startup costs, sharing responsibilities, increasing your potential profits, and allowing you to spend time together while also working nights and weekends.

Are there any drawbacks to starting a side hustle as a couple?

A potential drawback to starting a side hustle as a couple is that it can put added stress on your relationship. It can also lead to arguments over how to run the business and divvy up responsibilities.

How can I choose the right side hustle?

The right side hustle for you depends on your interests, goals, and availability. You also want to factor in what you’re qualified to do, and if you have any skills, experience, tools or equipment that could give you a competitive advantage.

Once you’ve narrowed down the side hustles that match your interests, skills, and resources, you can examine the costs and profit potential to find the best fit for you.


Photo credit: iStock/PeopleImages

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a 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.

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

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

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

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

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


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.


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