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REPAYE vs PAYE: What’s the Difference?

Struggling to make your student loan payments? Pay As You Earn (PAYE) and Revised Pay As You Earn (REPAYE) may ease the burden. The choice boils down to your degree of financial hardship, desired repayment term, and income trajectory.

Both adjust your monthly loan payments based on your income and family size.

PAYE vs REPAYE: An Overview

If your federal student loan payments under the standard 10-year repayment plan are high compared with your income, one of the four income-based repayment plans might be an option.

The PAYE and REPAYE plans generally enable eligible federal student loan borrowers to cap their monthly student loan payments at 10% of their monthly discretionary income. (Discretionary income is the difference between annual income and 150% of the poverty guideline for family size and state of residence.)

One main difference: While borrowers need to apply for both programs, the PAYE plan typically requires proof of financial hardship.

The pay as you earn repayment plans are available for Direct Subsidized and Unsubsidized Loans; Grad PLUS loans; Direct Consolidation Loans that did not repay any Parent PLUS loans; FFEL loans if consolidated; and consolidated federal Perkins Loans.

Recommended: Direct vs. Indirect Student Loans: What’s the Difference?

Key Differences Between PAYE and REPAYE

Both plans extend the length of your loan beyond the standard 10-year repayment plan. Both require you to “recertify” your income and family size each year. Both cap your monthly loan payment at 10% of your discretionary income.

Both consider the same federal student loans eligible.

Both plans are designed to forgive any loan balance after 20 or 25 years, although if you’re also working toward Public Service Loan Forgiveness, you may qualify for forgiveness of any remaining loan balance after 10 years of qualifying payments.

So what are the differences?


•   Requires proof of financial hardship.

•   Has a repayment period of 20 years.

•   Counts a spouse’s income unless you’re married and file separately.

•   You’re eligible if you took your first loan out on or after Oct. 1, 2007, and received at least one Direct Loan on or after Oct. 1, 2011.


•   Has a repayment period of 20 years if all loans being repaid under the plan were for undergraduate study.

•   Has a repayment term of 25 years if any loans being repaid under the plan were for graduate or professional study.

•   Always considers a spouse’s income.

•   Has no application restrictions based on when you took out your federal student loans.

Recommended: Types of Federal Student Loans

There are also differences in the interest subsidy.

What Is the Interest Subsidy?

If your payments under PAYE or REPAYE are too small to cover the interest your loan accrues each month, the government will help in the form of an interest subsidy.

Under both plans, the federal government covers surplus interest charges on subsidized loans for the first three years.

With REPAYE, though, after three years, the government will pay 50% of the accruing interest on subsidized loans. Eligible unsubsidized loans receive a 50% interest subsidy at all times if your payment is too small to cover the interest.

Interest will capitalize under both plans if you fail to recertify income and family size or you leave the plan, and in the case of PAYE if you no longer can demonstrate financial hardship.

Answers to Common Questions

How do I apply for a repayment plan?

You only need to submit one application for any income-driven repayment plan and will need to supply financial information. It will take about 10 minutes. The federal Student Aid Office also will recommend a repayment plan based on your input.

I want to apply for PAYE. How is financial hardship defined?

A general rule of thumb: If your debt exceeds your income, you likely demonstrate hardship under PAYE.

More specifically, your loan servicer will compare your monthly payment under the standard plan and PAYE. If you’d pay more under the standard plan, you have a financial hardship.

What if I’m in PAYE and no longer demonstrate hardship?

Your loan payments will stop being based on your income, and unpaid interest will be added to your loan.

What if I forget to recertify my income and family size for either plan?

Your loan payments will no longer be based on your income. They will revert to the amount you would pay under the 10-year standard repayment plan.

I’m married and have a moderate income I don’t expect to change much. What’s the better fit?

PAYE might fit best.

I’m single, I’ll probably earn much more in the coming years, and I can’t prove financial hardship. Which plan of the two might fit me better?


Does a Parent PLUS Loan qualify for either plan?


Looking to lower your monthly
payments or reduce your term?
Check out SoFi student loan refinancing.

