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A checking account can be a convenient place to store your cash and manage daily transactions. Among its benefits: You can usually make as many transfers in and out of the account as you like. Also, your funds are likely to be insured.
There are, however, some cons, too. You probably won’t earn much or any interest for parking your money in a checking account, and you may be hit with an array of fees that nibble away at your funds.

Here, take a closer look at checking account pros and cons so you can pick the right financial product to suit your needs.

What Is a Checking Account?

Simply put, a checking account is a safe place to stash funds and enable the flow of money in (what you earn and receive) and out (what you spend).

Whether held at a brick-and-mortar bank, an online bank, or a credit union, a checking account is often the hub of a person’s financial life. Your pay can be seamlessly direct-deposited, if you like.

For your everyday spending, you might schedule automatic payments for your mortgage and utilities, write a check when paying for a doctor’s appointment, and tap your debit card when treating yourself to a wine tasting with friends on the weekend.

Benefits of Checking Accounts

Here’s a closer look at the pros and cons of a checking account, starting with the upsides.

Security

Yes, you could stuff your money under the proverbial mattress, but with a checking account, you have a secure spot for it, where it can’t get lost, stolen, or damaged.

If your bank is insured by the FDIC (Federal Deposit Insurance Corporation) or, in the case of a credit union, the NCUA (National Credit Union Administration), your account will typically be covered up to $250,000 per depositor, per insured institution, for each account ownership category.

Easy Access to Cash

Checking accounts allow you to access your money quickly and easily, whether you need to pay for a meal or something unexpected, like a school donation. Setting up direct deposit allows your paychecks to be transferred directly into your checking or savings account, with some banks offering access to cash up to two days early.

You can then tap your funds by using your checking account’s debit card, writing checks, snagging some cash from the ATM, or making a transfer.

Pay Bills Conveniently

Here’s another benefit of a checking account: Having a checking account means you can get your bills taken care of without much effort. You might set up recurring payments to a car loan, for instance, or use a digital payment app to send money to your roommate, a friend, or your yoga teacher. You can also typically move funds quickly via wire transfer, which can be especially useful for international transactions, and other methods as well.

Debit Card for Purchases

When you open a checking account, you’re usually provided with a debit card that’s linked to the account. Similar to a credit card, you can typically use your debit card to pay in person or online for anything from this week’s groceries to a cool new pair of shades to a matcha latte.

Unlike a credit card, however, debit cards pull funds directly from your checking account. They usually only let you dip into funds you actually have on deposit, which can help you keep spending in check and stay on budget, not to mention avoid credit card debt.

Rewards

Some checking accounts come with rewards that can be a nice perk. For example, when you open an account, you might get a sign-up bonus. Who doesn’t like free money? Or your debit card may carry rewards, similar to those of a credit card, such as cash back.

Direct Deposit Benefits

Direct deposit can be a seamless way to get paid; in fact, more than 95% of Americans get paid this way, according to National Payroll Week. Direct deposit sends cash, ready to spend, straight into your bank account, so you don’t have to deal with depositing a check or cash.

FDIC Insurance Protection

As noted above, most financial institutions (but not all) are insured by either the FDIC or NCUA. In the very rare event of a bank failure, you would be protected from loss up to those limits of $250,000 per depositor, per account ownership category, per insured institution. Note: Some institutions offer programs that provide even more than $250,000 in insurance.

Cons of Checking Accounts

As you might guess, there are advantages and disadvantages to checking accounts, as is the case with most financial products. Checking accounts are designed to serve customers’ everyday, short-term money needs and can have a few potential downsides to consider.

Low or No Interest Earned

While your money is sitting in your checking account, it is probably earning very low, if any, interest. For instance, as of June 2025, the average interest checking account rate was a meager 0.07% of one percent, according to the FDIC. Translated into dollars and cents, that means that if you kept $5,000 in your checking account for a year, you would only earn $3.50 in simple interest.

That said, there are high-yield and premium checking accounts available that pay heftier interest rates. These may come with minimum deposit and balance requirements. Online-only banks frequently offer these accounts without those barriers, however, and with interest rates that are several times higher than the national average.

Potential Overdraft and Other Fees

Sooner or later, many people will try to transfer more money out of their checking account than they actually have on deposit. It could be a simple math error, or they might have forgotten about that on-the-fly payment they made to contribute to, say, a friend’s baby shower gift.

Not having enough money in your checking account can lead to overdraft fees. The average charge currently stands at a steep $25 to $35, with an average (as of 2024) of $27.08. Also, even if you have overdraft protection — meaning you have linked accounts so that money can be pulled from savings into checking to cover payments, if needed — you may still be charged a fee. However, it’s likely to be lower than an overdraft charge.

Also, check the fine print when signing up for a new checking account: There can be other fees, such as account maintenance and out-of-network ATM fees (more on those below).

Security Risks

While banks are extremely safe overall, there is always a small possibility of a security risk (such as a hack). Losing or having your debit card stolen and used without your authorization is another concern— and it can be a common one. A card thief could potentially gain access to the funds in your checking account.

It’s vital to report the issue within two days of noticing the card is missing so that you’ll be liable for no more than $50 in unauthorized usage. Otherwise, you could be liable up to $500 or more depending on the circumstances.

Minimum Balance Requirements

Some checking accounts require the account holder to maintain a certain balance to avoid monthly account fees. Or they might want account holders to keep a certain sum on deposit in order to earn a premium interest rate. Depending on the institution, this minimum deposit could be several hundred or more than a thousand dollars. If your balance dips below this amount, you could be hit with fees and/or lose your interest rate.

Recommended: Ways to Manage Your Money

When a Checking Account Makes Sense

Quite simply, checking accounts make sense for the vast majority of Americans. It typically serves as the hub of one’s daily financial life.

