ACH vs Check: What Are the Differences?

ACH vs Check: What Are the Differences?

While both ACH and checks have their upsides, ACH tends to be the quicker and more secure payment method. However, in your financial life, there will probably be times when one is a lot better suited to your needs than the other.

Here’s a detailed breakdown of ACH vs. check, the pros and cons of each, and how they stack up.

What Is ACH and How Does It Work?

An ACH transfer (named after the Automated Clearing House network) is an electronic banking transaction that is processed through the ACH network. The network is a major financial hub, made up of around 10,000 institutions. Through the ACH network it is possible to process the following transactions:

•   Direct debits

•   Direct deposits

•   Direct payments

•   Electronic checks (eChecks)

•   Electronic funds transfers (EFTs)

Businesses and consumers have the option of using ACH transfers to make direct payments (known as ACH debit transactions) or direct deposits (ACH credit transactions). Some financial institutions even make it possible to schedule and pay bills electronically via ACH transfers. You are probably familiar with ACH transactions when you set up autopay on an account, whether it’s a utility bill or your gym membership.

You may wonder how long ACH transfers take. Because they are electronic, ACH transfers can clear banks in a matter of a few business days as long as there are enough funds in the account. However, there are times where ACH transactions will take longer. This is especially common if a transaction is suspected to be fraud.

However, for something like a direct deposit of a paycheck, ACH can be quite quick. When the payment hits your checking account, it’s immediately available. You don’t have to run around with a paper check that needs to be deposited. That can make a big difference between getting paid by ACH vs. a check.

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Pros and Cons of ACH

Like any financial tool, ACH transfers have some advantages and disadvantages worth considering. Here’s a closer look at some important pros and cons.

Pros

Cons

•   Free. Most, but not all, ACH transfers are free.

•   Errors can be reversed. You can sometimes request a transaction reversal for ACH transfers if an error occurs.

•   Simple and straightforward. Convenient form of payment allowing you to pay without cash.

•   Secure. The digital nature of these payments can make them less likely to have funds stolen.

•   Fees can apply. May need to pay a fee to expedite bill-pay services or to make a transfer to an outside bank.

•   Slow timeline. Can take up to three days for a transfer to go through.

•   Potential roadblocks. Daily transfer limits apply.

What Is a Check?

A check is a payment method that involves making a payment using a paper check that has the payment amount and the payee’s bank account information on it. Once someone writes a check, the recipient can cash it and receive the funds.

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Pros and Cons of Using a Paper Check

While not as popular as in the past, checks are still one of the most basic and time-honored financial tools at your disposal. They allow you to move money around without paying a fee, and they are a secure way to do this. What’s more, checks create a paper trail with proof that funds have been received.

But they can wind up costing you, they can take longer than you might expect, and sadly, there are scams that prey upon those who use checks. Here are some of the pros and cons of using a check to make payments or to receive payments in chart form.

Pros

Cons

•   No fees. Electronic payments can come with fees, but there are no fees for standard checks once you purchase them.

•   Safe way to send money. Cash can be lost or stolen. If a check is lost or stolen, the person who finds it will have a hard time cashing it thanks to handy security features.

•   Proof of payment. Checks have a paper trail confirming proof of payment.

•   Check scams exist. Check scams can be dangerous and easy to fall for.

•   Checks cost money. Typically, you don’t pay a fee when you use a check, but it costs money to buy checks, and depending on your situation, you might have to pay a fee to cash a check at some locations.

•   Processing delays occur. Paying by cash, credit, or electronic transfer can usually occur more quickly than paying by check.

Recommended: Ways to Send Money Online

ACH vs Check: The Differences

Here, a side-by-side comparison of ACH vs. checks. It’s important to note that both have their own unique set of advantages and disadvantages, but much of the choice about which to use will depend on your particular circumstances and preferences.

ACH

Check

•   For the most part, ACH transfers are free unless a rush fee or a fee for transferring to an outside bank applies.

•   It is sometimes possible to request a transaction reversal for ACH transfers if an error occurred.

•   ACH payments are fairly simple and easy to conduct.

•   ACH transfers can take a few days to clear.

•   There are no fees associated with checks, but consumers do have to buy the checks to be able to use them.

•   Checks offer a safe way to make payments, but there can be issues with scams and stolen checks.

•   Checks provide a convenient paper trail that cash payments lack.

•   Checks can take several days to clear.

Recommended: Average Savings by Age

Which Should You Consider Using?

There’s no right or wrong answer when it comes to choosing a check over an ACH transfer. Both have unique advantages and disadvantages. Consider these scenarios:

•   Because it’s possible to set up recurring ACH transfers, that can be a much more convenient option if someone wants to schedule ongoing automated payments such as rent or bills.

