Family Finances Archives | Page 5 of 98

Aug

2024

Do Money Orders Have an Expiration Date?

By Jacqueline DeMarco | Family Finances, money | Comments Off

Money orders don’t have an expiration date, but as the years pass, service charges may be deducted from the amount they are written for, lessening their value. That’s an important fact to know about this form of payment, which is likely to be an affordable, secure, and convenient option for many people.

Keep reading for more insight on how a money order may not expire but can decrease in value over time.

Do Money Orders Expire?

Money orders don’t generally expire, which can be a benefit when using them as a secure form of payment.

Here’s a closer look, however, at this aspect of this payment form. The way a money order works is the individual who needs to make a payment purchases the money order and pays for it upfront. Because of this, the payment can’t bounce like a check could.

Technically, money orders do not expire. However, they can lose some of their value if someone fails to cash or deposit a money order. Usually, if a money order goes uncashed for one to three years after purchase, then a non-refundable service charge will be deducted from the principal amount (though not in the case of USPS domestic money orders). The exact amount of this charge varies and depends on the unique terms and conditions of the money order. This service fee could then potentially be charged on a monthly basis, which could eventually deplete the value of the money order.

This makes a money order quite different from personal checks drawn on your checking account or a cashier’s check. These are typically void (or uncashable) after 180 days but don’t depreciate in this way.

Do Money Orders Lose Their Value?

Yes, money orders can lose their value after a certain period of time when service charges begin to kick in because the recipient didn’t cash or deposit the money order. (This can be done at a variety of locations like banks, credit unions, grocery stores, select retailers, or the U.S. Postal Office.)

While technically there is no set money order expiration date, in some states they can fall under abandoned property regulations after a certain period of time or can lose value due to those aforementioned fees.

What Happens if a Money Order Goes Unused?

So, how long is a money order good for and what happens if it goes unused? How long a money order is good for depends entirely on state laws and the rules set by the issuer. If a money order continues to go unused, service fees can apply that diminish or, in some instances, completely deplete the value of the money order, or the money order can be considered abandoned property. In the latter case, it’s up to the payee to identify this issue and attempt to reclaim the funds.

Tips for Keeping Yourself Safe With Money Orders

Money orders are considered to be a secure way to make payments. However, there are scam artists who commit money order fraud by forging money orders. This can cause major issues for the recipient of the money order. If someone receives a falsified money order and deposits it, the bank or credit union they used to deposit the fake money order will eventually discover the fraud. This can take the depositing institution a week or so to do, but when they do learn the truth, they remove the funds from the depositor’s account, potentially causing overdraft or non-sufficient funds issues.

On the other hand, paying with a money order can put someone at risk of fraud if the person they’re paying isn’t sincerely offering the services or goods they’re requesting payment for. Once they cash the money order, they may disappear without making good on their end of the transaction.

These are some tips that can make it easier to avoid money order scams:

• Don’t send money to a stranger. The FTC advises that consumers never send a money order to a stranger. If someone asks for the payment to be kept secret or claims they can only accept a money order, this can be a red flag.

• Verify funds before cashing. If someone is receiving a money order, they can contact the issuer listed on the back of the money order so they can confirm the money order is genuine before they cash it.

• Evaluate signs of forgery or tampering. Take the money order to the branch location of an issuer and ask them to inspect it, as you might with verifying a check. They can point out any signs of forgery they detect. (The recipient can also examine the money order to see if it appears to have been tampered with. For example, if the amount looks like someone erased or added to it, that can be a sign of a scam.)

• Wait to use the funds. After depositing a money order, hold off a week or two before spending the money. You might track a money order to make sure that it clears. That way, if the money order was fake and the bank takes the funds back, they’ll be available.

• Say no to pressure tactics. If someone is trying to rush you to quickly send a money order, cash it, or issue a refund, this can be a sign of fraud. The same goes for sob stories or threats with the aim of encouraging faster movement.

The Takeaway

Money orders typically don’t have a set expiration date, but after a certain period of time, if the recipient fails to deposit or cash the money order, service fees can be deducted from it. Eventually, these service fees can chip away at the value of the money order, even until it becomes worthless in some cases. This is why if you receive a money order, it’s best to cash it right away to retain its full value.

Your bank can offer a variety of ways to move funds, too.

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FAQ

Can you cancel a money order?

The payer can request to cancel the money order before the recipient has cashed it; they typically must have the receipt from the purchase in order to do this. It is also possible to replace a stolen or lost money order after the loss or theft has been confirmed (which can take up to 60 days to confirm). Having a money order replaced or refunded can result in an additional fee.

Can you replace a money order?

Yes, it is possible to replace a money order but only if the loss or theft of the money order has been confirmed. The confirmation process can take up to 60 days to confirm. If someone wants to replace a money order, they usually have to pay a processing fee.

Why do money orders never expire?

Money orders don’t expire because they have already been paid for when the money order is issued. For this reason, you can think of the funds as being guaranteed. However, if someone fails to cash a money order for between one and three years, service fees can apply and subtract from the value of the money order.