Some people, though, are unbanked, meaning they have not (or are not able) to access the usual banking services. If you are seeking a checking account and haven’t been able to secure one, you can try a few other options:

•   It might be easier to get an account at a credit union, if you qualify for one based on where you live, your profession, or other factors.

•   Your banking history may reveal some issues, such as multiple overdrafts, as tracked by ChexSystems (a kind of reporting agency for the banking industry). In this situation, you might qualify for a second-chance account. This kind of account may have higher fees and/or minimum balance requirements, but it can be a good way to show that you can handle an account responsibly. In some cases, a second-chance account can be a stepping stone to a standard checking account.

When Other Accounts May Be Better

There are some situations in which another kind of account could be better than a checking account. A few scenarios to consider:

•   If you are hoping to park your money for a while and earn interest vs. spend it, a savings account can be a good bet. Some savings accounts have limits on how many transactions can occur per month (check the fine print). Whether or not that applies, you will likely earn a higher interest rate than you would with a checking account. For instance, the current average interest rate for a savings account is 0.38% vs. 0.07% for checking.

•   For those who want their money to earn still more money, a high-yield savings account can offer still more earning potential. At the time of publication, some online-only banks were offering rates in the range of 4.5%.

•   A CD (or certificate of deposit) can be another way to earn a higher return on money you keep in a bank. However, these don’t offer the accessibility of a checking account. You agree to keep your funds on deposit in return for the bank guaranteeing a certain interest rate and are usually penalized if you withdraw funds before the end of your time.

•   For those who want spending power without a checking account, prepaid debit cards can deliver. You load funds onto them and can then spend or pay bills with them. They are typically backed by a major network, like Visa or Mastercard.

•   One other option is to use digital payment services, such as Venmo and PayPal. These can allow you to move funds to shop and otherwise spend without a bank account.

Checking Account Features To Consider

If you are looking for a checking account, you may want to focus on these three considerations:

ATM Access and Fees

Since accessibility is a key selling point of checking accounts, you likely want your money to be within easy and affordable reach. Check out a financial institution’s network of ATMs and make sure they are near your usual haunts.

Also see what the charges are for using an out-of-network bank: Certain banks (especially online-only ones) may waive those usual out-of-network fees that can ding you; these currently average $4.77 a pop.

Online/Mobile Banking

Today, it’s par for the course for financial institutions to provide online banking features and mobile banking apps, but some provide more robust, user-friendly digital services and offer them for free.

As you consider your options, you might look for a bank that helps you save automatically. A round-up function that nudges purchases up to the next whole dollar amount and adds the extra money to your savings can be valuable.

Also helpful are dashboards that allow you to see your money (earnings, spending, and savings) and credit score at a glance, for no extra charge. This feature can help you budget better.

Overdraft Protection

As mentioned above, many people have those “oops” moments and overdraw their accounts. Some banks will give you free overdraft protection up to a certain sum. For instance, they might cover up to $50 of your overdraft without charging you the standard fees. This can be a valuable feature when you are deciding which financial partner is right for you.

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Account Maintenance Fees

As noted above, some banks will charge monthly account maintenance fees for holding a checking account at their institution. It can be one of the ways that banks make money. These fees can range from, say, $5 to $12 a month or more, which can take a bite out of your budget.

You may find that some banks, especially online ones, offer no-fee checking accounts. Or a financial institution may waive fees if you keep a certain amount on deposit across your accounts or if you meet other requirements.

Customer Service and Support

Another factor to consider is the kind and quality of customer service and support a financial institution offers. Some people may gravitate toward online banks which typically have 24/7 online support by phone or text chat. Others may prefer banking with a traditional bank where they can meet in-person with team members. Consider what’s important to you to make the best decision for your news.

The Takeaway

For many people, a checking account can be a reliable hub for their personal finance needs. You can store your earnings securely and still easily access your money to pay bills and fund daily purchases.

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.

FAQ

Are checking accounts free?

Some are. You can often find free checking accounts from traditional and online-only banks as well as credit unions. While these accounts may be billed as “free,” keep in mind that some fees may apply, say, if you overdraft your account.

What happens if my checking is overdrawn?

If your checking account is overdrawn, that means you have tried to withdraw more money than you have in your account. This can lead to payments not being processed (a check bouncing, for example) and charges piling up. By linking a checking and savings account, you may be able to have funds automatically transferred from savings into checking to cover the shortfall. Your bank may charge you a fee, whether they cover the shortfall through overdraft protection or not.

Can I have multiple checking accounts?

There is usually no limit on how many checking accounts you can have. It can be convenient to have one for, say, your salary and your living expenses and another for a side hustle and related expenses.

Are checking accounts FDIC insured?

Most but not all checking accounts are FDIC-insured. You can look for this feature before opening an account. With FDIC insurance, you are covered for up to $250,000 per depositor, per account ownership category, per insured institution in the very rare event of a bank failure. Some banks have programs that offer even higher amounts of insurance.

Do checking accounts offer fraud protection?

Most banks will refund you if your account is hacked or your debit card is used without permission, provided you report it in a timely fashion. Check with your financial institution about their policies, but note that if you willingly sent money to an individual or business that turned out to be a scam, refunds are less likely.

Photo credit: iStock/SDI Productions

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.


¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

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.

SOBNK-Q225-103

When your home energy usage peaks in the summer and winter, you could be surprised by a higher energy bill — and might have to scramble to cover the cost. Signing up for budget billing with your utility providers can eliminate these unexpected cost surges and make it easier for you to plan your monthly expenses.

However, budget billing may not be right for everyone. Below, we’ll explore what budget billing is, how it works, its benefits and drawbacks, and how to set up budget billing on your own — without any help from your provider.

Budget Billing Defined

Budget billing is an alternative, optional payment program for utilities like gas and electricity. By opting into budget billing, you will pay the same predictable amount each billing cycle, regardless of how much or how little energy you actually used.