•   Checks, which are very secure and convenient, may be a better fit for one-off payments such as paying the babysitter or a hairdresser.

As you see, the decision depends on what best suits your needs for a particular transaction.

The Takeaway

Both ACH transfers and checks offer benefits. They can be convenient, secure ways to transfer money, though ACH may be faster and safer. Which one is the “best” will often depend on the unique preferences of both parties involved in the transaction. You may well find yourself toggling between the two during your everyday financial life.

While you’re thinking about which kinds of payments work best for you, consider your banking options.

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

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FAQ

Is an ACH payment a check?

No, ACH payments are an electronic transfer processed through the Automated Clearing House network, which is a network made up of around 10,000 financial institutions. A check is a different kind of payment, using a paper document and being processed in a different way.

Is ACH better than checks?

Not necessarily. ACH can be faster, cheaper, and more secure in certain scenarios, but both can be useful ways to make payments.

Is ACH cheaper than checks?

When it comes to check vs. ACH costs, ACH payments can be cheaper than checks in some cases, but not always. ACH payments are free, whereas consumers generally need to buy checks to use for payments. However, you may run into fees when doing certain ACH payments.

Is ACH safer than a check?

Both checks and ACH transfers are very secure, but ACH payments are known to be more secure, thanks to the extra layers of protection in place due to encryption that occur during the transfer. Both checks and ACH transfers do require that the identity of the recipient be verified before the transaction can complete. Fraud and mistakes can occur for both payment types.


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

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

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

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

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

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


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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Charge Card vs Credit Card: What’s the Difference?

Charge Card vs. Credit Card: Understanding the Key Differences

Though the terms may be used interchangeably, there are major differences: With a credit card, you can either pay your full monthly bill or a portion of it. With a charge card, no matter how much you owe, you’re expected to pay the monthly bill in full.

That’s not the only thing that sets these cards apart. The two also vary in their accessibility, flexibility, spending limits, and costs. If you’re wondering if a charge card vs. a credit card is a better fit for you, read on to understand their key differences, which can help you decide.

How Charge Cards Work

In some ways, a charge card is much like a regular credit card. When you use it to make a purchase, you’re borrowing money from the card issuer. And when you pay your bill, you’re paying the card issuer back.

But there are several things about the way charge cards work that make them very different from traditional credit cards. And because of the way they work, there are benefits and risks of charge cards to consider.

As mentioned above, a charge card holder’s obligation to pay the bill in full each month is probably the most important distinction. Because you don’t have the option of carrying forward a balance, you won’t pay any interest. But if you don’t pay the balance in full by the due date, you could be subject to a late fee and restrictions on your future card use.

Another thing that makes a charge card unique is that there’s no pre-set credit limit. This offers charge card holders some added flexibility, but it doesn’t mean you can go out and spend as much as you want any time you want — even if you’ve stayed current with your charge card payments.

A transaction still may be declined if it exceeds the amount the card issuer determines you can manage based on your spending habits, account history, credit record, and other financial factors. To avoid any confusion, card holders can contact their charge card issuer before making a major purchase to ask if the amount will be approved.

Recommended: When Are Credit Card Payments Due

How Credit Cards Work

Because they’re more common, you may be more familiar with how credit cards work than you are with charge cards. With a traditional credit card, card holders are given a preset credit limit that’s based on their income, debt-to-income ratio, credit history, and other factors.

Once your account application is approved and you receive a card with a unique credit card number, you can use your card as much or as little as you like — as long as you stay within that limit.

Each month when you receive your billing statement, you can decide if you want to repay the full amount you owe or make a partial payment, but you must make at least the minimum payment that’s due. And if you carry forward a balance, you can be charged interest on that amount. (Similar to your spending limit, interest rates are typically based on a cardholder’s creditworthiness.)

A credit card is classified as “revolving credit” because there’s no set date for when all the money you’ve borrowed must be repaid. As long as you make at least your minimum payments on time and stay within your credit limit, the account remains open, and you can use the available credit over and over again.

Differences Between a Charge Card and Credit Card

Here’s a side-by-side look at some key differences between charge cards and credit cards:

Charge Card vs. Credit Card
Charge Cards Credit Cards
Full payment required every billing cycle Can carry a balance, but must make minimum monthly payment
Can be difficult to find and qualify for Many options available, even for those with not-so-great credit
Accepted by most U.S. vendors (but less so overseas) Widely accepted in the U.S. and worldwide
No interest charged, but can expect a high annual fee May avoid annual fee, but interest accrues on unpaid balance
Known for prestigious rewards programs Many cards offer rewards, often without an annual fee
No hard spending limit Hard pre-set spending limit

Payment Obligations

With a charge card, you’re required to pay what you owe in full when you receive your monthly billing statement. With a credit card, on the other hand, you can make a full or partial payment, but you’re only required to make a minimum monthly payment.

