SoFi

With enough money in savings, investors could live off of interest. How big of a nest egg is needed, and is it a good idea?

Read more

If you’re new to investing, you might ask, “What is an asset class?” Here’s an explainer—plus learn how this can help you diversify your portfolio.

Read more

In a rising interest rate climate, especially after historic lows, you may be more aware of purchase interest charges on your credit card statement. These charges are a wordy way of saying interest, which you owe when you don’t pay your credit card statement balance in full.

Americans pay about $120 billion per year in credit card interest and fees — about $1,000 per year for each household. Read on for more about credit card interest, including how it works and how to find your card’s interest rate.

What Is Credit Card Interest?

Credit card interest is what you’re charged by a credit card issuer when you don’t pay off your statement balance in full each month. Card issuers may charge different annual percentage rates (APRs) for different types of balances such as purchases, balance transfers, cash advances, and others. You may also be charged a penalty APR if you’re more than 60 days late with your payment.

An interest charge on purchases is the interest you are paying on the purchases you make with the credit card but don’t pay in full by the end of the billing cycle in which those purchases were made. The purchase interest charge is based on your credit card’s annual percentage rate (APR) and the total balance on that card — both of which can fluctuate.

Taking a closer look at your credit card balance and interest rate can help you figure out the best way to pay it off. Here’s some information about how purchase interest charges work and, in general, how interest works on a credit card.

Recommended: Average Credit Card Interest Rates

How Does Credit Card Interest Work?

Credit cards charge different APRs on purchases, cash advances, and balance transfers. The cardmember agreement that was included when you first received your credit card outlines the different APRs and how they’re charged. This information is also included in brief on each monthly billing statement, or you can contact your credit card issuer’s customer service department for this information. Another place to find how interest works on various credit cards is through the Consumer Financial Protection Bureau, which maintains a database of credit card agreements from hundreds of card issuers.

Some credit cards offer an introductory 0% interest rate. But once that promotional period ends, paying your balance in full each month is how you can avoid interest charges.

For example, you get a new credit card with a $5,000 available credit limit and 0% interest for three months. You use the credit card to buy a new computer that costs $3,000 and a designer dog house for your poodle that costs $1,000.

For each of the three interest-free months you pay only the minimum balance due. But since the full balance hasn’t been paid, your fourth statement will include a purchase interest charge. That is the interest you now owe because you did not pay off your credit card statement balance in full.

Credit card interest is variable, based on the prime rate, and banks typically calculate interest daily. A typical interest calculation method used is the daily balance method.

•   The bank will calculate the daily periodic rate, which is the APR divided by 365.

•   To each day’s balance, the bank will add any interest charge from the previous day (compounded interest) and any new transactions and fees, then subtract any payments or credits. This is the new daily balance.

•   The daily periodic rate is multiplied by the daily balance each day.

•   At the end of the billing cycle, each day’s balance is added together, resulting in the amount of interest owed.

•   If the amount owed is less than the minimum interest charge shown on the credit card’s fee schedule, the bank will charge the minimum.

You can make a payment toward your balance due at any time — you don’t have to wait until the due date. Since interest is commonly calculated daily, making multiple smaller payments rather than one large payment on the due date is one way to decrease the amount of interest you might owe at the end of the billing cycle. This can be a good strategy to use if you don’t pay your credit card bill in full each month. You’ll still owe some interest, but it may be less.

Recommended: APR vs. Interest Rate

What is a Purchase Interest Charge?

Sometimes also known as a finance charge, an interest charge on purchases is simply interest you pay on your credit card balance for purchases you made but didn’t pay in full. If you don’t pay off your balance each billing cycle, a purchase interest charge for the unpaid amount then becomes part of the total balance you owe.

For example, let’s say you owe $1,000 on a credit card, and because you did not pay that $1,000 in full you were charged a purchase interest charge of $90. You now owe $1,090, and then the next month’s purchase interest charge will be calculated based on a balance of $1,090.

This is called compound interest and can lead to a cycle of credit card debt. The interest charges continue to accrue if you’re not paying your balance in full every month.

How Do You Get Rid of a Purchase Interest Charge?

For a temporary reprieve from paying an interest charge on purchases, you might look for a credit card that has an introductory 0% APR. Some credit card issuers offer introductory rates for anywhere from 12 to 18 months for qualified applicants. If you make a plan for paying off the balance before the promotional period ends and you’re diligent about sticking to it, you could forgo paying interest on purchases made during that period.

Some people might choose this strategy rather than taking out a personal loan for a specific purchase. If you’re sure you can pay the balance in full while the APR remains at 0%, it could be a good strategy.

The only sure way not to pay a purchase interest charge is to pay your credit card balance in full each month.

