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Wondering how to get paid on YouTube? Nearly 400,000 people have made YouTube a full-time job, and 51 million channels now exist across the video platform. From ads to affiliate marketing to content licensing, average Americans have ample opportunities to make money off their YouTube videos.

Not sure how to make money off YouTube though? This guide contains 12 ways to generate revenue from your video content — plus helpful tips for getting started.

The Popularity of Content Creation

The internet has enabled anyone and everyone to become content creators. Brands now rely on content creators and influencers to advertise products across industries, and sites like YouTube, TikTok, and Instagram have enabled people with something to say to earn income just for posting photos, videos, and reviews.

YouTube’s continued popularity (it’s the second most visited website in the world) and TikTok’s recent explosion underscore that content creation plays an important role in our culture. And if you know how to make good content on YouTube in particular, you could make a lot of money.

Recommended: Active vs. Passive Income

12 Ways to Get Paid on YouTube

YouTube offers creators an opportunity to make good money, but how exactly? It actually takes a lot of hard work, fresh ideas, and regular posting, but if you’ve got a knack for it, it could be an easy way to make money through social media.

Here are 12 YouTube monetization ideas to get you started:

1. Joining the YouTube Partner Program

The most common way to make money off YouTube is by joining the YouTube Partner Program. Doing so allows you to run ads on your videos — before, during, and after — as you see fit.

At one time, YouTubers could count on $1 per 1,000 views, give or take, but it’s a little more complicated today. There’s really no guarantee how much money you’ll make by running ads on your videos, though the average YouTuber now sees $3 to $5 per 1,000 video views.

According to social media management company Sprout Social, your revenue can vary depending on:

•   Your target demographic (there are some strict regulations about ads on videos intended for children)

•   How relevant the ad content is to your video

•   What kind of content you produce.

Recommended: 39 Passive Income Ideas

How Does the YouTube Partner Program Work?

Not every content creator can slap ads onto the front of their videos. To run ads, you have to qualify for the YouTube Partner Program. Requirements include:

•   1,000 subscribers

•   4,000+ valid public watch hours in the last year

•   A linked Google AdSense account.

Your video content must also abide by all Community Guidelines, and you must live in a country where the program is available.

And here’s the kicker: You’ve got to stay active. YouTube can turn off monetization for channels that haven’t put out new content in the last six months.

Recommended: Ways to Make Money from Home

2. Sending Viewers to Your Blog

If you have a blog with ads, you can encourage your viewers to check it out during your video and include a link to it in your video description. YouTube video descriptions can be up to 5,000 characters (roughly 800 words), though shorter descriptions tend to perform better.

By steering viewers to your ad-optimized blog site, you can earn additional ad revenue with every pageview. Common examples where this make sense include:

•   Recipe videos paired with your recipe website

•   Travel product review videos paired with your travel blog

•   Car maintenance instructional videos paired with your how-to blog content.

Though blogs can be a good revenue source, don’t forget to factor in the cost to run a blog.

3. Sending Viewers to Your Commerce Site

There are other similar ideas for how to get paid on YouTube. For instance, you can use your YouTube video description to link viewers to your commerce site. If your channel is popular enough to warrant branded merch, this could be a good way to generate additional revenue. Alternatively, if you run your own shop selling goods like artwork, candles, or apparel, you may want to create product videos on YouTube that send viewers to your site.

If you don’t have your own merch site but instead sell items on Amazon, Etsy, or eBay, you can also send viewers there.

Recommended: Places to Sell Your Stuff

4. Using Lead Magnets

Lead magnets are another idea for how to get paid on YouTube, though it’s a more indirect way of making money.

Your YouTube video description might send viewers to a free resource that you’ve created, like an ebook, template, or online course. When the viewer signs up for or downloads their freebie, you can collect their contact information for a newsletter and future sale alerts, which can in turn grow your business and earnings.

5. Starting a Channel Membership

YouTube has another great built-in feature for popular content creators: channel memberships. This enables creators to charge a monthly membership fee. In return for the fee, your viewers will expect certain perks like badges.

Channel membership usually only makes sense if you post content everyday, especially YouTube livestreams. You must be a part of the YouTube Partner Program to offer channel memberships.

Recommended: How to Build an Online Community

6. Encouraging the Use of Super Chat and Super Stickers

Content creators who are part of the YouTube Partner Program can also encourage viewers to utilize Super Chat and Super Stickers during live streams. How does this help to get paid off YouTube videos? To access these features, viewers pay a small fee to pin their comments and stickers to the top of a live chat feed.

7. Encouraging YouTube Premium

While you won’t get money directly for encouraging a subscriber to sign up for YouTube Premium, you will get a cut of a viewer’s monthly membership fee when they watch your videos. If your subscribers are loyal and watch your videos regularly, encouraging them to become YouTube Premium members could put more money in your pocket.

