SoFi

Think back to the beginning of the pandemic: We were all locked inside our homes, perhaps brewing coffee for Zoom meetings and navigating new food delivery services. And all of us were virtually coming together to watch and then dissect the latest binge-worthy hit we just streamed.

That’s the power of these services: delivering addictive TV (or movies, articles, or audio) that we all can’t stop talking about. If the content is good, we’ll willingly pay a fee every month to consume it. Who wants to be bored, or left out of the cultural conversations?

But now that the average viewer has four to five streaming services, the monthly price tag is on the rise. In 2021, Americans jumped from spending $47 to $55 a month on streaming services, reflecting an increase in both prices and number of subscriptions.

Wondering how to save money on streaming video services, short of just canceling them all? We’ve got 12 tips for cutting costs without cutting (all) the content. Read on to learn about the different techniques, and see which are right for you.

13 Ways to Cut the Costs of Streaming

Monthly subscriptions to Netflix, Hulu, Disney+, Amazon Prime, and HBO Max — not to mention music subscriptions like Spotify, Apple Music, and Pandora — expose us to more content and more choice in terms of entertainment and education.

But the cost of streaming services is on the rise. In an age of price prices, many of us want to protect our money from inflation. Cutting costs and sticking to a budget can be especially important. Also, as life returns to normal after the early stages of the pandemic, it may not be necessary to have quite so much programming on demand.

Those are good reasons to examine how to save money on subscriptions. Here are 12 ways you might be able to save some cash on your streaming habits:

1. Paying Annually Over Monthly

Some streaming services allow you to pay a lump sum once a year instead of monthly payments. This can make it more challenging to build streaming services into a line item budget, but the reward could be worth it. Usually when you pay for a year in advance, streaming services offer you a discounted rate.

If you don’t plan to keep the service for a year — say, you only want Netflix the month that your favorite show releases a new season — paying the annual fee might not make sense. Instead, it could be more cost-effective to pay the monthly fee for one or two months a year when you want to use the service.

2. Setting Renewal Reminders

Whether you pay once a year or month to month, it’s a good idea to know when your card will be charged again. If you set a reminder in your phone or on your digital calendar, you can receive an alert before paying for another month.

When you get the alert and think about how much you and your family used the streaming service over the last pay period, you might realize that it’s not worth it to keep paying. If that’s the case, consider canceling to add $10 to $20 back into your monthly budget.

Recommended: How Much Money Should You Save Each Month?

3. Finding Streaming Bundle Deals

Many streaming services offer bundle deals that allow you to save. If you already plan on subscribing to two separate services, it is a good idea to explore discounts for bundles. For example, if your family wants Hulu and Disney+, you might be able to save money by bundling the two together.

However, if you don’t want one of the services in the bundle, calculating the cost of individual services vs. the bundle could also be helpful. If you are motivated to save money, opting out of a bundle that includes services you don’t really need could be a way to free up funds for, say, retirement savings or a cash cushion. Every bit helps.

4. Utilizing Free Trials Before Paying for a Plan

Several major streaming platforms, including Hulu, Apple TV+, and Amazon Prime, allow you to try out their content before committing. Some people who only want to watch a specific movie or TV series that is released in a certain month might take advantage of free trials — signing up to watch their desired content and then canceling the service before it renews and charges their card.

Even if you aren’t utilizing free trials to game the system, they do get you a month of content without having to worry about fees. It’s a good idea to set a reminder at the end of the free trial to cancel the service if you don’t want to keep it; otherwise, your account may be charged.

Recommended: 27 Fun Things to Do for Free

5. Determining If You Really Need the Services — And Canceling What You Don’t Need

Regularly analyzing your budget is a good idea, especially as the cost of living increases. While reviewing your average monthly expenses, you might want to consider if you really need each of the streaming services to which you are subscribed.

If your family has any services that they rarely use, you can consider canceling those subscriptions to save money.

6. Seeing if a Phone Plan Comes With a Subscription Deal

When’s the last time you changed your phone plan? If you are thinking about upgrading to a new phone or a new plan, you might want to shop around to see what streaming deals phone carriers are offering.

Promotions are subject to change, but often, carriers like T-Mobile, Verizon, Sprint, and AT&T offer free subscriptions to popular streaming platforms like Netflix, Apple TV+, and Paramount+. These are often for a year but sometimes for as long as you keep your phone contract.

Recommended: The Importance of Saving Money for the Future

7. Choosing Plans with Ads

Long before TiVO and DVR, families had to sit and watch commercials during their favorite TV shows and movies. There was no pausing and fast-forwarding, and we hadn’t yet uncovered the beautiful “Skip Ads” invention.

Today, streaming services offer viewers ad-free experiences that allow them to consume content unhindered. But increasingly, that comes at a cost. To save money on monthly subscription services, many families opt in for the lower-tier, less expensive “with ads” plans.

Streaming services like Hulu offer their content at discounted rates if you opt into the “with ads” plan, and even streaming giant Netflix has announced its intentions to roll out a cheaper, ad-supported plan.

If you don’t mind watching ads in between your favorite shows and movies, downgrading to a cheaper, ad-supported subscription could save you money.

Recommended: How to Save Money From Your Salary Each Month

8. Downgrading to a Cheaper Plan if You Can

Ad-supported plans aren’t the only downgrade you can consider to save money on streaming services. Some services, like Hulu, have top-tier plans with live TV options. Others, like Netflix, allow you to pay more so that you can utilize additional screens at the same time.

