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Food stamps, or SNAP (Supplemental Nutrition Assistance Program) benefits, help millions of Americans who earn lower incomes or face economic hardship feed their families. In one recent year, 12% of all Americans accessed this benefit.

In the not too distant past, however, SNAP benefits weren’t always the most convenient way to go food shopping. A person had to go to the store and pay for their groceries with the program’s EBT card. Today, however, as so much of life is going digital, the United States Department of Agriculture (USDA) offers an online purchasing program to make food stamps more convenient for residents of every state. It’s becoming easier to use SNAP benefits online.

Here, you’ll learn more about how, where, and when you can use these benefits to grocery-shop online.

What Are Food Stamps?

“Food stamps” is an older, but still commonly used term to describe SNAP, or the Supplemental Nutrition Assistance Program.

SNAP is designed to provide nutritional assistance to low-income families, as well as the elderly, disabled, and people who have filed for unemployment. SNAP is a federal program administered by the USDA’s Food and Nutrition Service, which has a network of local offices.

While SNAP doesn’t cover all the items you might pick up at the supermarket, it can significantly cut your grocery bill.

•   You can use food stamps to purchase meat, poultry, and fish; vegetables and fruit; bread and cereal; dairy products; snack food; and seeds and plants that produce food.

•   However, you can’t use them to purchase tobacco, wine, beer, liquor, vitamins, prepared food, and nonfood items like cosmetics, hygiene items, and cleaning supplies.

Everyone on food stamps has a bank card called an EBT card, backed by the government. The program allows for customers to pay in-store and increasingly online, using their EBT just like a debit or credit card.

The maximum monthly food-stamp assistance you can get varies by where you live and how many people are in your household. A family of four living in the U.S. can now receive around $939 a month.

Who Qualifies for Food Stamps?

A household is eligible for Food Stamps, or SNAP, when it meets specific criteria. Each state has an income limit that SNAP households must stay under. Additionally, they may factor in your finances and savings to determine your eligibility.

To apply for food stamp benefits or to get information about the SNAP program in your area, you can contact your local SNAP office. You can find local offices and each State’s application on the USDA national map .

Each state has its own application form. If your state’s form is not on the web yet, you can contact your local SNAP office to request a paper form.

Recommended: Average Grocery Budget for a Family of 5

Can You Use Food Stamps Online?

Yes, food stamps can be used online. Thanks to the expedited expansion of an online purchasing pilot program run by the USDA’s Food and Nutrition Service, households receiving SNAP benefits in any of the 50 participating states (along with the District of Columbia) can now use EBT to pay for groceries online from select retailers.

If a retailer is enrolled in SNAP’s online program, people on food stamps can select foods eligible for EBT benefits online and then arrange for in-store or curbside pickup. In some cases, it may be possible to have your groceries delivered. If the retailer charges a delivery fee, however, you cannot use your benefits to cover that fee.

What Stores Accept Food Stamps Online?

You now know the answer to “Can food stamps be used online?” The next question is probably, “Where exactly can I use food stamps online?”

Fortunately, many stores now accept food stamps online. While Amazon and Walmart are among the best known retailers for online EBT shopping, the number of stores accepting EBT card payment online is continuing to expand.

•   FreshDirect, an online grocery delivery service, now delivers for free to SNAP participants in some zip codes in the New York metropolitan area.

•   Instacart, a grocery delivery service, is currently partnering with many local stores in the U.S. to offer SNAP EBT benefits. The latest version of the Instacart app should display whether your local store offers EBT SNAP.

Which retailers (and which specific locations) participate in the online SNAP program will vary from one state to another, so it’s a wise idea to check which options are available in your area.

Here are some of the retailers that are now accepting food stamps for online shopping (for either delivery or pickup):

•   Walmart

•   Amazon

•   Aldi

•   Food Lion

•   Publix

•   FreshDirect

•   BJ’S Wholesale Club

•   Kroger

•   ShopRite

•   Fred Meyer

•   Safeway

•   Albertsons

•   Vons

•   Hy-Vee

5 Ways to Use Food Stamps to Buy Groceries Online

The rules for using food stamps online will vary by retailer. Here are some ways this transaction might work.

1. Use Food Stamps on Amazon

For example, when shopping on Amazon, you can add your SNAP EBT card, shop for groceries, and when you check out, you enter your EBT PIN to pay for eligible purchases.