Note: YouTube Premium members don’t see ads. If your viewers are increasingly Premium members, your ad revenue may go down.

Recommended: How to Save Money on Streaming Services

8. Crowdfunding

Here’s another way that many YouTube creators make money: by crowdfunding. What is crowdfunding? It’s a process by which many people contribute small amounts of money, often to help an entrepreneur reach a particular business goal. Patreon is a popular choice for YouTubers, though there are plenty of crowdfunding sites to use. If you have loyal viewers who are willing to donate toward a specific goal or project, crowdfunding could be lucrative for you.

9. Using Affiliate Links in the Description

Links in video descriptions don’t just have to go to your own site. You can also add affiliate links to relevant products. For example, if your video talks about the 10 best ways to save money on a vacation, you can include affiliate links to any products or services in the description. For every viewer who clicks the link and purchases the item, you’ll earn a commission.

10. Getting Brand Sponsorships

YouTubers may also work directly with brand sponsors. For example, a recipe video for a dessert may be sponsored by a specific brand of cake mix. The YouTuber will mention the cake mix directly in the video and may even offer a code to get a discount on the product, and the brand will pay the YouTuber for the exposure.

It’s a good idea to thoroughly vet a sponsor to ensure their brand aligns with your values — and makes sense alongside your video content. Always be transparent with viewers by letting them know in the video and the description that this is a paid sponsorship.

Recommended: 13 Online Shopping Trends

11. Publishing Product Reviews

Similarly, YouTubers may review a specific product in a video. In these instances, the brand may specify talking points for the reviewer to discuss. These kinds of videos are common in the beauty, health, and fitness industries. Proceed carefully, though; they may be off-putting to viewers who view the content as inauthentic.

12. Licensing Content to the Media

If one of your videos goes viral, news outlets may want to report on it and show it to their audiences. Legally, they cannot do this without paying you. Thus, media companies often approach YouTube content creators to license their content.

Just make sure your contact info is clear on your channel so that members of the media know how to find you. You could profit from this as another way to earn money off YouTube.

Tips for Starting Your Own YouTube Channel

Ready to start making money on YouTube? Here are a few tips for starting a YouTube channel:

•   Follow YouTube’s guidelines and best practices for setting up an account. YouTube will walk you through all the major steps so you don’t miss anything. You can also search the web for tips on optimizing your channel as well.

•   Think about your target audience. Creating content for the sake of creating content may be fun for you. However, if you want to make money, you should focus on content that your target audience actually wants.

•   Invest in the right equipment. Depending on the level of quality you’re aiming for, you may need to invest in high-quality light equipment, an external microphone, a video camera, and video editing software.

•   Know how to optimize your videos. There’s a science to YouTube. Research everything from writing strong video titles and descriptions to popular video trends to creating click-worthy thumbnails to optimizing videos for search.

•   Don’t quit your day job just yet. YouTube has 51 million channels, but less than 1% of those have 100,000 or more subscribers. Subscribers will be key to your success. If you can, build up your channel and subscribers while relying on income from another avenue — until you’re confident you can make the leap.

Recommended: Tips for Spending Money Wisely

The Takeaway

YouTube is a source of entertainment for viewers, but it also can create real revenue opportunities to content creators. There are plenty of ways to make money on YouTube, but it requires hard work, dedication, fresh ideas, and a bit of luck.

3 Money Tips

1.    If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

2.    If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

3.    If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

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

FAQ

How many people make money on YouTube?

In October 2021, YouTube released a report stating that 394,000 people in the U.S. alone were working (at least) a traditional 40-hour work week to generate video content for YouTube. But even more people could be making passive income off a few videos on YouTube, even if they have other full-time jobs.

How many people are on YouTube?

YouTube has more than 51 million channels with more than 2 billion monthly active users consuming content. In fact, YouTube is the second largest search engine in the world behind Google; the video search engine generates more search queries than Yahoo, Bing, Ask, and AOL combined.

On average, how much do YouTubers make per year?

With AdSense, YouTube content creators can expect to make between $0.01 and $0.03 per ad view; the average content creator earns $18 for every 1,000 ad views and $3 to $5 per 1,000 video views. Calculating an annual salary largely depends on how many views a content creator can amass.

For YouTubers with at least one million subscribers, the average salary is $60,000. But only 29,000 YouTube channels actually have more than one million subscribers.

How can you make money on YouTube without making videos?

Though it’s technically possible to make money on YouTube without making videos, it may be a much more challenging path to financial success. However, you might be able to generate revenue on a YouTube channel by reposting reels or TikToks as YouTube Shorts, uploading your Twitch streams or Instagram Lives to the YouTube platform, or even transforming an existing webinar or slideshow presentation to a video format on YouTube.

In all of these cases, you’re still technically creating video content — but you’re using content optimized for another platform and recycled for YouTube, so you may be less successful.

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Photo credit: iStock/mapodile

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.