Here’s another way to save money on streaming services: Consider whether you are fully utilizing every aspect of a service. (This is a good moment to tap your financial discipline.) If you aren’t truly using a service or realize you can pare down, it’s wise to explore what alternatives the platforms offer that could save you money.

Downgrading your plan could free up cash that you could funnel towards growing your emergency fund or saving for a vacation.

9. Sharing the Account With Your Household

Some streaming services allow you to share your account with friends and family, usually within the same household. Rather than maintaining separate accounts, you might be able to save money by sharing services with roommates.

If you opt to save money this way, you may find that streaming services even allow you to create separate, personalized profiles within your account.

Recommended: How to Save Money in College

10. Using Free Alternative Streaming Services

Not all content requires a subscription. If you have a smart TV or other internet-connected device, you can connect to free services like the Roku Channel and Pluto TV. While this may not give you access to the hot new shows everyone is talking about, it can definitely give you plenty of options for viewing.

11. Rotating Streaming Services Instead of Having Them All at Once

Most consumers have four to five streaming services in a given month, according to a recent J.D. Power survey. Depending on how much TV and music you consume, it’s possible to utilize that many services fully. But for many families, that might be too many. Just watching a few episodes of a show every month may not justify the expense.

If you find that you don’t regularly watch all your services, it could be a good idea to rotate them. For example, you could pay for two in the spring because they’ve got new shows you like, then switch to another two during summer vacation because they’ve got great content for kids, and then switch again in the fall and winter because you enjoy their holiday programming.

Recommended: How to Be Better With Money

12. Using a Cash Back Credit Card

Earning money by spending money can make monthly expenses a little more manageable. For example, say you have a cash-back card that allows you to earn up to 3% back on qualifying purchases. While it might not sound like much, that’s 30 cents cash back for every $10 streaming service each month. It can add up.

Some cash back credit cards are actually designed for people who like streaming services; they might offer special cash back rates specifically for subscription services like Prime Video and Spotify.

13. Swapping Down on Resolution

Some people are obsessed with having the latest, most crystal-clear image as they view their shows; others, not so much. If you fall into the latter category, you might be able to score a cheaper subscription for lesser resolution. For instance, Netflix currently charges $9.99 for a monthly subscription without HD; a standard plan with HD is $15.49 (with perhaps other perks as well); and $19.99 for a premium one with Ultra HD available.

Banking With SoFi

Looking for more ways to lighten your monthly budget? Skip the monthly fees at your current bank, and switch to a SoFi bank account. Sign up with direct deposit, and not only will your Checking and Savings account be fee-free, but you’ll also learn a competitive APY. Combined, these two factors can help your money grow faster. Eligible SoFi accounts, which allow you to conveniently spend and save in one place, can also enjoy no-fee overdraft coverage up to $50, as well as paycheck access up to two days early.

Watch your money work harder for you with SoFi.

FAQ

Are streaming services continuing to increase in price?

Many streaming services have increased their prices in recent years. How their pricing will evolve depends on many factors, but we are at a moment of high inflation with price hikes likely. To save money on monthly subscriptions, consumers might want to cut back on the number of streaming services, look for ad-supported plans, and consider streaming bundles.

Is cable cheaper than streaming?

A J.D. Power study from last year found that the average American uses between four and five streaming services, with an average monthly bill of $55. While higher than it was pre-pandemic, monthly spending on streaming services is still lower than the average cable bill, which is $79. Of course, you can find much cheaper basic cable packages, but you can also have a single streaming service to cut costs.

What streaming services have bundle deals?

You can find bundles with multiple streaming services, such as Hulu, Disney+, and ESPN+. Amazon Prime members get access to video content plus Prime shipping deals on Amazon.com; they can also take advantage of bundles with platforms like SHOWTIME, AMC+, and Paramount+. Bundle deals might not always be available, so it’s a good idea to research before signing up.

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Photo credit: iStock/Brothers91

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.

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.

SOBK0822009

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Nearly 90% of consumers in the U.S. report that they have used coupons. That’s a lot of ketchup, laundry detergent, hotel rooms, and other stuff grabbed at a discount.

Most of us love getting something for nothing (or for less), and couponing can deliver just that. Using coupons can help you stick to your budget. If you get a favorite brand of cereal or pet food at a discount, it can help stretch your weekly supermarket budget — provided you were going to buy those things anyway.

But if coupons entice you to buy things you don’t want or need, they can do damage to your budget. For instance, is a $1 Chips Ahoy! coupon a smart move if you must buy three packages to use it and you already have cookies at home? In this case, it might be wise to take a step back.

Here, you’ll learn the ropes of smart couponing, including:

•   Different types of coupons

•   Why people coupon

•   The benefits of couponing and the drawbacks

•   Whether coupons are worth it and will ultimately save you money.

What Is Couponing?

Couponing means redeeming discounts on goods and services, which can seem like an easy way to save money. Coupons are created by businesses and retailers as a customer acquisition tool (that is, they encourage people to try a product for the first time) or they could be a customer loyalty device (a way of rewarding steady consumers with a discount).

Coupons take several forms, including:

•   The old-fashioned way; paper coupons clipped from newspapers, store ads, and mailers

•   The instant way, via apps for discount codes on everything from dinner out to Target finds (20% off dresses, anyone?).

