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With so many options available, choosing a credit card isn’t as simple as signing up for whichever card happens to be popular at the moment. Instead, you should consider things like your credit score, preferred features, and spending habits.

After all, there are many different types of credit cards meant for different purposes. Making the best choice is about not only knowing your approval odds, but also how you intend to use the card after signing up. Using a step-by-step approach for how to choose a credit card will help you make the right decision for your situation.

Where To Begin When Choosing a Credit Card

Choosing a credit card is a matter of understanding which type of credit card works best for you. You’ll want to consider a number of factors, including:

•   Your credit score

•   How you plan to use your new credit card and which features you’ll need

•   How the card stacks up to other options

•   The card’s interest rates and fees

•   Which rewards you want

•   Any sign-up bonuses offered

Read on to learn more about each of these items and what specifically to look for.

Checking Your Credit Score

Checking your credit score should be one of the first steps you take before applying for a new credit card. One of the best ways to know your approval odds is to check your score.

One way to do so is to use AnnualCreditReport.com . This website allows you to request a copy of your credit report from each of the major credit reporting bureaus: Experian^®, Equifax^®, and TransUnion^®. Federal law allows you to request one copy of your credit report from each reporting bureau per year.

However, you may want to check your credit score more often than once per year, especially if you are in the process of building your credit. Fortunately, several big banks allow you to check your FICO^® score — the most widely used credit score — on a monthly basis.

There are several credit scoring models available, but most lenders use FICO, so getting this score can be a good way to gauge your chance of approval. These checks won’t guarantee you’ll get approved for a credit card, but they can help you get a better sense of where you stand. Plus, pulling your credit report won’t hurt your credit score.

Identifying the Features You Need

There are many different types of credit cards, each of which has its own set of features. Identifying the features you need can help you find the right credit card, as how credit cards work varies depending on the type.

Credit Builder Credit Cards

Some credit cards are meant for those who are working on building their credit. This could include college students, those trying to repair their credit, or anyone with little to no credit history.

In those cases, you might need a secured credit card or a student credit card. Secured credit credit cards require a security deposit, usually around a couple or a few hundred dollars, that is fully refundable. Your credit limit is usually equal to your security deposit, so the card issuer has little risk of losing money. Student credit cards, on the other hand, are usually unsecured and may have special perks for students.

Here are some features to look for in credit builder credit cards:

•   No annual fee: If you are working to build your credit, annual fees could make things more difficult.

•   Credit limit increases: Credit limits often start low with these cards; some offer credit limit increases if you use your card responsibly.

•   Free credit score: Some credit builder cards offer free credit score monitoring to let you know where you stand.

Balance Transfer Credit Cards

Balance transfer credit cards are ideal for consolidating and paying off debt. Thus, the key with this type of card is finding one that keeps fees as low as possible:

•   0% introductory APR: Balance transfer credit cards may come with low or 0% balance transfer APR for a specified introductory period, sometimes lasting a year or more. Some even have a separate 0% APR introductory period for purchases. This can allow you to avoid paying much in interest for a certain period of time and instead put your money toward paying down the principal balance.

•   Balance transfer fees: These cards often charge separate balance transfer fees, which you should be aware of if you plan to transfer large balances.

Rewards Credit Cards

Credit card rules say that you shouldn’t get a card just for the points. However, rewards credit cards may come with a variety of benefits. These include cash back, points and miles, and various perks, such as rental car insurance and airport lounge access. You can redeem points and miles for statement credits, gift cards, flights, and hotels, so you’ll have to decide what’s most important to you.

Here are some rewards credit card features to consider:

•   Sign-up bonuses: Some rewards credit cards include sign-up bonuses that can be worth hundreds of dollars.

•   Low or no annual fee: While some of these credit cards have annual fees, not all of them do.

•   Rewards categories: Rewards credit cards generally let you earn a percentage of your purchases in cash back or points/miles. Some have higher earning rates for certain categories, such as groceries or travel. Look for one that earns a lot of points where you normally spend the most.

•   Other perks: These cards can come with a variety of other perks, from UberEats credits to free hotel nights. If you never travel, for example, you may not be interested in free hotel stays.

Narrowing Your Choices by Doing Research and Asking Questions

The key to how to pick a credit card is understanding how you want to use it. While some credit cards are more like generalists, doing many things somewhat well, others are niche cards that are great in certain scenarios. Consider what’s most important to you and how much you need certain features.

Once you’ve decided which type of credit card you want, the next step is to compare some of the best options. For instance, if you want a rewards credit card and don’t want to pay a high annual fee, look for no annual fee rewards credit cards. For balance transfer credit cards, you can look for ones with the lowest fees, including a lengthy 0% introductory APR. Also keep in mind you don’t need to rely on one card to meet all of your needs — here’s a primer on how many credit cards you should have.