Even if you’re waiting for a refund that hasn’t yet shown up as a credit on your statement, you’ll be expected to pay the full amount of your charge card bill. With a credit card refund, you’ll just have to make sure you pay at least the minimum amount on your current bill.

Availability

If you’re looking for a new card, you’ll find there are far more credit cards available than true charge cards these days. Even American Express, the only major card issuer that still offers charge cards, has gone with a more hybrid approach.

American Express still offers cards that don’t have a preset spending limit. But those cards now come with a feature that — for a fixed fee — allows a card holder to split up eligible large purchases into monthly installments.

There also are some fuel cards, typically geared toward businesses, that are true charge cards.

Credit cards also are generally easier to qualify for than the charge cards that are available. Even if you have a poor or limited credit history, you may be able to find a secured or unsecured credit card that suits your needs.

Acceptance

Whether you shop local most of the time or hope to use your card as you travel the world, you may want to look at the acceptance rates of charge cards vs. credit cards.

Your card may not do you much good if you can’t use it where you like. American Express says its cards can now be accepted by 99% of the vendors in the U.S. that accept credit cards. If you aren’t sure your favorite local boutique or grocer will accept a particular card, you may want to ask or look for the card’s network logo in the store window.

If you plan to use your card overseas, you may want to check ahead on the acceptance rate in that country and also find out if you’ll have to pay a foreign transaction fee. Charge cards tend to have a lower rate of acceptance overseas.

Costs

If you’re trying to decide between a charge card vs. a credit card, how much a credit card costs compared to a charge card — both in interest charges and fees — could be an important consideration.

Interest

You can find a full explanation of how your card issuer calculates interest in your card’s terms and conditions. But as noted above, if you carry forward a balance on your credit card, you can expect to pay interest on the outstanding amount.

According to the Federal Reserve, the average credit card’s annual percentage rate (APR) is currently around 22.8%. Your rate may be higher or lower, depending on your creditworthiness.

You may not have just one interest rate associated with your account either. Your account may have a different APR for purchases, for example, than for credit card cash advances or balance transfers. Or you might have a lower, introductory APR for the first few months after you get a new card. If, over time, you miss payments or make late payments, the card issuer also could decide to raise your APR.

Because you don’t carry a balance with a charge card, you don’t pay interest. But if you pay off your credit card balance by the due date every month, you also won’t have to worry about accruing interest on a credit card account.

Annual Fees

You won’t pay interest with a charge card, but you may end up paying a significant annual fee just to own the card. (The annual membership fee for an American Express Platinum Card, for example, is currently $695.)

Some credit cards also charge annual fees, but you can find many that don’t.

Rewards and Perks

You may decide it’s worth paying a higher annual fee to enjoy the extra benefits some charge cards offer. American Express, for example, has a reputation for offering its card holders prestigious perks, including travel and retail purchase protections, early access to tickets for concerts and other entertainment events, and special offers from partner merchants.

However, plenty of credit cards also come with special benefits, such as cash back rewards, travel rewards, retail discounts, and more. And many of those card issuers don’t charge an annual fee.

Both charge card and credit card issuers also occasionally offer generous welcome or sign-up bonuses to new card holders, so that might be another benefit worth looking at when you’re searching for a new card.

Before you sign up for any card to get the perks it offers, though, it can be a good idea to step back and assess whether it’s worth paying a higher annual fee (or accruing interest on a balance you can’t pay off) to reap those rewards.

Spending Limit

With a credit card vs. a charge card, you’ll know exactly how much you can spend, because your credit card will come with a pre-set limit. You can go online or use an app to check your credit card account at any time to see how much available credit you have.

Charge cards don’t have hard spending limits. But that doesn’t necessarily mean you can use your card to buy a car or take a trip around the world. Your card issuer may decline a charge if you’re spending more than it thinks you can afford.

How Card Choice Can Impact Your Credit Score

When it comes to what a charge vs. credit card can do for (or to) your credit score, there are few things you should know.

Inquiries

Whether you’re applying for a charge card or credit card, you can expect the card company to run a hard inquiry on your credit. This could temporarily lower your credit score, but usually only by about five points.

Payments

Whether you use a charge card or a credit card, paying your monthly bill on time is critical to building and maintaining a good credit record.

Payment history makes up 35% of your FICO® credit score, so consistency is key. If your payment is 30 days or more past due and your card issuer reports it to the credit bureaus, that negative news could remain on your credit report for up to seven years. And it could come back to haunt you when you try to borrow money to buy a car or house.