Coupons tug at a person’s budget-wise motivation to save money. But read on to learn if coupons are worth your time and energy.

How Does Couponing Work?

Merchants want you to shop for their brands, so they dangle discounts. When these arrive in the mail or email, on a cash-register receipt, or in a print publication, you will likely need to clip them out and bring them with you to a retail location or enter the pertinent information when purchasing online.

In terms of digital coupons, you will often have to create an account with your email address and a password to get coupons or discount codes. This is an important trade — you get, say, a 10% off welcome code and in exchange, the merchant gets your contact information to potentially reel you in with more deals.

Both paper and virtual coupons typically have expiration dates. More and more often, online merchants do “flash sales” and short-term offers with a tight time window to get you to click spend your money without much pause. This can lead to impulse purchases.

Keep in mind, the business goal behind coupons is to get you to spend money, not keep it.

Recommended: How to Coupon for Beginners

Are Coupons Used Today?

Coupons are still quite popular today. According to the 2022 Retail TrendWatch Report, 38% of consumers use coupons, discounts, or deals to plan their shopping lists. Downloading coupons on your phone is quicker than using scissors to cut along the dotted lines.

But however you coupon, merchants are motivated to keep these offers coming. A full 81% of retailers say consumers want more deals and discounts.

How Many People Use Coupons?

To give you an idea of just how popular coupons are, consider this: An estimated 145.3 million U.S. consumers reported using digital coupons in 2021. The research forecast for 2022: Total digital coupon redemption will top $91 billion, up from $47 billion in 2017.

But using coupons isn’t always super simple or convenient. One-fourth of grocery shoppers say they avoid shopping online because they can’t use the coupons they can present to an in-store cashier.

Types of Coupons

Merchants are getting more inventive with the kinds of coupons and discounts they offer shoppers. Here are some of the popular ways you can likely access deals.

•   Set up a user account with email and password on favorite shopping sites. By joining the rewards club, if there is one, they can also unlock digital codes and get merch rebates.

•   Download your grocery chain’s app and link weekly digital coupons to your account.

•   Follow brands on Instagram and Facebook to watch for discount and free shipping codes on social media.

•   Download coupon apps (SnipSnap, for instance) that allow you to photograph a printed coupon and find or create a mobile coupon to redeem in-store. The app scans the text, images, logos, and barcodes in the photo and offers features such as expiration-date reminders.

•   Use couponing and discount sites that add an extension to your browser and then let you know about coupon codes available when you shop online. Check reviews and ratings of these before downloading, however. Many have mixed reviews.

•   Look for the physical coupon with purchase. Yes, some companies still do coupons the old-fashioned way. Boxes of powdered laundry detergent may come with coupons inside, or frozen pizzas may have stickers on the pack that you peel off to get a discount.

Why Do People Coupon?

Consumers coupon to save money or get things free. A discount or freebie can inspire a person to try a new product or a brand other than the one they usually buy. In this way, the company issuing the coupon may build their customer base and their sales.

A bit of history: The first coupon reportedly came out in 1887, when Coca-Cola offered them, good for a free sample.

Benefits of Couponing

Couponing has its pros, for sure. These include:

•   Trimming your expenses, and using the money saved to reach other financial goals.

•   Having fun. Couponing has some aspects of a game, which can make it feel like a fun way to save money.

•   Sharing the wealth with your family and finding better deals, thanks to coupons, on such expenses as school supplies and uniforms, sneakers, electronics, and home furnishings.

•   Scoring discounts on lodging, car rental, and other travel expenses.

Recommended: Why Saving Money Is Important

Drawbacks of Couponing

The chase for discounts can, however, have downsides, such as:

•   If you scoop up items you would not have otherwise bought just so you use a coupon, you could wind up buying things you don’t need or even really want. Do you need tropical fabric softener, or are you just eager to use the coupon?

•   Coupons can encourage over-buying. For example, if you need to purchase four boxes of cereal to reap a discount, you may have food sitting unused. (That said, buying in bulk to save money can be an effective tactic if done properly.)

•   Consumers may feel under pressure to use coupons before they expire in order to be a “good shopper.” It’s a misconception that not using a coupon is losing “free” money. It’s not free; you’re still spending your dough to get the discount.

•   Coupons can be inconvenient. Remembering to carry and use paper coupons requires financial discipline. Plus, it’s too easy to forget to redeem coupons attached to products in-store. Customers and cashiers often don’t detach the manufacturer coupon and scan it.

•   Ironically, you might be tempted to overspend on other things after saving with a coupon. For instance, a 50% discount code on a clothing site may prompt you to buy other items you didn’t plan to purchase or really need.

Recommended: How Much Money Should I Save a Month?

Do Stores Lose Money by Couponing?

In general, stores do not lose money from offering or accepting coupons. In fact, they are more likely to profit.
Coupons encourage people to shop by offering an incentive: free merchandise or lower-cost goods. These offers entice people to try new products (and hopefully become loyal customers) and buy items that they might not have otherwise considered.

In addition, for bricks-and-mortar stores, coupons encourage foot traffic. They tempt shoppers to come inside, where they might find more than just the coupon item that catches their eye. In these ways, coupons actually build sales.

Does Couponing Ultimately Save You Money?