2. Order Groceries With Food Stamps at Walmart

For Walmart, you can order groceries online or through the store’s grocery mobile app. You first need to sign into your Pickup & Delivery account and then select Payment Methods.

3. Use Food Stamps Online at a Local Store

If your local store accepts EBT Online, you’ll see an option to add your EBT card to your account and can then add your card. During checkout, you select EBT as your payment method. You can then enter your PIN and complete your order.

For instance, at ShopRite, you can order groceries online at Shoprite.com or via the store’s mobile app. During checkout, you can select Pay Online and then click the Place Order button. You can then choose the EBT Snap Card as the payment method to complete checkout. That’s another way to use food stamps online.

4. Know Which Are Non-SNAP Items

At some retailers, you can also include non-SNAP items in the same order, but you’d need to pay for them separately with a debit or credit card. If the store charges a delivery fee, that charge would also need to be paid via a separate payment card since service fees are not included in SNAP benefits.

5. Continue to Check As Options Expand

If you don’t find EBT SNAP as a payment option when attempting to order from your preferred grocery store, you may want to keep checking back — the coverage areas and list of participating stores continue to expand.

Recommended: Average Grocery Budget for a Family of 3

Other Ways to Save on Groceries

If you don’t qualify for SNAP benefits or are looking for additional ways to trim your grocery budget, try these tips. They can help you save, regardless of how much you usually spend on food per month.

Plan Your Meals

By planning your meals ahead and buying in bulk, you can save money on food. Say you decide in advance that you’ll buy chicken that’s on sale and make a stir-fry one day, a sheet pan dinner the next, and will grill it as well. You might even double up on your cooking and freeze leftovers for the following week.

Shop Solo and Stick to Your List

Impulse buys have a way of wrecking your food budget, and if you have your family with you at the supermarket, it can be more likely that they will spot enticing and expensive items. It can be more economical to hit the grocery store on your own and stay laser-focused on your list.

Use Coupons

Whether you choose to clip the old-school paper coupons or use some of the digital couponing options, those deals can help you stay on your budget. You may even be able to use coupons in a way that doubles their saving power for even lower prices.

The Takeaway

The Supplemental Nutrition Assistance Program (SNAP) — better known as food stamps — provides assistance to low-income people in the form of an EBT card that can be used to purchase certain types of food.

Many national retailers and supermarket chains now allow SNAP recipients to order eligible groceries online and then go into the store to pick them up, either in-store or curbside, or have them delivered.

Looking to keep better tabs on your grocery (and other) spending? Finding the right banking partner could help.

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

FAQ

Can you use EBT anywhere in the US?

Yes, if you qualify for EBT, you can use your benefits anywhere in the U.S.

Can EBT be used on DoorDash?

Yes, it can: DoorDash is partnering with Safeway and Albertson to enable shoppers to use EBT as payment in the app.

How much do you get for one person on SNAP?

In 2023, the average benefit for SNAP for a single person is $195 per month, though the benefit could be as high as $281.

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Photo credit: iStock/Yana Tatevosian

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

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

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

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

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

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

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

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

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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.

SOBK0923003U

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Whether you’re paying for college, buying a house, or starting a business, it’s common to take on debt at some point in your life. Repaying that debt typically involves making a fixed or minimum monthly payment by a certain day each month.

But what happens if money is tight and you don’t have enough to make that monthly payment?

It might seem like making a partial payment is better than paying nothing at all. However, that’s not necessarily the case. Depending on the lender or creditor, a partial payment may be looked at the exact same way as a late or missed payment.

Though partial payments might help lower your balance and reduce the interest that accrues on your debt, lenders and creditors generally don’t see them as on-time payments and may still consider your account as in default.

If you’re thinking about making partial payments, here’s what you can expect to happen — and what you can do instead.

What is a Partial Payment?

A partial payment on a debt is any payment smaller than the minimum amount due, as specified by the creditor.

Credit cards have minimum payment amounts, which can vary depending on your balance and annual percentage rate (APR). Other types of debt, such as car loans and mortgages, typically have set monthly payments that don’t vary as much.

Partial payments typically do not typically satisfy a creditor’s payment requirements for loans, credit cards, and other debt. And, not paying the full amount could be treated the same as a missed payment.

Why Do Customers Make Partial Payments?

Generally, customers make partial payments if they’re dealing with financial hardship or other money issues that make them unable to cover all their monthly expenses.