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As an alternative to direct deposit, 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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Aug

2024

Can a Married Couple Have Two Roth IRAs?

While planning for retirement, many couples look at several investment options in order to make the most of their assets and ensure a stable financial future. A Roth IRA is a popular type of retirement savings account, and both individuals in a couple who meet the eligibility requirements can open and contribute to their own Roth IRAs.

Though a married couple can have two Roth IRAs, there are some things to take into consideration, such as contribution limits, certain rules that may pertain to married couples, and more.

Rules for Married Couples and Roth IRAs

Married couples who want to use Roth IRAs to save as much money as possible for retirement must follow certain rules.

Roth IRAs, or Roth individual retirement accounts, are, as the name suggests, designed for individuals, and so they cannot be opened as a joint account. However, as long as a married couple meets the income requirements (more on that below), each spouse can open and contribute to a Roth IRA. A couple can still contribute to two different Roth IRAs even if one of them does not have earned income by opening a spousal IRA for the non-working spouse, assuming they’re filing their tax returns jointly.

The combined total of a married couple’s IRA contributions cannot be more than the sum of each person’s annual cap. In 2024, individuals can contribute a maximum of $7,000, or $8,000 for those 50 years of age and above. So, if both spouses were 50, they could potentially contribute up to $16,000 to their IRAs altogether for the year.

But again, the full amount a couple can contribute as well as their eligibility for contributing to an IRA depends on a few factors, including their income, age, and whether they’re contributing to a traditional or Roth IRA. For a Roth IRA, their modified adjusted gross income (MAGI) for the year must be less than $230,000 in order to be able to contribute the full amount. Knowledge of these IRA guidelines can help married couples optimize their retirement savings plan.

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Can Married Couples Have Two 401(k)s?

Married couples can also have two 401(k) plans. Since 401(k)s are employer-sponsored retirement accounts, each spouse would have their own, through their respective employers, and contribute to each plan separately. Similar to IRAs, there would be contribution limits and strategies to consider when maxing out each 401(k), but it is possible that a married couple could and would have two 401(k)s.

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Different Types of IRAs

There are different types of IRAs you might consider for your retirement plan — whether you’re married, or not. These may include, for example, traditional, Roth, SEP, and SIMPLE IRAs.

The IRA plans that are perhaps most common are traditional and Roth IRAs. Both provide tax advantages and are in many ways similar. Withdrawals made before age 59 ½ from both accounts may be subject to taxes and a 10% penalty (though in the case of a Roth IRA, this applies only to earnings, not contributions).

However, they also have important distinctions. Traditional IRAs enable you to contribute pre-tax funds, which grow tax-deferred within the account, and are then later taxed as regular income upon withdrawal. Roth IRAs enable you to contribute after-tax dollars, which grow tax-free in the account. You generally won’t have to pay taxes on contributions or earnings when you make qualified withdrawals in retirement.

Simplified employee pension (SEP) IRAs or SIMPLE IRAs may be good options for the self-employed, small business owners, and their employees.

The differences between retirement savings and investment vehicles can get even more granular, too. But for many people, knowing the basic differences between traditional vs Roth IRAs can be a good place to start.

Understanding Roth IRA Contribution Limits

To get the most out of a Roth IRA savings plan, you should be aware of its contribution limits for individuals and married couples. Here’s a breakdown:

• Again, the yearly contribution cap for people under 50 is $7,000 in 2024; those 50 and over can pay an extra $1,000 as a catch-up contribution, for a total contribution cap of $8,000.

• These caps apply to each individual’s Roth IRA, so based on the ages of each spouse, a married couple may be able to contribute up to $14,000 or $16,000 overall.

• There are also income restrictions based on modified adjusted gross income (MAGI) that impact eligibility for making contributions to a Roth IRA:

◦ Married couples filing jointly with a combined MAGI of less than $230,000 may contribute up to the full contribution limit.

◦ Married couples filing jointly with a combined MAGI between $230,000 to $240,000 may contribute a reduced amount.

◦ Married couples filing jointly with a combined MAGI of $240,000 or more are not permitted to contribute to a Roth IRA.

Understanding these limits can help spouses choose the retirement options that are best for them.

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Tax Considerations for Spousal Roth IRAs

In order to set up a spousal IRA for a non-working spouse, a married couple must file their taxes jointly. A spousal IRA, again, permits the non-earning spouse to make contributions based on the income of the working spouse.

It’s important to know that contributions to both Roth IRA accounts cannot exceed the taxable income of the employed spouse. Contributions cannot come from gifts or investment money.

Couples should also pay close attention to the modified adjusted gross income (MAGI) restrictions for Roth IRAs. Again, per 2024 limits, they can only contribute a reduced amount to a Roth IRA when their household MAGI reaches $230,000, and they are not permitted to contribute any funds when it reaches $240,000.

