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Does Buying in Bulk Save Money?

Conventional financial wisdom says buying in bulk is smart. When you buy en masse, the price per unit tends to drop. So the thinking goes, if you buy more, the less each unit winds up costing you. Seems simple enough, but like anything financial, there’s a bit more to the story.

It’s worth doing a deep dive on buying in bulk. What do you need to know, what mistakes should you avoid, and do you really save money?

The Pros of Buying in Bulk

Who isn’t looking for ways to save money? A firm financial foundation starts with saving. While the big deal is the potential for saving money on the cost per item, there are other reasons to shop in bulk.

For one thing, it’s typically more socially responsible and environmentally friendly because bulk purchases usually have significantly less packaging per use than smaller purchases have. (Envision a mammoth pickle jar or tub of frosting.)

Ideally, buying in bulk also means you shop less, and that’s less time spent on the road and burning gas.

Then too, who knows what additional savings you might rack up just by being in the store less frequently and having fewer opportunities to pick up things that weren’t on your list?

If you’re the organized type who is big on preparing meals in advance, cooking lots of food and freezing it, buying in bulk can make that endeavor easier.

For sure it’s cost efficient to prepare your family’s favorite pasta dishes and soups and have enough for today and whenever you’re ready for round two, or three.

Finding the Price Per Unit

This is one time you need to do the math. To capitalize on a bulk buy, determine the cost per unit. What is a unit? Think measurements like ounces, square feet, grams, and gallons.

A bottle of olive oil is not a unit. A fluid ounce of olive oil is.

A roll of paper towels is not a unit. A square foot of paper towels is.

Figure out how many units you are buying. Take the total cost of your purchase and divide that by the number of units.

Then compare the unit prices of a few packages of the same product to determine which is the better value.

Ideally, the cost per unit of a bulk buy should be at least 50% below what you would normally pay.

Although a supersized item usually has a lower cost per unit than its smaller brethren, crunch the numbers to see.

How Much Can You Save By Buying in Bulk?

The answer is: It depends. While the amount shoppers save depends on the item, they can anticipate saving around 20% on purchases, though it can be 50% or more.

Foragers can also up their savings from buying in bulk by using coupons for those items.

Remember, what’s important isn’t an item’s price but the price per unit.

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Two Tips for Buying in Bulk

When you want to stop spending so much and begin buying in bulk, you need a game plan. It’s a good idea to reach for the familiar and sweeten the deal by looking for familiar items that are also on sale. That will snag you the best prices and help keep your bank account well padded.

Stick With What You Know

This is not the time to experiment. If you’re loading your cart with goods, you don’t want to be guessing about whether you’ll love them or not. Go for the family’s beloved items.

Buying in bulk and getting a deal is worthless if nobody wants to eat or use what you buy.
That’s money down the drain.

Search for Your Favorites on Sale

Just like you don’t want the tax tail to wag the investment dog, you don’t want to buy what’s on sale solely because it’s on sale.

When trying to cut your grocery bill, the goal is to get what you know and love on sale, not to be overly adventurous. The latter can leave you disappointed, with a few fewer dollars in your pocket to boot.

What to Buy in Bulk

Some products are perfect for stockpiling. While your list will depend on your family, think items like paper towels, toilet paper, detergent, dishwashing liquid, sponges, aluminum foil, toothpaste, canned goods, frozen foods, beans, rice, sugar, flour, and nonperishables.

On the flip side, generally, you don’t want to load up on fresh produce unless you are cooking for a crowd, as your family may not be able to eat it all before it perishes.

The Cons of Buying in Bulk

For sure buying in bulk can work to your advantage, but it’s not without caveats. You have to come out of your pocket big time.

Let’s say you pay $40 for $60 worth of lotion, but what if $40 puts a bigger squeeze on your budget than buying them one at a time, weeks apart? If you use a credit card, fine — if you can pay off the entire bill when it’s due. If you incur interest charges, that will eat into your “savings.”

Keep in mind, too, that you need space to store all that stuff and a car to pile it in to take home. If either of these are issues, buying in bulk may not be ideal for you.

Know thyself. Maybe you are the person who gets bored quickly and takes to heart that variety is the spice of life. When you’ve got mega amounts of the same product, be prepared for sameness for a long stretch, which is all the more reason to purchase only what you love, as you may be using it for months.

If you’re going deep into bulk buying, you likely won’t settle only for what you can get in bulk at the grocery store but will want to shop at the warehouse stores like Costco and BJ’s. Consider the annual membership fees that are required.

Costco’s “Gold Star” membership is $60, and the “Executive” level is $120. BJ’s tiers are $55 and $115. Sam’s Club advertises membership fees of $45 and $100.

Will you frequent the store enough to make the fee worthwhile?

Mistakes to Avoid When Buying in Bulk

As with all shopping, you need to be mindful of a few things. Understand that more is more. If you have something in abundance, it’s all too easy to be less conscious of how much you’re using, meaning you could overuse.

There’s also the issue that if you’re earning a lower income and/or have considerable debt, you may not be able to come up with enough money to purchase bulk products versus their smaller and less expensive single-use versions. One big purchase could blow your weekly budget. If you spend a chunk of money to buy a mega-pack of toilet paper, can you then afford other necessities?