Utilization

Credit utilization (the percentage of your available credit that you’re currently using) makes up 30% of your FICO score, so it’s important to keep your credit card balances well under the assigned limit.

To maintain or positively impact your credit score, the general rule is that you should try not to exceed a 30% credit card utilization rate. If you’re using up a big chunk of the pre-set limit on your credit card, it could have a negative effect on your score.

Because charge cards don’t have a pre-set credit limit, it can be difficult to determine if a card holder is at risk of overspending — so neither FICO or VantageScore include charge card information when calculating a person’s utilization rate.

This can have both pros and cons for charge card holders. The advantage, of course, is that you don’t have to worry about negative consequences for your credit score if you spend a lot in one month using your charge card. On the flip side, though, if you have a large amount of available credit that you aren’t using, it won’t do anything to help your score.

Choosing Between Credit Cards and Charge Cards

Deciding whether to apply for a credit card vs. a charge card may come down to evaluating the benefits you’re hoping to get from the card and assessing your own spending behavior. Here are some questions you might want to ask:

•   Does the card offer unique, valuable perks you think you’ll use?

•   If there’s a high annual fee for the card, does it fit your budget and are the card’s perks worth the cost?

•   Do you have enough money, discipline, and organization to ensure your bill is paid in full every month? Or could there be times when you’ll want to make a partial or minimum payment and carry forward a balance?

•   Is your credit score good or excellent? If not, you may have more options and a better chance of qualifying if you apply for a credit card instead of a charge card.

•   If you think you’ll pay off your card’s balance every month, would a credit card still be a better fit because of the rewards, low or no fees, and wider acceptance from vendors?

Also keep in mind that you don’t necessarily have to choose. In fact, you could benefit from owning both a charge card and a credit card. You may find there are reasons to have both types of cards in your wallet.

Recommended: Charge Cards Advantages and Disadvantages

The Takeaway

The terms charge card and credit card are often used interchangeably, but they are not the same thing. A charge card must be paid off every month, so there’s no interest to worry about — but there may be a high annual fee to pay. A credit card allows the user to make a minimum monthly payment and carry forward a balance, but the interest on that balance can add up quickly.

Each individual user must decide which is the better fit for their needs. And a card’s benefits vs. its costs may be a deciding factor.

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

FAQ

Is a credit card easier to get than a charge card?

Because these days there are more companies issuing credit cards, it may be easier to find one that suits your needs and has qualifications you can meet — even if you have a poor or limited credit history. There are very few charge cards available anymore.

Does a charge card build credit better than a credit card?

Both a credit card and a charge card can help or hurt your credit score, depending on how you use it.

When do credit cards charge interest?

Most credit cards come with a grace period, which means the credit card issuer won’t charge you interest on purchases if you pay your entire balance by the due date each month. If you fail to pay the entire amount on your statement balance, however, or if you make your payment after the due date, interest charges will likely appear on your next monthly statement.


Photo credit: iStock/9dreamstudio

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.

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 .

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Interest Rates FAQ: How the Federal Fund Rate Impacts Your Savings

It’s been a tumultuous couple of years for interest rates. After reaching a historic low during the COVID-19 pandemic, the Federal Reserve enacted a series of rate hikes in 2022 and 2023—culminating in the highest rates in decades—in an effort to fight persistent inflation. So far, in 2024, the Fed has held its rate steady at 5.25% to 5.50%. Though many economists expect rates to decrease this year, the number of cuts, and how steep they might be, remain unclear. And it’s always possible that rates could remain unchanged or even increase if economic conditions shift.

Learn more: SoFi’s Liz Young Looks at the Fed’s May Statement

Changes to the Fed’s interest rate, or federal funds rate, almost invariably create a ripple effect of changes throughout the economy, impacting interest rates on loans, mortgages, and savings. Here’s a closer look at the Federal Reserve and how its economic outlook and policies can impact your accounts.

Q: What Is the Federal Reserve?

A: The Federal Reserve System was founded by Congress in 1913, with the primary goal of promoting the stability of the U.S. banking system. Since then, the Fed’s mandate and methods have evolved—today the work includes regulating financial institutions, directing monetary policy, managing inflation, and keeping employment rates high. And one of the key levers it pulls to those ends is adjusting the federal funds rate.

Q: What Is the Federal Funds Rate?

A: Banks frequently borrow money from one another to ensure they have sufficient reserves to cover consumer withdrawals and other commitments. The federal funds rate influences the interest rate U.S. banks use when lending money to other banks.