Overall, a spousal Roth IRA is not that different from a typical Roth IRA. Since a Roth IRA contribution is made with after-tax money, a couple cannot take an immediate tax deduction. The benefit of this, however, is tax-free growth and tax-free withdrawals during their retirement years.

Maximizing Roth IRA Contributions

Familiarity with Roth IRA rules and contribution limits can help married couples plan strategically to both maximize annual contributions and ensure that both spouses may benefit from these retirement accounts.

For example, it’s a good idea for a couple to keep an eye on their combined household income in order to plan for their potential contribution amounts. Spouses who know their combined MAGI will be less than $230,000 can each plan to contribute the full contribution amount in a single year in order to boost their retirement savings.

If a couple anticipates that their combined MAGI may reach the phase-out range of $230,000 to $240,000, they may need to modify their contributions or look for ways to lower their taxable income, such as by raising contributions to employer-sponsored retirement plans or giving to charities.

Additionally, keeping in mind that a spousal Roth IRA is an option if one spouse is not earning income can help each spouse build retirement savings.

Roth IRA eligibility considerations and tax laws are complex, so it’s wise to consult with a professional to better understand your options for retirement investing and saving.

Roth IRA Investment and Withdrawal Strategies

It may be wise to use some simple investment strategies to optimize your IRA investment and withdrawals — to try and maximize returns and lower risk. First and foremost, it can be a good idea to try and diversify your Roth IRA’s holdings, insofar as it fits your time horizon, risk tolerance, and retirement objectives. For instance, that may include, but not be limited to, investing in index funds and ETFs, rather than individual stocks

Further, it may be a good idea to consider regularly assessing and rebalancing your portfolio, be it your IRA, or your portfolio at large (which would include your Roth IRA). Rebalancing may help mitigate risk, and ensure that your investment mix aligns with your broader goals.

Further, it’s critical to understand the rules regarding withdrawals, in order to prevent paying taxes and fines. Remember: Roth IRAs let you contribute after-tax dollars, which grow tax-free. So, you won’t need to pay taxes on contributions or earnings when you make qualified withdrawals. Again, it may be helpful to consult with a financial professional if you have specific questions about taxes or fines.

The Takeaway

A married couple can have two Roth IRAs, but it’s important that they take a few things into consideration, including their overall or gross income level, and contribution limits. Given that each couple’s financial circumstances are likely to be different, you may need to think carefully about your own specific situation.

Further, it can be a good idea to try and incorporate sound, yet simple investment strategies when investing in a Roth 401(k). That can include diversification, regular reallocation or rebalancing, and more.

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For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

What are the individual and spousal Roth IRA contribution limits?

For 2024, the maximum amount an individual under age 50 can contribute to a Roth IRA is $7,000, or $8,000 for those over 50. For a married couple, these restrictions apply to each spouse individually.

How do filing taxes jointly or separately impact Roth IRA eligibility?

Filing taxes jointly may affect Roth IRA eligibility by allowing both spouses to contribute based on combined income, whereas filing separately may limit or disqualify eligibility due to lower income levels and stricter MAGI requirements. It may be complicated depending on your situation, so it may be a good idea to speak with a financial professional.

Can a married couple maximize their Roth IRA contributions each year?

Yes, if a married couple meets the income requirements and files their taxes jointly, they can maximize their annual contributions to a Roth IRA by each contributing up to the individual limit.

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Aug

2024

Guide to Endorsing a Check for a Minor

By Ashley Kilroy | Budgeting & Goals, Family Finances, money | Comments Off

Endorsing a check for a minor is a pretty straightforward process. It means printing their name on the back of the check and designating them as a minor. Then, print your name and define your relationship to the minor. Third, sign underneath your name. Finally, it’s a good idea to write the account number so the bank can deposit the check into the appropriate account.

That said, handling a check for your child can raise some issues. After all, how do you endorse a check for a minor if they don’t have a bank account? Fortunately, most banks and credit unions allow parents to deposit such checks into their accounts. You can also use a check made out to a minor as an opportunity to open a custodial account and begin your child’s financial education.

Here are the details on endorsing a check for a minor and how it can facilitate financial literacy.

Key Points

• Endorsing a check for a minor involves printing the minor’s name, indicating their status as a minor, and providing the endorser’s relationship to the minor.

• Banks typically allow parents to deposit checks made out to minors into their own accounts, especially if the child does not have a bank account.

• Opening a custodial account for a minor can facilitate financial education and help children learn money management skills under parental control until they reach adulthood.

• It’s essential to verify bank policies regarding check endorsements and to include necessary information, such as the account number, to ensure proper deposit.

• Teaching children about saving and financial fundamentals is crucial for their financial literacy, and involving them in banking activities can enhance their learning experience.

What Is a Check Endorsement?

A check endorsement is when you sign the back of a check that’s been made out to you. Signing your name on the back and providing your account number allow you to deposit or cash the check. If you have a joint bank account, one or both account holders should sign the check.

Signing over a check is also possible. This is a process that allows you to transfer the right to deposit the check to someone else.