Income-Driven Repayment Alternatives

PAYE and REPAYE may lower your monthly student loan payments, and forgiveness of any balance after 20 or 25 years is a big perk. But these plans aren’t the only way to reduce the sting of loan payments.

You can also refinance your student loans — private and federal — with a private lender and potentially qualify for a lower interest rate.

Got graduate school or federal parent loan debt? Many borrowers refinance Grad PLUS Loans and Parent PLUS Loans, as those have historically offered less competitive rates.

The government Direct Consolidation Loan program combines federal student loans into a single federal loan, but the interest rate is the weighted average of the original loans’ rates rounded up to the nearest eighth of a percentage point, which means the borrower usually does not save any money. Lengthening the loan term can decrease the monthly payment, but that means you’ll spend more on total interest.

With PAYE or REPAYE, federal loan benefits and protections like deferment and public service-based loan forgiveness are in play and will not carry over with a refinanced private loan. But borrowers who qualify for a lower interest rate could see substantial savings over the life of the loan through refinancing.

Recommended: Student Loan Refinancing Calculator

The Takeaway

PAYE and REPAYE tie federal student loan payments to income and family size for 20 to 25 years. They differ in small ways, and each has its merits, but borrowers might want to consider refinancing student loans if they can get a better rate.

SoFi blazed the trail in student loan refinancing, offering flexible repayment plans and charging no origination fees.

Rates have been at historic lows. See what you qualify for in just two minutes.

SoFi Student Loan Refinance
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Your Financial Checklist: Financial Moves to Make During a Job Transition

Your Financial Checklist: Financial Moves to Make During a Job Transition

So your dream job didn’t work out.

Maybe you had a change of heart. Maybe your life circumstances changed. Or maybe you never even got the job. estimates that between the ages of 18 to 24, the average American changes jobs about 5.7 times, and they change jobs an average of 2.4 times between 25 to 34 years old. So if you’re in the middle of a job transition, you’re in good company.

Still, transitioning from one job to another can be a stressful time no matter the reason, especially for those who may be transitioning from the public to private sector, or vice versa. No matter if you’re about to start the transition from one job to another or if you’re still looking for your next career move, there are a few things you can check off your financial to-do list in the meantime to make sure your job transition doesn’t wreak havoc on your financial life.

1. Build an Emergency Fund

Building an emergency fund is a great first step when you’re transitioning from one job to another. Doing so can give you a better idea of your financial situation and if you have enough savings to cover an emergency (such as your job transition taking longer than expected). Most experts advise you have at least six months’ worth of expenses saved up.

2. Use Vacation and Sick Days

According to Expedia’s 2021 Vacation Deprivation Survey , Americans took the fewest vacation days (eight, on average) out of 16 countries surveyed. So if you’ve accumulated any vacation or sick days, check with your HR department to see if you can cash them in. Many companies pay exiting employees a preset rate for unused vacation and sick days, as outlined in their contracts.

3. Take an Honest Look at Your Finances

Is buying locally important to you? Does your gym membership help you feel healthier, both mentally and physically? You’ve heard the adage that nothing is free, so take a deep dive into what you’re spending your money on and ensure that discretionary spending matches up with your values, life goals, and your budget.

4. Look for Easy Spending Cuts

When was the last time you actually read that knitting magazine? Are you ordering food delivery for every other meal? Take a look at your credit and debit card charges and pick off the easy things that you don’t need to be spending money on. This could be a quick way to build a cushion in your budget during your job transition.

5. Fend off Lifestyle Creep

If you’re still getting a coffee every morning even if you’re not going to work, you may have fallen victim to lifestyle creep. You can look for easy fixes, such as buying a coffee maker, to hedge against it and build better financial habits even after your transition from one job to another is complete.

6. Don’t “Orphan” Your Retirement Fund

Many people abandon their 401(k) after they leave a job. That is, they assume the account is owned by their ex-employer, and by quitting they’ve forfeited their funds. However, the money that you contribute to a 401(k) stays with you even after changing jobs. So you may want to check into your current or former employer’s 401(k) policy for insight on how you might claim these funds or roll them over into a new retirement account.

7. Combine Your Retirement Accounts

Do you have multiple retirement accounts? Now may be a good time to review your account details and decide whether it makes sense for you to consolidate your retirement accounts.