With budget billing, you can avoid the roller coaster-like highs and lows of utility billing — where costs can skyrocket during sweltering summers and frigid winters. For many, this makes building a monthly budget much easier.

To opt into budget billing, call your utility provider or check out the website for information about what programs are available.

How Does Budget Billing Work?

Energy prices and usage fluctuate throughout the year. This can make it difficult to anticipate what your gas, electric, water, and other utility bills will be each month. Depending on where you live and how harsh the seasons are, you might be in for a surprise on a few bills each year.

Budget billing eliminates those bill fluctuations. Instead, your utility provider analyzes past energy usage for your residence (usually over the prior 12 or 24 months) to estimate an annual total. The company then divides that total into 12 identical payments for the upcoming year.

Of course, it’s unlikely that your energy consumption will be exactly the same as it was the previous year. And with inflation rates and unpredictable weather events, the price of electricity, natural gas, and oil could increase over time. To account for this, your utility provider will track your actual energy usage throughout the year and calculate what you would owe (sometimes called a “true-up amount”).

If you overpaid for the year, the provider may reimburse you for the amount you paid above your actual energy use or they might issue you a credit on an upcoming bill. If you underpaid for the year, you’ll typically have to pay the outstanding balance or the extra will be folded into your upcoming bills.

Either way, the utility provider will use the past year’s worth of data to calculate a new monthly equal billing amount for the year ahead. Some providers may update bill amounts quarterly, rather than annually. Be sure to ask your provider exactly how their budget billing works.

Recommended: Can You Change the Due Date of Your Bills?

Does Budget Billing Save You Money?

Budget billing does not save money on utility bills. It just makes your monthly payments more predictable. Some months, you will likely pay less than what you actually owe. In others, you could be paying more than what you would owe.

Having a predictable line-item in your budget may make it easier for you to handle other monthly expenses or keep you from needing to dip into your emergency fund to cover an especially high energy bill.

Factors That Impact Savings

So is budget billing worth it for eclectic and other utility bills? It can be. While the payment program itself doesn’t lower your energy costs, equal billing programs can still have a positive impact on your finances. Some factors to consider:

•   Energy efficiency: If you become more energy-conscious after enrolling and reduce your consumption, you could end up with a credit at year-end.

•   Rate fluctuations: If utility rates rise during your plan term, your fixed payments might be temporarily lower than actual usage costs.

•   Personal budgeting habits: Budget billing can help you avoid missed payments or overdraft fees, potentially saving you money indirectly.

Advantages of Budget Billing

Budget billing can offer several benefits to households looking for financial stability and easier budgeting. Here’s how it may help you out:

Easier Budget Management

Paying a fixed amount to your utility providers each month makes it easier to build — and stick to – a monthly budget. With predictable bills, you’ll know how much money to set aside each month for utilities. You’ll also know how much is left for other expenses, as well as for savings and retirement contributions, debt repayments, and investments.

Less Financial Stress

If seeing an unusually high total on an email statement or paper bill can send you into a panic, you may appreciate the stability afforded by budget billing. Budget billing won’t save you money, but when you know what to expect each month, you might rest a little easier.

Reducing Late Payment Penalties

If you receive a high energy bill that you can’t afford to pay, you may have to dip into emergency savings, or just pay the bill late. The latter could result in late payment penalties.

With budget billing, you won’t have to worry about a spike in your monthly energy bills and may feel comfortable putting the bill on autopay, which further ensures you never miss a payment.

Predictable Monthly Expenses

This predictability of budget billing supports overall financial planning. It can be particularly helpful for individuals on fixed incomes, such as retirees or those relying on government assistance.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

Drawbacks of Budget Billing

As helpful as budget billing can be for some families, there are also some cons to consider:

Potential Fees

Some utility providers charge a fee to enroll in budget billing. On top of the startup fee, the provider may charge ongoing fees for the service. If that’s the case, budget billing will actually cost you more money than a traditional billing program. It’s a good idea to ask about fees before signing up for any new program.

Chance You Could Underpay

With budget billing, you can end up underpaying throughout the year and, in turn, owing money to your utility provider. This can occur if your actual energy consumption ends up being more than your budget plan accounts for, or if rates rise sharply during the year.

But if you didn’t pay enough each month, you’ll owe whatever remains. If it’s a sizable amount, you may have to rely on a credit card to cover other expenses or take money out of savings to pay off the bill. Many people enroll in budget billing to avoid such surprises to begin with, so this can be counter-productive.

Complacency

When you’re on a budget billing plan, you might get used to a relatively low electric bill in the summer and be tempted to blast the AC. Similarly in the winter, it could be tempting to get all toasty by cranking up the heat, since you won’t feel the financial repercussions of those decisions until much later.

If you don’t think you can be responsible with energy consumption without the threat of a high bill looming over you each month, budget billing may not be the right fit for you.

Possible End-of-Year Adjustment

At the end of the program — usually a year after it kicks off — the utility company will calculate what you actually owed for the year, based on your energy consumption. If you overpaid, you’ll get a credit on a future bill (nice!).

But if you didn’t pay enough each month, you’ll owe whatever remains. If it’s a sizable amount, you may have to rely on a credit card to cover other expenses or take money out of savings to pay off the bill. Many people enroll in budget billing to avoid such surprises to begin with, so this can be counter-productive.

Recommended: Money Management Guide

What Happens If You Are Billed Incorrectly?

Mistakes can happen with budget billing just like with standard billing. It’s important to know how to handle billing errors to protect your finances.

Steps to Resolve Billing Disputes

While every utility company’s dispute process varies slightly, here are the general steps to take if you have an energy billing concern or dispute:

•   Review your bill: Carefully examine the charges, usage history, and any billing adjustments.

•   Gather supporting documentation: If you think you’ve been billed incorrectly, you’ll want to collect previous bills, meter readings, and anything else you feel supports your claim.