Even a sound budget can go off the rails when emergency expenses, such as medical bills or car repairs, arise. When bills are due, paying for necessities, like food, housing, and utilities, are usually a higher priority than long-term debt.

People who are out of work due and collecting unemployment benefits may also consider making partial payments on debt for a period of time.

An unexpected turn of events, such as job loss or a major bill you didn’t see coming, are examples of why financial experts recommend starting an emergency fund. Ideally, you’d have three to six months’ worth of basic living expenses socked away.

Does a Partial Payment Affect Your Credit Score?

It could. If you pay less than the minimum amount due on a credit card or loan, it likely won’t satisfy your creditors, and they will still consider it a missed payment. In addition to hitting you with a late fee, they may also report to the credit bureaus that your payment is late.

By law, creditors can’t notify credit bureaus of a late payment until it’s 30 days past the due date. Paying the remainder of what you owe for that month prior to the 30-day mark can keep a late payment from showing up on a credit score, though you could still be liable for fees and penalties set by the creditor for making a late payment.

Because your payment history makes up 35% of your FICO® Score, having a late payment on your record can cause your score to drop.

Lenders consider a borrower’s repayment track record as a primary indicator of their ability to pay back future debt, which is why payment history is the largest component of most credit scores. Paying on time, all the time, can help build your credit score.

The impact of late and partial payments on your credit score will vary based on your existing credit history and how far behind you are on payments. Accounts that go unpaid for several months will do more harm to a credit score than a single late payment.

Over time, the impact of a late payment on your score will diminish and, after seven years, it will be removed from your credit report.

Other Downsides of Making a Partial Payment

Falling short of what you owe can create other issues besides putting a dent in your credit score. Creditors may impose fees and take additional measures to secure repayment.

Here’s a closer look at what could happen if you only make partial payments on these common types of debt.

Auto Loans

What happens to your auto loan will depend on your agreement and history with the lender. If you’ve never missed a payment before, they may be willing to accept a partial payment for now.

Depending on the state, defaulting on your car loan can mean vehicle repossession, which can involve selling the car at public auction or electronic disabling the car to prevent it from being used. It can be a good idea to check the contract terms to learn what the lender is authorized to do and when.

Credit Cards

Unless you’ve come to a prior agreement with the credit card company, partial payments likely won’t satisfy your account’s minimum payment requirements. That’s not, unfortunately, how credit cards work.

Even if you pay something towards the bill, your account will likely still become delinquent, and the credit card company may report the late payments to the credit bureaus.

Failing to pay the minimum amount on a credit card bill also typically comes with late fees. Delaying payment further can result with additional consequences, such as freezing your credit card and sending your debt to a collection agency.

Mortgages

Making partial payments on a mortgage can be considered defaulting on the loan and even trigger the foreclosure process.

Prior to foreclosure, borrowers will likely incur late fees and receive a notice of default when the mortgage payment is a few months past due.

In general, a foreclosure can’t begin until 120 days after the first missed mortgage payment. That means you have some time to pay the amount that’s past due before the lender starts the foreclosure process.

Recommended: Prepayment Penalties: Why They Exist and How to Avoid Them

Student Loans

Getting out of student debt typically doesn’t involve partial payments. Paying less than the minimum due on student loans could cause them to become delinquent one day after the payment due date unless alternative arrangements are made with lenders.

With federal student loans, your loans typically enter default when you miss or only make partial payments for 270 days. The lender can then report the default to the credit bureaus. In addition, the government can garnish your wages, and even keep your tax refund.

A possible exception: If you have an income-driven federal student loan repayment plan, your monthly payment could be as low as $0 if your income dips low enough.

With private student loans, the rules will depend on the lender. If you remain delinquent for 90 days or more, the delinquency may be reported to the credit bureaus. If the account continues to be delinquent, you could fall into default, at which point private lenders can take legal action.

Alternatives to Making Partial Payments

Before making a partial payment, you may want to consider some alternatives:

Reaching Out to Your Creditor

It can be a good idea to contact the creditor or lender before the payment is due to explain your situation and what you can afford to pay that month.

You may also want to ask about a “hardship repayment plan.” This type of plan could potentially allow you the option of minimal or no payment, a temporary reduction or suspension in account interest, or interest-only payments.

You may want to keep in mind, however, that interest-only payments won’t decrease your principal — or the size of your loan. Some programs last a month, and others up to six months or so.