Couponing can save you money if you are offered a discount on an item you were already planning to buy. Or perhaps offers you free shipping from an online retailer you love.

However, you could end up losing money in the long run if you’re not careful. If you spend two hours a week combing through coupon fliers just to save a dollar, it’s probably not worth it. Your time is valuable. Also, gas prices are high, and if you need a car to get to a store to use a coupon, it may not be a great deal.

Lastly, coupons can lead to price creep. For instance, did you really save money if you budgeted, say, $50 for a skirt and got waylaid by a coupon for $25 off a purchase of $100? You went in planning to spend $50, not $75 (that is, $100 minus the $25 discount).

Recommended: Guide to Practicing Financial Self-Care

Banking With SoFi

Couponing and discount codes can be a smart, frugal move if you stick to buying products and services you would have purchased anyway and don’t get sucked into getting unnecessary items just to save a buck (or a few). But the coupon game takes time, patience, and organization.

If you want to track your spending and save money with minimal effort, see how SoFi can help. When you open a bank account online with direct deposit, you’ll earn a competitive APY and pay no fees. Plus, with SoFi Checking and Savings, you’ll have a single convenient place to save and spend, along with tools to help you organize your money, which can help you meet your financial goals.

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

Can you go to jail for couponing?

The typical act of redeeming a coupon is not illegal. However, Illegally creating, copying, or using coupons can land you in jail. A Virginia couple went to prison in 2021 for a combined 19 years after the FBI uncovered one of the largest coupon fraud schemes in U.S. history. Retailers and manufacturers lost more than $31 million when the couple used social media sites such as Facebook to sell counterfeit coupons to groups of couponers.

Is extreme couponing possible?

Yes, extreme couponing, in which people save a huge percentage off their costs, is real. Everyday people have saved hundreds of dollars in grocery stores. When the final numbers are crunched at the cash register, the top extreme couponers have shaved more than 90% off their bills, bringing them close to zero. But this is a serious endeavor demanding much time, energy, and planning, plus you might end up stuck with items you don’t want, need, or will ever use.

Is extreme couponing stealing?

No, extreme couponing is not stealing, but it’s not uncommon for stores to resent it if a shopper brings in a stack of coupons and spends very little money in the end.

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Photo credit: iStock/monkeybusinessimages

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.

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.

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When it comes to changing bank accounts, inertia seems to set in. According to SoFi research from February 2021, a third of 1,600 respondents said they feel no benefit to switching their bank or financial institution. Another 20% said they feel loyal to their current bank.

But is it wise to sit tight with your current banking situation? Big banks may count on you to do so. They know that once you start a relationship with them, it’s hard to change. Maybe you’ve signed up for direct deposit or you’ve had your account since college. You may like that there’s a bricks-and-mortar branch near you and are reluctant to switch to online banking. Or maybe you have an online bank and figure they’re all about the same.

Whatever the case, now may be the time to rethink your banking relationship. Rising interest rates have encouraged some banks to offer more attractive rates as well as plenty of features and services with low or no fees.

Take a look at these five reasons why you may benefit from switching banks.

Smart Reasons to Switch to a New Bank

1: Higher Rates

The Federal Reserve has raised the federal funds rate — a key borrowing benchmark — several times this year and is expected to continue to do so. Some, but not all, banks have increased the annual percentage yield (APY) they pay on their savings and checking accounts. That means some banks out there, usually online banks, are offering rates closer to 2% or possibly more after years of near zero interest rates. An increase like that can add up over time and boost your savings.

It’s important to remember that your bank won’t automatically raise rates in line with the Fed. Some banks find that an increase doesn’t fit with their business plan. Or they may figure they won’t lose many customers if they don’t offer an increase.

Online banks, with lower overhead costs and more incentive to attract new customers, often offer much higher rates than traditional banks. It makes sense to check what APY vs. interest rate you’re currently earning on your bank account and see how that compares with other banks. That’s a tip for both checking accounts and savings accounts; there’s no reason not to earn top dollar.

Recommended: All About Interest Rates and How They Work

2: Low or No Fees

You may also want to make sure any extra interest you’re earning isn’t eaten up by fees. In fact, avoiding the usual fees can be a good reason to switch banks. Minimum balance fees, maintenance fees, paper statement fees, savings withdrawal fees, out-of-network ATM fees, and overdraft and NSF fees (that last one is for non-sufficient funds) can add up over time and take a chunk of your savings.

Fees you pay will depend on the way you bank. People who have a high monthly balance or who link their checking and savings accounts may never incur fees. Or, if your bank offers a wide network of ATMs in your area, out-of-network ATM fees will hardly ever apply. That said, many institutions, particularly online banks, offer no-fee banking with competitive APYs, so you can avoid paying any account fees at all. This can be a wise move if you are being charged costly banking fees.

3: Better Online and Mobile Banking

When it comes to how to manage a bank account, consumers want it to be fast and simple. Many have gotten accustomed to 24/7 banking. It used to be that online banks offered the most advanced electronic services. To compete, many bricks-and-mortar banks have improved their websites and mobile apps. But whether it’s an online or traditional bank, not all portals are the best they can be.

Make sure the banks you’re considering offer a secure, easy-to-use, state-of-the-art platform. Can you pay bills, scan mobile deposits, check your real-time balance, change your password, report possible fraud, and complete other functions at any time and almost anywhere you have a secure connection? Is there a chat or phone function available to get help if you need it? If possible, talk to other customers to see if they’ve experienced any glitches or compromised security.