8. Create a ‘Career Change’ Budget

Once you have a better idea of what your expenses will look like as you transition from one job to another, it may be time to create a career change budget. This can be a temporary budget that’s adjusted for the period of time between now and when you start your next job. If you don’t currently have your new job lined up, you can still use a temporary career change budget as a starting point to test out potential permanent budget changes, such as cutting streaming services.

9. Do Your Homework

No matter if you’re just started a new career or if you’re still looking for one, now may be an ideal time to delve into your new industry’s average salary expectations. Being armed with this information could help you know your worth and provide data points to help you negotiate your starting salary, bonuses and reach your financial and career goals.

10. Make Money off Your Passions

Do you love gaming? Or maybe you have a passion for making candles or pottery. You may be able to make some side cash streaming on Twitch or selling goods on Etsy. Doing so may help you relieve stress since you’re doing something you love while also bringing in a few extra bucks.

11. Check Your Health Insurance Options

In the U.S., most health insurance options are tied to your jobs. As such, a job transition may be a good time to see what your insurance covers or even if you need less or additional insurance. Researching what type of insurance options are generally offered in your new career may also be beneficial.

12. Keep Extra Cash in Your Bank Account

Do you usually only keep a couple hundred bucks in your checking or savings account? Having extra money in your bank account during a job transition may be wise. If you have a new job lined up, you may have to go longer than usual to get your next check, such as getting paid monthly instead of bi-weekly. And if you don’t have a job quite yet, keeping more cash in your account than usual can save you from hefty overdraft fees.

13. Cash in on Networking

Most people don’t have a Rolodex anymore, but they do have a network of professionals they’ve accumulated throughout their career. Now may be a good time to log into LinkedIn and send some messages to people who may be able to help you get a job. You could also invest in online courses on sites like LinkedIn and Coursera that are related to your new career, especially if you don’t have much experience in the career you’re transitioning into.

14. Invest in Networking Events

Even during COVID-19, you can find a plethora of networking opportunities both in person and online. While some of these won’t be free, they still may be a wise investment to not only help you learn about your new industry, but also to meet new people who could open doors for your career. As such, networking can be a great financial move while you transition from one job to another.

15. Keep Track of Work-Related Expenses

If you do attend networking events or pay for industry-specific training or webinars, you may want to keep track of these expenses. You may be able to write off work-related training and other expenses during your job transition, especially if you’re a freelancer or contract employee.

16. Use Extra Time To Learn about Investing

Do you not know what a blue chip stock is? Or maybe you’re confused about the differences between stocks and bonds. Leveraging your time during a career transition to decode investing could help you learn how to make smart investment moves that your future self may thank you for.

17. Re-evaluate Your Savings Accounts

You may be surprised at the number of savings accounts you actually have, be them health savings accounts, high-yield savings accounts, money market accounts, CDs and yes, even your 401(k). Before transitioning from one job to another, you may want to ensure you have a handle on your current savings accounts and how they may be affected by a career change, especially if your income level is likely to change.

18. Purchase or Update Your Life Insurance Policy

Because different industries have different levels of risk and danger, your life insurance offerings may change during a job transition. Knowing what your life insurance needs are and how they may change in a new career could help you save money if you start researching and comparing insurance options now.

19. Set Up Automatic Payments & Transfers

Got a late fee because you forgot that credit card bill was due last Thursday? You can avoid these fees by setting up automatic payments. You can also set up your bank account to automatically transfer funds to another account, such as a savings account, on pay day. Of course, you only avoid a fee, though, if you don’t overdraw your account, so you may want to make sure you’ll have the funds available before setting up automatic payments or transfers.

20. Deal with Debt

Student loans, credit card balances, medical bills, car loans, mortgages: It’s easy to build up debt, but it’s not-so-easy to tear it down. If your student loan interest rates are soaring higher than your income, it may be worth checking into student loan refinancing options. Debt consolidation may also be worthwhile if a budget overhaul isn’t enough to put a dent into your debt. Having less debt going into your new career could relieve some of your financial stress as you wait for that first check to come in.

