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Road trips are a popular vacation idea, and there are plenty of ways to cut costs when taking to the open road. Whether you are heading to a national park or a local lake, on a wine-tasting getaway or just to hang with your college roommate, you can do a little bit of planning to bring down costs.

Learn how to minimize expenses on a road trip here.

1. Choose a Fuel-Efficient Car

If you have a choice of cars to take, you may want to go with one that is large enough to be comfortable but also gives you the best gas mileage. This is true whether you are using your own wheels or renting a car.

You can use FuelEconomy.gov’s Trip Calculator to determine which car will cost you the least in gas. This tool helps estimate fuel consumption and how much it will cost for a particular route using a specific car.

2. Drive at or Below the Speed Limit

This cautionary measure can help you save money in two ways. For one, you’ll be less likely to get pulled over and slapped with an expensive speeding ticket.

For another, observing the speed limit can actually reduce your gas consumption. In fact, according to the U.S. Department of Energy, every five miles you drive above 50 miles per hour is akin to paying an additional $0.27 per gallon.

3. Pack Your Car Wisely

You can also cut your gas costs by placing items inside the car or trunk rather than piling them on your roof. By reducing drag, this tactic can increase your fuel economy by 5% on highways according to one benchmark study.

4. Set a Road Trip Budget

When you first start talking about the road trip, you may want to roughly map out where you want to go, how long it’ll take to get there, and if you’ll need hotels or motels. From there, you can calculate the approximate cost of gas (FuelEconomy.gov can help) and tolls (try Tollsmart ), as well as food and fun.

Once you’ve established an overall budget for the trip, you start creating a travel fund.

A smart place to keep your fund is in a high-yield savings account, often found at online banks. These can help grow your money faster, thanks to favorable interest rates and no or low fees.

5. Bring Your Own Food and Supplies

Packing a cooler with water bottles, drinks, hand-held snacks, and sandwiches before leaving home is a proven frugal traveler trick. You can end up saving a sizable chunk of cash by not having to buy drinks and snacks at rest stops, vending machines, and drive-throughs.

You’ll also have a quick solution the next time someone in the car wants to pull over because they’re hungry.

6. Sign up for an Electronic Toll Account

The money-saving shift to electronic tolling is well underway. If you haven’t yet done so, getting a quick pass (or transponder) for your car can be a smart move. In New York, for example, drivers with EZ-Pass can save up to 75% on tolls.

7. Avoid Tolls Altogether

When your road trip isn’t on any set schedule, you may want to take the scenic route and completely avoid tolls. You can do this by setting your GPS app to “avoid tolls.”

If you’re in a location with pricey bridges and highways, your savings could really add up. You may want to make sure, however, that avoiding tolls doesn’t take you so far out of your way that you’re spending a lot more on gas.

8. Look for Hotels that Offer Free Breakfasts

If you’re comparing lodging options in a similar price and quality range, one way to save on hotel costs and on road trip expenses in general is to choose the hotel with a free breakfast.

Not only will you probably get a large, filling meal, but you might even be able to take a piece of fruit or cereal box as a snack for later on in the trip.

9. Pack Reusable Water Bottles for Everyone

You’ll no doubt get thirsty while driving and sightseeing, especially in summer, and buying water or drinks can put a major dent in your road trip budget.

Making sure everyone in the car has a large reusable water bottle (or two) to fill up at rest stops and in restaurants can help you avoid spending money on drinks, and also create less plastic waste.

10. Buy a National Park Pass

If you’re going to be road-tripping across the U.S. and visiting a few national parks, you may want to consider getting an America the Beautiful pass.

The pass (which costs $80 per year and $20 for seniors) covers entrance, standard amenity, and day use fees for a driver and all passengers in a personal vehicle (up to 4 adults) at more than 2,000 federal recreation sites.

Just remember that summer is primetime for many parks, from Yosemite in California to Acadia in Maine. If you need lodging, book early.

Recommended: How to Make Money Fast

11. Hit the Grocery Store

Once you’ve run out of your cooler meals and snacks, consider restocking at a local grocery store while en route so you don’t have to resort to fast food or a pricey local restaurant for the rest of your trip. That can be a good way to save on food costs.

This is also a good strategy if you’re going to be staying at a hotel for a few nights. Making good use of a hotel kitchenette and fridge can help you avoid having to eat out for every single meal.