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

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

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

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

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

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

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

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.

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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It’s the most wonderful time of the year. It’s also the time when Americans tend to go on a shopping spree. The average person spends more than $900 on holiday gifts, according to the latest research. And that’s before factoring in entertainment, food, or travel costs, or the higher inflation rate, which means your dollars don’t go as far as they used to.

Fortunately, it is possible to have a festive season without blowing your budget and starting the New Year in debt. Try the holiday budgeting tips below to help you celebrate the holidays affordably.

20 Holiday Savings Ideas

It is possible to enjoy the holidays on a budget. In fact, you may have even more to celebrate since you won’t be starting the New Year in debt. As you start making your lists for holiday gifts and activities to do, consider these clever ways to avoid overspending and still have fun this season.

1. Create a Holiday Budget

Before you start your holiday shopping, make a budget for gifts, decorations, and experiences. This will allow you to prioritize your spending in advance and identify where you can make cuts.

As a bonus, following a budget can be one way to help achieve financial security, so this could be a good practice to continue after the holidays as well.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

2. Use the Envelope Method

By making purchases with cash instead of credit during the holidays, you could end up spending more thoughtfully. Try the cash envelope system to help stick to your holidays on a budget. To do it, designate a few different envelopes for spending categories like holiday meals, decorations, and experiences, and then put cash for each into the envelopes. When you run out of money, it means you can’t spend any in that category (or you’ll have to dip into the budget for another category).

3. Host a Potluck

Hosting a gathering at your place and asking your friends and family members to bring food to the holiday meal is a good way to cut costs on your grocery bill. It’s also less stressful for you. Just make sure that you ask people ahead of time what they plan to bring so that you have enough different kinds of dishes and options for everyone.

4. Visit a Museum for Free to See the Holiday Decorations

Another holiday budgeting tip: Check out your local museum when there’s no admission fee (many cultural institutions offer a monthly or weekly date) as a fun thing to do for free. The holiday decorations will likely be up, and there may even be an exhibition of holiday ornaments or trees. It can get your seasonal spirit soaring at no cost.

Recommended: 23 Tips on Saving Money Daily

5. Take a Tour of Your Town’s Christmas Lights

There may be an area near you that’s known for looking spectacular at the holidays. Or perhaps you just drive around until you find some fun Grinch inflatables. Whatever the case, hop in the car with a friend or your family and tour the local lights and decor for a festive, free night out.

6. Hold a Cookie Swap

Instead of doing a Secret Santa gift exchange with presents, get together some friends, colleagues, or neighbors and do a cookie swap instead. It’s simple and fun: Everyone bakes a different kind of treat and then shares them, so that each guest goes home with an assortment of sweets. Just make sure each person is making a different kind of cookie so you don’t end up with duplicates.

7. Go Ice-Skating

Local ice rinks typically offer an affordable and fun way to get some exercise, along with helping to put you in the holiday spirit. It can be a great after-work outing with friends or colleagues or a family activity. You can all celebrate (and warm up) with hot chocolate afterward.

8. Head to the Dollar Store

Here’s one secret to not paying full price: Go where the discounts are. The dollar store is full of inexpensive holiday decorations as well as goodies you can put into gift bags or stuff into stockings. You can find low-cost ornaments, lights, balloons, and more to make your home more festive for the season.

9. Give the Gift of Holiday Playlists

A custom playlist is a thoughtful gift for friends and family, and it’s another way of budgeting for the holidays. And now that most music is available online, making a playlist is easier than ever. Just create a playlist on Spotify or another platform, name it, and then share the link. The recipients will appreciate the tunes!

10. Check Out Your Town’s Calendar

Your town likely hosts lots of events you can participate in during the holidays. Search for Christmas tree lightings, concerts, parades, and outdoor movie nights, which are usually free or low cost.

11. Volunteer at a Soup Kitchen

What better way to celebrate the holidays than to give back? Look for local opportunities to volunteer at a soup kitchen or local animal shelter, for instance. Your community will benefit from your kindness, and you’ll feel great for volunteering.

12. Donate Toys to Families in Need

Another way you can give back — and get the entire family involved — is to donate toys your kids no longer use to children and families in need. Search for local toy drives happening in your community to find the best place to donate them to.

13. Get Friends Together to Regift

Here’s another alternative to a Secret Santa get-together: Host a regifting party with you pals. Everyone brings a gift they received but didn’t like or use, and then swaps them. After all, one person’s trash is another’s treasure.

14. Host a Game Night

Have some board games in your closet? Invite over friends and neighbors, and host a game night. Buy some snacks like popcorn, chips, and pretzels, and serve some beverages like soda, water, beer, or wine to stay on budget.

15. Use Your Credit Card Points

If you have credit card points racked up, the holiday season can be a good time to use these rewards to purchase gifts as well as book hotels and flights at a discount.