The federal funds rate is set by the Federal Open Market Committee (FOMC), which is responsible for setting a range of monetary policies that can influence inflation and economic growth. The FOMC is made up of 12 members who meet approximately every six weeks to discuss a range of economic policies, including adjustments to the federal fund rate.

Q: What Factors Influence the Fed’s Rate?

A: The FOMC determines interest rate policy based on a wide range of economic indicators including inflation, employment levels, and durable goods orders data, which can provide insight into the economic health of a variety of industries such as technology, transportation, and manufacturing.

When these market indicators suggest that the economy is languishing, the FOMC may reduce the federal funds rate to make borrowing less expensive in the hopes of boosting economic activity. More money in consumers’ pockets typically means more spending and more money streaming into the economy.

When prices are rising too quickly, the FOMC may increase its interest rate, making it more expensive to borrow. That can slow spending and, in theory, help keep inflation in check.

Q: How Does the Fed Influence My Savings APY?

A: As mentioned above, the federal funds rate directly influences the interest rates banks use to borrow from or lend money to one another. But secondary effects eventually impact the wider economy, including the interest rates banks and financial institutions use when lending money through credit cards, personal loans, and mortgages. It can also affect the annual yield percentage, or APY, for savings accounts.

A federal rate decrease should eventually translate into lower interest rates when you borrow money to buy a house or car. It may also lead to a lower APY on your savings account.

When the federal rate increases, on the other hand, it becomes more expensive to borrow money, and savings account APYs typically increase.

Because most savings account APYs are variable, they tend to rise or fall in the wake of federal rate changes. There are accounts—such as fixed-rate certificates of deposit offered by some banks and credit unions—that have APYs that do not change, regardless of how the federal fund rate fluctuates.

Q: Do Other Factors Influence My Savings APY?

A: Federal fund rate changes have a substantial influence on saving account APYs—but they are not the only factor.

Some banks offer high-yield savings accounts with APYs that are considerably higher than the national average rate. Online-only banks and credit unions, for example, generally have less overhead than traditional brick-and-mortar banks, which may influence their ability to offer higher APYs.

Larger banks tend to be less dependent on deposits than those with a smaller regional presence, for example, so those smaller banks may offer higher rates.

Competition among banks for consumer deposits may also drive changes to the APYs they offer.

Even among these different scenarios, however, the Fed’s interest rate adjustments can still influence whether these banks’ APY rates rise or fall over time.

Recommended: What Is a Good Interest Rate for a Savings Account?

Q: How Has the Fed Adjusted Rates Recently?

A: After the economic crisis of 2008, the Fed presided over a period of relatively low and stable interest rates. Rates began to tick up gradually in 2015 until the COVID-19 pandemic upended the economy in 2020. The FOMC followed with two steep rate cuts to encourage economic activity, at the time, bringing interest rates down to historic lows.

Since then, as the U.S. has grappled with its highest rate of inflation in decades, the Fed has initiated a series of increases, culminating with a rate of 5.25% to 5.50% in July 2023 — the highest level in 23 years.

Federal Funds Target Rate (2015-2024)

Source: Federal Reserve Bank of St. Louis

Q: When Will the Next Rate Change Come?

A: The FOMC typically convenes eight times per year—but it does not necessarily adjust rates at every meeting. In addition, banks and financial institutions sometimes adjust their own interest rates ahead of FOMC meetings, especially when economic conditions or signals from the Fed suggest a rate change may be forthcoming. The Fed publishes the schedule of FOMC meetings on its website.

The Takeaway

While the FOMC sets the federal funds rate to directly influence the rates banks use to lend money to each other, the rate has a broader effect on the U.S. economy, impacting many financial services and products including personal loans, mortgages, and savings accounts.


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

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

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

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

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

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


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.

Our account fee policy is subject to change at any time.
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 Do Credit Card Companies Report to Credit Bureaus?

When Do Credit Card Companies Report to Credit Bureaus?

Credit card companies typically report to the credit bureaus monthly. This usually happens at the end of your card’s monthly billing cycle, also known as your statement or billing cycle date. Credit card companies typically spread statement dates throughout the month, so your date may not be the same as your significant other’s or your best friend’s.

The credit reporting bureaus then use this data to update your credit score. Here’s a closer look at how payments are reported to the credit reporting bureaus as well as how factors like on-time payments can affect your three-digit score.

How Credit Card Payments Are Reported to Bureaus

Credit card issuers typically report to credit bureaus on your regular billing cycle date. Each credit card may report at different times, and they may report to some of the major credit bureaus and not others. Reporting is up to the lender’s discretion, so it is also entirely possible that they won’t make a report at all.