Process of Endorsing a Check for a Minor

Endorsing a check for a minor is similar to endorsing a check for yourself, with a few extra steps in the process. Here’s how to endorse a check for a minor.

• Flip the check so its back is facing upwards. Print the minor’s name where the endorsement section is. Following the printed name, add a hyphen and write “minor.”

• Below the minor’s name, print your full name. Following your name, add a hyphen and write the best word that describes your relationship to the minor such as parent or guardian.

• Finally, sign the check and write your account or the minor’s custodial account number.

Recommended: How Do You Write a Check to Yourself?

Can a Check Made to a Minor Be Deposited Into the Parent’s Account?

Guidelines vary among banks and credit unions for depositing a child’s check into a parent’s account. Generally, banks and credit unions will deposit checks made out to children into the parent’s account. Banks and credit unions usually do this when the child doesn’t have a bank account.

Either way, ask your bank or credit union for their endorsement policy on the child’s checks and endorse them as instructed to ensure you can deposit the check. You may need to provide supplemental documents and your child’s ID.

On the other hand, your bank might encourage you to open a bank account for a minor; you may also hear this referred to as a custodial account for your child. While this account is separate from yours, you’ll control it until your child turns 18 or older.

A custodial account is an excellent way to teach kids money management and show them how to use banking services. Although a minor isn’t technically unbanked if they don’t have a custodial account, opening one can help them acclimate to banks and credit unions and set them up for financial success as an adult.

Recommended: What Does It Mean to Be Unbanked?

Tips for Endorsing a Check for a Minor

With money becoming increasingly digital, matters such as ordering checks and handling them can be challenging for people of all ages. Follow these tips to have a smooth experience when endorsing a check for a minor.

• Ask your bank for their rules and conditions for how to endorse a check for a minor.

• Read the front of the check to verify your child is the payee.

• Print your child’s name and your name on the back and specify who each person is (minor and parent).

• Adding your account number or your child’s custodial account number under your signature ensures the bank will deposit the money in the correct account.

• Keep in mind how long checks are good for. Typically, checks expire after six months, so it’s best to endorse and deposit them as soon as possible. In addition, hanging onto a check without depositing it increases the chance of losing it.

Getting Your Child Started With Banking

Opening a bank account for a minor can introduce your child to healthy money management and improve financial literacy. Here are some tips for parents who want to show their children the ropes.

• Open a custodial bank account. Shop around for a custodial account for your child that can earn an annual percentage yield (APY) and charge no fees. In addition, you can deposit your child’s checks into this account to grow their savings.

Plus, these accounts usually give control to the parent until your child reaches 18 or older and can take over. You may hear these accounts referred to as UGMA (Uniform Gift to Minors Act) accounts.

However, for some accounts for minors, your bank may allow joint control between the child and the parent. This may be referred to as kids’ bank accounts at some financial institutions.

• Involve your child in the process. Instead of managing the custodial account alone, bring your child to the bank to help open the account. They can bring their identification and speak with the banking staff. Ask ahead of time if they offer memorable experiences for children, such as viewing the safe deposit boxes. The more your child enjoys the bank or credit union, the more they may interact with their account.

• Remind your child that saving is vital. Again, bringing in a real-world example can help. For instance, the next time you have an unexpected expense such as a car repair or emergency dental work, use it as a teaching moment. Explain that saving money helps smooth out financial bumps in the road.

• Explain financial fundamentals. For example, teaching your child about compound interest can motivate them to save more. You can also create a budget showing what their allowance income lets them afford each month and set long-term goals, such as buying a scooter.

• Keep up the flow of information as your child gets older. While a first-grader isn’t ready to peruse financial documents, middle-schoolers can begin to understand how to read an account statement from their custodial account. Likewise, your child’s first job can provide a lesson about paychecks and income taxes.

In addition, the prevalence of phone and internet use has given rise to financial scams over text messages and email. It’s wise to educate and warn kids about this so they don’t become a victim.

The Takeaway

Endorsing a check for a minor requires an additional step or two compared to endorsing your own; the trick is knowing what information you need. Whether you deposit the money into your account or your child’s custodial account, the endorsement process is an opportunity to expose your child to the world of banking. It’s never too early to teach financial literacy, and depositing checks at the bank is a great jumping-off point.

When thinking about your own banking choices, it’s wise to look for multiple better banking features. When you open an online SoFi Checking and Savings account, for instance, you can take advantage of a competitive APY and not pay any account fees that can nibble away at your balance. Plus, SoFi offers features like Vaults and Roundups to help savings grow faster, and qualifying accounts with direct deposit can get paycheck access up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

Can a child endorse a check?

A child too young to write or sign their name cannot endorse a check. For older children, banks and credit unions generally require parents to write and sign their name under the child’s name. They also must include their relationship to the child and add the account number for the deposit.

Can a minor deposit a check into their own account?

A minor can deposit a check into their account if their parent or guardian endorses it and if the minor is old enough to use banking services. Each bank or credit union sets rules for how old a minor must be to access banking services.

Can you use mobile deposit to endorse a check to a minor?