16. Make Your Own Decorations

If you log onto Pinterest, you’ll find a number of DIY holiday decorations you can make yourself for a fraction of the price of store-bought. For instance, you could create a wreath out of cranberries or string up popcorn on your Christmas tree.

If you have a natural area nearby where pinecones are abundant and yours for the taking, consider a winter walk to gather some. You’ll get some fresh air and exercise, plus these and any pine boughs on the ground can make a festive seasonal display at home.

17. Get Creative with Gift Wrap

Rather than buying expensive wrapping paper and ribbons, find some low- or no-cost ways to make your gifts look great. For example, you could use craft paper that you decorate with a few colorful flourishes with a marker. Yarn or twine can work well in place of ribbon and save you money.

18. Make Some of Your Gifts

You can construct some great gifts at home without having to spend much on materials — and at the same time, get the satisfaction of practicing a more sustainable way to shop. For example, you could make a family cookbook with treasured recipes and stories about the person they came from. If you sew or knit, you could whip up items like scarves or tote bags, and if you’re a whiz in the kitchen, you could make jams and jellies, and more.

19. Save Your Shopping for the Biggest Sale Days

Black Friday and Cyber Monday are great times to save on certain items. The key is knowing in advance what price actually constitutes a deal. Many stores advertise their upcoming sales around this time of year, so you should have plenty of time to research and comparison-shop.

20. Avoid Last-Minute Purchases

If you put off shopping until the last minute, you’re much more likely to blow your budget. Schedule time to shop before the holiday season is in full swing to help you avoid the impulsive overspending trap.

The Takeaway

The holidays don’t have to be expensive for you and your family to enjoy them. Focus on spending time with loved ones, investing in your community, and exploring your DIY side to get the most out of the season while spending the least.

It can also be helpful to start saving up money ahead of time. You could designate a certain bank account for the holidays, for instance, and contribute a little bit to it each week.

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

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

FAQ

How much does the average person spend during the holidays?

The average person spends more than $900 on gifts alone, according to the latest research. That doesn’t include decorations, holiday entertainment, or travel.

Is it possible to celebrate the holidays on a tight budget?

Yes! There are many ways to celebrate the holidays without spending much money. For instance, you can make gifts and decorations yourself. Rather than buying and cooking an elaborate holiday dinner, you could host a potluck and ask each guest to bring a dish. And you can take advantage of no-cost seasonal activities like free nights at a local museum, holiday parades, and outdoor movie nights in your town.

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Photo credit: iStock/Tijana Simic

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.

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.

4.60% APY
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

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

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

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

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

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

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Thanksgiving is a great time to gather with loved ones, but it can certainly come with a steep price tag. Whether you’re hosting family at your place or flying home for the weekend, you may be concerned about costs — especially this year. Though inflation is slowing, many consumer’s budgets are already stretched, and costs for food and travel remain stubbornly high.

Fortunately, you don’t have to go into debt to have a memorable holiday and enjoy a delicious spread. We’ve got 23 ways to keep your Thanksgiving costs under control and still enjoy an incredible meal surrounded by your favorite people.

23 Ways to Save Money on Thanksgiving

Thanksgiving is often the kickoff to the holiday — a.k.a. spending — season. But don’t stress. Below are some simple strategies for doing Thanksgiving inexpensively this year. Bonus: These tips can also help you save time — and stress.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

1. Making a Budget

Whatever your holiday plans, it can be a wise idea to make a simple budget. Come up with a total amount you can afford to spend on Thanksgiving. You can then make a list of expected expenses, and determine how much you can realistically spend on each item.

Recommended: Building a Line Item Budget

2. Stocking Up as Stuff Goes on Sale

Throughout November, stores typically have different Thanksgiving dinner items on sale. Grabbing nonperishables whenever you see them on discount can save a bundle, and also help spread out the cost of the meal.

3. Making It a Potluck

Whether you’re having family over or hosting your first friendsgiving, you can make Thanksgiving inexpensive by asking your guests to each contribute a dish. You can coordinate who is bringing what in advance to make sure there are no overlaps or gaps.

4. Collecting Coupons

Before heading out to the grocery store, you may want to check out coupon websites like Coupons.com , LOZO , and CouponMom to find deals on the items on your shopping list. It’s also worth checking manufacturer’s websites, such as Butterball and General Mills, for coupons and seasonal promos.

Many supermarkets also have apps that offer coupons and deals. Sometimes you can get a reward just for signing up.

5. Hitting More Than One Store

Going to just one supermarket is obviously more convenient. But if you check the circulars, you may see different items on sale at different stores. Going to a couple of different grocery stores could lead to significant savings.

Recommended: 31 Tips for Cutting Your Grocery Bill

6. Skimping on (or Skipping) Appetizers

When hosting, you may be tempted to wow your guests right off the bat with a beautiful charcuterie board and other special hors d’oeuvres. In a word: Don’t. It’s expensive, and it’ll just dampen appetites for the main event.