Recommended: 11 Types of Personal Loans & Their Differences

Different Types of Credit Card Interest

Interest charges on purchases are just one type of interest charged on a credit card. Other transactions and fees may apply and must be disclosed to credit card applicants. The information can be found in a credit card’s rates and fees table often referred to as the “Schumer Box” after legislation introduced by Sen. Chuck Schumer as part of the Truth in Lending Act. The APR for purchases is typically at the top of the list, with others below.

•   Balance transfer APR: If you transfer a balance from one credit card to another, this is the rate you’ll pay on the amount of the transfer. You’ll also be charged interest at this APR on any balance transfer fee your card issuer might charge you.

•   Cash Advance APR and fee: Cash advance APRs tend to be much higher than purchase APRs, and there’s typically no grace period — interest starts accruing immediately. Like a balance transfer fee, you’ll be charged interest on a cash advance fee, too.

•   Penalty APR: If your credit card payment is more than 60 days late, your credit card issuer may increase your APR. If you make the next six consecutive payments on time, the card issuer must reinstate your original APR on the outstanding balance. But they are allowed to keep the higher penalty APR on any new purchases.

In addition to interest charges, there may also be fees charged. All of these fees could potentially accrue interest at their respective rates if the credit card’s balance is not paid in full by the payment due date.

•   Annual fee: Some credit cards charge an annual fee to the card holder.

•   Balance transfer fee: A fee of 3% to 5%, typically, on the amount transferred.

•   Cash advance fee: The greater of a flat dollar amount or a percentage of the cash advance.

•   Foreign transaction fee: A percentage of each transaction amount, in U.S. dollars.

•   Returned payment fee: Having insufficient funds in the bank account used to pay your credit card bill could result in a returned payment fee.

•   Late payment fee: Payments made after the statement due date will incur a late fee of at least $29 and not more than $40.

Where Can I Find My Credit Card’s Interest Rates?

There are several places you can locate your credit card’s interests rates and fees.

Anytime you receive a solicitation for a credit card, which is basically an advertisement, the credit card issuer is required by law to disclose the card’s possible interest rates and fees, as well as how interest is calculated. Since the recipient of this advertisement hasn’t been approved for the credit at this point, these numbers are estimations.

If you are going through a prequalification process for a credit card, the issuer should be able to provide you with more specific APRs so you can decide if that card is a good financial tool for you.

After you’ve been approved, the credit card issuer will mail you a packet containing your physical credit card and detailed information in a cardmember agreement. It’s a good idea to read this document thoroughly so you’re aware of all possible APRs and fees you could be charged.

If you access your credit card account online, you can also find this same detailed information on the card issuer’s website. You can call the card’s customer service telephone number for the information.

The Takeaway

If you’re one of the many people who carry a credit card balance, knowing how much interest you’re paying on different types of charges is important. Interest charges on purchases are likely the most common interest charges, and the amount of interest you may pay can add up quickly.

To keep from paying interest on purchases at all, it’s important to pay your credit card balance in full each month. If you don’t, you’ll accrue interest, which compounds and can create a debt cycle.

3 Personal Loan Tips

1. Before agreeing to take out a personal loan from a lender, you should know if there are origination, prepayment, or other kinds of fees. If you get a personal loans from SoFi, there are no-fee options.
2. If you’ve got high-interest credit card debt, a personal loan is one way to get control of it. But you’ll want to make sure the loan’s interest rate is much lower than the credit cards’ rates — and that you can make the monthly payments.
3. Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.

Learn more about how a personal loan from SoFi can help you get out of credit card debt.

---

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.

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.

SOPL0322031

Read more

What Are Crypto Faucets?

A crypto faucet allows crypto users and investors to earn small cryptocurrency rewards — basically free – for completing small or simple tasks. Investors generally do not need to make a purchase or put up any additional assets in exchange. The term “faucet” comes from the fact that the rewards are very small — like drops of water dripping from a faucet.

The idea of earning free crypto may sound intriguing, but know that crypto faucets have been used in scams in years past. However, when used wisely they can be a way to increase your crypto holdings over the long term.

There are numerous types of crypto faucets, like Bitcoin faucets. A Bitcoin faucet, for example, sends small amounts of free or earned Satoshis or “sats” (the smallest unit of Bitcoin) to a user’s wallet. To claim these rewards, users typically have to perform a task such as:

•   Watching product videos

•   Viewing or clicking on advertisements

•   Completing a Captcha

•   Solving a puzzle

•   Playing a game

As payment for these tasks, users could receive a single Satoshi, which is one millionth of one Bitcoin (0.00000001 BTC). While that may sound like a very small drop in the bucket indeed, Bitcoin is still the oldest cryptocurrency (and by far the largest) on the market, and its value could increase over time. (Remember that past performance doesn’t guarantee future results.)