Also, as noted above, think about how you will store the large sizes. And when it comes to food, will you be able to use it up before it spoils? So think carefully before assuming that “bigger is better” and cheaper. Sometimes, shopping with a friend or two at warehouse stores and dividing the goods can work well. You split the costs, you all save, and everyone avoids waste.

One last note: Buying in bulk can be a fun way to save money, but don’t get so giddy grabbing great buys that you forget important things like expiration dates. Products like bleach and sunscreen may expire in 12 months or less.

The Takeaway

Buying in bulk has its advantages. Getting a good deal can keep you motivated to save money, but you’ll need to be savvy. Buy only what you need and what you can use in a timely fashion.

Like all shopping, but particularly in warehouse stores, temptation is everywhere. It’s best to know how to compare cost per unit and to have a list.

Speaking of planning, you can make your money grow faster, which can help you meet your financial goals, with SoFi. Open Checking and Savings, an online bank account that has no account fees or monthly fees, and with direct deposit, you’ll earn a whopping 1.25% APY.

Sign up with SoFi


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.
Third-Party Brand Mentions: No brands or products 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. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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10 Advantages of Credit Card: Perks of Using It

10 Advantages of Credit Cards

You may already know that credit cards offer an easy and convenient way to make purchases, but that’s just one of many potential credit card benefits. From rewards offerings like cash back, travel points, and one-time bonuses, to financial benefits like payment security, the opportunity to build credit, and a grace period, there are a number of reasons to keep a credit card in your wallet.

Read on to learn 10 advantages of using a credit card, as well as some tips to ensure you use your card responsibly.

Recommended: Tips for Using a Credit Card Responsibly

1. Cash Back

Many credit cards allow you to earn cash back on everyday purchases, such as gas or groceries, a reward introduced long ago in the history of credit cards. Essentially, with cash back, you get a small amount back in cash that’s a percentage of how much you spent.

With cash-back cards, you can usually put any cash you receive towards your credit card balance, or you can opt to receive the money through a direct deposit to your bank account, as a check or gift card, or put it towards other purchases.

2. One-Time Bonuses

Credit cards sometimes will offer a one-time, introductory bonus that allows you to earn enhanced rewards as long as you spend a certain amount on your card within the first months your account is open. For instance, you might be able to earn a bonus of 100,000 reward points if you spend $6,000 within the first six months of opening your card. These rewards can be a great way to get something extra out of opening a new credit card.

3. Reward Points

Reward points are similar to cash-back rewards in that they offer an incentive for you to use your card. You’ll earn points for every dollar you spend on your card, such as 1 cent for every dollar spent. You can then redeem those points to put towards travel, gift cards, merchandise, charitable donations, or statement credits.

4. Safety

Another one of the many perks of how credit cards work is the built-in security and safety features they offer. Many major credit card issuers offer a zero-liability policy for fraud, meaning you won’t be responsible if any fraudulent purchases are charged to your account. Other credit card safety features include encryption and chip-and-pin technology, which keeps your account information safe when using your card for in-store transactions. Plus, many credit cards offer fraud and credit monitoring services to allow you to easily keep tabs on your account.

Compared to debit cards, credit card security tends to be much more robust and the protections against fraud are more consumer-friendly.

Recommended: What is a Charge Card

5. Grace Period

This usually isn’t the first advantage of a credit card that comes to mind, but it’s a major one and a key part of what a credit card is. A credit card’s grace period between when your billing period ends and when your payment is due. During this grace period, no interest accrues. So if you are able to pay your balance in full during the grace period, you won’t owe any interest.

6. Insurance

Many credit cards come with insurance. For instance, travel credit cards might come with travel insurance, trip cancellation insurance, trip delay insurance, or rental car collision insurance. Cards may also offer price protection, extended warranties, purchase protection, or phone protection.

7. Universal Acceptance

Credit cards are pretty much accepted anywhere, and you can use one whether you’re paying a bill via snail mail or making a purchase in store, online, or over the phone. A credit card can be used to pay for most things, including paying taxes with a credit card.

Breaking it down by credit card network, Visa and Mastercard are accepted in over 200 countries, American Express cards are accepted in over 160 countries, and Discover cards are accepted in over 185 countries. This comes in handy when you’re traveling and don’t want to fret about converting your U.S. dollars into foreign currency.

If you’re running a business, accepting credit card payments can help prevent fraudulent activity, such as someone trying to pay with counterfeit bills. It can also make it easier to keep track of transactions and purchases related to your business.

Recommended: When Are Credit Card Payments Due

8. Building Credit

Another major perk of using a credit card is that it can help you build credit. Credit card issuers report your activity to the three main credit card bureaus — Transunion, Equifax, and Experian — which is then used to calculate your credit score.

If you maintain a continuous streak of on-time payments, it will help with your payment history, which makes up 35% of your credit score. Plus, the longer you keep a credit card open, the more it helps with your length of credit, which is 15% of your score. A credit card can also help you build credit because it helps with your credit mix, which makes up 10% of your score.