7. Buying a Store-Brand Frozen Turkey

Typically, a turkey makes up a big part of your budget for the Thanksgiving meal. Some good news: According to the American Farm Bureau Federation, the cost of purchasing a turkey may be lower this Thanksgiving, due to a drop in avian flu cases and a recovery of the turkey population in the U.S. To save even more on the centerpiece of your meal, consider going with a store-brand frozen bird, rather than a fresh one.

Recommended: 41 Budget-Friendly Ways to Celebrate the Holidays

8. Splitting the Costs

You may want to consider teaming up with your bff, a sibling, or another family member to co-host this year’s gathering, even if the festivities will take place at your place. That way you can split all of the costs, rather than foot the entire bill.

9. Buying Basics in Bulk

Buying staples like flour, potatoes, eggs, cream, and butter from a warehouse store like Costco or Sam’s Club can help you spend a lot less on food, as long as you’re not buying more than you need or will use up after Thanksgiving.

Recommended: How to Buy in Bulk: Beginners Guide

10. Asking Guests to BYOB

Wine, beer, and other alcohol can add up quickly. One easy way to save money is to ask your guests to bring their favorite beverage. That way, everyone will get to sip something they love, and you won’t have to shell out all that extra money.

11. Sticking With Seasonal Produce

Vegetables that are in season in November, such as sweet potatoes, squash, Brussels sprouts, and white potatoes, will typically cost a lot less than out-of-season picks, such as corn, asparagus, and green beans.

12. Opting For Frozen Veggies

If you want to use veggies that aren’t in season, you may want to choose the frozen versions, which are generally much cheaper than fresh but are still likely to work well in your holiday recipes.

13. Baking Your Own Bread

While it may sound like more trouble than it’s worth, baking bread can be fun, and it typically involves spending a lot less than buying rolls or loaves at a bakery. After all, many recipes require just flour, yeast, water, and maybe a dash of salt and/or sugar. You can also make bread ahead of time and stick it in the freezer until the big day.

14. Going Simple With Sides

It can be tempting to try a new gourmet recipe you saw online or in your favorite food magazine, but fancy recipes often require specialty ingredients — and can end up costing a lot to make.

Remember, too, that with everything on the plate, including cranberry sauce and gravy, chances are your guests won’t miss that “spicy stuffing with chorizo and chiles” you considered making, but wisely opted not to.

15. Getting a Bigger Turkey Than You Need

Yes, this sounds like a way to increase costs. Going with a larger bird, however, can pay off by giving you several additional meals, like turkey sandwiches and turkey pot pies, you can make later without going back to the store or spending another dime.

16. Considering Pre-Made Dishes

Sometimes store-made dishes and desserts can actually be cheaper than buying all of the ingredients and making these things yourself. It can be worth doing some quick math at the store. This move can also save you time as well as stress.

17. Going DIY with Decor

A fun way to save money on Thanksgiving is to recruit the kids in the family to create your decorations. They could collect and paint pine cones, create cut-out turkeys (tracing their hands as a template), or make a craft paper tablecloth where everyone can write or draw what they are thankful for.

18. Handing the Reins to Someone Else

Hosting can be fun and rewarding, but if you need a reprieve from the work — and expense — you may want to see if someone else wants to step up this year. You can offer to bring your famous balsamic roasted Brussels sprouts and smashed potatoes to make the host’s job easier.

19. Forgoing Flowers

Yes, stores are filled with pretty arrangements of flowers in shades of red, orange, and yellow. And yes, they make a table extra festive. But you’ll save a chunk of change if you don’t purchase them. After all, your table is likely to be packed with dishes to dig into; you don’t really need a bouquet to fill any empty space.

20. Volunteering for the Holiday

Helping out at a local soup kitchen can be a great way to get into the holiday spirit and have a chance to focus on giving back, rather than spending.

21. Using Up Airline Points

If you need to travel by plane over Thanksgiving, you may want to consider using any points you’ve racked up with the airlines or on your credit card to score a free or discounted ticket.

Recommended: Ways to Be a Frugal Traveler

22. Asking for Travel Discounts

Whether you’re renting a car or staying in a hotel over the holiday, it can be a good idea to ask if you are eligible for any discounts when you book. You may be able to score a lower price if you’re a AAA member, a student, a resident of the state, a member of the military, or over age 55.

23. Checking Warehouse Clubs for Travel Deals

Before you book any Thanksgiving travel, you may want to check for deals offered by your local warehouse club. If you are a member, you may be able to access discounts on hotels, rental cars, vacation packages, and more.

💡 Quick Tip: Want a simple way to save more each month? Grow your personal savings by opening an online savings account. SoFi offers online savings accounts with no account fees. Open your savings account today!

TheTakeaway

You can enjoy Thanksgiving (and the soon-to-follow December holidays) without running up expensive credit card debt that you may struggle to pay back.