You can use the mobile deposit to endorse a check for a minor by printing their name on the back of a check with a hyphen and the word “minor.” Then, under the minor’s name, print your name with a hyphen and the word “parent” or another descriptor for your relationship with the minor. Then, sign the back and write your account number or the minor’s custodial account number. Lastly, use your phone to complete the check’s mobile deposit.

How can a minor cash a check?

A minor can cash a check if their parent or guardian endorses it and the minor is old enough to use banking services. Each bank or credit union determines the age requirements for banking services.

Photo credit: iStock/Drazen Zigic

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

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://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.

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.

SOBK0123012

Aug

2024

Checking Account vs. Debit Card: What’s the Difference?

By Timothy Moore | Budgeting & Goals, Family Finances, money | Comments Off

Checking accounts and debit cards are both key to storing and accessing your money for making everyday payments. Think about how often you use them as you pay bills, grab a latte, and check your balance to see if you can afford some new shoes.

Though they are linked, they are two separate financial tools — and it’s possible (though uncommon) to have one without the other.

Key Points

• A checking account allows individuals to store and access funds for daily transactions, often featuring options for writing checks and electronic transfers.

• A debit card provides a convenient method for making purchases and withdrawing cash from a linked checking account, requiring a PIN for secure transactions.

• Both checking accounts and debit cards offer various features, such as direct deposit capabilities and mobile wallet integration, enhancing accessibility and usability.

• Checking accounts are typically insured by the FDIC, while debit cards are linked to these accounts, providing an easy way to manage finances without incurring debt.

• Choosing the right checking account and debit card involves considering personal needs, such as fee structures, interest rates, and banking features that align with individual financial goals.

What Is a Checking Account?

A checking account is a type of bank account that allows you to access your money when you need it for paying bills or making purchases. Unlike other deposit accounts (like saving accounts), checking accounts allow you to make regular withdrawals by writing checks, swiping your debit card for purchases, or taking money out of an ATM.

Most checking accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or NCUA (National Credit Union Administration), meaning your funds are protected up to $250,000 per depositor, per bank, per ownership category. You can typically fund your checking account through bank transfers and via direct deposit from your employer.

You can also connect your checking account to a peer-to-peer payment app like Venmo or Cash App to send money to and receive money from friends and family. Some banks may even offer built-in payment programs through their mobile apps.

Some checking accounts charge monthly fees while in other situations you can open a free checking account. Banks charging fees for accounts may offer ways to waive the fees. Other “fine print” details to consider when selecting a checking account include minimum balance requirements, overdraft fees, and annual percentage yield (APY).

What Is a Debit Card?

A debit card is a form of payment that gives you access to the funds in your checking account.

You can use a debit card online and in person to make purchases, wherever that card is accepted. You can even add your debit card to mobile wallets, like Apple Pay or Google Pay. You typically must use a unique personal identification number (PIN) to use the card for in-person purchases and ATM withdrawals.

Unlike a credit card that allows you to loan money from the card issuer, a debit card only gives you access to the funds in your checking account. If you don’t have enough funds in your account to cover a purchase, the transaction may be declined or you may overdraw the account (and face overdraft fees).

You can also use a debit card to withdraw cash at ATMs. Most banks and credit unions offer a network of fee-free ATMs where you can safely take out cash without incurring charges. You may also be able to request cash back at the point of sale at some businesses when paying with your debit card.

While we typically think of debit cards as a component of a checking account, consumers without a checking account can purchase a prepaid debit card, load funds onto it, and spend it at stores like a bank debit card.

Do You Automatically Get a Debit Card When Opening a Checking Account?

Most checking accounts come with debit cards nowadays, but it’s always a good idea to confirm before opening up a new account. Upon account creation, the bank or credit union will generally send your debit card in the mail. In some cases, you may have to request the debit card.

Not all debit cards are created equal. When looking for a checking account with a debit card, you may want to prioritize one that:

• Has a large network of ATMs

• Doesn’t charge fees for card replacements

• Doesn’t charge foreign transaction fees

• Offers cash back on debit card purchases.

Can You Have a Checking Account Without Having a Debit Card?

While most checking accounts come with debit cards these days, it’s still possible to encounter a checking account that doesn’t have a debit card. However, you’re more likely to find a checking account that no longer supplies free paper checks to members.

Debit Card vs. Checking Account

Let’s break down the difference between a checking account vs. a debit card.

Checking Account	Debit Card
Deposit account at bank or credit union that is typically federally insured	A card that allows you to make purchases and withdraw cash, typically tied to a checking account
May earn interest	May earn cash back
May have monthly maintenance fees	May have foreign transaction fees and overdraft fees
Can be used for online transactions	Can often be used for online transactions
Can be linked to P2P app	Can be linked to P2P app
Federally insured	Insured if tied to insured account

The best way to think about the difference between checking accounts and debit cards? A checking account is a deposit account for storing and spending your money; a debit card is a common tool to access the money in that deposit account.