21. Consider Getting a New Credit Card

While it may not seem like an obvious option, applying for a new credit card during a job transition could make sense for you. Having more lines of credit could help you build your credit score (as long as you pay your bill, of course!) It could also help you make ends meet in the short-term, especially if you take advantage of cashback bonuses or other credit card rewards.

22. Re-Evaluate Your Financial Goals

Don’t like the idea of having a furry friend anymore after hearing about that big vet bill your friend just paid? Maybe you want to move that pet fund into a travel budget or prioritize paying off your student loans instead. You may want to use your time now to reevaluate your financial goals so you know what you’re saving for once you start your new career.

23. Evaluate Your Housing Situation

Many early career professionals are eager to stake down their roots and buy into that American dream of a white picket fence and a big backyard. But a big backyard doesn’t come cheap (and neither do white picket fences). If you’re living in a big city studio apartment but your job transition could mean you work remotely or in another market, it may be worth the savings to break out your moving checklist and head for cheaper horizons. And if you’re not ready to give up your expensive apartment just yet, you may want to consider roommates or even renting out your cool pad on Airbnb when you’re away.

24. Check in with Financial Mentors

Nothing in this world is free … or is it? Maybe you have an investment-savvy uncle or a friend who works in accounting. Asking a trusted financial mentor or friend for advice may be the closest thing to free financial guidance you can get; however, you may want to be sure you really trust this individual with details about your financial life and take their advice with a grain of salt.

25. Consult an Expert or Two

While your friends and family could be a good place to start, a financial advisor could help you make the most out of your finances during a career transition. An advisor could help you learn more about how to adjust your financial situations if your new career path changes your income, be it lowering or raising your expected income. Being prepared for a change in income before it happens could help you create a budget ahead of time so you’re not scrambling to adjust after that first paycheck clears.

The Takeaway

Transitioning from one job to another can be stressful, especially if you’re unsure of when your net paycheck will be. However, there are several money moves you can make during a job transition to help yourself both now and in the future. A major life event like transitioning to another job is a good time to take stock of your financial situation and reevaluate your budgets and money goals.

If you need a tighter grip on your funds during a career transition, signing up for SoFi Money could be part of your financial checklist. Its mobile interface literally puts cash management at your fingertips and there are zero account fees. Plus, SoFi Money holders get access to free one-on-one career services to help with career transitions.

Photo credit: iStock/Chalirmpoj Pimpisarn

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The Biggest Money Scams in the US

The Biggest Money Scams in the US

Scammers have been around forever, and the only thing that changes from year to year, it seems, is the technology they use to pull off their scams. While many of these con artists still use the phone, the mail or even in-person tactics to try to part you from your hard-earned money, most scams these days are pulled off digitally — reaching you through your email, text messages and fake websites.

According to the Better Business Bureau , nearly 75 percent of consumers lost money to a purchase scam in the first eight months of 2021. And the amount consumers lose every year continues to rise — from an average of $76 in 2019 to $102 in 2021.

To help folks battle these scammers, we’ve rounded up some of the biggest, most common scams hitting American consumers this year with tips to help you avoid them and a guide on how to report scams if you do become a victim.

According to the Federal Trade Commission, some of the most common bank scams include:

Overpayment Scams

Many con artists try to get between you and your dollars by tricking you into sending them funds directly. Scammers typically start off by sending you a fake check in the mail, but because they’ve sent you “too much” money, they reach out instructing you to deposit the full check into your bank account and send the overpaid portion back to them via check or wire transfer. As a rule of thumb, you should contact your bank before depositing checks from anyone you don’t recognize.

Automatic Bank Withdrawals

In this scam, a company sets up automatic withdrawals from your bank account in order for you to “qualify” for a free trial or to collect a prize. Some companies will also legitimately charge you for a purchase, but will continue charging you each month because your purchase signed you up for some obscure product or service that requires monthly billing. Consider protecting your banking information by using a credit card instead. Unauthorized charges are easier to dispute, and you don’t provide anyone with direct access to your money.

Charity Scams

It’s hard to imagine a worse scam than stealing money in the name of people in need, but it’s a tried-and-true grift we should all be on the lookout for, especially around the holidays or after emergencies/natural disasters. Scammers pose as a real charity (or one that sounds real) and call, mail or email asking that you help with some recent tragedy. Instead of making a donation pledge right then and there, it’s smart to tell them you’ll contact them through the organization’s official website or phone number noted there.