•   Contact customer service: Reach out to your utility provider’s customer service department and clearly explain your issue or concern. Ask for clarification and, if necessary, request a correction or adjustment.

•   File a complaint: If your issue doesn’t get resolved, you may need to involve an external agency, such as an energy ombudsman or a regulatory body like the Public Utility Commission.

Can You Make Your Own Budget Billing System?

If your utility provider doesn’t offer budget billing — or if you prefer more control — you can create your own system.

DIY Budgeting Strategies for Utility Bills

By handling budget billing yourself, you can avoid any potential fees the utility provider might have charged you. You can also create a budget billing system for all of your utilities combined. Here’s how:

•   Track historical usage: Sign into your accounts and look at historical data to determine your average monthly cost for each utility. Combine those numbers to get your average total monthly utility costs. Use this amount when building your monthly budget.

•   Set up a separate utility fund: Open a savings account (ideally a ​​high-yield savings account) and deposit a fixed amount each month based on your average utility usage. If your first bill comes in and is less than your monthly budgeted amount, pay the bill and keep the extra funds in the account — you’ll need them later.

•   Automate savings: Set up automatic transfers to your utility fund for consistent budgeting.

•   Monitor your monthly usage: It’s a good idea to assess your usage every few months and adjust your contributions if it changes significantly.

This approach gives you the benefits of budget billing without relying on your utility provider.

Alternatives to Budget Billing

In addition to, or instead of, budget billing, there are other strategies to manage high utility costs and smooth out your expenses.

Energy Efficiency Programs

Many utility providers offer free home energy audits, rebates on energy-efficient appliances, and deals on HVAC systems and other home improvements. Reducing your overall energy usage can permanently lower your monthly bills.

Seasonal Savings Strategies

You can save on utility bills by lowering energy consumption during high-use seasons. Simple actions like sealing drafts around windows and doors, adjusting your thermostat, and turning off unused lights and electronics can lead to significant savings. For more sustained reductions, consider upgrading to LED lighting, installing a programmable thermostat, and adding insulation to key areas like the attic, walls, and crawl spaces.

The Takeaway

Budget billing is a helpful tool for households that want more predictable utility payments. While it doesn’t reduce your energy costs directly, it offers peace of mind, eases budgeting, and helps prevent missed payments. However, there are some downsides to consider. These include potential fees, underpayment risks, and the need for year-end reconciliations.

Before enrolling in a budget billing program, it’s a good idea to review the pros and cons and understand how it can affect your finances each year.

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.

FAQ

Do all utility companies offer budget billing?

Not all utility companies offer budget billing, but many do — especially larger electric, gas, and water providers. Availability often depends on your location, the specific utility company, and your account history. Budget billing is typically offered to customers with a good payment record and at least 12 months of usage history. To find out if your provider offers this option, check their website or contact customer service directly for eligibility requirements and enrollment details.

Am I better off budget billing or not?

Budget billing can be helpful if you like a predictable utility bill each month. Knowing what you’ll spend may make it easier to budget for other expenses. However, budget billing does have its drawbacks, especially if the utility provider charges a fee for the service.

Can I budget bill for other areas of my budget besides utilities?

Yes, while budget billing is most common for utilities, you can apply similar strategies to other budget categories. For example, you can set aside a fixed monthly amount for irregular expenses like car maintenance, subscriptions, or annual insurance premiums. This method — often referred to as a “sinking fund” approach — helps smooth out large or seasonal costs over time, preventing expense spikes. Budgeting apps and spreadsheets can help you track and manage these monthly allocations effectively.

What happens if my actual energy usage is much higher than estimated?

If your actual energy usage exceeds the estimate used for budget billing, you’ll typically have to pay the difference during a reconciliation period — usually at the end of the billing year. Your utility provider may also adjust your monthly payment going forward to reflect your higher usage. While budget billing can help avoid seasonal spikes, it doesn’t eliminate your responsibility for actual costs, so it’s wise to monitor your usage and be prepared for possible adjustments.

Can I cancel budget billing if it doesn’t work for me?

Yes, most utility companies allow you to cancel budget billing at any time, though the process may vary. When you cancel, you’ll usually be billed for the difference between what you’ve paid and what you’ve actually used. This could result in a credit or a balance due. Be sure to ask your utility provider about any specific terms or timing considerations. If budget billing no longer aligns with your financial needs, switching back to regular billing is usually simple.

Photo credit: iStock/Milan_Jovic

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

SOBNK-Q225-105

Living beyond your means can easily happen. Typically, it’s a case of your spending outstripping your earnings. This in turn means it’s hard to pay off debt and save for your financial goals.

Sound familiar? If you find yourself running out of money before the next payday, you could be leaving above your means.

Here, learn more about this issue and the warning signs. Then you can begin to take action and take control of your money.

What Does “Living Beyond Your Means” Mean?

Simply put, ”living above your means” means that you are spending more money than you are earning. People are able to do this by relying on credit cards, loans, and prior savings to cover their expenses. However, the process is not sustainable, and eventually overspending is likely to catch up to you.

Living beyond your means can also mean that you’re spending most or all of what comes into your checking account each month and, as a result, don’t have anything left over for saving or investing, such as building an emergency fund, saving for a short-term goal like buying a car or a home, or putting money away for retirement.

Here are ten red flags that you’re living a lifestyle you simply can’t afford — and tips for how to get back on track.

1. You Live Paycheck to Paycheck

One of the most obvious and common signs of living beyond your means is when there’s little to no money left after you pay your bills. If your paycheck disappears within days of receiving it, and you’re counting down the days until the next one, that’s a major warning sign.

Living paycheck to paycheck means you have no cushion for emergencies and would not be able to cover your living expenses if you were to lose your income. This puts you in a precarious situation, where any financial bump in the road could throw your entire financial life into disarray.

2. Your Credit Score Has Dropped

A declining credit score is often a silent but powerful indicator that you’re overspending. This drop can result from late payments, high credit utilization (the amount of credit you’re using compared to your total limit), or accumulating too much debt.