Pros and Cons of Checking Accounts

Now that you know how a debit card vs. checking account stacks up, here’s a closer look at checking accounts. These accounts are a staple of personal finance and, as such, offer plenty of benefits to consumers. There are also some downsides to be aware of.

Here are some of the pros and cons of checking accounts:

Pros

• Easy access to funds: A checking account allows you to make purchases (in person or online), pay bills, and receive direct deposit paychecks.

• Security: Checking accounts are typically insured by the FDIC or NCUA.

• Banking benefits: Depending on the checking account, you may enjoy premium features like mobile check deposit, automatic savings tools, and early paycheck access.

Cons

Checking accounts have a specific and necessary purpose for most consumers, but they do have drawbacks:

• Low or no interest: In terms of checking vs. savings accounts, checking accounts typically have low APYs — if they earn interest at all.

• Fees: Some checking accounts may have monthly maintenance fees, overdraft fees, account inactivity fees, and other charges that can add up.

• Minimum balance requirements: Some checking accounts may require you to maintain a specific amount of funds in your account. They may also require a minimum deposit to open the account.

Here are the pros and cons of checking accounts in chart form:

Pros of a Checking Account	Cons of a Checking Account
Easy access to funds	Low or no interest
Security	Fees
Banking benefits	Minimum balance requirements

Pros and Cons of Debit Cards

To better understand the difference between a debit card and a checking account, it can be helpful to consider debit cards’ unique features. These cards also have their fair share of pros and cons.

Pros

Advantages of debit cards include:

• Easy way to spend and withdraw cash: Debit cards are more convenient than paper checks and give you quick access to your cash at ATMs.

• No risk of debt: Unlike credit cards, debit cards don’t let you spend money on credit. This means you don’t risk overspending and falling into high-interest credit card debt.

• No fees or interest: Debt isn’t the only risk of credit cards. You also have to worry about annual fees and annual percentage rates (APRs) when opening a credit card. Neither applies to debit cards.

Cons

Debit cards have drawbacks, as well:

• Less fraud protection: Credit cards may pose more debt risk, but they typically offer better fraud protection than debit cards.

• Ability to overdraft: Some banks and credit unions charge fees if you accidentally overdraft using your debit card.

• Daily spend limits: Your debit card likely has a daily spend limit, and it may be less than you think (possibly $300 or $400). Before using your card for a big purchase, you may want to check with your bank to see if they need to increase the limit temporarily.

Take a look at how these pros and cons look in chart form:

Pros of a Debit Card	Cons of a Debit Card
Easy way to spend and withdraw cash	Less fraud protection
No risk of debt	Ability to overdraft
No fees or interest	Daily spend limits

Tips for Finding the Right Checking Account and Debit Card

How can you find the right checking account and debit card for you? Each person’s banking needs are different, but here are a few tips to get you started:

• Think about the features that are right for you: It’s likely that no checking account will tick all the boxes for you, so it’s a good idea to make a list of the most important features of your ideal checking account. Maybe you want an interest-bearing account that also has a cashback debit card, or perhaps you just want a standard account with no monthly fees or overdraft fees. Deciding on your wish list will help you narrow down the options.

• Ask friends and family: Getting recommendations from people you trust is a great way to instill confidence in any big financial decision.

• Consider online banking: Online banks can often offer lower (or no) fees and higher interest rates because of their low overhead. With the advent of mobile banking, including mobile check deposit, online bill pay, and P2P payments, you may find that you don’t miss your brick-and-mortar bank — while enjoying the checking and debit features.

• Bank in one place: It’s possible to have checking and savings accounts at separate institutions, but you may appreciate the convenience of banking in one place (or in one app). If you already have a credit card or savings account with a specific institution, it might be worth researching their checking account and debit card offerings.

Banking With SoFi

Looking for a new checking account with a debit card? Open an online bank account with SoFi. Our Checking and Savings account allows you to unlock a wealth of banking features, including a competitive annual percentage yield (APY), no account fees, automatic savings tools, and cashback on select local purchases when swiping your debit card.

Bank smarter with SoFi, and see why people love the SoFi debit card and Checking and Savings Account.

FAQ

Is a checking account a debit card?

A checking account is not a debit card. Rather, a debit card is a common way for consumers to spend and withdraw cash from their checking accounts.

Can you withdraw cash without a debit card?

It is possible to withdraw cash without a debit card. If your bank has a physical branch, you can go in person to take out funds. Some banks offer ATM cards for ATM withdrawals, and others may even offer cardless ATMs that allow you to access your funds through a mobile app.

Do checking accounts come with a debit card?

Most checking accounts come with a debit card. The bank may automatically send you the card upon account creation, but in some cases, you may have to request the card before the bank will send it.

Photo credit: iStock/Phiromya Intawongpan

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

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://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.

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.

SOBK1222005

Aug

2024

How Do I Check My Credit Score?

By Ashley Kilroy | Budgeting & Goals, Family Finances, money | Comments Off

If you’ve ever wanted to check your credit score and do so without dinging your score or paying a cent, guess what? It’s possible. You can get that important three-digit number from a number of sources. In fact, your bank or credit card company may provide just what you are looking for.