Grandparent Scams

Also popular around the holidays are “grandparent scams” where scammers call older adults pretending to be a grandchild or other relative. They claim they are in trouble and need help, often asking that you wire them money or send them a gift card so they’ll have the cash they need. If this happens to you, it’s smart to tell the caller you need to call them back. That will allow you to contact your relative directly to confirm if the request was real or fake.

Read more about other ways to protect older adults from fraud and financial exploitation .

Imposter Scams

A cross between charity and grandparent scams, imposter scams typically work something like this: A caller tries to persuade you to give money to their organization or government agency (think police and firefighter funds). As they’re often able to fake their caller ID, the grift may seem legitimate. Instead of contributing over the phone, it’s a good idea to directly contact the organization the person claims to be associated with and make a donation that way if you’re so inclined. You can read more about imposter scams .

Debt Collection Scams

Dealing with legitimate debt collectors can already be stressful, but there are guidelines they must adhere to which can make identifying a scammer easier. An overly aggressive “debt collector” may be a scammer in disguise. These warning signs can help you further recognize if you’re being targeted, and these sample letters can be used to request more information if you’re still questioning the legitimacy of someone contacting you about a debt.

Unclaimed Money Scams

It’s estimated that more than $40 billion in unclaimed money is out there waiting to be claimed by its rightful owners, mostly languishing with state governments. Some companies may offer to help you find and recover unclaimed money for a percentage of the found funds. Paying these fees is pointless, since you can search for unclaimed property and reclaim it for free (or perhaps for a small processing fee) on official databases.

Foreclosure Relief or Mortgage Modification Scams

For people who are behind on their mortgage payments, this can be a truly frightening scam. These con artists often offer to save you from foreclosure, but they require upfront fees for their “services,” such as loan modification. Sometimes they’ll even ask for you to sign over the title or rights to your property on paperwork you don’t understand. If you’re contacted with mortgage promises that sound too good to be true, it’s a good idea to contact a HUD-approved housing counselor who can help you avoid scams and review your actual payment options.

Mortgage Closing Scams

These scams target homebuyers whose mortgage closing date is approaching. They attempt to separate the homebuyer from their down payment and/or closing costs by pretending to be a realtor, title company, escrow company or other mortgage-related company or entity.

Like with so many other scams, it’s important to communicate directly with people and companies you already know who can verify if these information requests are legitimate. The Consumer Financial Protection Bureau has put together some helpful information to help you protect your closing funds .

Mail Fraud

If you ever receive a letter asking you for money or personal information in order to receive a prize from a lottery or sweepstakes, or in order to claim an offer of a high value item like a car or a vacation, it could be a scam. The U.S. Postal Service has identified common postal or mail fraud schemes to help you avoid some of the most common ones.

Romance Scams

Targeting the heartbroken is another tried-and-true con that scam artists just love. Typically, the scammer tries to trick you into being romantically interested in them so they can ask you for money or get you to share personal information like credit card numbers, bank account details and even your Social Security number. These romances can lead to financial ruin so stay alert and don’t send money or gifts to a love interest that you haven’t met in person.

How to Report a Scam

If you think you’ve been a victim of a scam, you can report it by:

•   Submitting an online complaint with the Federal Trade Commission

•   Contacting your local police department or sheriff’s office

•   Reporting it to your state’s attorney general

How to Protect Yourself From Scams

Though scams abound, you’re not completely vulnerable. There are plenty of things you can do to help protect yourself against scams and scammers. Here are some of our favorites:

Using Credit Cards & Payment Apps

In general, credit cards can offer significantly better fraud protections than debit cards, which are directly connected to your bank account. Plus, a lot of credit cards also offer additional services like purchase protection, price protection and extended warranties.

Mobile apps (think Apple Pay and Google Pay, but also SoFi Money) offer advanced technologies, like fingerprint authentication and “tokenization” (credit card account numbers are replaced by randomly generated numbers) to provide added layers of security. Similarly, virtual credit cards similarly allow online shoppers to mask their financial accounts.