9. Increased Purchasing Power

Having a credit card can increase your purchasing power, as you’ll have access to a line of credit that can make it easier to buy big-ticket items. For instance, if you’re down to $1,000 in the bank, you won’t be able to purchase that $2,000 laptop. But if you have a credit line of $3,000 (and know you have a big paycheck en route), you can purchase that laptop you’ve been wanting when it’s on sale and then pay it off when the funds hit your bank account.

Take this credit card advantage with a grain of salt though — using your credit card to cover more than you can immediately afford to pay off can lead you to get into credit card debt.

10. Keeping Vendors Honest

Unscrupulous behavior from vendors does happen, unfortunately. If you pay a vendor through another means, such as cash, Venmo, or by writing a check, the vendor will have an easier time getting away with not providing the goods or services they promised.

But if you pay a vendor using a credit card, the credit card issuer has an incentive to get to the bottom of the issue and prevent fraud. And if you dispute a credit card charge, the issuer will withhold funds from the vendor. In turn, the transaction won’t go through, and you may be able to get your money back.

What to Look for in a Credit Card

Before applying for a credit card, do some comparison shopping first. Think about what kind of credit card you might need. Depending on your needs, preferences, and lifestyle, a travel credit card or cash-back card might be the best fit for you. Or, if you’re after a card with a low APR and minimal fees, a solid everyday card might be a better fit. If you’re working to rebuild your credit, you might consider a secured card.

Besides any credit card perks, look at the card’s interest rate. Your annual percentage rate (APR) will vary depending on your creditworthiness and the type of card you’re applying for (top rewards cards tend to have higher APRs than more basic cards). In general, however, a good APR for a credit card is one that’s below the current average credit card interest rate, which is 14.56% as of May 2022.

Additionally, it’s important to check whether a card has an annual fee. If it does, look at its perks and how much you anticipate putting on the card in a given year to see if that fee is worth it. Also take into consideration any other fees a credit card may charge, such as late payment fees, foreign transaction fees, and balance transfer fees.

Using a Credit Card Responsibly

To use a credit card responsibly, it’s crucial to make on-time payments of at least the minimum payment due each billing cycle. This ties in with not spending more than you can afford to pay back, or running up a high balance on multiple cards, both of which could lead you into credit card debt.

Another rule of thumb to use your credit card responsibly is to keep your credit utilization ratio — the total amount you owe divided by your total available credit — under 30%. The average credit card limit in the U.S. in 2020 was $30,365, according to data published by the credit bureau Experian. So, to maintain a 30% credit utilization ratio, you’d need to keep your balances below $9,109.50.

When Not to Use a Credit Card

If you’re spending more than you can afford to pay back, or can pay back within a reasonable amount of time, then it’s best to avoid using a credit card. The advantages of a credit card aren’t worth it if using credit cards is causing you to get into debt.

You’ll rack up interest charges on any remaining balances each month, and those costs can start to add up fast. While there are options like credit card debt forgiveness, they aren’t necessarily easy to get, and you can damage your credit score in the process.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Apply for a Sofi Credit Card Online and Earn 2% Cash Back

As you can see, there are a number of potential advantages of credit cards, from rewards to payment security to an interest-free grace period. Enjoying credit card benefits requires using your credit card responsibly though. If you’re racking up more charges than you can afford to pay back, the interest and other implications could quickly outweigh the credit card advantages.

If you are in the market for a new credit card, the SoFi credit card is worth considering given the perks it offers. SoFi cardholders earn 2% unlimited cash back when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back when redeemed for a statement credit.1

Apply for a SoFi credit card today.

FAQ

How secure are credit cards?

Credit cards come with many security features, such as pin-and-chip technology, fraud and credit monitoring, and zero-liability fraud protection. Plus, there are usually features like two-factor authentication or biometrics at login, and you can temporarily freeze your credit card if you suspect fraudulent activity.

How can I protect myself from credit card fraud?

You can protect yourself from credit card fraud by reviewing your credit card statement each billing, storing your cards safely in your wallet or purse, keeping your passwords protected, and being vigilant when using your credit card. You can also set security alerts whenever there’s a transaction that’s over a certain dollar amount, or for in-person, online, or over-the-phone purchases. If you suspect fraudulent activity, block your card from further usage and report the suspicious activity immediately.

Do credit cards allow you to save more?

Credit cards usually enable you to spend more. However, if used smartly and responsibly, they can help you save through credit card rewards and other advantages, such as insurance and discounts. For a credit card to help you save, however, you’ll want to stay on top of payments and ideally pay your balance in full. Otherwise, the interest charges might outweigh any perks of credit cards.

Should I use a credit card if I have a poor credit score?

If you have a poor credit score, it could be a good idea to use a credit card to rebuild your score — as long as you can use it responsibly and manage on-time payments. Keep in mind that those with poor scores likely won’t get approved for the cards with the most competitive rewards, and they may face a higher APR and fees.


Photo credit: iStock/Suphansa Subruayying

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

Third-Party Brand Mentions: No brands or products 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.
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) 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.
1See Rewards Details at SoFi.com/card/rewards.
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Secured vs. Unsecured Credit Card: What’s the Difference?