Credit bureaus, such as Experian®, Equifax®, and TransUnion®, may collect a variety of information, including:

•   Personal information, such as name, address, date of birth, Social Security number, and employer

•   Credit account information, such as balances, payments, credit limits, credit usage, and when accounts are opened or closed

•   Credit inquiries

How Credit Scores and Reports Are Updated

The credit reporting bureaus will generally update your credit score as soon as they receive information from your credit card company. That means that your credit score could change relatively frequently as you make credit card charges, especially if you have multiple credit cards.

Also, because credit card companies only report credit activity periodically, there can be a bit of a lag in how long it takes for a payment to show on your credit card report. When you read your credit report, it may not match your current account balances, instead reflecting the last information reported to the bureaus. This situation may be particularly irksome if you’ve paid off debts in hope of building your credit score. Fortunately, your information should be updated during the next reporting period.

However, if you notice that no changes are made after a number of months, it’s worth contacting your lender to make sure changes are reported correctly. If they can’t resolve it, you can contact the credit bureau.

Recommended: Charge Cards: Advantages and Disadvantages

How Credit Card Balances Affect Credit Score

Credit reporting bureaus may collect information about your credit card balance. There is a popular misconception that carrying a credit card balance from month to month will help you positively impact your credit score. However, this is a myth. In fact, carrying a balance can actually hurt your score.

An unpaid balance is not necessarily seen as a bad thing. However, credit utilization — how much of your available credit you’re using — can have an impact on your score. If your balance exceeds 30% of your borrowing limit, it may have a negative impact on your score. Those who keep their credit utilization below 10% tend to have the highest credit scores.

It’s best to pay off your credit card balance each month to protect your credit score and to avoid racking up costly interest charges, which can cause your credit card debt to balloon.

How Applying to Credit Cards Affects Credit Score

Before you apply for a credit card, it’s important to know the difference between a hard and soft inquiry. When you apply, you will trigger what’s known as a hard inquiry when a lender requests to see your credit report.

In contrast, a soft inquiry occurs when you check your own credit or use a credit monitoring service, for example. Hard inquiries will generally have a negative impact on your credit score (though often only by several points temporarily), while soft inquiries will not.

Hard inquiries suggest that you are in the market for new credit. That may seem like a no-brainer. But in the eyes of other lenders, a hard inquiry suggests that you may be in some sort of financial stress that makes you a bigger risk for borrowing money. This is especially true if you have many hard inquiries in a short period of time.
Luckily, the hard inquiry’s effects fade relatively quickly.

In general, it’s wise to avoid causing many hard inquiries in a short period of time. There are some exceptions to that rule. If you’re shopping for a mortgage, auto loan, or new utility providers, multiple inquiries in a short period — typically 14 to 45 days — are usually counted as just one inquiry.

How On-Time Payments Affect Credit Score

Your payment history is one of the biggest factors that goes into calculating your credit score. As a result, making payments on time is one of the best things you can do to maintain a strong credit score or to positively impact your score.

Even a single late payment can have a negative impact on your score, though the missed payment likely will not show up on your credit report for 30 days. If you can make up the payment within that time period, your lender may not report it, though you may still be subject to late penalties.

It’s also important to understand that if you only make a partial payment, that will still usually be counted as late and reported as such to the credit bureaus.

To make sure that you pay bills on time, consider setting up a budget to help control your spending. You might also automate your payments to ensure you don’t miss any payment due dates. But if you do so, make sure that you have enough money in your account to cover your credit card balance.

Recommended: When Are Credit Card Payments Due?

The Takeaway

The credit reporting bureaus collect all sorts of financial information from your various lenders to create your credit score. Your credit card company likely reports your card activity about once a month, on your statement or billing cycle date. Understanding what information has an impact on your score, as well as the impact of on-time payments and credit inquiries, can help you keep your score as high as possible and help keep credit card costs down.

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

FAQ

What time of the month do creditors report to credit bureaus?

Creditors may report to the credit bureaus at any time of the month, though credit card companies will usually make their reports at the end of the billing cycle, or on your statement date.

How often do companies report credit?

Credit card companies usually report to the credit bureaus once a month. However, they do so at their own discretion.

How long after paying off debt until you see an impact on your credit score?

Your credit score should see an impact after paying off a debt as soon as that debt payment is reported to the reporting bureaus, usually within 30 days. If your payment doesn’t show up on your report after a few months, contact your lender to make sure it was reported correctly.


Photo credit: iStock/iamnoonmai

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.

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 .

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How to Set Up a Health Savings Account

How Do I Start a Health Savings Account?

A Health Savings Account (HSA) can be set up in three simple steps, and once it’s up and running, it can help you bridge the gap between what your health insurance covers and your actual costs, among other benefits.