How Do Crypto Faucets Work?

Most crypto faucets are relatively easy to use. Sometimes, using one can be as simple as entering a public key address for your crypto wallet, clicking a few buttons, and receiving the coins or tokens. In general, the more complex the tasks required, the higher the rewards.

Keep in mind that some faucets tend to give out very small rewards — and it is unlikely that users will amass a large amount of crypto from them.

Faucets often have a web-hosted crypto wallet, which stores coins for users up until a certain threshold. To avoid transaction fees eating up most or all of the rewards, many crypto faucets have a minimum threshold that users must reach before they can withdraw the coins to their own wallet.

What Is the Point of Crypto Faucets?

A bit of context is required to fully understand why crypto faucets are a part of the crypto universe.

During the first few years after the creation of Bitcoin 2009, few people had heard of virtual currencies, let alone used them. And those who had couldn’t do much with their coins, as businesses did not accept Bitcoin for payment, and there were no opportunities for trading, because modern crypto exchanges didn’t exist yet.

Gavin Andresen, an early Bitcoin adopter, believed in the future of Bitcoin and devised a way for more people to learn about cryptocurrency. He offered free Bitcoins in exchange for completing Captchas.

In 2010, the first Bitcoin faucet ever created paid out 5 BTC in exchange for the simple task of clicking on images. This was, at a time, when one Bitcoin was worth less than a penny. Today, 5 BTC would be worth well into the six-figures.

As crypto and crypto faucets became more popular, the rewards fell to the smallest denominations possible. Faucets became an integral part of cryptocurrency history, as they helped get crypto into more people’s hands.

Pros and Cons of Crypto Faucets

Crypto faucets have both benefits and drawbacks that investors should make note of:

Pros	Cons
Free crypto	Some faucets could be scams
Easy way to get started learning about crypto	Small rewards
Anyone can use faucets	Mindless tasks required

Pros of Crypto Faucets

•   The biggest pro of crypto faucets might be the free crypto. There aren’t many other ways to get crypto simply handed to you. Crypto airdrops also involve users receiving free crypto, but those are usually distributed to select users based on certain eligibility requirements.

•   Faucets are an easy way to get started with Bitcoin or other cryptocurrencies. There’s no real investment required beyond getting a crypto wallet and the time required to complete the task in question.

•   Faucets don’t require much knowledge or know-how to get started. Anyone can use them — you don’t need to know how to trade crypto to use a faucet.

Cons of Crypto Faucets

•   The amount of crypto earned is very small. As mentioned earlier, the reward could be as little as one Satoshi from a Bitcoin faucet, which is worth only a tiny fraction of a cent.

•   The tasks that a Bitcoin faucet will require can quickly get monotonous. How long will someone be willing to sit there and repeatedly complete a Captcha, after all?

•   The general risks associated with crypto also apply to faucets. Some can be types of crypto scams, phishing attempts, or ways to steal a user’s funds or identity. Some faucets could infect users’ devices with malware.

The lure of free money can be an effective way for hackers to compromise the devices or identity of potential users. The website or app might be phishing for information or download malware to a user’s device after having them click a link or download a file. Here are a few red flags that a crypto faucet is a scam:

◦   The rewards are too good to be true. If the rewards seem significantly higher than other faucet rewards, they are likely not legitimate.

◦   You’ve received an unsolicited offer. If you’ve received a faucet offer via email or message without asking for it, it could be from a scammer.

◦   Error-heavy messages. Multiple grammatical errors and misspellings could indicate the email is fraudulent.

Bitcoin Faucets

As noted, Bitcoin faucets were the original crypto faucet, as Bitcoin itself was the original cryptocurrency. As such, Bitcoin faucets are likely the most common on the market. Also as mentioned, Bitcoin faucets distribute BTC to users who are willing and able to complete certain tasks or activities.

Other Types of Crypto Faucets

It all began with a Bitcoin faucet many years ago, but today, there are crypto faucets for all types of different cryptocurrencies. Some of the most popular include Litecoin faucets, Ethereum faucets, and Dogecoin faucets.

Litecoin Faucets

A Litecoin faucet functions in the same manner as a Bitcoin faucet. The only difference is that the faucet distributes Litecoin (LTC) rather than Bitcoin (BTC).

To use Litecoin faucets, users will have to first set up a Litecoin wallet. Then it’s just a matter of choosing the highest-paying Litecoin faucet. Some faucets could pay up to 1,000 litoshis (the smallest units of Litecoin).

Ethereum Faucets

An Ethereum faucet is one that distributes ETH, the native token of the Ethereum network.

Ethereum faucets, like some other faucets, may also have referral bonuses. Users who refer their friends could get an extra faucet drip without having to do anything more.