One great way to keep your costs under control is to set up a simple holiday budget. This can help you determine how much you can spend on Thanksgiving and still have enough leftover to enjoy the rest of the holiday season.

Another smart move is to set up a high-yield savings account designated for the holidays and to start saving up in advance. (Note: Some banks actually allow you to subdivide one savings account into sub-accounts to help you save for different goals). Good news for savers: The Federal Reserve’s rate hikes throughout 2022 and 2023 have translated to higher rates on top-yielding savings accounts.

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Photo credit: iStock/GMVozd

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

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

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

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

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

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

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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There is a sinking feeling in your gut that comes with credit card debt, especially when it starts to feel unmanageable. While negotiating a credit card settlement might not sound like a fun solution, there are scenarios when it may make sense. Let’s dive in.

The Difference Between Secured and Unsecured Debt

First, let’s talk about the type of debt a credit card typically is. When a credit card company issues a credit card, it’s taking a big chance on getting its money back, plus interest. It’s more than likely that the credit card you have is considered “unsecured.”

All that means is that it isn’t connected to any of your assets that a credit card company can seize in the event that you default on your payments. Essentially, the credit card company is taking your word for it that you are going to come through with the monthly payments.

Secured debt works a bit differently. They’re backed by an asset, like your car or home. If you default on a secured debt, your lender could seize the asset and sell it to pay off your debt. Mortgages and auto loans are two common types of secured debt.


💡 Quick Tip: With lower fixed interest rates on loans of $5K to $100K, a SoFi personal loan for credit card debt can substantially decrease your monthly bills.

Credit Card Debt Negotiation Steps

The process of negotiating credit card debt usually begins when you have multiple late or skipped payments — not just one. A good first step is to find out exactly how much you owe, and then research the different options that may be available to you. Examples include a payment plan, an increase in loan terms or lowered interest rates.

Once you have that information, you’re ready to negotiate. You can start by calling your credit card company and asking for the debt settlement department. Or, you can send a note by email or regular mail.

You may have to go through a number of customer service reps and managers before striking a deal, but taking the initiative can show creditors that you are handling the situation honestly and doing what you need to do.

When you do reach an agreement, be sure to get the agreed-upon terms in writing.

Types of Credit Card Debt Settlements

Lump Sum Settlement

This type of agreement is perhaps the most obvious option. Essentially, it involves paying cash and instantly getting out of credit card debt. With a lump sum settlement, you pay an agreed-upon amount, and then get forgiveness for the rest of the debt you owe.

There is no guarantee as to what lump sum the credit card company might go for, but being open and upfront about your situation could help your cause.

Workout Agreement

This type of debt settlement offers a degree of flexibility. You may be able negotiate a lower interest rate or waive interest for a certain period of time. Or, you can talk to your credit card issuer about reducing your minimum payment or waiving late fees.

Hardship Agreement

Also known as a forbearance program, this type of agreement could be a good option to pursue if your financial issues are temporary, such as the loss of a job.

Different options are usually offered in a hardship agreement. Examples include lowering interest rate, removing late fees, reducing minimum payment, or even skipping a few payments.

Why a Credit Card Settlement May Not Be Your Best Option

Watching your credit card balance grow each month can be scary. Depending on your circumstances, a settlement may be the best solution for you.

However, it’s not without its drawbacks. For starters, a settlement may result in your credit card privileges being cut off and your account frozen until a settlement agreement is reached between you and the credit card company.

Your credit score could take a hit, too. This is because your debt obligations are reported to the credit bureaus on a monthly basis. If you aren’t making your payments in full, this will be noted by the credit bureaus.

That said, by negotiating a credit card settlement, you may be able to avoid bankruptcy and give the credit card company a chance to recoup some of its losses. This could stand in your favor when it comes to rebuilding your credit and getting solvent again.

Solutions Beyond Credit Card Debt Settlements

Personal Loan

Consolidating all of your high-interest credit cards into one low-interest unsecured personal loan with a fixed monthly payment can help you get on a path to pay off the credit card debt. Keep in mind that getting a personal loan still means managing monthly debt payments. It requires the borrower to diligently pay off the loan without missing payments on a set schedule, with a firm end date.

For this reason, a personal loan is known as closed-end credit. A credit card, on the other hand, is considered open-end credit, because it allows you to continue to charge debt (up to the credit limit) on a rolling basis, with no payoff date to work towards.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

Transferring Balances

Essentially, a balance transfer is paying one credit card off with another. Most credit cards won’t let you use another card to make your payments, especially if it’s from the same lender. If your credit is in good shape, you can apply for a balance transfer credit card to pay down debt without high interest charges.

Many balance transfer credit cards offer an introductory 0% APR, but keep in mind that a sweet deal like that usually only lasts about six to 18 months. After that introductory rate expires, the interest rate can jump back to a scary level — and other terms, conditions, and balance transfer fees may also apply.