Let’s face it: Many of us these days select a High Deductible Health Plan, or HDHP, when it comes to health insurance. That means you may be paying a lower monthly premium in exchange for a high deductible. You could potentially get hit with a lot of unforeseen healthcare expenses before your benefits kick in. And even after you meet that deductible, you may have charges that are not reimbursed. A Health Savings Account (HSA) can help you set money aside to fill that gap.

Setting up an HSA may sound intimidating, as if you’ll have to fill out reams of paperwork, but that’s not at all the case! Whether through an employer or on your own, once you’re ready to start saving, the steps to opening an HSA account can be as simple as filling out an online form with basic information — easy peasy.

Here’s a look at the steps involved, plus a few important considerations before you take the leap.

Key Points

•   Eligibility for a Health Savings Account (HSA) requires enrollment in a high deductible health plan without other health coverage or Medicare.

•   Setting up an HSA involves selecting a provider, completing paperwork, and verifying health plan coverage.

•   Contributions to an HSA are pre-tax, reducing taxable income and allowing tax-free growth, with a maximum limit set annually.

•   Funds from the HSA can be used to pay for a wide range of medical expenses, including those not covered under typical health plans.

•   After age 65, funds can be used for any purpose without penalties, though they will be taxed if not used for qualified medical expenses.

What Is a Health Savings Account (HSA)?

The HSA will be turning 21 soon: In 2003, Congress passed the Medicare Prescription Drug, Improvement, and Modernization Act which created the Health Savings Account. These accounts were meant to help people with high deductible health plans set aside money to pay for out-of-pocket medical expenses: copays, dental care, eyeglasses, prescriptions, psychiatric help, and more. This can happen both before and after you reach your deductible.

In addition to covering health costs, these tax-free accounts can lower your amount of federal income tax owed. What’s more, HSAs can help with saving for retirement and unforeseen emergencies.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

How Does an HSA Work?

A Health Savings Account can work just like a checking account. You can make deposits (or contributions), pay bills online, make transfers, and even pay for qualified medical expenses with an HSA debit card. You are free to withdraw HSA funds at any time to pay for health costs not covered by your high deductible health plan. One big note: Once you enroll in Medicare, you can no longer contribute to an HSA.

Deposits can also be contributed by your employer, with direct deposits made into your HSA straight from payroll. A nice aspect of these plans: Health Savings Account contributions roll over every year, so you don’t have to race to spend the pre-tax funds in your account. If you stay healthy, you can build up your emergency fund as well as your retirement nest egg. Your good health can lead to wealth down the line!

Who Can Open an HSA?

According to Federal Guidelines, you qualify to open a Health Savings Account if you:

•   Are covered under a high deductible health plan, or HDHP.

•   Are not covered by any other health plan, including a spouse’s.

•   Are not claimed as a dependent on someone else’s tax return.

•   Are not enrolled in a disqualifying alternate medical savings account, such as an FSA (Flexible Spending Account) or an MSA (a Medicare medical savings account).

•   Are not currently enrolled in Medicare.

How to Set Up a Health Savings Account

Once you’ve established that the pros outweigh the cons, you may wonder exactly how to set up a Health Savings Account (HSA). Fortunately, the process is pretty straightforward:

Step 1: Research Your HSA Options

If an HSA plan is offered directly through your employer, go to Step Two.
If you’re self-employed, investigate HSA options online, or reach out to banks or other financial entities.

Step 2: Fill Out the Necessary Paperwork

The set-up for an HSA is not unlike opening a bank account. You’ll be provided with paperwork or an online form, where you’ll give basic information such as your Social Security Number and proof of your identity (typically verified by a government-issued photo ID).

Step 3: Complete Verification

Be prepared to offer verification of your high deductible health plan (HDHP).

That’s it! It’s a quick and simple process to set up a Health Savings Account.

Once your HSA is up and running, you may be able to opt for automatic regular deposits from your bank account or straight from your paycheck. There is no minimum amount required to open an HSA, but you typically need at least $1,000 in the account in order to invest in certain mutual funds.

HSA Contribution Limits

For tax year 2023, HSA contribution limits are $3,850 for individuals and $7,750 for families with HDHP coverage. Those 55 and older can contribute an additional $1,000 as a catch-up contribution. For 2024, HSA contribution limits are $4,150 for individuals and $8,300 for families. Those 55 and older can contribute an additional $1,000 as a catch-up contribution. There is never a minimum requirement for deposits. Some ground rules to be aware of:

•  You are covered under a high deductible health plan (HDHP), described later, on the first day of the month.

•  You have no supplemental health coverage except what is permitted under other health coverage.

•  You aren’t enrolled in Medicare.