If you’re relying heavily on credit cards to cover basic living expenses — like groceries, gas, or other monthly bills — it likely means your spending has outpaced your income. Over time, this kind of borrowing not only hurts your score but also racks up interest charges that dig you deeper into the hole.

3. You’ve Stopped Your Retirement Contributions

If money is feeling a little tight, you may feel that now is not the time to worry about retirement. While this may seem like a short-term fix, it can significantly damage your long-term financial health.

Halting retirement contributions — even temporarily — means missing out on compound returns (when the returns you earn start earning returns of their own), employer matches, and overall portfolio growth. If you’re regularly suspending or avoiding savings altogether, it may indicate your current expenses are too high to support your financial goals.

4. A Big Portion of Your Income Goes to Housing

Housing is typically the largest monthly expense, but if your rent or monthly mortgage payment is above 30% of your monthly pre-tax income, you may be financially overextended.^[1] This can make it hard to have enough money leftover to cover other expenses, save, invest, and build wealth over time.

Staying below 30% can be difficult if you live in a region of the country where the cost of housing is high. Nevertheless, spending a lot more than a third of your income on housing can leave you “house poor,” and put your other financial obligations at risk.

5. Your Savings Account Isn’t Growing

If your savings balance has stayed flat — or worse declined — over the past few months, it’s a sign that your lifestyle is too costly. A lack of progress in savings makes it hard to handle unexpected events or set aside funds for the future.

Making regular deposits into a savings account, such as a high-yield savings account — in addition to your 401(k) or IRA — allows you to work towards your short- and medium-term financial goals, such as putting a downpayment on a home or a car or going on vacation.

6. You’ve Been Charged an Overdraft Fee More than Once This Year

An overdraft fee is charged when there’s not enough money in your account to cover a check or debit card payment. Overdrawing from your account often means the bank will lend you money to cover the overage. You’re then responsible for paying back that amount, as well as an overdraft fee, which can potentially be more than the overdrawn amount. (That said, there are some banks that offer no-fee overdraft protection.)

Mistakes happen, and a one-off overdraft isn’t necessarily an indicator of overspending. But repeat offenses can be a sign that you are living too close to the edge and don’t have a clear picture of how much money is going in and coming out of your account each month.

7. You’ve Never Set a Budget

A lack of budgeting can be a fundamental sign of living beyond your means. If you’ve never taken the time to outline your income, expenses, and saving goals, you may well be spending money in ways that aren’t sustainable.

Without a budget, it’s easy to underestimate your monthly expenses or overestimate what you can afford. You might think you’re managing fine but in reality you could be accruing debt, missing saving opportunities, or overspending in certain categories.

Many people think making and following a budget will be too complicated. But having a budget can actually simplify your spending decisions by letting you know exactly what you can and can’t afford. Having a budget also helps to ensure you have enough money to cover essentials, fun, and also sock some away in savings.

8. You’re Leasing a Car You Can’t Afford to Buy

Leasing a vehicle you would not be able to purchase outright or finance can be a major financial red flag. Leasing lets you rent a high-end lifestyle, but many people end up with leases they really can’t afford.

You might be covering your monthly auto payments, but if you can’t do that while meeting your other expenses and also putting money into savings, then your car is likely too expensive. Leasing also means you’re never building equity in a vehicle and may face additional costs for mileage or wear-and-tear penalties.

9. You’re Only Making Minimum Payments on Credit Cards

It’s fine to use your credit card to pay for everyday expenses and the occasional big purchase. But if you can’t pay off most of the balance each month, it’s a red flag that you’re living beyond your means.

While minimum payments keep your account in good standing and avoid late fees, most of the payment goes toward interest, which means they don’t address the underlying debt. Minimum payments are also designed to be small, so it takes much longer to pay off your balance, sometimes even years. This can trap you in a cycle of debt where you’re constantly paying off interest rather than reducing the principal, making it highly challenging to ever become debt-free.

10. You Don’t Have an Emergency Fund

Not having a stash of cash you can turn to in a pinch can be a sign that you’re living above your means. You may be gambling on the fact that nothing will go wrong. But life is unpredictable, and you could well get hit with an unexpected expense (like a major car repair or medical bill) at some point, or potentially lose your job.

Without savings to fall back on, you may be forced to rely on high-interest credit cards or loans, which can lead to debt that’s hard to repay. This financial strain can cause stress, damage your credit, and disrupt long-term goals like saving for retirement or buying a home. An emergency fund provides a buffer that protects your financial stability.

How to Live Below Your Means and Get Back on Track

Overspending can feel like a slippery slope — once you’re living above your means, it can be tough to stop the cycle. But financial recovery is entirely possible. The key is to learn how to live below your means and establish habits that promote long-term stability. Here’s how to get started:

1. Create a Realistic Budget

A solid budget is the foundation of any financial turnaround. Start by tracking all your income sources and listing every expense, from rent to streaming services. Categorize your spending into needs, wants, and goals/savings, then determine if you want to rejigger how much you are spending in each area.

One popular budgeting framework is the 50/30/20 rule. This divides your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment beyond the minimum. This set-up ensures that your essential expenses are covered while also allowing for some “fun” spending and future financial security.

Recommended: 50/30/20 Budget Calculator

2. Reduce Unnecessary Expenses

To find room in your budget for saving and paying more than the minimum on debts, you may need to cut back on nonessential spending. For example, you might free up funds by cooking more and eating out less, getting rid of streaming services you rarely watch, and/or quitting the gym and working out at home.

To cut back on impulse purchases, you might institute the 30-day rule: When you feel the urge to buy something you want but don’t need, commit to waiting 30 days before making the purchase. If after the waiting period, you decide you truly want the item and it aligns with your financial goals, go ahead and buy it. There’s a strong chance, however, that the urge to buy it will have passed.