If you are lacking the convenience of online and mobile banking, you may want to rethink where you bank for these reasons. There are many pros to online and mobile banking, and you should be enjoying them.

4: More Banking Features

Many banks offer lots of extras when you open a new account or agree to maintain a certain minimum deposit. Waiving fees is common. So is a monthly reimbursement for out-of-network ATM fees. Some banks may offer a limited amount of no-fee overdraft protection coverage.

Also available: Connected checking and savings accounts with combined interest, discounts on personal loans from the same institution and budgeting tools included in the banking app. In addition, many banks offer incentives for setting up direct deposit and early pay options that offer faster access to your paycheck.

Once you’ve created a list of banks with favorable APYs, compare the various features each bank offers to help determine which is the best fit for your needs.

Recommended: Checking vs. Savings Accounts: Which is Better for You?

5: Sign-Up Incentives

How to switch banks isn’t necessarily complicated, but it’s probably not a good idea to do so solely because of a temporary sign-up promotion. If the fees are high or the bank lacks other features you need, you may find no bonus or other incentive is worth the trouble.

That said, if you’re shopping for a new bank, whether it’s a small or a large bank, and all other things are equal, it may make a lot of sense to take advantage of special promotions. Who wouldn’t want some extra cash or a higher interest rate?

Recommended: 8 Ways to Make Your Money Work for You

The Takeaway

How to switch banks does entail some time and paperwork. It’s easy to understand why consumers often avoid this task. But additional banking features, low or no fees, and a higher interest rate are some of the reasons why making the switch can make sense. Choosing a bank that’s a better fit can help improve your overall financial picture.

If the signs are pointing you in a new direction, you might consider trying SoFi Checking and Savings. Open an online bank account with direct deposit, and you’ll enjoy a competitive APY, no fees, and the Allpoint network of 55,000+ fee-free ATMs. What’s more, there’s the convenience of spending and saving in one simple place, plus SoFi recently announced that deposits may be insured up to $2 million through participation in the SoFi Insured Deposit Program¹.

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.

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Photo credit: iStock/NicolasMcComber

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by banks in the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.

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.

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.

SOBK0822049

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These days, there’s no shortage of people spouting financial advice. The problem is, not all of it is good. Following unsound financial advice, without doing your due diligence, can lead to poor decisions and serious financial mistakes.

When it comes to money guidance, it’s important to realize most people aren’t experts and learn to decipher the difference between solid and terrible advice. By doing so, you can prevent a future financial fiasco.

Read on to learn:

•   Why the worst financial advice gets passed along

•   How to recognize terrible financial advice

•   Examples of bad financial advice and how to avoid it

Money Advice That May Be Bad (for Your Situation)

Financial advice isn’t one-size-fits-all. Some people may think they know what’s best for you, but chances are, their pointers don’t pertain to your personal circumstances.

When they offer advice, what they suggest may have worked great for them but won’t for you. Staying savvy whenever you get unsolicited counsel is key to protecting your financial health.

Here’s 11 examples of money tips you should take with a grain of salt at and quite possibly avoid at all costs.

1. Renting is A Waste of Time

While it may be the American dream to own a home for many people, not everyone can or even wants to take on the expense and burden that comes with it. When you own a home, you’re in charge of paying for property taxes, homeowners insurance, maintenance costs, and more. All of these expenses can add up to cost more than monthly rent.

Owning also means if anything breaks or gets damaged, paying for home repairs will come out of your pocket. When something goes wrong with a rental, it’s your landlord’s responsibility. Renters also typically have lower utility bill payments because things like heat, water, and electricity are often included in your rent. Depending on where you live, you may also have access to amenities such as a gym, pool, or parking garage.

2. Follow Your Passions

Although it sounds nice, following your passions professionally rarely pays the bills. And it can also put you into a very competitive and crowded field, if your passion is one of the common ones; say, acting, singing, cooking, or creating art.

Passion might fuel you for a while, but unless you’re lucky enough to turn it into a profitable full-time career, you’re probably juggling a day job, various side hustles, or living with roommates. There’s nothing wrong with having a passion, but if it’s not your main source of income, it might be more sensible to switch to a plan B. Then you can focus on your strengths, build on your skills, and maximize your potential. Doing so raises the likelihood, you’ll be better able to financially support yourself.

3. Your Credit Score Does Not Matter

This bit of advice should sound the alarm bells. A subpar credit score can hold you back from achieving important goals and even gaining employment. Having positive credit helps lenders to recognize your creditworthiness and overall trustworthiness.

Your three-digit score impacts whether you’ll get approved for credit cards, mortgages, and other types of loans. A high credit score also can help you snag the best terms and interest rate for a loan once you are approved. Landlords, insurance companies, and employers may also do a credit check when you’re applying for an apartment, car insurance, and even a job.

4. You Cannot Be Financially Successful with a 9-5 Job

There’s a lot of advice out there to say avoid being “chained to a desk” and pursue more entrepreneurial ways to be successful. People can certainly achieve financial success without a 9-to-5, but the majority of individuals need a steady paycheck, medical coverage and paid sick days.

Working 9-to-5 also offers you the chance to build a nest egg if your job offers a 401(k)plan. If there’s a company match offered by your employer, that’s akin to free money and well worth nabbing, too.