Identify a handful of cards that look like good candidates based on your research. Once you have two to three cards that seem like the right fit, you might want to submit a prequalification form. This process will give you a hint about whether you might qualify — and it won’t affect your credit score. Prequalification doesn’t guarantee approval, but it will help you know where you stand.

Familiarizing Yourself With the Interest Fees and Rates

Having a basic understanding of interest rates and fees will help you avoid paying more than expected to use your new credit card.

Different types of credit cards tend to come with varying interest rates. For instance, the minimum annual percentage rate (APR) for travel cards tends to currently range between 18.24% and 29.99%. However, the maximum APR for these credit cards can be slightly lower than the maximum for 0% APR and low-interest credit cards.

Of course, fees also matter. Balance transfer cards might have a 0% introductory period, but a fee may apply every time you initiate a balance transfer. Depending on the card, other fees may be involved, such as late fees and penalties, annual fees, and foreign transaction fees. Be sure to review all relevant fees before signing up for and using a credit card.

Deciding Which Rewards You Want

You also may need to decide which type of rewards you’ll want to earn. There are a few different types of rewards that credit cards can offer:

•   Cash back: With a cash back rewards credit card, you will earn a percentage in cash on each eligible purchase you make with your card. You could get a flat rate across categories, or you may earn a higher rate in specific categories. Or you might see offers for unlimited cash back. If you want to earn rewards across spending categories and don’t want to worry about calculating and converting, cash back might be the right rewards option for you.

•   Points: Another way to earn credit card rewards is through points. You’ll earn a certain number of points for every dollar spent, with the rate and redemption options varying depending on the issuer. The perk of points is that you can redeem them in a number of different ways, including cash back, travel, charitable donations, statement credits, gift cards, and more.

•   Miles: If you’re a frequent flier, you might prefer earning airline miles. Credit cards that allow you to earn miles let you redeem your rewards for flights and other travel-related perks, such as hotel stays or access to airport lounges.

Looking at Sign-Up Bonuses

Some credit cards feature sign-up bonuses to attract new customers. Usually, you have to spend a certain amount in the first three or four months of opening the card. If you meet the minimum spending threshold within that time frame, you’ll receive cash, points, or miles as a reward. The trick is to ensure you can meet the spending threshold on time.

There can be a wide range of bonus amounts; for instance, the Chase Freedom® Student credit card has a $50 bonus for making a purchase in the three months. On the other end of the spectrum is the American Express Platinum Card, which at the time of writing offers 125,000 points after spending $8,000 in the first six months. Most sign-up bonuses, however, fall somewhere in between.

Choosing the Card With the Highest Overall Value

There are several credit cards available that offer similar benefits. In those cases, you will want to compare them directly to one another and find features that give one card the edge. Here are a few things to consider for each type of credit card:

Student and secured credit cards:

•   Credit limit increases: Some student credit cards will automatically increase your credit limit if your account remains in good standing.

•   Flexible credit lines: Some secured credit cards give you access to a larger credit line than your deposit.

0% introductory APR or balance transfer credit cards:

•   No late fees or penalties: Some credit cards waive these fees, which might be helpful when transferring balances.

•   Installment plans: Some balance transfer cards offer installment plans to help you repay your balance over time.

Rewards or travel credit cards:

•   Low spending threshold: Requirements to earn sign-up bonuses can vary; look for one that’s well within your budget.

•   Points transfer: Some travel credit cards let you transfer points to airlines or hotels, which can lead to better redemption rates in some cases.

How Your Credit Score Affects Your Chance of Approval

Your credit score is one of the biggest factors in determining whether you’re approved for a credit card. If you have poor or no credit, you probably won’t get approved for a card that requires very good to excellent credit, regardless of other factors, given what a credit card is and how the approval process works.

Luxury credit cards, for example, may require a credit score of 670 or higher. If your score is higher, you might be approved for one of these cards (though approval is not guaranteed). If your credit score is below 670, however, your approval odds will probably be quite low.

While a credit score and credit card offers are intertwined, that may not be the only factor a card issuer considers. Issuers might also look at things such as your employment status and income. This is one of the reasons that a good credit score doesn’t guarantee approval.

Still, a better credit score can help you secure the credit card you want. As such, you might consider taking steps to build your credit score before applying for a credit card, such as by making on-time payments or lowering your credit utilization ratio.

What Comes Next After Choosing a Credit Card?