12. Prebook Your Hotels

Spontaneity is great, but if you’re looking to save money on accommodations, it can be wiser to book ahead of time and stick to your plan. You can often secure a better rate by booking in advance (and online), than by showing up without a reservation or booking last minute.

13. Look Beyond Hotels

Your first thought when looking for roadside accommodation may be cheap hotels or motels. But you sometimes find a better deal (or a nicer option for the same price) using a home rental site, such as Airbnb, VRBO, or FlipKey, especially if you’re staying for more than one night.

When booking lodging, it can be smart to use a travel credit card or a cash back rewards credit card, since every swipe can help you earn points, miles, or cash back that you might apply to future trips.

14. Plan to Visit Free Attractions

Part of the fun of a road trip is to enjoy the journey and scenery while en route to your final destination.

To cut spending while still enjoying your travels, you may want to research free attractions, such as a hike, walk on a beach, or a free museum, on your route for times when you need to stretch and take a driving break.

You can also look for festivals and local events by checking out the online events calendar for the towns you’ll be visiting that day. You might also check out Meetup.com and see what kinds of local groups are gathering for experiences and outings.

15. Plan Gas Stops in Advance

Getting stuck in a big city with the tank close to empty can be costly (and driving in circles looking for a gas station when you’re en route to the beach is no fun either). To avoid overpriced gas, you may want to use a gas app like Gas Guru or GasBuddy, which can help you compare prices and find affordable gas no matter where you are. This hack is an easy way to lower your gas costs.

16. Set a Daily Spending Limit

You can use your overall budget to get a rough idea of how much you can spend on the road trip each day. This can help you avoid blowing the money you’ve saved, wherever you may keep your travel fund, before the end of the trip.

A spending plan can also let you know when you can splurge a bit and when you’ll have to reign it in with a meal, activity, or lodging. You may also want to set aside some of your budget for the unexpected, such as the car getting a flat and needing to be towed, or discovering the cheap hotel you planned to stay in is actually a total dump. Also factor in some summer road-trip treats: You’re likely to be stopping for ice cream here and there and maybe even a lobster roll.

17. Entertain the Kids on the Cheap

Road trips can help you afford a family vacation since you sidestep pricey plane tickets. But remember that kids have a tendency to get bored, tired, and antsy on a road trip. To avoid giving in to impulse toy purchases, you may want to bring along their favorite toys and also pick up a variety of new ones at the dollar store before you leave.

Good choices include coloring books and games they can play in the car that won’t create a mess. You might also consider borrowing audio books from the library to give yourself an hour or so of peace and quiet.

18. Search Online for Local Coupons and Passes

It can be worthwhile to research online coupons and discount codes for local attractions and restaurants at some of your scheduled stops.

Consider checking Groupon or LivingSocial for deals and steals. Sometimes booking online ahead of time saves you money, and it’ll give you a reason to try to reach a specific destination by a certain day.

19. Save on Alcohol

Sipping a cold beer or glass of wine at a local bar at the end of your long drive might sound like the perfect way to unwind.

But alcohol costs can quickly add up on a road trip vacation. Consider buying a few local beers or a small bottle of wine that’s native to that area to enjoy in your hotel room. You’ll save money on tipping too.

20. Volunteer at a Festival

Yes, you read that correctly. Some festivals and special events offer discounts or free admission to volunteers. You can look up events taking place in the town you’ll be visiting and reach out to the event organizer to see if they need help. Summer is full of events like these, from concerts to craft fairs to food festivals.

21. Sign up for a AAA Membership

An auto club like AAA can save you time, money, and hassle should you run into car trouble during your trip. What’s more, a membership (often starting at around $6 a month) gives you access to discounts at loads of hotels, restaurants, and many retailers nationwide.

22. Travel During the Off-Season

Yes, summer can be the most welcoming time of the year to hop behind the wheel. But visiting national parks when kids are back in school can often help save money on lodging and activities. Planning a road trip to a destination like Disney World or Disneyland? You’ll likely find better deals if it’s not during a spring break or other school vacation.

You can often also save money by visiting warm weather locations during “shoulder seasons.” This is the period in between a destination’s low and high seasons of tourism, when prices for hotels tend to be lower, and crowds tend to be smaller, at popular attractions.

23. Do Some Camping

Outdoorsy road trippers might enjoy setting up a tent at a free or low-cost public campsite. You can find out more on the Bureau of Land Management site.