Credit Consumer Counseling Services

Credit consumer counseling services often take a more holistic approach to debt management. You’ll work with a trained credit counselor to develop a plan to manage your debt. Typically, the counselor doesn’t negotiate a reduction in debts owed. However, they may be able to have your loan terms increased or interest rates lowered, which would lower your monthly payments.

A credit counselor can also help you create a budget, offer guidance on your money and debts, provide workshops or educational materials, and more.

Many credit counseling agencies are nonprofit and offer counseling services for free or at a low cost. You can search this list of nonprofit agencies that have been certified by the Justice Department.

The Takeaway

When credit card debt starts to become unmanageable, negotiating a credit card debt settlement may be an option to consider. There are different types of settlement options to consider. Understanding what’s available to you — and what makes sense for your financial situation and needs — can help you make an informed decision. If a settlement isn’t right for you, there are other solutions, such as a personal loan or credit counseling services, that may be a better fit.

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

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

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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

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.

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

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Life can occasionally throw you — and your finances — a curveball. During those times, it might be too much of a stretch to make a payment on a personal loan. But what are the consequences of missing a loan payment?

What can happen if you miss one payment, of course, is quite different from what can happen if you miss several, so let’s take a look at possible ramifications.

What Does It Mean to Default on a Personal Loan?

Just as with a mortgage or student loans, defaulting on a personal loan means you’ve stopped making payments according to the loan’s terms. You might be just one payment behind, or you may have missed a few. The point at which delinquency becomes default with a personal loan — and the consequences — may vary depending on the type of loan you have, the lender, and the loan agreement you signed.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

How Does Loan Default Work?

Even if you miss just one payment on a personal loan, you might be charged a late fee. Your loan agreement should have information about when this penalty fee kicks in — it might be one day or a couple of weeks — and whether it will be a flat fee or a percentage of your monthly payment.

The agreement also should tell you when the lender will get more serious about collecting its money. Because the collections process can be costly for lenders, it might be a month or more before yours determines your loan is in default. But at some point, you can expect the lender to take action to recover what they’re owed.

What Are the Consequences of Defaulting on a Personal Loan?

Besides those nasty late fees, which can pile up fast, and the increasing stress of fretting about a debt, here are some other significant consequences to consider:

Damage to Your Credit

Lenders typically report missing payments to the credit bureaus when borrowers are more than 30 days late. This means your delinquency will likely show up on your credit reports and could cause your credit scores to go down. Even if you catch up down the road, those late payments can stay on your credit reports for up to seven years.

If you actually default and the debt is sold to a collection agency, it could then show up as a separate account on your credit reports and do even more damage to your credit scores.

Though you may not feel the effects of a lower credit score immediately, it could become a problem the next time you apply for new credit — whether that’s for a credit card, car loan, or mortgage loan. It could even be an issue when you try to rent an apartment or need to open new accounts with your local utilities.

Sometimes, a lender may still approve a new loan for borrowers with substandard credit scores, but it might be at a higher interest rate. This means you’d pay back more interest over the life of the loan, which could set you back even further as you work toward financial wellness.

Dealing with Debt Collectors

If you have a secured personal loan, the lender may decide to seize the collateral you put up when you got the loan (your car, personal savings, or some other asset). If it’s an unsecured personal loan, the lender could come looking for payment, either by working through its in-house collection department or by turning your debt over to a third-party collection agency.

Even under the best conditions, dealing with a debt collector can be unpleasant, so it’s best to avoid getting to that stage if you can. But if you fall far enough behind to be contacted by a debt collector, you should be prepared for some aggressive behavior on the part of the collection agency. These agents may have monthly goals they must meet, and they could be hoping you’ll pay up just to make them go away.

There are consumer protections in place through the Fair Debt Collection Practices Act that clarify how far third-party debt collectors can go in trying to recover a debt. There are limits, for example, on when and how often a debt collector can call someone. And debt collectors aren’t allowed to use obscene or threatening language. If you feel a debt collector has gone too far, you can file a complaint with the Consumer Financial Protection Bureau (CFPB).

You Could Be Sued

If at some point the lender or collection agency decides you simply aren’t going to repay the money you owe on a personal loan, you eventually could end up in court. And if the judgment goes against you, the consequences could be wage garnishment or, possibly, the court could place a lien on your property.

The thought of going to court may be intimidating, but failing to appear at a hearing can end up in an automatic judgment against you. It’s important to show up and to be prepared to state your case.

A Cosigner Could Be Affected

If you have a cosigner or co-applicant on your personal loan, they, too, could be affected if you default.

When someone cosigns on a loan with you, it means that person is equally responsible for paying back the amount you borrowed. So if a parent or grandparent cosigned on your personal loan to help you qualify, and the loan goes into default, the lender — and debt collectors — may contact both you and your loved one about making payments. And your cosigner’s credit score also could take a hit.