5. Never Use a Credit Card

Be wary of someone who tells you to avoid getting or using a credit card. Their bad advice may stem from their own experience as an irresponsible card holder. Despite the warnings and horror stories you hear, credit cards don’t always lead to trouble or financial ruin.

Rather, credit cards can offer you one of the best ways to establish credit and show you’re fiscally responsible, especially if you pay your balance in full every month. Having credit cards help in times of an emergency and when your cash reserves are low. Other benefits include valuable perks that card companies offer such as points, cash-back rewards, and airline miles.

Recommended: How Does a Credit Card Work?

6. You Don’t Have to Worry About Retirement Until Later

When you’re in your 20s or 30s, retirement may seem too far off to make it a priority. Friends, family, and acquaintances may tell you to enjoy your youth and not to worry about your old age until later.

However, the sooner you start to save, the more money you’ll have later on thanks to compounding interest, which builds earnings on your investment and on that investment’s interest. Putting off saving until midlife can put you behind the eightball, causing you stress and anxiety as you try to make up for lost time. Start early by taking advantage of your employer-sponsored 401(k) or contributing to a Roth IRA. Imagine how much better off you’ll be if you’re 65 with 40 years of savings versus only 15 or 20 years.

Recommended: 10 Personal Finance Basics

7. The Best Way to Save Is Through a Savings Account

Back in the day, putting money in a savings account was often considered the gold standard for safely socking away your money. Talk to an older relative and you’ll hear about how 40 years ago or so, they managed to live off their savings account interest, when rates around 10% weren’t uncommon.

Today, on the other hand, you might get around 1% to 2% back on your savings, if you get the top interest rate (typically found at online banks vs. traditional banks). While a savings account is a solid place to put your money for near-term goals (like an emergency fund), it can be wise to look further afield as well. You might want to take on more risk by investing in stocks, which historically gives you the chance to garner greater returns.

If you’re not sure where to start, talk to a certified financial planner or financial advisor who can help set you up with an investment portfolio. Financial advisors and planners do charge for their services, so shop around. If you’re concerned about the cost of a financial advisor, you might want to try getting investment recommendations from a less costly automated robo advisor.

Recommended: Robo Advisor vs. Financial Advisor: Which Should You Choose?

8. YOLO (You Only Live Once)

YOLO, or “you only live once,” can be the rallying cry to spend freely; say, to lease a pricey convertible or take that trip to Cancun. While it’s true you only have one life to live, engaging in irresponsible, unmoderated spending can lead to consequences down the road.

Going overboard with the YOLO mantra now can catch up with you when you’re older, leaving you without any financial cash cushion or safety net or perhaps saddled with high-interest debt. It’s not a pretty picture.

Bottom line: Your YOLO-inspired shortsightedness and poor money management habits could leave you wishing you’d reined in spending and had focused on managing your money better.

Recommended: Tips for Creating a Financial Plan

9. College Is a Waste of Time

Gaining knowledge and education is currency, literally. Research has found having a college degree significantly increases a person’s job prospects and earning potential. For instance, a landmark Georgetown University study found that bachelor’s degree holders earn a median of $2.8 million during their career, 75% more than if they had only a high school diploma. Workers with more education may also benefit from greater economic stability throughout their careers.

College not only gives you the knowledge you need for a chosen profession, but it can also help develop important soft skills (character traits and interpersonal attributes) as well. For example, communication, teamwork, problem-solving, and decision-making are all soft skills that college students develop and employers pay close attention to when hiring.

10. You Only Have to Pay the Minimum Every Month

Some of the worst financial advice you can get is to only make minimum credit card payments. It’s better to pay your balance off in full when the statement comes. Why? Otherwise, you’ll end up paying interest that will keep your bill increasing and making it all the harder to whittle down your debt.

Credit card interest rates are notoriously high (currently, typically between 15% and 19%), and paying only the minimum can keep you in debt for years. There are helpful credit card payoff calculators online that can help you find the best schedule to get rid of your debt.

11. File for Bankruptcy

It may be tempting to follow the “Why not just file for bankruptcy?” suggestion if your financial problems seem insurmountable. Some people will tell you bankruptcy is the best way to get out of financial difficulty and make a fresh start.

Although the starting over idea may have some appeal, declaring bankruptcy involves many drawbacks. For example, filing for bankruptcy results in long-term damage to your credit, which will stay on your report for seven to 10 years, becomes part of the public domain, and makes it much harder to qualify for a mortgage, among other loans. Bankruptcy also doesn’t cover certain debts, such as student loans, child support, or government-owed taxes. So declaring bankruptcy may relieve some but not all financial hardship.

Before seriously contemplating bankruptcy, try seeking other alternatives including consulting a credit counseling agency, consolidating your debt, and negotiating with creditors. These steps can help address the issues you’re having without taking that more drastic step that should be considered a last resort.

Recommended: Understanding Bankruptcy: Is it Ever the Right Option?

How Bad Advice Leads to Bad Decision-Making

Taking someone’s money advice as gospel without careful thought and research is one reason why people may make poor financial decisions. Emotions are another. Debt can bring on feelings of helplessness, low self-esteem, and loss of hope. It’s also linked to depression and anxiety. When these emotions overwhelm you, you might feel desperate enough to follow bad financial advice, just to know you are doing something.