Checking Bank & Credit Card Statements

No matter how you prefer to pay for purchases, checking your bank and credit card statements regularly for suspicious or erroneous charges can help you spot fraudulent activity right away. You may want to do this daily during periods of high usage, like around the holidays when it’s easier for fraudulent charges to slip through.

Activating Transaction Alerts

Many banks and other financial institutions offer free transaction alerts each time a new change hits your account. Like reviewing your statements, these alerts can help you spot suspicious activity right away.

Being Proactive

If you do spot something unusual when reviewing statements or alerts, it’s a good idea to contact your financial institution right away. You’ll be able to immediately cancel your compromised card(s) and get replacements so you can get on with your life and hopefully avoid further issues.

Staying on Alert

If you get a call asking for your payment information or other personal information, it’s smart to just hang up and call the company directly so you can avoid potential fraud.This goes for your address, phone number and especially your Social Security number.

Securing your Devices

Is your smartphone, tablet or laptop password-protected? If not, it can be an important first line of protection against fraud, so it’s definitely something to consider. If you’re unsure how to do it, enlist the help of a trusted friend or relative (but it’s still smart to set your own password that they are not privy to). Also, you may want to keep in mind that browsers like Firefox, Google Chrome and Safari issue updates to protect against scams, so it’s wise to ensure you have the latest version of whatever browser you use. You may also want to consider purchasing antivirus software to keep your computer clean and safe.

Reconsidering Public Wi-Fi

If you like to use your phone for shopping or banking while sitting at your local coffee house and using their Wi-Fi, you may want to reconsider that. Public Wi-Fi networks are well known spots where hackers and scammers steal personal information. That’s why a virtual private network (VPN) can be a smart choice for connecting to the internet when you’re away from home. It’s much harder to pick up information you may transmit than it is over a public network.

Shopping Where You’re Comfortable

Shopping only at reputable and recognized retailers — especially online — can help you avoid some of the fraud headaches abounding out there. If you are concerned about an unfamiliar retailer you want to transact with, consider researching them on the Better Business Bureau website. You can also check out their site state using Google’s Transparency Report tool.

Watching Out for Skimmers

Does that ATM or gas pump look a little weird? It’s not uncommon for scammers to install skimmers in places where consumers swipe their credit and debit cards. These devices snatch your payment information, including PIN codes whenever used. Take a close look at whatever reader you’re using to swipe your card. If it looks suspicious, report it to the establishment.

Avoiding ‘Phishers’

Did you get a weird notice from your bank or pharmacy? How about a text message from AT&T that your phone bill has been paid as a “gift”? It’s possible the unsolicited offer you receive is a “phishing” scheme. Scammers often pose as a legitimate company or website in order to get you to click on a link that either asks for personal info or downloads malware on your device. They can use emails or even texts to try to get you to bite. If it looks fishy, avoid clicking on any links or downloading any attachments.

A Few More Tips

Putting this advice into practice can definitely help keep you safe and your money in your pockets, but it can’t guarantee you won’t become a victim. Here are some additional things to keep in mind that can help boost your overall awareness.

The Basics

Keeping things simple is almost always a good idea, and that’s true of avoiding scams as well. If you’re shopping online, it’s super smart to check that the website url starts with HTTPS instead of just HTTP when you’re checking out. That means it has a Secure Sockets Layer certificate, meaning all your data will be encrypted. On secure sites, you’ll see a little padlock icon in your browser’s address bar.

Bad Reviews

Scam artists really aren’t known for their stellar online reviews, so if a company you’re considering buying from has a bunch of bad reviews (or no reviews at all), you may want to strongly consider taking your business elsewhere.

Words Matter

Is the website you’re considering making a purchase from riddled with misspelled words and grammatical errors? Typos can be a sign of scammers, so if what you’re reading looks a little off, you might want to reconsider purchasing from that site. It’s also good practice to check website urls for little differences (think instead of

Strength Also Matters

The strength of your password can be very important, but what’s considered “strong?” Passwords that are hard to crack generally have a random mix of letters, numbers and symbols, but long phrases like song lyrics that are easily remembered can also be used. Also, keep in mind that a password used on more than one site actually makes you more vulnerable, so take the time to customize your logins.