Secured vs. Unsecured Credit Cards: What You Need to Know

If you have a thin credit profile or want to rebuild your credit , you may come across secured credit cards when searching for a card you can qualify for. But what’s the difference between a secured vs. unsecured credit card? And how can you gauge which one is right for you?

Let’s take a look at how both types of credit cards work and the differences between secured and unsecured credit cards, so you can decide which to choose.

What Is a Secured Credit Card?

Like a traditional, or unsecured, credit card, an unsecured credit card is a type of revolving loan. This means that it offers a line of credit that you can borrow from as needed and then repay. However, with a secured credit card, you’ll need to put down a deposit, which “secures” the credit card.

The bank holds onto that money as a form of collateral if you default on payments, but it’s refundable if you close your account or upgrade to an unsecured credit card. Your secured credit card’s credit limit, an essential part of what a credit card is, usually is the same amount as your deposit. The deposit is typically at least $200 to $500, though it can range as high as $25,000 depending on the specific card and how much you can afford to put down.

A secured credit card is designed for building credit. So, if you’re working on rebuilding your credit or don’t have much in the way of a credit history because you’re young or new to the country, it could be a good option. The age requirement to get a credit card that’s secured is the same as for an unsecured credit card.

How Secured Credit Cards Work

As mentioned before, you’ll need to put in a deposit to open a secured credit card. Your available line of credit is usually the same amount as your deposit. Just like how credit cards work when it’s an unsecured card, you’ll need to repay the balance, and your credit limit will get replenished as you make payments.

Like with an unsecured credit card, there’s a minimum monthly payment you’re responsible for. If you carry a balance from month to month, you’ll incur interest charges. Your credit card activity, including your payment history, is generally reported to the three major credit bureaus, Experian, Equifax, and TransUnion.

Your deposit on a secured credit card isn’t used to make payments should you fall behind or miss payments altogether. If you’re unable to make payments and your account goes to default, you’ll lose your deposit. Plus, it can hurt your credit. If the balance you owe is larger than the deposit, you might be on the hook for the difference owed.

Secured credit cards may offer a “graduation” option. In other words, if you make on-time payments and show a track record of responsible financial behavior, the credit card issuer might offer you an unsecured credit card.

Recommended: Tips for Using a Credit Card Responsibly

Pros and Cons of a Secured Credit Card

Let’s look at some of the advantages and downsides of a secured credit card:

Pros of a Secured Credit Card Cons of a Secured Credit Card
May qualify with a low credit score or limited credit history Need to provide a deposit
Could be easier to get approved for than an unsecured credit card Credit limit is usually low
Can be a way to build or rebuild credit as activity is reported to credit bureaus Can have higher interest rates and more fees than secured credit cards
Offers a revolving line of credit you can use as long as you make payments Could lose your deposit if you’re late or miss payments

What Is an Unsecured Credit Card?

Also known as a traditional credit card, an unsecured credit card doesn’t require a deposit or collateral of any sort. Instead, you’re offered a credit limit based on your creditworthiness and other factors, such as your income and existing debt. The lender simply has your word that you’ll pay back what you borrow, which is why you’ll also generally need a higher credit score and a more robust credit history to qualify.

Just like with a secured credit card, the credit remaining on an unsecured credit card dwindles as you rack up a balance. Once you make a payment, your limit replenishes. For example, let’s say your credit limit is $5,000. If your balance is $500, your credit limit goes down to $4,500. Once you pay off your balance, your credit limit goes back up to $5,000.

The annual percentage rate (APR) and terms associated with an unsecured credit card are usually better than they are for a secured credit card. Typically, the better your credit score, the better your rates and terms are for an unsecured credit card. The average credit card APR as of May 2022 was 14.56%; meanwhile, many of the top secured credit cards have APRs well over 20%.

How Unsecured Credit Cards Work

Because an unsecured credit card is a form of revolving credit, you have access to that credit line as long as you remain in good standing and your account stays open. Unsecured credit cards also require you to make minimum monthly payments to avoid incurring late payment fees and harming your credit score. You’ll owe interest on any balance that carries over from month to month.

Sometimes, unsecured credit cards might offer perks, such as cash-back rewards and travel insurance.

Pros and Cons of an Unsecured Credit Card

Here are some of the pros and cons of traditional, or unsecured, credit cards:

Pros of an Unsecured Credit Card Cons of an Unsecured Credit Card
Higher credit limits compared to secured credit cards Can be harder to get approved for
Need at least a fair credit score to qualify (580+) Can still incur interest and fees
Can help you build your credit May entice you to spend more than you can afford due to higher credit limits
Opportunity to earn rewards and enjoy other benefits Could damage your credit if not used responsibly

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Similarities Between a Secured Credit Card and an Unsecured Credit Card

When it comes to a secured credit card vs. an unsecured credit, there are a number of similarities:

•   Both are revolving lines of credit, so you’ll have access to those lines of credit as long as you keep the card open and your account in good standing.

•   Your payments are reported to credit bureaus. If you make on-time payments, your credit score will improve. Conversely, it can drop if you don’t use your credit card responsibly.