Tips for Avoiding Bad Advice

There are ways you can protect yourself from the traps of bad financial advice. Consider these suggestions:

•   Carefully assess whether the advice someone gives you makes sense for your lifestyle and money goals. If you have any doubts about what they’re touting, trust your gut and don’t follow it.

•   Educate yourself on the basics of personal finance by listening to podcasts or reading books written by credible money experts. You can also find accurate information and finance articles online on sites such as consumerfinance.gov .

•   Avoid taking money advice from random people on social media. Many of the social influencers who tell you how to get rich aren’t always legitimate and often make claims that are too good to be true.

•   When in doubt, seek out a qualified professional. Make sure you’re seeing a certified financial advisor or certified financial planner. Although they’re not licensed to give you the same type of financial advice that a planner or advisor does, a financial coach can help you understand the fundamentals of finance, attain goals, and develop better money management skills.

The Takeaway

There’s no shortage of bad financial advice out there, and some of it might even sound good. It can encourage reckless financial behavior, whether that means overspending on YOLO moments or not worrying about saving for retirement until it’s too late. It’s wise to remember that solid money advice will come from trusted sources and be tailored to your specific situation, needs, and goals. Do due diligence before letting someone else’s advice sway your money management plans. You could dodge some serious financial risks.

One bit of financial advice that most experts will agree on is that earning high interest on your money and paying low fees is a win-win combination. You’ll find that when you open an online bank account with SoFi. Sign up with direct deposit, and you’ll earn a competitive APY, pay no account fees, and have access to a network of 55,000+ fee-free Allpoint ATMs. These perks can help your money grow faster. Plus, our Checking and Savings provides a quick and convenient way to manage your finances 24/7 while spending and saving in one place.

See the difference that banking smarter with SoFi can make.

FAQ

How do I know if my financial advisor is bad?

A good financial advisor takes into account your individual circumstances and doesn’t offer non-personalized, cookie-cutter advice. First and foremost, a good advisor should spend time getting to know you, your needs, and your goals. Signs of a bad financial advisor include pressuring you to make decisions; not letting you know how they’re paid; not being able to explain things in a way you can understand; encourages you to put all your money into one investment, and doesn’t return your calls or emails.

Who should I listen to for financial advice?

As mentioned above, a certified financial professional can be a good bet, but there are other places to go for financial information. Bank or credit union officers, your employer’s human resources department, and credit counseling agencies may be able to answer questions or make referrals. There are also government websites.

Can I sue my financial advisor if they give bad advice?

Yes. If you’ve lost money because your advisor misled you, gave you bad counsel, mismanaged your investments, or took other unlawful or unethical actions, you can sue for damages. Keep in mind though that it’s not a slam dunk. The merits of your case need to be strong and your claims provable. An experienced investment fraud attorney can help to recoup your losses.

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Photo credit: iStock/MicroStockHub

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.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBK0822028

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While most CDs are federally insured, an uninsured certificate of deposit is one that’s not covered by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Association (NCUA).

The FDIC and the NCUA provide insurance protection to consumers at banks and credit unions, respectively, up to $250,000.

Investing in an uninsured certificate of deposit could make sense if you’re hoping to earn a higher return for your money. But it’s important to understand the potential risks involved with uninsured CDs.

What Is an Uninsured Certificate of Deposit?

An uninsured CD is any CD that is not covered by depositor’s insurance. Depositor’s insurance protects consumers against financial losses in the rare event that a bank or credit union fails. The FDIC covers accounts at insured banks; the NCUA covers accounts at insured credit unions.

Types of Uninsured CDs

There are different kinds of uninsured certificates of deposit investors can open. The types of CD options available may include:

•   Yankee CDs. A Yankee CD is a certificate of deposit that’s issued by a foreign bank through a U.S. branch. These CDs may offer fixed or floating interest rates and require a minimum deposit of $250,000 or more. Because the funds are held at a foreign bank, these CDs are not federally insured.

•   Brokered CDs. A brokered CD is a CD that’s offered through a brokerage on the secondary market. Brokered CDs may be FDIC-insured if certain requirements are met; otherwise, they do not enjoy FDIC protection.

•   Market-linked or index-linked CDs. Market- and index-linked CDs offer returns based on an underlying market benchmark or index. For example, you might open an index-linked CD that aims to match the returns of the S&P 500® Index. These uninsured CDs are also referred to as equity-linked CDs.

A CD may also be uninsured if it’s issued by a financial institution that has no affiliate with the FDIC or NCUA. You can usually tell if a bank or credit union is FDIC-insured by looking for the appropriate signage at a branch or on the homepage of their websites.

Recommended: What is Liquid Net Worth

Advantage of an Uninsured CD

Why might someone choose to invest in an uninsured certificate of deposit?

A simple answer is that higher risk may be balanced against greater rewards. A two-year Yankee CD, for example, may offer a fixed rate approaching 2%. A regular two-year CD, on the other hand, might offer just 0.22% to savers. Thus the opportunity to earn a higher return may outweigh the potential risks for investors who are focused on growing their money with CDs.

Are Certificates of Deposit FDIC Insured?