Contacting a Nonprofit Credit Counseling Agency

Nonprofit credit counseling agencies can help by negotiating lower interest rates with your current creditors. This can often result in lower monthly payments. If you are able to work out a plan, the payment you make may no longer be considered a “partial payment,” but instead an agreed-upon amount.

Considering Debt Consolidation

If you have multiple credit cards with high-interest rates and you’re having trouble paying the minimum on each, you may want to look into whether a debt consolidation program might help. The process involves taking out a personal loan at a bank or other reputable lender and then using it to pay off your credit cards.

You then end up with one loan to pay back, ideally at a lower interest rate. Typically, a closed-end loan like a personal loan means higher monthly payments, since personal loans have fixed terms. This is great news for borrowers who want to pay down their debt sooner, but it might not be the right choice for everyone.

Recommended: 6 Strategies for Becoming Debt Free

The Takeaway

If cash flow is tight, you might consider making a partial payment on a debt, hoping that paying something will prevent a late fee or a late payment from showing up on your credit report.

However, borrowers don’t typically get any extra credit for making a partial effort. If the monthly minimum or fixed payment hasn’t been paid in full, the lender will likely mark the payment as missed.

While partial payments may help chip away at your account balance, you can still end up facing fees, a reduced credit score, and potentially loan default.

If you’re unable to make full payments on your debt, it can be a good idea to contact your creditor as soon as possible and see if they may be able to offer alternative payment plans, forbearance, or postponement. Budgeting and tracking your spending can help you stay on track; many banks offer helpful tools for these tasks.

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.

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

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

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

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

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

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

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

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

Third-Party Brand Mentions: No brands, 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.

SOBK0823008

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If you want to sell your car but still owe money towards the purchase price, the process will be different from selling a vehicle that you own free and clear. And the process will change depending on whether you are selling the car privately, to a dealer, or are doing a trade-in.

Here, you’ll learn the step-by-steps for selling a car that you still have a loan on, as well as learn smart advice for buying your next set of wheels.

How to Sell a Car You Still Owe Money On

At a high level, selling a vehicle with a loan has three main steps:

1.    Gather important info

2.    Determine if you have positive or negative equity

3.    Pick a selling option.

You’ll explore each of these steps in more depth next.

Gather Important Info

First, get a sense of what the car is worth. This will depend upon its condition, so objectively look at your vehicle. How clean is it? How well has it been maintained? What does the body and interior look like? Examine other used cars like yours for sale and see how they’re priced.

Look at used car valuation guides, as well. They will have different values for trade-ins (when working with a dealership) than for private-party sales (when selling to an individual), and will also list retail values. Look at the one that will fit the situation.

Also, verify the payoff amount on the vehicle’s loan. This will include the principal balance plus any accrued interest and is often available online or can be obtained by calling the lender. During the conversation about selling a vehicle with a loan, you can also find out how to send the payoff amount to the lender and when the lender wants to receive it (before or after the sale of the car).

Determine If You Have Positive or Negative Equity

The vehicle’s equity is the difference between the resale value and the amount owed on it, and this number can be positive or negative.

Let’s say that a vehicle is valued at $20,000 with a loan amount of $10,000; that car has a positive equity amount of $10,000. If, though, the vehicle is valued at $20,000 and the outstanding loan amount is $25,000, then it has negative equity of $5,000. Loans on cars with negative equity are referred to as “upside-down” or “underwater.”

So, when figuring out how to sell a car with a loan, the processes will differ based on whether the vehicle has positive or negative equity as well as the selling option you select.

Pick a Selling Option

If you have a car with an outstanding loan balance — and it isn’t practical or even possible to pay it off — then selling a car with a loan can typically be handled in one of three ways:

•   Selling it to a used car dealership

•   Selling it privately to another person

•   Trading it in.

Selling a Car to a Used Car Dealership

If a car dealership will buy used cars without requiring that you buy one from them during the transaction, then the process will probably be pretty straightforward. The dealer will offer you a certain dollar amount. If you agree, they will pay off the lender in exchange for getting the vehicle’s title.

If there is positive equity on the vehicle, then you’ll get the money that remains after the loan balance is paid off. If it’s a negative equity situation, then you’d need to pay the difference between what the used car dealer is willing to pay and what it takes to pay off the loan.