If you’ve already submitted prequalification forms, you should have some idea about your approval odds for each card. As mentioned, those forms do not guarantee approval but can serve as a valuable guideline.

Once you have chosen a credit card, it’s time to apply. Some general steps are to:

1.    Visit the card issuer’s website and click apply.

2.    Fill in the required information.

3.    Submit your application.

In some cases, you may receive instant approval (or denial). In others, the card company will need more time to review your application. If approved, you can usually expect to receive your card in the mail in seven to 10 business days.

If you are denied, you can call the card’s reconsideration line and provide additional information. Perhaps you forgot some additional sources of income that could help your case. Anything that may help is worth mentioning.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

The Takeaway

Deciding which credit card is best for you can be a long and arduous process. However, once you have a better understanding of what you need, the process of choosing a credit card doesn’t have to be so complicated. Some credit cards are simply better than others, and picking them is a surprisingly easy choice after comparison shopping.

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

FAQ

How does your credit score determine the card to choose?

Your credit score is one of the most important factors in deciding which credit card to choose. For example, if your credit score is poor, you probably won’t be approved for a premium card with excellent rewards that requires good to excellent credit.

How do you choose a credit card for the first time?

In most cases, the best choice for your first card should have no annual fee. Some good choices are student credit cards (for students) or secured credit cards. These cards are ideal for building credit and often have low fees.

What is the most important factor when choosing a credit card?

The most important factor when choosing a credit card is probably how you intend to use it. For example, a premium credit card may offer excellent benefits for the frequent traveler, but someone who just wants to earn cash back on groceries may not benefit from travel perks.

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Photo credit: iStock/Eva-Katalin

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

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

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.

SOCC-Q224-1910756-V1

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When you open a new checking or savings account, some financial institutions require you to make a minimum opening deposit, which might be anywhere from $25 to $100. In some cases, you may also need to meet certain ongoing minimum balance requirements to avoid fees or qualify for a certain annual percentage yield (APY).

Fortunately, there are banks, credit unions, and other financial institutions that don’t require a minimum deposit so you can stash and spend your money even if you’re low on cash. Here are key things to know about minimum deposit and balance requirements for bank accounts.

What Is a Minimum Deposit?

A minimum deposit is the lowest amount of money you need to open a new bank account with a bank or credit union. It can also refer to the minimum balance you must maintain in order to receive certain perks or avoid fees.

Minimum deposits vary depending on the type of account and the financial institution. Some banks do not request a minimum deposit to open a basic checking or savings account, while others require between $25 and $100. Generally, higher minimum deposits are associated with premium services and higher APYs.

If you’re in the market for a bank account, it’s a good idea to check with the bank or credit union to determine whether an initial deposit is required, your options for depositing the funds, and if there are any ongoing balance requirements.

Types of Minimum Balance Requirements

When researching checking and savings accounts, keep in mind that there are typically two types of minimum balance requirements. Let’s clarify those terms, since they can sometimes be used interchangeably and cause confusion.

Minimum Opening Deposits

A minimum opening deposit is the amount of money required to activate a new account, such as a checking, savings, or money market account, or a certificate of deposit (CD). Generally, a money market account or CD will come with a higher opening deposit than a basic savings or checking account.

You can usually make a minimum opening deposit by transferring money from an account at another bank or from an account you already have at that same bank. You can also usually make an opening deposit using a check, money order, or debit card. Keep in mind you are not limited to making the minimum opening deposit — you can typically open a bank account with more than the required minimum.

There are some financial institutions that offer accounts with no minimum opening deposits. However, it’s important to read the fine print. In some cases, these accounts may require you to make a deposit within a certain timeframe (such as 60 days) in order to keep the account open.

Minimum Monthly Balance

A minimum monthly balance is the amount of money that must be maintained in the account each month to enjoy certain benefits or avoid fees. These minimums can range anywhere from $100 to $2,500, depending on the institution and type of account. If you opt for an account with a balance minimum, you may be able to set up alerts on your bank’s app to let you know when your funds are slipping below a certain threshold.

Minimum balance requirements can vary in their specifics, but typically fall into one of these three categories.

•   Minimum daily balance: This requirement means you need to maintain a minimum amount of money in your account each day to avoid fees or qualify for certain benefits, like earning interest.

•   Average minimum balance: Banks calculate this by adding up the balances in your account at the end of each day over a statement period, then dividing that total by the number of days in the period.

•   Minimum combined balance: This involves averaging the total amount of money you have across multiple accounts, such as a checking and a savings account, each month. This combined average must meet the minimum balance requirement to avoid fees or earn benefits.

How Do Minimum Deposits Work?