The FDIC insures a number of different types of deposit accounts at banks, including certificates of deposit. So CDs can be FDIC-insured, if they’re held at member banks. FDIC insurance coverage can extend to:

•   Standard CDs

•   Jumbo CDs

•   No-Penalty CDs

•   Add-on CDs

•   Bump Up CDs

•   Raise Your Rate CDs

But again, not all CDs are FDIC-insured. That’s important to note, as an uninsured certificate of deposit doesn’t carry the same protections as insured CDs. If your bank fails, you wouldn’t automatically be entitled to recoup money deposited in an uninsured CD held at that financial institution.

You also need to keep in mind that FDIC insurance and NCUA insurance is not blanket coverage. There are limits on how far this coverage extends. Generally only $250,000 is covered, per account, per person (see details below).

How FDIC Insurance Works

FDIC insurance protects consumers if their bank fails. You don’t need to apply for this insurance coverage; you’re covered automatically when you have accounts at a member bank. If a bank fails, the FDIC pays depositors within a few days of its closing, up to the applicable limit.

The standard coverage limit is $250,000 per depositor, per account ownership type, per financial institution. This is the same coverage limit that’s offered by the NCUA for CD savers at credit unions. If you have accounts at both banks and credit unions, it’s possible to be covered by both types of insurance.

The coverage limit is important to remember when asking, Is a CD FDIC-insured? The answer may be yes, but only up to a certain amount, depending on how much money you keep in CD accounts and other deposit accounts at the same bank. The FDIC offers an online estimator tool to help you determine how much of your deposits are insured at any given time.

Understanding Uninsured Certificates of Deposit

An uninsured CD can be attractive as an investment if you’re looking for alternatives to the certificate of deposit options your bank offers. Generally speaking, CDs are safe investments. You can deposit money into a CD and earn a fixed interest rate. Once the CD matures, you can withdraw your deposit plus interest, or roll it over to a new CD.

Your money isn’t invested in the stock market so there’s very little risk of loss. And even if the bank fails, you’d likely still be covered by FDIC protection. An uninsured certificate of deposit, on the other hand, carries more risk since you don’t have FDIC coverage.

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Special Considerations for Uninsured CDs

When considering whether to invest in an uninsured certificate of deposit, it’s important to think about how much risk you’re comfortable taking. The risk factor can vary across different types of uninsured CDs. A floating rate Yankee CD, for example, may be riskier than a fixed-rate Yankee CD since it may be more difficult to estimate your returns.

Also, consider how much money you’ll need to invest if you’re looking into specialized uninsured CDs. While you might be able to open a standard CD at your bank with $500 or $1,000, you might need $100,000 or more to open a Yankee CD or a market-linked CD at a brokerage.

Uninsured CDs: Real World Example

It’s possible you might have an uninsured certificate of deposit without even realizing. For example, say you have checking and savings at the same bank. You don’t own those accounts with anyone else. Your combined balance across accounts is $200,000. You decide to open a new CD account and transfer $100,000 to it from an account held at a different bank.

Your combined balances across checking and savings and your CD account at the same bank now total $300,000. Under FDIC insurance rules, you’d only be covered up to $250,000 of that amount and the remaining $50,000 would be uninsured.

The FDIC applies insurance coverage limits per financial institution. So it’s possible to max out the limit at each bank where you have a CD account or any other eligible deposit account. Going back to the previous example, you could deposit $50,000 in the CD instead, then take the other $50,000 and open a CD at a different bank without exceeding FDIC insurance limits.

Pros of an Uninsured CD

Here are some of the advantages of uninsured CDs:

•   Investors may earn higher rates compared to regular CDs.

•   Market- or index-linked CDs may allow you to match the returns of a particular benchmark or index, similar to the way an index mutual fund works.

•   Brokered CDs may still be partially insured.

•   Uninsured CDs can also add diversification to a portfolio. The more diversified your investments are, the easier it may be to manage risk.

Cons of an Uninsured CD

Here are some of the drawbacks of an uninsured certificate of deposit:

•   No FDIC or NCUA protection.

•   Greater risk could mean a greater possibility of losing money.

•   Larger deposits may be required to open an uninsured CD.

Additionally, you may not be able to get a CD loan with an uninsured certificate of deposit. A CD loan allows you to borrow money using your CD balance as collateral. In terms of CD loan pros, this type of borrowing arrangement can help you build credit as you repay the loan. Your CD deposit can also continue earning interest during the loan period.

The Takeaway

Uninsured CDs could be a good fit for your financial plan, if you’re looking to set aside a large amount of money for a fixed period of time, at a higher rate than a standard CD or savings account. There are various types of uninsured CDs to choose from, but they generally require higher minimum deposits of $100,000, $250,000 or more. And these CDs may have additional restrictions, so be sure to do your research. A Yankee CD, for example, is only available via the U.S. branch of a foreign bank.

CDs aren’t the only way to save, of course, and SoFi now offers a new all-in-one Checking and Savings that can help you save big. You can sign up for an account right from your phone and pay zero account fees — and if you qualify and sign up with direct deposit, you can earn a competitive APY.

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

Are all CDs FDIC insured?

No, only CDs that are held at FDIC member banks are insured. FDIC coverage applies up to the standard limit of $250,000 per depositor, per account ownership type, per financial institution.

Who benefits from a certificate of deposit?

People who want a safe, secure way to save money while earning interest can benefit from opening one or more CD accounts. A CD can be used to save for short- or long-term goals and FDIC coverage offers reassurance that your money won’t be lost if your bank goes under.

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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.

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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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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