3. Build an Emergency Fund

Living paycheck to paycheck leaves little room for error. An emergency fund is your financial safety net — it prevents one unexpected bill from becoming a crisis.

Financial advisors often recommend setting aside at least three to six months’ worth of living expenses for emergencies. But you don’t have to come up with that entire sum overnight. Begin with whatever amount you can afford, even if it’s just $10 a week. Consider setting up an automatic transfer to a separate savings account earmarked for emergencies so you’re not tempted to spend it. Or, if your bank offers it, you might dedicate a savings vault within your account for emergency savings.

This buffer provides peace of mind and helps you avoid falling into debt when life throws curveballs.

The Takeaway

Living above your means doesn’t always look like luxury vacations or designer clothes. Often, it’s more subtle: relying on credit cards, skipping savings, or struggling to cover basic expenses. The good news is that these warning signs are not life sentences — they’re signals that you can change course.

Learning how to live within your means involves awareness, building a budget, and making one smart money decision at a time. With consistent effort, you can shift from financial survival to financial security — and ultimately, financial freedom.

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.

FAQ

What are the long-term impacts of living beyond your means?

Living beyond your means can lead to chronic debt, poor credit, and financial instability. Over time, high-interest credit card balances and loans can become unmanageable, making it difficult to build savings or qualify for major purchases like a home. This behavior often leads to stress, strained relationships, and limited future financial opportunities. Without change, it can also delay or prevent retirement, forcing individuals to work longer or rely on others for support later in life.

What are the first steps to take if I’m overspending?

The first step is to track your spending for a full month to understand where your money is going. Then, categorize your expenses and identify areas where you can cut back, such as dining out, subscriptions, or impulse purchases. Creating a realistic budget is crucial — allocate funds for needs, savings, and limited wants. Set financial goals and consider using a budgeting app or cash envelopes to stay disciplined. If overspending is tied to emotional triggers, you might benefit from speaking with a financial counselor.

How can I start saving if I have no extra money?

Start by reviewing your expenses and identifying small, nonessential costs to reduce or eliminate — like daily coffee runs or streaming services. Even setting aside just $5 to $10 a week adds up over time. You might also want to automate your savings (so money is transferred to a savings account before you can spend it) and boost your income through side gigs or selling unused items. The key is to start small and build momentum through consistency and gradual lifestyle adjustments.

What percentage of my income should go toward housing?

Financial experts generally recommend spending no more than 30% of your gross monthly income on housing. This includes rent or mortgage payments, property taxes, insurance, and utilities. Staying within this limit helps ensure you have enough left over for other essential expenses like food, transportation, savings, and debt payments. In high-cost areas, it may be harder to stay under 30%, but exceeding it by too much can strain your finances and reduce your ability to build long-term wealth.

What helpful resources exist if I’m struggling financially?

There are many free and low-cost resources available. Nonprofit credit counseling agencies, like the National Foundation for Credit Counseling (NFCC), offer budgeting help and debt management plans. Local community organizations often provide food assistance, utility aid, and housing support. Government programs like SNAP, Medicaid, and unemployment benefits can also offer relief during tough times. In addition, financial literacy websites, public libraries, and budgeting apps offer tools and guidance to help you regain control of your finances.

Photo credit: iStock/urbazon

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q225-108

Before the age of digital payments, traveler’s checks were considered one of the safest and most convenient ways to carry money while traveling, especially abroad. Though their popularity has waned with the rise of credit cards and mobile wallets, traveler’s checks do still exist and are issued by a limited number of banks and credit unions.

Whether you’re curious about their modern use or holding onto a few from a past trip, understanding traveler’s checks can help you make informed financial decisions on your next journey.

Traveler’s Checks Defined

Traveler’s checks are paper checks you can purchase at a bank or credit union then carry when you travel abroad in a place of cash. Unlike cash, however, travelers checks are secured by the issuing financial institution, which means that the issuer will replace the funds if the checks are lost or stolen at any point at home or abroad.

Issuers print checks in varying denominations, such as $10, $20, or $50, and they are available in a range of currencies. Depending on where you buy traveler’s checks, you may be charged a fee in the range of 1% to 3% of the total purchase amount.^[1]

You can use travelers checks just like cash to pay merchants for goods and services, as long as they accept traveler’s checks. Typically, any change due back to you will be given in local currency. You may also be able to get the checks converted into cash in the local currency at some banks, hotels, and currency exchange offices, though you may need to pay a fee.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

How Do Traveler’s Checks Work?

Traveler’s checks operate somewhat like regular checks but are pre-paid and come with built-in fraud protection. Here’s a step-by-step explanation of how they work:

Where Can I Get a Traveler’s Check?

While traveler’s checks still exist and people still use them, they are getting increasingly hard to come by. American Express — which issued traveler’s checks for over a century — no longer offers new checks (though they will honor previously issued checks). However, some financial services companies — including Visa —- still issue traveler’s checks, which are sold through various partner banks.

If you’re interested in buying traveler’s checks, you will likely need to contact several banks and credit unions to find one that still offers them.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Pros and Cons of Traveler’s Checks

Traveler’s checks offer a mix of benefits and drawbacks. For some, they are a nostalgic or extra-safe backup option. For others, they may seem outdated compared to more modern financial tools.

Pros of Traveler’s Checks

Cons of Traveler’s Checks

Do I Need Traveler’s Checks When Going Abroad?

Generally, no. Modern travelers often find credit cards, debit cards, and mobile wallets to be more convenient, widely accepted, and cost-effective. However, there are exceptions. You might consider traveler’s checks if:

Still, for the majority of travelers, modern financial tools usually make traveler’s checks unnecessary.

4 Alternatives to Traveler’s Checks

Traveler’s checks are no longer the only secure option for carrying money while abroad. Here are four modern, practical alternatives:

1. Prepaid Debit Card

A prepaid travel card is the modern-day version of a traveler’s check. You can load the card with a set amount of money from your bank account before you travel, then use it to get local currency, shop, dine, and more while you’re abroad.