For example, if a dealer offers $15,000 on a vehicle that has a $10,000 loan, then the dealer would take care of the loan payoff and provide the person selling the car the remaining money ($5,000), minus any fees involved.

In a negative equity situation, for example, if the vehicle’s value is $10,000 and the outstanding loan is $13,000, then the seller would need to chip in the difference (in this case, $3,000 plus any fees) to complete the sale and transfer the title to the buyer.

Recommended: Smarter Ways to Get a Car Loan

Selling a Car Privately

With a private sale, you might get more money than you would from a used car dealer (who needs to resell the vehicle at a profit), but you’d also need to take on more responsibility for managing the sale. This includes the transfer of title and payment of fees among other duties.

Steps to take include the following:

•   Get the current loan payoff from the lender (there will likely be interest owed beyond the principal amount).

•   Find out what paperwork they’ll need and how they want the process to work.

•   Have the buyer follow the lender’s procedures when paying for the car.

From the lender’s perspective, they want to ensure that they get paid. So, as just one possibility, they may have a buyer pay them the agreed-upon price for the vehicle. If it’s more than what’s owed, then the lender could give you the overage. If it’s less than what’s owed, you could give the bank the difference between the price and loan amount.

When selling a car with a loan privately, you’ll also need to handle any fees and forms with the motor vehicle department of your state. Then you’ll be ready to move ahead, and, if another vehicle is in your plans, decide whether to buy or lease a car.

Trading In a Car You Still Owe Money On

As a third possibility, you could trade in the car with a loan balance to a dealer as part of purchasing either a new or used car. The dealer will offer a certain amount of credit for the trade-in vehicle and if its value is more than the loan amount, that difference would go towards the purchase of the replacement vehicle.

If you’ve been saving for a car, here’s how this might work: The dealer will offer a certain amount of credit for the trade-in vehicle. If its value is more than the loan amount, that difference would go towards the purchase of the replacement vehicle.

If the loan amount is higher than the value, then the dealer may agree to combine the vehicle’s negative equity with the loan for the replacement vehicle. If this is the chosen route, the term may need to be extended to create affordable payments and this will potentially lead to more interest being paid on the new loan.

Recommended: 31 Ways to Save Money on Car Maintenance

The Takeaway

Selling a car with a loan is a little different from selling one that’s paid in full. When thinking about how to sell a financed car, it’s easier to do so if you have positive equity in your car but still can be doable with negative equity. Some options include selling to a dealer or to an individual or trading in the vehicle towards another one.

Then you can, if necessary, start a savings account so you’ll be ready to buy your next car.

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.

Photo credit: iStock/Sakkawokkie

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

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

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

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

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

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

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

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Many people don’t carry cash these days, preferring to make a purchase by tapping or swiping a debit card or credit card. However, there are times it can actually pay to dip into your wallet and break out the bills.

Using cash can be more secure and less costly, among other benefits.

Here, you’ll learn when it can be better to buy with cash and when plastic is preferable.

The Benefits of Cash

Here are some of the pros of using cash:

You May Get a Discount

You may be rewarded for paying cash, like paying a lower price at the gas station or when you get take-out at a restaurant.

Many businesses pay a fee for accepting credit and debit cards, so they may be willing to charge you less if you’ll pay in cash. If you frequently fill up your tank, saving even 10 to 20 cents per gallon can add up to significant savings over time.

It Can Help You Avoid Overspending

When you tap or swipe your credit or debit card, you don’t physically see your money leaving your account. Since there’s no sense of immediacy or consequence, it can be easy to spend more than you originally intended. That can lead to debt and overdraft or NSF charges.

If, on the other hand, you leave home with only the amount of money you need for the day in cash, your spending is likely to be more mindful. That could mean you may have a better chance of sticking to your budget and avoiding overspending.

There Are Fewer Security Risks

Yes, someone could rob you when you are carrying cash. However, there is less risk of identity theft or your information getting stolen when you pay with cash vs. a debit or credit card.

You Can Avoid Fees

Cash is a one-shot deal — the purchase you made won’t end up costing you a penny more. With credit and debit, however, you can end up paying additional charges down the line, from late fees to interest payments on debt.

Recommended: How to Avoid Overdraft Fees

Times When You Should Pay in Cash

Your Tab is $10 or Less

It can be a good idea to carry cash for small purchases. Many retailers have a minimum amount of money you must spend in order to use debit or credit. If your purchase is under, you’ll have to throw in extra things (you probably don’t need) to meet the minimum.