Minimum deposits work by setting a threshold that must be met to open or maintain a bank account. The minimum opening deposit is required to open a new account, while the minimum monthly balance must be maintained each month (or day) to avoid fees or earn a higher interest rate. It’s important to note that the minimum opening deposit is a one-time requirement, while the minimum monthly balance must be maintained on an ongoing basis.

In addition, some accounts may require a minimum monthly deposit (such as direct deposit of your paycheck) to qualify for certain account benefits, such as earning a higher APY or avoiding a monthly fee.

Real World Example of a Minimum Deposit

Let’s say you decide to open a savings account at XYZ bank. The bank has a $50 minimum deposit to open the account and to start earning interest, so you transfer $50 into the account from an account you have at another bank.

XYZ bank also requires you to maintain a monthly minimum balance of $250 to avoid a $3 service fee. You’re not a fan of fees, so you keep tabs on your account and make sure you always have at least $250 in the account. To help, you set up an automatic alert on your banking app to let you know when the account dips below $250 so you can top up the account and avoid fees.

What Happens If You Don’t Maintain a Minimum?

If you fail to maintain the minimum monthly balance required by your bank, you may be charged a fee, lose any interest you were set to earn that month, or forgo other perks. The specific consequences vary depending on the financial institution and the type of account.

The Takeaway

Minimum deposits are an important aspect of managing a bank account. When you open a new checking or savings account, you may need to make a certain initial deposit to activate the account. You may also be required to keep the balance in the account above a certain threshold in order to avoid a monthly service fee or earn a certain interest rate.

It’s important to be aware of the minimum deposit requirements for your bank account. This helps ensure that you get all the perks of your bank account, while avoiding any unexpected costs.

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

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

FAQ

What is a minimum opening balance and how much is it?

A minimum opening balance is the initial deposit required to open a bank account. This amount varies depending on the bank and the type of account. For example, some banks may require as little as $25 to open a basic savings account, while others may require several hundred dollars for a checking account that earns interest.

What is a minimum monthly deposit and how much is it?

A minimum monthly deposit is the amount of money you must deposit into your bank account each month to avoid fees or earn certain perks, like a higher interest rate. This requirement varies by bank and account type. Some banks may not have a minimum monthly deposit requirement, while others may require a certain amount, such as $500 or $1,000, to be deposited each month to avoid fees.

What bank has no minimum balance?

Several banks and credit unions offer accounts with no minimum balance requirement. These banks include Ally, NBKC, SoFi, Discover, Connexus Credit Union, Ally, Capital One, and Chime.

Why do banks require an initial deposit?

Banks require an initial deposit to open an account for several reasons. First, it helps ensure that the account is legitimate and that the customer is serious about opening and maintaining the account. Second, it helps cover the costs associated with opening the account, such as processing paperwork and issuing a debit card. Finally, it helps the bank establish a relationship with the customer, which can lead to additional business in the future.

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Photo credit: iStock/pinstock

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

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

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

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

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

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

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

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

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBK-Q224-1874405-V1

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When paying back your student loans, certain repayment strategies require a 10-day payoff letter. This is a document or statement that you can obtain through your original lender. It has the final loan amount needed to fully pay off your loan at a given time, and how to make the final payment and close the account.

Your 10-day payoff amount is typically more than just your current loan balance. For this reason, getting a 10-day loan payoff statement is the best way to find out how much you need to pay to fully satisfy the loan, including all accrued interest.

You typically need a 10-day payoff statement if you want to pay off your loan early or refinance your student loans. Here’s how to get it, what it contains, and other times when it might be required.

What Is a 10-Day Payoff for Student Loans?

Even if you understand the basics of student loans, you might not be clear on what a 10-day payoff letter is and why you would ever need one.

Used with many types of loans, a 10-day payoff statement tells you the amount you owe toward your loan in order for the loan to be closed and marked as “paid in full.”

A payoff statement is not the same thing at your current loan balance. Since interest is still charged on the loan in the days leading up to the actual payoff date, your lender will add 10 days’ worth of interest to your final payoff amount. Lenders can also calculate other time frames, like a 15- or 30-day payoff amount, if needed.

Depending on whether you have federal or private loans, your 10-day payoff letter might look visually different. Generally, it will contain your full name, student loan account number(s), outstanding balance, accrued interest, any fees, total payoff amount, a “good-through” or “good-until” date, and instructions on how to pay off your current loan.

The final payoff amount that’s listed includes interest for a 10-day period, and it might also include any unpaid fees. If your loan isn’t paid off in full by the “good-through date,” you’ll need to request another 10-day payoff from your current lender for the most accurate amount.