Why is your credit report intel such a gift? Because keeping tabs on your credit scores can help you spot potentially fraudulent activities or discrepancies. It can also help you monitor your progress if you’re working hard to establish your credit or have a stellar financial profile. Higher scores may well unlock lower loan rates and other benefits.

Key Points

• Checking a credit score can be done for free through various channels, including banks, credit card companies, and credit counselors.

• Understanding the components of a credit score is crucial, as factors like payment history and credit utilization significantly impact the overall score.

• Monitoring credit scores helps identify discrepancies or fraudulent activities, providing an opportunity to address issues promptly.

• Regularly reviewing credit scores can help individuals gauge their financial health and make informed decisions about loans or credit products.

• Experts recommend checking credit scores at least once a year, or more frequently when preparing for significant financial decisions or suspecting fraud.

What Is a Credit Score?

A credit score is a three-digit number that lenders and creditors use to assess your creditworthiness. In other words, it helps lenders decide the probability of you repaying a loan or a line of credit in a timely manner based on your past behavior.

Credit scores are usually broken down into two types: custom and generic scores, and this may explain why you have different credit scores depending on where you check.

While different algorithms are used, your credit score usually reflects such factors as how much money you have borrowed, whether you manage it well and pay it back on time, the length of time you’ve been borrowing money, and what kinds of credit lines you have used (you’ll learn more about this below).

• What are known as generic credit scores are the ones reported by the three major credit bureaus, Experian, Equifax, and Transunion. They utilize Information from lenders and businesses to come up with their figures.

• Conversely, individual lenders may create custom credit scores to determine your likelihood of repayment. These scores include credit reporting from the three credit bureaus and other data. This type of credit score is often meant to determine your creditworthiness with regard to a specific type of lending (like a mortgage) or a particular lender.

Examples of custom scores are FICO® scores and VantageScore®; these companies have their own guidelines to determine your credit score. Worth noting: FICO scores are the ones that many lenders and creditors use when they evaluate a candidate for credit.

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.40% APY, with no minimum balance required.

What Your Credit Score Means

fico ranges

Now, here’s how to understand the number itself. Credit scores typically range between 300 and 850. Usually, the higher your credit score, the less risky you are perceived in the eyes of lenders. That may mean you get a better (lower) interest rate on loans, among other perks.

A bad credit score can result in your paying more to borrow money or even being declined.

The FICO ranges look like this:

• Poor: 300-579

• Fair: 580-669

• Good: 670-739

• Very good: 740-799

• Exceptional: 800-850.

Credit Score vs. Credit Report

Here’s one important distinction to be aware of: Your credit score and credit report are two very different things, even though they may sound similar.

• Your credit score is the three-digit number that reflects your creditworthiness; that is, how likely you are to manage a line of credit or loan well and pay it back on time.

• Your credit report, however, is a record of your credit activity and history. It will reflect how much you’ve borrowed, how promptly you have paid, and more details. Typically, negative information on your record can go back seven years.

Both of these sources of information can help lenders (say, for a mortgage, car loan, or new credit card) evaluate how well you have handled credit in the past and how well you might do so in the future.

Check out our Money Management Guide.

This article is from SoFi’s guide on how to manage your money, where you can learn basic money management tips and strategies.

How Do I Check My Credit Score for Free?

Next, here’s how to find out your credit score for free.

• Check with your bank. Most banks provide customers with their FICO number or another credit score for free. Your bank is the hub for so many aspects of your financial life, it’s likely they will help you out by allowing you to view your score at no charge.

• Ask Experian. You can get your free FICO score from Experian.

• Ask your credit card company or lender. You might be able to view your credit score by logging into your account. If not, your creditor or lender can point you in the right direction to access your score.

• Ask a credit counselor. Often, credit counselors can help you scratch that “How can I check my credit score for free?” itch. To find one in your neck of the woods, you can visit the nonprofit National Foundation for Credit Counseling, or NFCC.

• Sign up for a free money management app. Lots of choices are out there if you are looking for a money tracker app that lets you view your accounts, budget, and optimize spending. Many offer a free credit score.

You can get free credit reports but not credit scores from AnnualCreditReport.com. It’s a good idea to check your credit reports at least once a year.

Recommended: Track your credit score for free with SoFi.

How Are Credit Scores Determined?

how credit scores are determined

Knowing what contributes to your credit score can help you get yours into the desired range. Here are some of the key factors that influence a FICO score:

• 35%: Payment history, or the timeliness of past payments

• 30%: Amounts owed, or how much credit you have used, especially vs. your available credit. (This can include your credit utilization ratio, which is the percentage of credit you’re using versus your limit. Ratios of 30% is often considered the limit of what you want to use, and many believe that 10% is a more financially prudent number.)

• 15%: Length of credit history; a longer credit history tends to be positive. How long you’ve had accounts and how frequently you have used them can matter.