•   The process of how to apply for a credit card is usually similar with a secured vs. unsecured credit card. You can usually fill out an application online, in person, over the phone, or through the mail.

•   Both secured and unsecured credit cards come with interest rates and fees. Depending on the card, there might be an annual fee.

•   Both types of credit cards usually offer a grace period, which is the period between when your billing cycle ends and your payment due date. During this time, you may not be charged interest as long as you pay off your balance in full by the payment due date.

•   While it’s less common among unsecured credit cards, both types of credit cards might feature perks, such as cash-back rewards, car rental insurance, trip and travelers insurance, extended warranties, and price protection.

Recommended: What is a Charge Card

Differences Between a Secured Credit Card and an Unsecured Credit Card

So what’s the difference between a secured and unsecured credit card? There are a handful of items that set these types of credit cards apart:

•   For starters, secured credit cards require a security deposit, whereas unsecured credit cards do not.

•   The credit limit for a secured credit card usually matches the deposit amount. With unsecured credit cards, the credit limit usually depends on a handful of factors, such as your creditworthiness.

•   Secured credit cards generally carry higher interest rates and fees, whereas unsecured credit cards typically have lower interest rates and fees.

•   Unsecured credit cards usually have one variable interest rate, meaning the card’s interest rate fluctuates over time based on an index. Secured credit cards can have a fixed or variable rate.

Secured vs. Unsecured Credit Card: Which Is Right for You?

Now that you know the similarities and differences between a secured and unsecured credit card, you can start to assess which one might be right for you. Here’s a high-level overview to help you better compare what sets secured vs. unsecured credit cards apart:

Secured Credit Card Unsecured Credit Card
Requires a deposit to open Does not require a deposit
Usually available for those with thin credit histories or lower credit scores Usually need at least fair to good credit to qualify
Lower credit limits, which are based on the amount of the deposit Higher credit limits, which are based on creditworthiness
Fewer card options available Variety of card options, such as cash-back cards, travel cards, business cards, and retail cards

Staying on Top of Your Credit After Choosing a Card

No matter if you decide on a secured credit card or an unsecured credit card, it’s important to stay on top of your payments. Ideally, you’ll pay the balance in full each billing cycle. Otherwise, you’ll owe interest.

At the very least, make sure to make the minimum payment each month. That way, your credit will stay intact and you’ll avoid late fees. If you’re struggling to make payments, reach out to the lender and see what they can do. They might be able to change the payment due date so it’s more in line with what’s feasible for you, or let you temporarily skip a payment to catch back up.

Recommended: When Are Credit Card Payments Due

Get a New SoFi Credit Card Online and Earn 2% Cash Back

If you’re looking for a new credit card, the SoFi credit card is an unsecured credit card that offers rewards. SoFi cardholders earn 2% unlimited cash back when redeemed to save, invest, or pay down eligible SoFi debt. Cardholders earn 1% cash back when redeemed for a statement credit.1 Plus, if you pay at least the minimum amount due for 12 consecutive months, your APR will be lowered by 1%.

Learn more and apply for a SoFi credit card today.

FAQ

Is an unsecured or secured credit card better?

Whether a secured vs. unsecured credit card is better depends on your situation. An unsecured credit card might be better for you if you’re having trouble getting approved for a secured card and can afford to make the deposit. On the other hand, a secured credit card may be better if you have at least an average credit score, are looking for a higher credit limit, and would like more card options.

Should your first credit card be secured or unsecured?

It really depends. If you have a thin credit history, are looking to build credit, and can afford the security deposit, a secured credit card might be the best route to take as they’re generally easier to qualify for. Note that you’ll probably need to stomach a higher interest rate and a lower credit limit though. While an unsecured credit card doesn’t require a deposit, it might be harder to get approved for one if your credit is less-than-stellar or you don’t have much of a credit history yet.


Photo credit: iStock/cesar fernandez dominguez

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

Third-Party Brand Mentions: No brands or products 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.
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) 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.
1See Rewards Details at SoFi.com/card/rewards.
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How to Deposit Cash at an ATM

How to Deposit Cash at an ATM

Can you deposit cash at an ATM? The answer depends on your bank, the ATM you’re using, and a variety of other factors — but generally speaking, yes, you can make cash or check deposits at many ATM terminals.

For most customers, though, depositing money at an ATM isn’t the only option — or even necessarily the most convenient. Still, it’s a good system to understand if you’re someone who regularly deals with cash payments and you’d like to use those monies to pay for things like utility bills, where cash may not be accepted or can be inconvenient.

In this article, we’ll walk you through:

•   How to deposit cash an ATM

•   Potential problems with depositing money at an ATM

•   Whether you pay fees when you deposit cash at an ATM

•   Alternative payments to ATM deposits that may work better for some customers

Depositing Cash at an ATM

In order to deposit cash via ATM, the first thing you need to do is ensure that the ATM you’re visiting is capable of taking cash deposits — and that your bank takes deposits through that particular type of ATM. For example, if you have an account with Bank of America, you’ll likely be able to make a cash deposit at an ATM located at or inside a physical Bank of America location — but you may not be able to make a cash deposit at the third-party ATM at your local grocery store or concert venue.