When trying to withdraw funds, however, users could run into an issue: The Ethereum network tends to have very high transaction fees, known as gas fees. So, to send $2 worth of ETH to another wallet could easily cost more than the transaction itself.

Dogecoin Faucets

Dogecoin faucets have been popular since the meme cryptocurrency was first invented back in 2014. These faucets distribute Dogecoin (DOGE). Because DOGE has such a low value, larger portions of coins can come out of faucets.

When one DOGE was worth a fraction of a penny, faucets would distribute between one and five DOGE at a time. Today’s Dogecoin faucets mostly distribute anywhere from 0.1 to 1 DOGE at a time.

The Future of Crypto Faucets

The future of crypto faucets probably looks a lot like the past. These are basically fun apps for people who are new to crypto (as long as you’re careful). It gives individuals a way to get started learning how to interact with the cryptocurrency ecosystem without having to make an initial investment. Some modern or current crypto faucets even allow users to play games, making it a bit more fun to earn rewards.

But, keep in mind: No one keeps clicking on a faucet all day hoping to cash in on big rewards. In terms of today’s value, the typical crypto faucet pays out a tiny fraction of a cent each time, and there are often limits on the number of payouts a user can receive in a given timeframe.

Are There Any Real Crypto Faucets?

Yes, there are numerous real crypto faucets, but it may take a little time for users to do some research to make sure they’re not falling for a scam or some sort of fake faucet. A simple internet search for a desired, certain cryptocurrency faucet is likely to yield a list of results.

But again: It’s up to you, the user, to take a little time and make sure you don’t see any red flags that could indicate a faucet is a scam.

Other Ways to Make Money With Crypto

Crypto faucets are an option for earning crypto, or adding additional holdings to your portfolio. But, as mentioned, it’s a slow, tedious process. Here are some other ways to make money with crypto.

Investing

Investing is likely the most common or popular way that people make money with crypto, which more or less entails buying at one price, and selling it at a higher price. There are numerous ways to invest in crypto, however (even through retirement accounts), and the risks involved are significant — even more significant than investing in stocks.

Mining/Staking

You can also mine certain cryptocurrencies, like Bitcoin, or stake others, to earn even more crypto. Whether you can mine or stake crypto will depend on the specific cryptocurrency, but know that an increasing number of cryptos are moving to a proof-of-stake system (which allows for staking), as it’s generally more efficient and less resource-intensive.

Play to Earn

You can also try your hand at any number of play-to-earn crypto games, of which there are many. These games reward players or participants with tokens or NFTs for playing, which may or may not have value — they allow the player to participate in the in-game economy, though.

If any of these methods don’t strike your fancy, there are numerous ways to earn passive crypto income, too, such as lending, cloud mining, and running lightning nodes.

Buying Crypto With SoFi

Crypto faucets can give new users their first foray into the crypto world. They reward users with small amounts of crypto, though the actual amounts are often miniscule. Crypto faucets take advantage of the divisibility of cryptocurrencies, or their ability to be divided into many smaller units — and the potential for growth over time (although with crypto there is also considerable volatility).

There are numerous types of crypto faucets, such as Bitcoin faucets or Litecoin faucets. There are also many scams out there using the guise of crypto faucets in order to take advantage of unsuspecting users — which is important to keep in mind.

FAQ

Are there any crypto faucets?

Yes, there are many crypto faucets out there. You should be able to find them through simple internet searches, but you’ll want to make sure you’re finding a faucet for the specific cryptocurrency you hope to accumulate through rewards.

Are crypto faucets legit?

Many crypto faucets are legit, but there are numerous scams out there — so, faucet users should proceed with caution.

Is using a crypto faucet profitable?

Crypto faucets are not really profitable. Though they do offer users “free” rewards in the form of tiny amounts of crypto, those amounts are often so tiny that they carry next to no value.

How can I get 1 Bitcoin for free?

It’s not likely that you’ll find anyone or anywhere that’s willing to give you a free Bitcoin as of 2023, given that a single Bitcoin’s value is more than $20,000, as of March 14, 2023.

---

Photo credit: iStock/Fabian19

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

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.

²Terms and conditions apply. Earn a bonus (as described below) when you open a new SoFi Digital Assets LLC account and buy at least $50 worth of any cryptocurrency within 7 days. The offer only applies to new crypto accounts, is limited to one per person, and expires on December 31, 2023. Once conditions are met and the account is opened, you will receive your bonus within 7 days. SoFi reserves the right to change or terminate the offer at any time without notice.

First Trade Amount		Bonus Payout
Low	High
$50	$99.99	$10
$100	$499.99	$15
$500	$4,999.99	$50
$5,000+		$100

SOIN0223006

Read more