• 10%: New credit, or whether you’ve opened a number of accounts recently. Doing so can make you look like more of a risk to a lender.

• 10%: Credit mix, or what kinds of accounts you’ve had, such as a home loan, retail accounts, car loans, and so forth. There isn’t a specific assortment you need, but this is a variable that will be factored into your score.

Learn more about credit here:

Can I Check My Own Credit Score Without Affecting It?

You may have heard that a credit score check can lower your number. In some cases, it can. Typically, this happens when what is known as a hard pull or hard inquiry happens, which is when a potential lender or other entity reviews your credit details.

But when you check your own credit score, it won’t affect those digits. Pulling your score is referred to as a soft inquiry, and you can do so without affecting your credit score. At the very least, you should review your numbers before applying for any financing like a home or auto loan or a new credit card.

💡 Quick Tip: When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.

What Credit Checks Can Hurt My Score?

You may wonder when credit checks can hurt your score. When you apply for new credit, the lender or creditor will conduct what’s known as a hard inquiry. This can indeed impact your score. For every new hard inquiry, your credit score may drop up to five points.

When a potential lender looks into your file, it indicates that you may plan to take on more debt. Hence, the score drops. If you have several hard inquiries back to back, your credit score may decrease more than a few points. Some hard inquiries that could affect your credit include:

• Applying for a mortgage, auto loan, or personal loan

• Submitting a new utility application

• Applying for a new credit card

• Requesting a credit limit increase

• Renting an apartment.

Take note, though: Credit bureaus consider rate shopping a financially responsible move and treat it differently than a standard hard inquiry.

When you’re rate shopping, FICO considers all inquiries when applying for student loans, auto loans, or mortgages a single inquiry as long as applications are submitted within a 45-day window. However, some lenders use the older FICO model, which has only a 14-day window for application submissions. If you are looking for a loan, keep these time frames in mind so your research doesn’t wind up decreasing your credit score.

Why You Should Check Your Credit Scores

Monitoring your credit scores is important, and to do it for free is that much better. Here are some of the most important reasons to review your numbers:

• You can spot discrepancies or potential fraud. Out-of-the-ordinary activities will reveal themselves when you keep tabs on your credit scores. You can immediately spot red flags when something seems unusual (say, a score drops 40 points for no reason). This way, you can act right away, work toward getting your score back on track, or file a dispute if you detect fraud.

• You can gain insight into your financial situation. Understanding your credit scores can help you determine if you’ve been tracking your spending and debt vs. your income well.

It might also reveal if it could be a good time to purchase a home or refinance your mortgage. For example, if a score is less than ideal, you may want to hold off on making big moves until you work on your score. The delay may help you qualify for more favorable terms and interest rates.

• You can better compare financial products. Lenders have different criteria and credit score requirements to qualify for specific products. So knowing your credit scores can help you determine if applying for a particular product is worth it or if you should explore other options.

• You can pinpoint ways to positively impact your scores. If your score isn’t where you’d like it to be, don’t just assume the answer to “Am I bad with money?” is yes and stagnate. Instead, you might use it as motivation to build your financial literacy.

Having a handle on a credit score as well as the factors used to calculate it can help you optimize it. Some resources and websites may offer simulations so you can see how changing certain factors will alter your credit score. Then you can summon some financial discipline and work to improve your money habits as necessary.

How Often Should You Check Your Credit Scores?

Financial experts usually recommend checking your credit score and credit report at least once a year. If you have reason to believe you are vulnerable to fraud (say, your credentials were involved in a data breach) or you are gearing up to apply for a loan, you may want to check more often.

The Takeaway

There are several free ways to access your credit scores, such as through your bank, a lender, a credit monitoring website, or a credit counselor. Accessing your score regularly can help you ensure there is no fraudulent activity while also making progress toward your financial goals. It can also help you optimize your scores so you can enjoy the best possible rates on credit as well as other benefits.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

What are some resources available to help me improve my financial literacy?

To improve your financial literacy, you might want to start with your bank. They likely have a library of content about financial topics and tools for improving your financial health. In addition, there are plenty of well-regarded books and podcasts on the topic.

How can I involve my family in developing good financial habits?

To involve your family in developing good financial habits, you might have family meetings and share information about the household budget and how you are managing the money. You could then set short-term goals they can have input on and participate in achieving, such as cutting the food or entertainment budget or finding ways to save for a family vacation.

How can I stay motivated to continue developing good financial habits over time?

There are several ways you can stay motivated and keep developing good money habits. Try surrounding yourself with like-minded people or those that share a specific goal, such as paying off student debt, to support one another and share ideas. Use apps to simplify your financial life and perhaps boost your financial health (say, with a roundup function). Reward yourself within reason when you do a good job meeting a financial goal, like adding to your emergency fund for several months.

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

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://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.

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 .

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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 Is a Checking Account?

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The Takeaway

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What are some resources available to help me improve my financial literacy?

How can I involve my family in developing good financial habits?

How can I stay motivated to continue developing good financial habits over time?

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