When Shopping at a Small or Local Business

Small businesses often offer discounts for cash payments, since it helps them save on bank fees. This can be an easy way to support your local businesses and save a few dollars at the same time.

You Want to Keep Advertisers at Bay

You may have noticed that after you buy something with a credit or debit card, you often get hit with ads and offers for similar products. That’s because retailers can track their customers’ spending and share their information with a third party, who can then target them with ads.

This can be annoying, and also lead to more spending if you’re enticed by an offer. Using cash makes it much harder for businesses to collect and share your information.

Times When You Shouldn’t Pay With Cash

Next, learn about the times when you should keep your wallet shut and find another, non-cash way to pay.

Buying a House

If real estate is hot where you live, you may be tempted (if you can) to plunk down cash to ensure you get that dream house before someone else does.

While buying a home with cash vs. getting a mortgage may get you the house, it may not be the most prudent move in the long run, especially if it wipes out all of your savings.

A mortgage has tax benefits and timely payments can help you build good credit. Also, there could be better uses for all that cash, like investing in the stock market or elsewhere.

Business Expenses

If you own your own business, have a side gig, or do freelance work, it can be better to use credit (or even a check) to pay for business-related purchases. You’ll likely want a paper trail so you can deduct these expenses on your tax return.

Another potential perk of using credit is that it may offer some purchase protection in event something you buy for your business that breaks or gets stolen soon after you purchase it.

Paying Service Providers

You may think a service provider, whether it’s an electrician or an auto mechanic did a good job, but only time will tell. Using credit can offer you some protection in the event that you experience problems with a service after you’ve already paid for it.

Renting a Car

Often your credit card will provide insurance on car rentals (which can help you save on renting a car), but only if you use that form of payment, as opposed to debit or cash. Using credit for the car rental can help you avoid paying for something you don’t need to purchase.

You’re Looking to Build Credit

If you need to build your credit score, one way to accomplish that is to use your credit card on a regular basis and show that you’re responsible by paying what you owe each month, consistently and on time.

When Buying Electronics

Using your credit card instead of cash for electronics can be a big advantage if your credit card offers extended warranties as a cardmember benefit. This allows you to get peace of mind without having to pony up for the store’s warranty. And, you can simply pay off the balance as soon as the bill comes.

You’re Looking to Track Your Spending

If you’re looking to see where your money is going so you can track your spending and set up a monthly budget, it can be easier if you pay with credit or debit.

Your financial institution may even offer you a pie chart of your spending, broken down into categories. Seeing everything in black and white can help you become better at budgeting.

Alternatives to Using Cash

Paying in cash has its pros and cons. If you decide that you want to pay with something other than cash, here are some alternatives.

Cash vs Credit Cards

A credit card can be a good alternative to cash if you are able to pay it off in full every month, and you do. If managed well, credit cards (even secured credit cards) can help you build credit to buy a home or another large purchase in the future.

Cash vs Debit Cards

A debit card can be a good substitute for cash, as long as you know there’s money in the bank. By using a debit card, you’re not incurring any new high-interest debt. As long as you are not incurring any overdraft fees, or withdrawing money from ATMs that charge high fees, debit cards can be a simple way to make purchases.

Cash vs Financing or Loans

It can sometimes be better to pay for a major purchase, like a car or a home, with a loan rather than cash if the interest rate is lower than what you could likely earn by investing that money.

However, you’ll also want to keep in mind that there is risk involved in investing in the stock market, so there is always a chance that you could lose money.

Recommended: Leasing vs. Buying a Car: What’s Right for You?

The Takeaway

Even as we move towards a more cashless society, it can be important to keep cash in your wallet and use it for certain everyday expenses.

Paying in cash can help you garner discounts at local businesses, stick to your budget, avoid paying overdraft and interest fees, protect against identity theft, and keep advertisers from targeting you.

There are times, however, when it can make more sense to pay with credit rather than cash. These can include: when you’re making business purchases and buying electronics and/or you’re looking to build credit or closely track your spending.

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.

Photo credit: iStock/towfiqu ahamed

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

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

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

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

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

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

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

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 .

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.

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There are moments when you may feel as if you are bad with money: You overdraft your account, pay a bill late, can’t put any cash towards retirement, or realize your savings account balance hasn’t budged in months.