In order to avoid wasting time at an ATM that won’t do the trick, it’s a good idea to do some research ahead of time. Log onto your bank’s website and look for an ATM locator, which will show you all nearby locations and may also specifically mention which services those ATMs can perform (including whether or not they accept cash or check deposits).

Now, here’s the nitty-gritty of how to deposit cash at an ATM: When you arrive at the ATM, you’ll most likely need to use your bank card and personal identification number (PIN) to confirm your identity and pull up the ATM’s service options, though some banks may allow you to access an ATM using cardless withdrawal technology through your phone. Either way, once you’ve got the ATM’s options screen pulled up, you’ll follow the instructions to make a cash deposit, and then select the account you want the deposit to go into (if you have multiple accounts, such as a checking and savings account, for example).

Some ATMs may have limits as to how many paper bills they can take at once, and ATMs typically don’t take coin deposits. As with any situation where you’re feeding bills into a machine (like when you’re trying to get a vending machine snack in your office lobby), you may end up with one or more bills fed back to you if the machine reads them as damaged or potentially counterfeit.

In general, though, how to deposit cash at an ATM is that simple: just feed the money in, confirm the amount of the deposit, and be sure to verify that you’re signed out of the ATM before you get on your way!

Recommended: Don’t Let Your Bank Rob You: How To Avoid ATM Fees

When Is the Money Available with ATM Deposits?

Once again, the answer to this common question is, “it depends.” At some ATMs, cash deposits are made available immediately, while with other ATMs you may experience some lag between the moment you feed the money into the machine and the moment the money shows up in your account balance.

The FDIC does have regulations that require banks to make cash deposits available within a certain amount of time — but in the case of a proprietary ATM, availability is not required until the second business day after the deposit. And at a third-party ATM, funds don’t have to be made available until the fifth business day, so be sure to plan ahead if possible!

Again, your bank may have more specific information available on their website as to their specific policies.

Recommended: Understanding Funds Availability Rules

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Open a SoFi Checking and Savings Account and start earning up to 1.25% APY on your cash!


Potential Problems With ATM Deposits

You’ve now learned the answer to the question, “Can I deposit cash at an ATM?” Next, let’s address, “What can go wrong with ATM deposits?”

Well, for starters, the length of time a deposit may be held can be problematic for some customers if they need access to the funds as soon as possible. And the automated reader on some ATMs may refuse to accept legitimate bills, at least on the first try, which can be frustrating.

For another thing, your bank or financial institution may simply not allow it. Certain online-only banking services, such as Chime, don’t offer ATM cash deposit capabilities. Instead, you must deposit cash at local retail partners (like Walgreens) through an at-the-counter transaction.

The good news is, most ATMs have a phone number printed on the machine itself that you can call if you experience any technical errors or other problems. And, as always when interacting with ATMs, be sure to look out for your personal safety. Make the deposit during the day and ideally with the company of someone you trust. Never give out your PIN.

Recommended: How Old Do You Have to Be to Open a Bank Account?

Are There Any Fees for Depositing Cash at an ATM?

Yet again, the answer to this question is, “It depends.” If you’re using an in-network ATM that’s directly linked to your bank, you’re unlikely to encounter any fees. But if you’re using an out-of-network ATM, there are a couple of fees you might need to be on the lookout for.

•   ATM fees are sometimes charged by the third-party owner of the ATM itself, and may be as little as $1.50 or as much as $10 per transaction.

•   Out-of-network ATM fees may also be charged by your bank, which could add an additional charge of $2 to $3.50 to the transaction.

•   Finally, keep in mind that foreign transaction fees can rack up quickly if you’re using an ATM overseas.

As always, we recommend checking with your bank ahead of time to get a better grasp of their specific policies and avoid these unnecessary fees if possible.

Why Make an ATM Cash Deposit?

You may be wondering why this topic even needs to be addressed. So many of us rarely use cash these days (or even use it), now that cards are nearly universally accepted. That’s one alternative to using cash. Digital money transfer apps like Venmo and CashApp also make it easy to split the bill and pay back friends and family without touching paper money. Plus, the COVID-19 pandemic caused some businesses to at least temporarily suspend the use of cash altogether to avoid further what were feared to be potential routes for contamination.

But many workers still get paid at least partially in cash, particularly those whose income includes cash tips, such as waiters and baristas. If you are among their ranks, you’ll definitely want to know, “Can you deposit money at an ATM?”

And as digital-first, online bank accounts become more common, some people don’t have the option of walking into a brick-and-mortar bank to make their deposits.

Making ATM cash deposits is sometimes the best way to get that money into an account where it can be more readily used to pay bills — or transferred to a savings or investment account, where it may earn more interest.

The Takeaway

Can you deposit cash at an ATM? Yes, you often can. And if you need to make your cash available for paying bills or other non-cash financial transactions, depositing it at an ATM can be a quick and potentially cost-free way to do so. While it may not be the most common financial transaction these days, it’s definitely a possibility that can help you easily manage your money.