Like traveler’s checks, prepaid cards are not linked to your bank account, which prevents anybody from draining your checking account if the card gets lost or stolen — and you can’t go into debt. On the downside, these cards limit you to a pre-set spending amount. And if you lose your card, there’s no way to get your money back.

2. Credit Card

Using a credit card is a convenient and secure way to pay for goods and services while you travel. These cards come with robust fraud protections that safeguard your money if your card gets stolen or lost while overseas. And many cards also offer spending rewards, such as points, miles, or cash back. However, there may be fees involved with using your card overseas, called foreign transaction fees.

And unless it’s an emergency, you’ll likely want to avoid using your credit card for getting cash at an ATM. When you request a cash advance from a credit card, you can get hit with a fee (often 3% to 5% of the advance amount), as well as interest, which can run as high as 29%. You may also pay an ATM fee of several dollars.

3. Debit Card

Another alternative to traveler’s checks is your debit card, which you can use to get local currency at ATMs and also to make purchases while traveling. Unlike a credit card, you’re spending your own money when you pay by debit card, so you can’t run up debt.

Like a credit card, however, you may get hit with a foreign transaction fee when you pay something overseas using your debit card. You may also have to pay out-of-network ATM fees every time you withdraw cash. However, some banks have partnerships with banks in other countries that allow travelers to make fee-free withdrawals. Before you travel, it’s a good idea to check to see if your bank has this kind of arrangement.

4. Mobile Wallet

Mobile wallets like Apple Pay, Google Pay, and Samsung Wallet are becoming more accepted around the world. You can link your credit and debit cards and pay directly from your phone without needing a physical wallet. This method of payment is not only convenient, it’s also highly secure, since digital wallets use encryption and tokenization to protect your data.

Just keep in mind that not all merchants accept mobile wallets, especially in rural areas, so you may not want to rely on this as your only payment option when you travel.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

How to Keep Your Money Safe While Traveling

Regardless of your preferred payment method, keeping your money safe while traveling is essential. Here are a few tips:

Recommended: How to Keep Your Bank Account Safe Online

What Can I Do With Old Traveler’s Checks?

If you still have old traveler’s checks from past trips, don’t throw them away — they may still be redeemable. Here’s what you can do:

Keep in mind that in order to redeem old traveler’s checks, you’ll need to provide identification and possibly documentation proving you were the original purchaser.

The Takeaway

Traveler’s checks were once the gold standard of secure travel funds, but the rise of digital banking has made them largely obsolete. Still, they retain some usefulness as a secure backup for international travelers, especially in less developed regions or for those who prefer not to rely on digital methods.

For most modern travelers, credit cards, debit cards, prepaid cards, and mobile wallets offer more convenience, better exchange rates, and broad acceptance. However, understanding traveler’s checks — and knowing how to use or redeem them — can still come in handy.

Ultimately, the best approach is a balanced one: carry multiple forms of payment, stay aware of local customs and banking norms, and prioritize security. Whether you’re heading off the beaten path or to a major city, having a thoughtful plan for managing your money can make your travels smoother, safer, and more enjoyable.

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.

FAQ

How does a traveler’s check work?

A traveler’s check is a prepaid, fixed-amount paper check used as a secure alternative to cash while traveling. You purchase it from a financial institution, sign it when issued, and sign it again when spending it or cashing it, allowing merchants or banks to verify your identity. If lost or stolen, traveler’s checks can usually be replaced quickly. However, traveler’s checks are not as widely issued and accepted as they once were. They have largely been replaced by prepaid debit cards and credit cards.

Why are traveler’s checks not used anymore?

Traveler’s checks have largely fallen out of favor due to the convenience and widespread use of credit cards, debit cards, and digital wallets, which are accepted almost everywhere and offer strong fraud protection. ATMs are now globally accessible, making it easy to withdraw local currency as needed. Additionally, it’s hard to find banks that still issue traveler’s checks, and many merchants no longer accept them as payment.

Can you cash traveler’s checks?

Yes, you can still cash traveler’s checks, though it might take some effort. Some major banks will cash them for account holders, especially if they issued the checks. Some currency exchange offices and hotels may also accept them. You’ll need valid identification, and you’ll usually sign the check in front of the cashier. However, because these checks are less common now, it’s best to call ahead and confirm if a location will accept or cash them.

Do financial institutions still carry traveler’s checks?

Some financial institutions still offer traveler’s checks, but their availability is limited. American Express no longer issues travelers checks. However, Visa still offers them through participating banks. You may need to call around to find a bank in your area that offers these checks. Those that do may also require advance notice or only provide them to account holders. As the travel industry shifts toward digital and card-based payment methods, traveler’s checks are now less commonly sold or promoted.

What can I do with old traveler’s checks?

If you have old traveler’s checks, you can generally still cash or deposit them, as they typically don’t expire. Visit a bank — preferably one that issued the checks or one with international banking services — and present valid identification. You can also contact the issuing company (e.g., American Express) for assistance or to process a refund. You may be able to deposit them into your bank account (though check with your bank first). They retain their original value if unused.

Photo credit: iStock/AndreyPopov

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

SOBNK-Q225-112

No one intends to waste money, yet it’s all too easy to look back and wonder where your paycheck went — and why it disappeared so fast.

Spending is personal. Whether you treat yourself to nights out or a biweekly fitness class, it’s your money and your choice. As long as these purchases align with your budget and priorities, they’re not inherently “bad.”

Still, you might find yourself wanting to rein in your spending. And that’s often easier said than done. Budgeting doesn’t come naturally to everyone, and many of us could benefit from a little guidance in spotting where our money might be slipping away.

With that in mind, here are some common ways people waste money — often without even realizing it. A few small changes can make a big difference.