If you feel as if you aren’t managing your money as well as you could in these instances, you might be right. But by taking a closer look at these signals and then shifting your course, you can get on a better track to taking control of your cash, building wealth, and reaching your financial goals.

So instead of just thinking, “I’m bad with money” and sidestepping the issue, read on to learn the signs that you could boost your money management. Then try the simple strategies that can help you improve.

4 Signs You’re Bad With Money

Sometimes the signs are clear, like getting multiple notifications for overdraft fees in a week. Sometimes, however, being bad with money is less obvious. Here are some red flags that can indicate you’re heading down the wrong financial path.

You Tend to Live Paycheck to Paycheck

Even if you are able to pay your bills in full each month, if you’re often broke after paying them, it can be a sign that you’re not all that financially stable.

Whatever your income or budget is, it can be wise to always have at least a little bit of extra money to put into savings. If that extra doesn’t exist, then you could be walking a financial tightrope, where a major crisis could be waiting just around the corner.

You Don’t Have an Emergency Savings Fund

Not starting an emergency fund (rainy-day money tucked away in a separate savings account) is an indication that you’re living too close to the edge. It’s important to have that cash to cover an unexpected expense, such as a medical bill, car repair, or sudden loss of income.

Although the specific dollar amount you should have in your emergency fund varies from person to person, many financial experts say you should try to have at least three months’ worth of living expenses set aside to cover the unexpected.

Without this cushion, a single large expense or loss of paycheck even for a couple of months could put you in a debt spiral that can be hard to get out from under. You might be tempted to put too much on your credit card and wind up with high-interest debt.

You Only Make the Minimum Payment on Your Credit Cards

Speaking on high-interest debt: Here’s another sign that you may be bad with money. Paying the minimum on your credit cards may seem like you’re keeping up, but in reality you are gradually getting further and further behind.

If you don’t pay the card in full each month, every dollar you put on a card can end up costing you many times more in interest charges over time. Credit card debt that you can’t get rid of can be a clear sign that you’re not being as good with your money as could be.

You Often Overdraft Your Account

If you’re gotten into the habit of spending almost everything you earn, it can be easy to overdraft your account. This often results in a high overdraft or NSF fee, which can make keeping up with your expenses even harder.

Overdrafts can also result from disorganization. Maybe you have the money, but didn’t transfer it over to your checking account in time. This can be a sign that you’re not keeping close enough tabs of your money.

Recommended: How to Avoid Overdraft Fees

How to Be Better With Money: 11 Tips

Becoming better at money management doesn’t have to happen overnight. In fact, the best approach to lasting change is often to take one small step at a time. This can be much easier to do and, as you start to see the rewards (more money, less stress), you will likely be inspired to keep going.

The following tips can help put you on the path to being good with money.

1. Setting Some Specific Money Goals

You likely have a few things you’d like to do in life that having enough money can help you accomplish. Maybe you want to take a great vacation next year, buy a home in a few years, or retire early.

Setting financial goals, both for the short- and long-term, can give you something to work towards — or, in other words, a reason to be better with your money.

Recommended: What is Financial Therapy?

2. Tracking Your Cash Flow

In order to get better with money, it can help to know exactly where you currently stand.

You can do this by gathering all your financial statements for the past several months, and then adding up all of your after-tax income to see how much is coming in each month.

Next, you can tally up how much you are spending each month. To do this, you may want to make a list of all your spending categories and then come up with an average amount you’ve been spending on each.

You may find it helpful to actually track your spending for a month or two, either by journaling or using an app that tracks spending right on your phone.

Ideally, you’ll want to have more coming in than going out each month. That means you have money you can siphon off into saving and investing, which can help you build wealth over time.

3. Coming Up With a Budget Method That Works for You

Once you have a clear picture of what’s coming and going out each month, you can create a budget for your money moving forward — in other words a budget.

While budgeting may sound onerous, it’s simply a matter of going through your expenses, seeing where you may be able to cut back, and then coming up with target spending amounts for each category.

One budgeting framework that may help you get started is a 50/30/20 budget breakdown. The idea is that 50% of your after-tax income should go to necessities, 30% goes to fun spending or “wants,” and 20% goes to savings goals.

These percentages may not work for everyone, especially if you live in an area with a high cost of living, but they can give you a general rule of thumb as you get started with budgeting.