Is There a Way to Avoid Defaulting on a Loan?

If you’re worried about making payments and you think you’re getting close to defaulting — but you aren’t there yet — there may be some things you can do to try to avoid it.

Reassessing Your Budget

Could you maybe squeak by and meet all your monthly obligations if you temporarily eliminated some expenses? Perhaps you could put off buying a new car for a bit longer than planned. Or you might be able to cut down on some discretionary expenses, such as dining out and/or subscription services.

This process may be a bit painful, but you can always revisit your budget when you get on track financially. And you may even find there are things you don’t miss at all.

Talking to Your Lender

If you’re open about your financial issues, your lender may be willing to work out a modified payment plan that could help you avoid default. Some lenders offer short-term deferment plans that allow borrowers to take a temporary break from monthly payments if they agree to a longer loan term.

You won’t be the first person who’s contacted them to say, “I can’t pay my personal loan.” The lender likely has a few options to consider — especially if you haven’t waited too long. The important thing here is to be clear on how the new payment plan might affect the big picture. Some questions to ask the lender might include: “Will this change increase the overall cost of the loan?” and “What will the change do to my credit scores?”

Getting a New Personal Loan

If your credit is still in good shape, you could decide to get proactive by looking into refinancing the old personal loan with a new personal loan that has terms that are more manageable with your current financial situation. However, be sure to factor in any fees (such as origination fees on the new loan and/or a prepayment penalty on the old loan) to make sure the refinance will save you money. You’ll also want to keep in mind that extending the term of the term of your loan can increase the cost of the loan over time.

You can use an online personal loan calculator to see how much interest you might be able to save by paying off your existing debt with a loan.

Or you might consider consolidating the old loan and other debts into one loan with a more manageable payment. This strategy would be part of an overall plan to get on firmer financial footing, of course. Otherwise, you could end up in trouble all over again.

But if your income is higher now and/or your credit scores are stronger than they were when you got the original personal loan, you could potentially improve your interest rate or other loan terms. (Requirements vary by lender.) Or you might be able to get a fresh start with a longer loan term that could potentially lower your payments.

If you decide a new personal loan is right for your needs, the next step is to choose the right lender for you. Some questions to ask lenders might include:

•   Can I borrow enough for what I need?

•   What is the best interest rate I can get?

•   Can I get a better rate if I sign up for automatic payments?

•   Do you charge any loan fees or penalties?

•   What happens if I can’t pay my personal loan because I lost my job? Do you offer unemployment protection?

💡 Quick Tip: With average interest rates lower than credit cards, a personal loan for credit card debt can substantially decrease your monthly bills.

Is There a Way Out of Personal Loan Default?

Even if it’s too late to avoid default, there are steps you may be able to take to help yourself get back on track.
After carefully evaluating the situation, you may decide you want to propose a repayment plan or lump-sum settlement to the lender or collection agency. If so, the CFPB recommends being realistic about what you can afford, so you can stick to the plan.

If you need help figuring out how to make it work, the CFPB says, consulting with a credit counselor may help. These trained professionals can work with you to come up with a debt management plan. While a counselor usually doesn’t negotiate a reduction in the debts you owe, they might be able to get your interest rates lowered or have loan terms increased, which could lower your monthly payments.

What’s more, a credit counselor can also help you create a budget, advise you on managing your debts and money, and may even often offer free financial education workshops and resources.

But consumers should be cautious about companies that claim they can renegotiate, settle, or change the terms of your debt. The CFPB warns that some companies promise more than they can deliver. If you’re interested in exploring credit counseling, a good place to start is browsing this list“>this list of nonprofit agencies that have been certified by the Justice Department.

Finally, as you make your way back to financial wellness, it can be a good idea to keep an eye on two things:

1. The Statute of Limitations

For most states, the statute of limitations — the period during which you can be sued to recover your debt — is about three to six years. If you haven’t made a payment for close to that amount of time — or longer — you may want to consult a debt attorney to determine your next steps. (Low-income borrowers may even be able to get free legal help.)

2. Your Credit Score

Tracking your credit reports — and seeing first-hand what helps or hurts your credit scores — could provide extra incentive to keep working toward a healthier financial future. You can use a credit monitoring service to stay up to date, or you could take a DIY approach and check your credit reports yourself. Every U.S. consumer is entitled to a yearly free credit report available at annualcreditreport.com, which is a federally authorized source.

The Takeaway

If your debt seems daunting right now, and you’re struggling to make payments, some proactive planning could help you avoid falling so far behind that you default on your personal loan. That plan may include talking to your current lender about modified payment terms — or it might be time to consider a new personal loan to consolidate high-interest debt.

The good news is there’s help out there. And the sooner you act, the more options you may have to protect your credit and stay away from the serious consequences of defaulting.

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

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

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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

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.

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

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