Recurring Subscriptions

Set it and forget it is great when it comes to automating your personal finances, but it’s less than ideal when it comes to subscription services. A full 81% of American homes have at least one streaming service subscription, and the average U.S. subscriber has signed up for around four services.

On top of streaming entertainment services, many American consumers subscribe to a regular delivery service, like Dollar Shave Club, Hello Fresh, or FabFitFun. Whether you are ready to ditch some monthly services or not, you can try tracking your monthly recurring spending on a spreadsheet, using your bank’s app, or enrolling in a free service, like Trim by OneMain or Hiatus, to catch those monthly bills.

From there, you can decide what stays and what goes. Consider what might be worth the cost based on frequency, or what is worth canceling because you didn’t even realize you were signed up. For instance, you might decide to save on streaming services and reduce the number of subscriptions you have on that front.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Food Expenses

Buying groceries is an essential part of your monthly budget, but it’s still one to keep an eye on. Purchasing too many groceries can be a big wasted expense. The average American throws away 325 pounds of food a year, and the average U.S. family of four throws out $1,600 a year just in produce. Meal planning and buying only what’s needed can help you spend less on food and reduce waste, too.

But groceries aren’t the only area where people waste money on food. The average home in America spends nearly $4,000 on food away from home per year, which includes home delivery.

Dining out is great for special occasions and, yes, ordering in makes sense sometimes, too. But eating even a few more meals at home a week can lead to some serious long-term savings.

Recommended: Savings Calculator

Small Impulse Buys

When a purchase is one click or tap away, buying things on impulse — like a new gadget, treat, or toy for the kids — becomes all too easy. Many of us rationalize these purchases because each item is not all that expensive.

But $5 here and $20 there can add up faster than you realize. Recent research suggests that more than one in five Americans (22%) have made impulse purchases that have significantly impacted their finances in the past 12 months.

Impulse spending ranges dramatically from shopper to shopper, but curbing it can look the same across the board. Try waiting at least 24 hours before making a nonessential purchase. This pause helps you to assess whether the purchase is truly a need or just a passing desire.

When shopping for not-so-small items online, consider implementing the “30-day rule” That means letting something sit in a digital shopping cart for 30 days before determining if it’s worth purchasing.

Slowing down the buying cycle can help separate want from need and prevent purchases that are forgotten moments after the transaction.

Unreturned and Unused Items

Some of us leave a lot of cash sitting on the floor of our closets. Ordering clothing and other items online has become fast and seamless, but when something doesn’t meet our expectations, returning it becomes a chore. So we let it sit.

Obviously, summoning your energy to deal with unwanted items and returning them is one solution. But if you missed the return window and/or have a closet full of unworn (or barely worn) clothes, you may be able to recoup some of your costs by finding places to sell used stuff. These can range from local consignment shops to online marketplaces like Poshmark or Depop.

Transportation Costs

Transportation is a major expense for many people, and it’s easy to overspend without realizing it. One common way people waste money in this area is relying heavily on ride-hailing services like Uber or Lyft, even for short or routine trips. Owning a car you don’t truly need — especially a new or luxury model — can also be a financial drain due to monthly payments, insurance, maintenance, and gas.

To cut back on spending, you might evaluate how often you truly need a car. If you live in a city with decent public transit, using buses, trains, or biking can significantly reduce costs. Carpooling or using ride-sharing services for occasional needs may also be more cost-effective. If owning a car is necessary, consider choosing a fuel-efficient used vehicle with lower insurance rates and maintenance costs.

Other ways to save money on transportation include using public transportation, walking or biking whenever possible, planning trips in advance to avoid peak ride-share pricing, and consolidating errands to reduce gas usage. Tracking your monthly transportation spending can help you spot areas to cut back without sacrificing convenience or mobility. Small adjustments can lead to major savings over time.

Bank Fees

Many Americans might not even realize how much they’re being charged simply for accessing their money. The average bank overdraft fee is around $31 per occurrence. If you’re not paying attention, you could overdraw multiple times before realizing what you’ve done and end up with a negative bank balance.

Some banks will even charge customers just for holding an account with them. Costs vary, but the average monthly account maintenance fee is around $14 per month.

ATM fees can also deplete your account over time. If you use an ATM that is not part of your bank’s network, you may pay two fees — one charged by your bank, and one charged by the ATM operator. Combined, these two types of fees add up to an average of $4.55. While that’s not a large sum, it can multiply quickly if you frequently use ATMs.

The Takeaway

Being mindful of how you spend your money is crucial for achieving long-term financial stability and peace of mind. By recognizing common areas of wasteful spending — such as food, unused subscriptions, impulse buys, Uber rides, unreturned items, and unnecessary bank fees — you can make more intentional financial decisions.

Regularly tracking your expenses and reviewing your budget can help eliminate unnecessary costs and ensure you’re using your money in ways that align with your income, needs, values, and goals.

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.

FAQ

How do you know if you are wasting money?

You might be wasting money if you frequently make impulse purchases, pay for unused subscriptions, or buy items you don’t need. Track your expenses to identify patterns and unnecessary spending. If you find yourself consistently overspending in nonessential categories or not meeting your financial goals, it’s a sign to reassess your budget and spending habits. Regularly reviewing your finances can help you make more mindful and intentional spending decisions.

What is the 70/20/10 rule money?

The 70/20/10 rule is a budgeting strategy that divides your income into three parts: 70% for living expenses (including necessary and discretionary spending), 20% for savings and investments, and 10% for extra debt payments or charitable donations. This approach helps you manage your finances responsibly, build wealth, and contribute to causes you care about.

What do Americans waste the most money on?

Americans often waste the most money on dining out, unused subscriptions, and impulse purchases. Other common areas include high-interest credit card debt, expensive coffee and snacks, and overpriced phone plans. Regularly reviewing your expenses can help identify wasteful habits and help become more mindful of how you spend your money.

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