If after weighing the pros and cons of refinancing, you determine that a refinance will be to your advantage, you’ll likely need to get a 10-day payoff letter from your current lender or loan servicer.


💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing makes sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections.

When You Need a 10-Day Payoff Letter

Here’s a look at three reasons why you might need a loan payoff letter.

•   You’re paying off your loans: If you’re able to put a chunk of money toward student loans to close out your debt ahead of schedule, you’ll need a 10-day payoff letter to get your true final amount due. That way, you’ll be able to make a final payment that fully satisfies the loan.

•   You’re refinancing your student loans: If you opt for a student loan refinance, your refinance lender will likely require a 10-day payoff letter. This informs them of how much they need to send to your current lender, and by what date, to satisfy the debt.

•   You’re buying a home: Mortgage lenders might ask to see your 10-day loan payoff amount to accurately determine your debt-to-income (DTI) ratio. Your DTI informs lenders about whether you can realistically afford taking on a home loan.

How to Request a 10-Day Payoff Letter

Despite having access to your loan details through a monthly statement or your servicer’s website, your actual 10-day payoff amount is likely different from the current amount shown on your account.

Fortunately, accessing this information is relatively easy, whether you have federal or private student loans.

For Federal Student Loans

As a federal student loan borrower, your federal student loan account was assigned to one of five federal loan servicers. To find your servicer, simply log in to your StudentAid.gov account, and go to “My Loan Servicers” from your dashboard.

Once you know who your servicer is, you can contact them to request a 10-day payoff letter.

Servicer	Support Phone Number
Aidvantage	1(800) 722-1300
Edfinancial	1(855) 337-6884
ECSI	1(866) 313-3797
MOHELA	1(888) 866-4352
Nelnet	1(888) 486-4722

For Private Student Loans

To get a 10-day payoff letter for a private student loan, you’ll want to contact your current lender. Keep in mind that your private loan might have been sold to a new lender since you first accepted it.

If you’re unsure about who your lender is, you can request a copy of your credit report at annualcreditreport.com . Your credit report will list all of your past and present debt accounts, including private student loans, and the entity that owns the loan.

After identifying your lender, you can contact their borrower support phone number to get a 10-day payoff statement.

What Is the Loan Refi Timeline After a 10-day Payoff?

The way student loan refinancing works is that you take out a new loan (ideally with a lower rate and/or better terms) and use it to pay off your current student loan(s). This doesn’t happen right away, however. There is generally a 10 day pay-off process.

To make sure your new lender fully pays off your old loan (and you won’t need to make any further payments on that loan), you’ll need a 10-day payoff letter. Once you’ve obtained your 10-day payoff amount and provided the information to your new lender, you’ll want to be sure to sign your loan agreement on the same day.

Once you sign the agreement, here’s a general idea of what the 10-day refi timeline may look like:

•   Days 1 to 3: A three-day cooling-off period is required by law. During this time, your new lender cannot send your payoff check. This is just in case you change your mind about the refinance loan and exercise your right to cancel.

•   Day 4: The refinancing lender will send a payoff amount in one lump sum, either as a mailed check or electronically, to your current lender or servicer. Typically, you’ll receive a welcome packet from your new lender soon after that.

•   Day 10: Upon receiving the payoff amount in full, your current lender will mark the loan as “paid” and close it.

Your first payment on the new loan will likely be due 30 to 45 days after the date your refinance lender sent the payoff amount to your current lender.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

The Takeaway

A 10-day payoff letter tells exactly how much money you would need to pay immediately to fully satisfy your student loan debt. Refinance lenders usually require a payoff letter so they can fulfill the right payment amount on your behalf — no more, and no less, than your original lender requires to fully pay off your debt.

Knowing this final amount is also useful if you want to pay off your student loans ahead of schedule. You may also be required to submit a 10-day student loan payoff lender when you’re applying for a mortgage.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How do I get a 10-day payoff quote?

Depending on your lender, you may be able to request a 10-day payoff letter by signing into your account online. If not, you will need to call or email your current lender or loan servicer and request a 10-day payoff statement.

Why is my payoff quote so high?

Your 10-day student loan payoff amount is typically higher than your current principal balance due to added interest. Because interest is still charged on the loan in the days leading up to the actual pay-off date, your lender will include 10 days’ worth of interest to your final payoff amount.

What is on a 10-day loan payoff?

A 10-day loan payoff letter or statement will typically include:

•   Student loan account number(s)

•   Outstanding balance

•   Accrued interest

•   Any fees

•   Total payoff amount

•   A “good-through” date

•   Instructions on how to pay off your current loan

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Photo credit: iStock/andresr

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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.

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

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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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