Safety in Person

If you’re shopping in a brick-and-mortar store, it’s smart to keep your purse and/or wallet close and secure at all times. This may mean moving your wallet to your inside pocket and wearing your purse strap over your head, especially during the holidays when stores are busier. In fact, traveling light can be the smartest way to ensure you don’t have your purse or wallet stolen. What’s traveling light? Consider carrying just one card with you into the store and leaving your cash and checkbook at home.

The Takeaway

While there will likely always be someone willing to cheat others out of their money, there are obvious ways you can help protect yourself. Staying alert and following your instincts can help, but implementing security measures and keeping some key tips in mind can make it harder for thieves to get at your dollars.

It’s equally important to use financial services that also have implemented top-of-the-line security measures. If you’re looking for one, you may want to consider setting up a SoFi Money account. SoFi Money is a mobile-first cash management that alerts you immediately after finding any suspicious account activity, and allows you to instantly freeze your card at the first site of fraud.

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Average Personal Loan Interest Rates and What Affects Them

Average Personal Loan Interest Rates & What Affects Them

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

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

Average Personal Loan Interest Rates By Credit Score

The average interest rate for personal loans is calculated by looking at several factors, including the requested amount, the applicant’s income history, and the reasons for borrowing, among others. An applicant’s credit score is a large percentage of the calculation, also. In general, the higher a borrower’s credit score, the lower the interest rate offered to the borrower may be. For example, average December 2021 personal loan interest rates by credit score range are:

Excellent credit score (781 to 850)


Very good credit score (661 to 780) 10.93%
Good credit score (601 to 660) 15.56%
Fair credit score (below 640) 15.91%

Factors That Can Lower Personal Loan Interest Rates

One thing to know about personal loans is that your unique credit profile will likely affect the interest rate offered to you.

Improving Credit Score

In general, the higher a borrower’s credit score, the lower their interest rate may be. Improving your credit score can, potentially, be one way to be eligible for more personal loans, perhaps with lower interest rates to choose from. And there are many ways to improve and build credit, many of which can positively affect your credit score in a short time. These can include:

•   Checking your credit report. Make sure your personal information — e.g., name, address, phone number, Social Security number — is correct; look for any erroneous public record information, such as lawsuits or bankruptcies filed that you were not a part of; and errors or inaccuracies in the credit accounts section. You can dispute any errors with the credit reporting agency.

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

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

Recommended: How AutoPay Works & When to Consider Using It 

Secured Versus Unsecured Personal Loans

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

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

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

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

Borrowers may offer only certain types of loans. And secured personal loans may go by different names, such as a car title loan. People who may not qualify for an unsecured personal loan, or may only be offered an unsecured personal loan with high interest rates, may find more options with secured loans. But, as with any financial decisions, it’s important to weigh the pros and cons of each option.

Income and Employment Status

Your income and employment status may affect the rate you’re offered on a personal loan. And you might need additional paperwork to prove your income if you’re a freelancer, independent contractor, or business owner than you would if you worked a W-2 job.

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

Factors That May Increase Personal Loan Interest Rates

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

Credit Score

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

Debt-to-Income Ratio

Debt-to-income ratio refers to how much debt someone has in relation to how much income they have. This is expressed as a ratio: Monthly debts divided by gross monthly income. Monthly debts include all debt payments, such as mortgage, car payments, and credit card payments. In general, the higher your DTI ratio, the riskier you may seem to lenders.


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

Recommended: How Does Unemployment Work?

Recent Bankruptcy

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

Is a Personal Loan the Right Choice for You?

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

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

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

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

SoFi Personal Loan Interest Rate Range

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

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

The Takeaway

Personal loan interest rates vary depending on an applicant’s financial circumstances, but can also vary by lender so it can make sense to shop around for rates. Trying to improve aspects of your credit that may be considered a shortcoming may increase your chances of loan approval with a more favorable interest rate.

Checking prequalification for a SoFi Personal Loan is an easy, online process that takes just one minute. With no fees and terms to fit a variety of budgets, an unsecured personal loan from SoFi may be a financial tool that will work for your unique needs.

See if a SoFi Personal Loan is right for you

Photo credit: iStock/alexsl

*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see

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


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