This can end up saving you a lot of money on hotel costs, provided you don’t go out and buy a lot of expensive camping equipment.

If you don’t have any camping gear, you may want to consider renting equipment from an outdoor specialty store or asking a friend who regularly goes camping if you can borrow their equipment. As noted above, summer can be prime time for basking in some of America’s natural beauty, so book your campsite early.

24. Eat Out for Lunch Instead of Dinner

If there are special restaurants you want to try without breaking the bank, consider going there for lunch. You might get a slightly smaller portion than you would if you ordered it off the dinner menu, but you’ll likely save on dining out.

25. Take Advantage of Loyalty Programs

Booking with the same hotel chain as often as possible and signing up for their member loyalty (or “points”) program may net you a free night after a few stays.

Travel booking services, such as Expedia, Travelocity, or Hotels.com, may also offer discounted rates and free nights for loyal customers.

Recommended: 50/30/20 Budget Calculator

The Takeaway

Planning a summer vacation? A car trip might sound much more affordable than traveling by plane. However, gas, food, and accommodations can add up.
One of the best ways to cut road trip expenses is to plan out your trip and research deals, coupons, and discounts ahead of time. Packing wisely and loading up on drinks, snacks, toys, and activities can also help cut costs once you’re out on the road. It’s part of optimizing your financial wellness.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 can I make road trips more affordable?

Some ways to make road trips more affordable include bringing your own snacks, driving at or under the speed limit, and booking hotels or motels ahead of time.

How can I save money when traveling by car?

You can save money when traveling by car by using a gas card and taking other steps that can help you save on tolls; using electronic tolling or avoiding tolls; and bringing snacks and drinks with you vs. buying them on the road.

How can I spend time when on a road trip?

Ways to spend time on a road trip include going to local and national parks, looking for activities at a discount on Groupon or LivingSocial, and checking out any interesting gatherings that might be happening on Meetup.com.

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 12/23/25. 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/.
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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

SOBNK-Q125-070

Zero-based budgeting is one method that can help you account for every dollar so you better understand your cash flow situation. This in turn can help you better manage your money and hit your financial goals.

You may be among those people who feel as if your money disappears as you pay for groceries, gas, utility bills, dining out, student loans, and everything else on your plate, without really knowing how much you earned or how much you are spending. That’s where a budget like the zero-based budgeting method can help.

A budget provides a framework to see how much is coming in and what it’s being spent on. It gives you the chance to recalibrate so you can, say, put more into savings. Here, learn more about zero-based budgeting and whether it would be a good fit for you.

How Zero-Based Budgeting Works

When building a zero-based budget (sometimes referred to as 0-based budget), your income minus your expenses should equal zero. In other words, with zero-based budgeting, every dollar of your income has purpose.

This doesn’t mean you won’t have any money in your bank account, since you might want to allocate some of your budget to savings. Rather, using this method could help you know exactly how much you will spend, save, and invest in any given month. And depending on your monthly needs, these figures may change or stay the same.

Recommended: How to Deposit a Check

How to Build a Zero-Based Budget

As with most budgeting techniques, you might want to start the zero-based budgeting process by making a list of your expenses.

•   Start with your fixed and necessary expenses first, such rent, utilities, groceries, transportation, insurance payments, and debt payments. You know that these payments have to be covered each month, so you could allocate income to each necessary expense.

   Tally these expenses and subtract them from your total income. The resulting figure could be the amount available for discretionary expenses.

•   Next, you could allocate those remaining discretionary funds. You might consider such spending as dining out, gym memberships, travel, and entertainment.

•   Also consider savings. That could include money that you pay to yourself to save for short-term goals such as an emergency fund. Or you might target longer-term goals such as stocking an online retirement account or saving for the down payment on a house.

•   Keep in mind that some expenses might be seasonal, such as vacations or holiday gifts. You might want to determine how you’d like to save for these expenses. You may choose to allocate funds in a single month, or it may make sense to set aside a small amount over each monthly period.

   It might take a little bit of extra planning to figure out how much you’ll need and how to divide up the cost. When doing so, don’t forget about one-off expenses, such as paying for an annual homeowners insurance premium.