4. Curbing Impulse Purchases

If you tend to shop without a plan, it can be easy to grab this and that without realizing how quickly these small costs can add up. A perfect example is going grocery shopping. But the same thing can happen if you are mindlessly browsing shops at the mall or online.

Making a list — and sticking to it — whenever you shop can help you avoid overspending. If you see something you really want but you weren’t planning to buy, it can be a good idea to put the purchase on pause for a day or two.

Once you have a cool head and a fresh perspective, you can then ask yourself if you’ll actually use this item and if you can afford it, meaning you can pay cash for it now. If not, it may be a good idea to skip it.

5. Thinking About Larger Spending Cuts

There are only so many lattes you can skip or cents per gallon you can save by heading to the cheaper gas station around the corner. So when you’re trying to find places to save money in your budget, you may also want to think bigger.

For example, you might decide to ditch your car in favor of biking to work — a move that means you save not only what you’d be spending on gas each month, but also insurance, registration, and likely a monthly car payment. (And you might even be able to ditch your gym membership, with all that moving around!) Or, you might consider moving to a less-trendy neighborhood or getting a roommate to help split the rent and other household expenses.

While lifestyle changes might be harder to enact up front, once you commit to them, they can help you save large amounts of money on a regular basis.

6. Automating Your Savings

Building an emergency fund and saving for future financial goals are key steps toward fiscal wellness. So once you have graduated from being at risk of overdrafting your accounts, a great next step can be to automate your savings.

That means setting up an automatic transfer of money from your checking account (or wherever your money is deposited) to one or more accounts designated for saving. This can be done on a monthly (or bimonthly) basis, and can be timed to happen right after your paycheck hits.

If saving is a chore that you have to remember to do every month, you may get busy and forget. Why not let technology do the heavy lifting for you?

7. Bringing in More Income

Do you feel like you’re cutting back on spending as much as possible but not getting anywhere? You may need to work on earning more money.

How exactly you go about this goal is up to you, of course. Maybe this means sitting down with a boss and creating a path towards earning more money. Or, it could mean picking up some freelance work in your profession, or starting a side hustle (like pet-sitting or signing up with a ride-share or delivery app).

8. Listing All of Your Debts

Many bad financial habits are born from the easy access consumers have to money that isn’t theirs — and the need to pay those debts back, with interest.

As with budgeting, the first step in conquering your debts is knowing exactly what you’re up against. To get the big picture, you may want to create a computer spreadsheet (or just make a chart with pen and paper) and then list each source of debt that you currently hold.

This includes student loans, credit cards, car loans, and any other debts you may have. You may also want to include the loan servicer, the size of the debt, the interest rate, and the amount and date of the monthly payment on each debt.

9. Knocking Down Debt One at a Time

If you’re paying the minimum on more than one high interest credit card, you may want to focus on getting rid of one entirely. It could be the debt with the highest interest rate, or it might be the smallest overall balance to give you the psychological victory of kicking a source of debt to the curb.

Whichever one you choose, you can then put as much extra money as you can towards the balance (principal) of that debt, while paying the minimum amount due on all the others. Once you pay that debt off, you can move on to the next one.

10. Avoiding More Credit Card Debt

Getting better at managing your money can be hard to do when you’re adding to your credit card balance. Credit cards are notoriously difficult to pay back when you’re only making the minimum payments and can be nearly impossible if you’re doing that while adding to the balance.

So, you may want to use your newfound money management skills to find ways around going further into credit card debt. Maybe there are more cuts that can be made to your budget or some overall shifts in lifestyle that could help. No matter how you do it, it can be helpful to focus on spending only the money you actually have.

11. Contributing More to Your 401(k)

You might think saving for retirement is something you don’t really need to focus on until you’re older. But the truth is that the earlier you start saving for retirement, the easier it will generally be to save enough to retire well. That’s thanks to the magic of compounding interest, which is when the interest you earn on your money earns its own interest.

If your company offers a 401(k), it can be a good idea to contribute at least a small percentage of each paycheck. If your employer offers matching funds, you may want to take full advantage of this perk by contributing the max amount your company will match.

Recommended: When to Start Saving for Retirement

The Takeaway

You don’t have to master all of the above concepts right away. Becoming a person who is “good with money” is a journey. Start with one area and move on to the next as you feel you have mastered each financial tool.

One simple step that can make it easier to manage your money is to find the right banking partner, one who can help you with tools for tracking and managing your cash.

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.

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

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

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

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

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

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

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

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