•  You can’t be claimed as a dependent on someone else’s tax return.

Advantages of an HSA

There are many benefits to opening an HSA. Sure, it can provide a cushion or safety net when it comes to out-of-pocket medical costs. But there are other perks beyond covering the price of a new pair of glasses.

Covering Expenses for You and Your Family

From ambulances to acupuncture, a Health Savings Account can cover the costs your HDHP doesn’t. The IRS has an extensive listof ways you can use your HSA funds. One example: Did you know you can also use your Health Savings Account to pay for medical expenses for a spouse or a child — anyone who is part of your tax household — even if they aren’t on your HDHP? It’s true!

Lowering Taxable Income

Here’s another bonus to having this kind of account: Your HSA contributions are made before taxes are deducted, thereby lowering your taxable income. As a result, you may pay less in taxes.

Rollover Contributions

There’s no “use-it-or-lose it” pressure when you have a Health Savings Account. Unused HSA funds don’t disappear at the end of the year. You can roll them over again and again, accumulating tax-free interest. Those earnings can turn into savings to be invested in the future or used for life’s little surprises — say, a chipped tooth.

Saving for Retirement

At age 65, you can start using the funds in your Health Savings Account for anything, without penalty. Withdrawals will be taxed the same as they would from a 401(k) or IRA, but any funds waiting for use will avoid taxes while earning interest.

Additionally, if you are lucky enough to be able to max out your annual IRA and/or 401(k) contributions, an HSA is another way to save more tax-free money toward retirement. Beyond covering copays, an HSA is a great way to get your money working for you.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.

Disadvantages of an HSA

Okay, now you know the upside of opening an HSA. But there are potential downsides that are worth knowing about and considering before you sign up.

Penalties for Unqualified Expenses

Until you turn 65, HSA funds cannot be used for anything but eligible medical expenses. To do so would subject withdrawals to income taxes and a 20% penalty.

Monthly Fees

Health Saving Account providers may charge a monthly fee. These fees generally tend to be lower than $5 bucks per month, but they do add up. While there are providers out there that don’t charge account management fees, all will assess an investment fee. Do your homework to find the vehicle with the lowest fees.

Potential Losses

Like an IRA or 401(k), any invested money in an HSA can mean monetary gains and losses. As with any investment account, you need to be prepared for your HSA balance to dip if the market trends downward.

Keeping Tabs for Your Tax Records

HSA contributions and expenditures must be reported on your tax return. It may not be a deal-breaker, but for some people, keeping records of your HSA activity can be a nuisance.

HSA Advantages vs. Disadvantages

ProsCons

•   Covers an extensive list of out-of-pocket health expenses

•   Can be used for family members

•   Lowers taxable income and therefore may decrease your taxes

•   Contributions roll over to the next year

•   Promotes tax-free savings for retirement

•   Penalties for nonqualified expenses

•   Unexpected and potentially hidden fees

•   Account balance can fluctuate with the marketplace

•   Activity must be reported on your tax return

Things to Consider When Choosing an HSA

If your job offers a Health Saving Plans, great! They’ve done the research for you. Employers may also offer Flexible Spending Accounts (FSAs). But unlike FSAs, which are owned by an employer and can be inflexible, a Health Savings Account has higher contribution limits and is controlled by you.

If you are self-employed, do your research. You’ll find an array of Health Savings Plans to choose among; HSA comparison websites can help you navigate the search. Remember to pay attention to any monthly/annual fees so you know exactly what to expect. Ideally, you’ll want an HSA that makes it easy to manage your account online. Many banks and credit unions offer HSAs, so check with your financial institution.

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.60% APY on your cash!


The Takeaway

Once you’ve made the decision to enroll in a Health Savings Account, the steps to set it up are relatively painless. You can start using your HSA funds right away to help cover qualified health-related costs. Contributions are made with pre-tax dollars, don’t need to be used up by the end of the year, and can potentially even help boost your retirement fund. A Health Savings Account goes beyond just covering your healthcare expenses and can serve as one of the best tax-advantaged savings vehicles available. It can enhance your sense of security and keep your wealth growing.

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

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

FAQ

How do I set up an HSA account?

With a valid government-issued photo ID, Social Security number, and proof of your HDHP, you can fill out a basic paper or online HSA form, provided by an employer or financial institution.

Can I start an HSA on my own?

Yes. As long as you are enrolled in an HDHP and not covered under someone else’s policy, you can start an HSA.

How much does it cost to open an HSA?

The initial sign-up is free, and there is no minimum deposit amount to start. But expect investment fees and possibly monthly management fees.


Photo credit: iStock/AndreyPopov

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

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

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

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

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

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


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


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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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

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