At SoFi, we’re all about making banking simple. And profitable for you. When you sign up for our Checking and Savings with direct deposit, you’ll earn an amazing 1.25% APY and you won’t pay any of the usual fees (not monthly, minimum-balance, or overdraft).

Bank smarter with SoFi.

3 Great Benefits of Direct Deposit

1. It’s Faster
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

2. It’s Like Clockwork
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.

3. It’s Secure
While checks can get lost in the mail – or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.

FAQ

How do I deposit cash at an ATM?

To deposit cash at an ATM, you’ll likely need your bank card and PIN, and then you simply follow the directions on the machine’s screen. However, it’s good to research first where ATMs in your network are or else what the fee will be to deposit cash at an out-of-network ATM.

Can I deposit checks at an ATM?

Yes, you can usually deposit a check into an ATM, though some machines may not accept them. It often takes a couple of days for the check to clear and for you to be able to access the funds.

Are there ATM deposit fees?

Whether or not you will pay to use an ATM varies. Typically, you will not be assessed a fee to use an ATM that belongs to your bank. However, if you use an out-of-network machine, you will likely pay a couple or a few dollars for a transaction.


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://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.
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.
Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Photo credit: iStock/RgStudio
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Benefits of Using Mobile Deposit

These days, more and more of us are handling our money matters from our phones. Splitting a dinner tab with a friend, depositing a check, transferring funds: All you need is a mobile device, a secure internet connection, and you’re golden.

Which makes perfect sense, considering how our phones have changed the way we do, well, just about everything. You can order NYC bagels to be delivered to your doorstep the next day or send live video footage to someone across the world.

But back to banking: Mobile banking has soared in popularity in recent years. In fact, two-thirds of all banking customers are conducting their business digitally, whether via a computer or a mobile banking app.

Many mobile banking apps allow you to transfer money between accounts, pay bills, check your account balances, and make mobile deposits. The latter is a huge convenience. In years past, a person either had to turn up at a bricks-and-mortar bank branch with a check or deposit it at an ATM. Now, you can snap a couple pics of your check on your phone and voilà! Your check is deposited.

It may seem like magic, but it’s actually technology at work. It’s worthwhile to take a closer look and understand:

•   What is a mobile check deposit?

•   How does mobile deposit work?

•   What are the pros and cons?

How Does Mobile Banking Work?

Mobile banking is a service provided by a financial institution, like a bank, that allows its customers to conduct transactions, such as checking an account balance, using a mobile device. This is somewhat different from internet banking, which generally refers to banking done on a computer or laptop.

The primary difference between internet banking and mobile banking is that mobile banking uses an app, aka software designed specifically for a mobile device. Customers using a computer would log onto an online portal to access their accounts using their internet browser.

It is possible to use a smartphone’s internet browser to log into the online portal, but a bank’s app generally provides a better and faster user experience, as it was specially designed and built to be used on a smartphone or tablet. “Mobile banking” refers specifically to the use of a bank’s app.

What Is A Mobile Check Deposit?

The latest iterations of mobile banking have made the use of mobile deposit widely available. With mobile deposit, you’re able to deposit a check into your account using your phone’s or your tablet’s camera.

Most financial institutions require that, once you’ve opened their app, you type in the amount of the check and take a photo of both the front and the back of the check. Before you do this, be sure to endorse the back of the check. Some banks may also request that the depositor write “For Mobile Deposit at [Bank] Only” or something similar.

The app generally lets you use this feature 24 hours a day, although some banks may only make a same-day deposit up until a certain hour, like 10:00 pm. Every bank will be different, but most banks will deposit a check quite late in the evening, even if they won’t allow 24 hours.

How long do mobile deposits take to clear? Deposits may show up immediately, later on the same day, or the next day. Sometimes, they’ll be fully available and sometimes partially, depending on the rules of your bank. For example, say you make a mobile deposit worth $3,000. Your bank may make $500 available immediately and the remaining $2,500 available in two business days.

Each bank is going to have its own “funds availability” policy, though there are some federal regulations on how long a bank can place a hold on a deposited check. (For example, a bank cannot place a hold on a check valued at less than $200.) A bank can always have rules that are less strict than the federal rules, and release the funds for use sooner. Again, it is always going to depend on the bank, so be sure to ask.

Some banks may have one-day or monthly dollar limits on mobile deposits (like $10,000 per month). Others may have limits on the size of checks that they are willing to cash over mobile deposit. For example, some banks will not allow customers to mobile deposit checks worth more than $5,000.

How Does Mobile Deposit Work?

How does mobile deposit work? For the customer, it’s quite simple actually. All you need to do is take a picture of your check within your financial institutions app and then the information is transmitted. It’s that easy! Convenience is a major advantage of mobile banking.

When you snap that photo, a bank or financial institution will generally produce a copy of the check as a stand-in for the physical copy. Using this facsimile, a bank will work to collect the money from the check writer’s account.

Even before the bank is able to retrieve the money from the check’s source, the money is deposited into your account. Though the technology is incredible, the money itself isn’t actually moving that fast.

That produces one of the primary problems with mobile banking — folks might spend or transfer the funds before the money has fully cleared. Unfortunately, just because you use mobile deposit to put a check into your account, and you see it credited there, that doesn’t necessarily mean the funds are yours to be used.

Think of the money you see in your bank account after you’ve done a mobile deposit as placeholder money. If the bank couldn’t obtain the funds for whatever reason and the placeholder funds don’t clear, it leaves the banking customer vulnerable to bounced checks and overdraft charges. (Those are issues you want to clear up quickly, to make sure you don’t wind up with black marks or errors on your credit report.)

After making a mobile check deposit, hold onto the physical copy of your check for two weeks in case there is a problem getting the check deposited. If you need to, mark it so you know that you’ve already deposited the check.

After a couple of weeks, when the check has cleared, you should be fine to get rid of the check. As with any document that contains private bank information, do not simply put the check into the trash or recycling, where the check could be stolen. Shred or destroy the check so that no one can obtain the information.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning up to 1.25% APY on your cash!


The Advantages of Mobile Deposit

Now that you know how the mobile deposit process works, here’s a guide to the benefits of mobile deposits.

Save Yourself a Trip to the ATM

Having to take a trip to a bank branch or ATM to deposit a check can be a real hassle. Maybe you have a busy day, you’re home with a sick kid, or it’s pouring out: Whatever the case, it’s not always so enticing to walk or drive to a bank just to get a check deposited into your account. Thankfully, with mobile deposit, you don’t need to budge from wherever you are to get that check into your bank account. This is a huge advantage of mobile banking.

Deposits Can Be Done Later than at Bank Branches

For lots of working people, getting to the bank before it closes at 5:00 pm on a weekday is difficult to do. With mobile banking, checks can be deposited at any time of day, any day of the week. You can be in your pjs, watching a streaming series, and quickly get that money deposited. That’s a major benefit of mobile banking.

Exactly when the cash becomes available to use (and in what amount) will depend on that particular bank’s rules, but many banks have extended hours for mobile deposit. Customers can generally access at least some money, even with deposits made later in the evening or on the weekends.

Deposits Are Credited Quickly

Because of the extended hours offered by mobile deposits, it may be possible to deposit a check and see the money available in your account faster than if you had to wait until you make it to a branch location. If you deposit the check during mobile deposit hours and the amount is, say, $200 or under, it is possible to see your funds immediately.

Plus, mobile check deposits are generally quicker than ATM deposits. With ATM deposits, bank staffers have to retrieve the actual checks from the ATMs and manually digitize them. When you deposit your check via a mobile app, however, it is already digital.

You Can Deposit a Check From Anywhere

Talk about convenience! Sometimes, you’re simply not anywhere near a branch or appropriate ATM but need to deposit a check. One of mobile banking’s biggest benefits is being able to deposit a check from anywhere in the world.

Let’s say you are heading out for a week-long family reunion, and you grab your mail as you are leaving. While you’re at the airport, you discover a check you’d been waiting for has arrived. No worries! You can deposit it from wherever you are (well, maybe not in-flight while at 30,000 feet) while you travel.

Deposits Are Secure

Worried about security? Many people are these days, as hackers and scammers seem to be multiplying. Here are the facts: Depositing your checks through your mobile app is as secure as any other digital banking process. Most banks and credit unions use enhanced security processes and encryption to protect their customers. Also, if you are worried that your phone might be stolen and the image of your check could potentially fall into the wrong hands, don’t. The image of a check that is deposited via mobile banking isn’t stored on your phone.

A Few Downsides

Now that you’ve heard about the benefits of mobile banking when it comes to depositing checks, let’s acknowledge that there are also a few downsides. A couple to consider:

•   If you want to cash your check and get those bills in hand, you will not be able to do so via mobile deposit. The funds must go into your account.

•   Your mobile deposit might wind up “bouncing.” Don’t assume that just because it’s deposited, you can go and spend it.

•   There are mobile deposit frauds that occur, often in which a person or organization you don’t know well sends you a check and asks for you to deposit it and then send a portion back to them. Keep your guard up!

•   Yes, security issues can occasionally crop up with mobile banking, so remember to protect your passwords and PINs; always do banking on private WiFi; and enable two-factor authentication for apps that move your money. Check your bank account often, too, to see if there is any suspicious activity.

The Takeaway

Many banks offer you the convenience of mobile deposits, which allow you to deposit a check from virtually anywhere at any time, using an app. There are many advantages to mobile banking in this way. It can save you time and energy versus taking a check in person to a bricks-and-mortar branch or an ATM. Though there are a few downsides to the process, mobile deposit is an innovative financial tool that can make banking that much more seamless.

While we’re on the subject of banking better, check out what SoFi offers. Our mobile banking app allows you to spend and save in one place, and we think you’ll like the way your money grows. When you sign up with direct deposit, you’ll earn up to 1.25% APY which is 41 times the national checking account average. And you’ll keep more of your money, too, because we don’t charge you monthly, minimum-balance, or overdraft fees.

Ready for your money to work harder? Sign up with SoFi.

3 Great Benefits of Direct Deposit

1. It’s Faster
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

2. It’s Like Clockwork
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.

3. It’s Secure
While checks can get lost in the mail – or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.


SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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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