•   Some expenses may also be variable — for example, say you’re hit with an unexpected bill when your car needs a new transmission — and these can be tricky to deal with. One way you could build them into the budget is to have a line item such as “savings for variable expenses” to help you cover them. This line item would be different from your other savings. You could keep the funds in a high-yield savings account so it earns some interest.

A simple example of a zero-based budget for someone who makes $6,000 a month might look like this:

In this example, the person’s income less their total expenses — $6,000 minus $6,000 — equals $0. As mentioned above, every dollar has a job to do.

Finally, remember that with a zero-based budget every dollar should have a purpose. So if at the end of figuring out your expenses, you find yourself with some extra cash, it needs to go somewhere. You might want to put a little extra toward savings or pay off some debt quicker.

But if you don’t allocate the funds, they might get spent. The problem is you may not know where you spent that money, and keeping track of it is the whole point of this exercise.

Tracking Your Budget

You might want to keep an eye on your spending throughout the month to make sure you’re sticking to your budget. This process could be dynamic, meaning it shifts in real time. If you find that you don’t need to spend as much on one budget item one month, you could shift that extra cash into another category the next month.

•   If you find yourself needing extra money in your checking account to cover an expense, you could look for places to save.

•   If you find yourself with little wiggle room in your budget and need to add to or boost your existing expenses, you might want to increase your budget with extra sources of income, like a side hustle.

Tools and Tips for Tracking a Zero-Based Budget

There are several tools that can make it easier to manage a zero-based budget. A few ideas to consider.

•   There are various online calculators for different budgeting tasks, such as emergency fund calculators. Search and find one that could help you with the math for your zero-based budget.

•   To better track your spending, see what tools your bank offers. Many have budgeting apps and/or trackers that can help you understand where your money is going.

•   You might also investigate third-party budgeting apps. Some are available for free; others require payment.

•   Tech tools can also help with managing your money when budgeting, from direct deposit to facilitate receipt of your paycheck to online bill pay to cover expenses seamlessly.

•   Some people will like to manage their budget with pencil and paper (a ledger-style pad can be helpful) or an online file, such as Excel or Google Sheets. It’s your choice.

A Zero-Based Budget on an Irregular Income

Many people earn a variable income, whether that means being a seasonal worker or a freelancer whose earnings ebb and flow. A variable income can pose some challenges to building a zero-based budget, but they’re not insurmountable.

Adapting Zero-Based Budgeting for Inconsistent Income

First, you could consider maintaining a buffer of cash, or a cash cushion, to help cover your expenses as your income varies.

You could then use your previous month’s budget as a base for the current month, using the buffer to cover any shortfalls. You might want to replenish this buffer when you have extra money in a month. You may also try building your budget based on a low estimate of your monthly income to increase the odds that you’ll be able to stay within your budget.

An irregular income means that you might spend more time adjusting your budget as your income fluctuates. You might need, say, multiple budgets. A seasonal worker could have, say, a high season and a low season budget that they use at various points during a typical year.

Recommended: How to Transfer Money

Other Budgeting Strategies to Consider

There are other budgeting methods that may be worth a try. One rule of thumb, called the 50-30-20 rule, allocates percentages of your income to different categories. When using this rule, 50% of income goes to necessities, like housing, utilities, and food. The next 30% of income goes to discretionary spending, and the final 20% is allocated to savings or additional debt payments.

You may also consider a budgeting system known as reverse budgeting, in which you focus on savings goals rather than expenses. To use this method, you might want to determine your short- and long-term savings goals, such as a down payment on a house, paying down student loan debt, and retirement.

You could figure out how much you need to save for those goals and then automate the savings. The money could be taken from your checking account and put into a savings account each month. You might use the money left in your checking account to pay for necessary expenses first, and the rest you could use however you’d like.

Comparing Zero-Based Budgeting to Other Methods

Finding the right budget to fit your needs is an important process, and it may take some trial and error. It can be wise to experiment with a couple of techniques to find one that feels like a good fit.

For example, some people may find the granular “every dollar has a job to do” approach of zero-based budgeting suits them. They may find it very helpful to know every single expense that occurs during a week or a month. Other people may prefer, say, the 50/30/20 budget rule, since they only need to stay focused on three key buckets of spending their money.

Pros and Cons of Different Budgeting Styles

Here are some points to consider as you decide whether zero-based budgeting is right for you.

•   Pros: For a personal budget, a zero-based budget can provide insight on expenses and spending habits which can help a person manage their money better. In a business context, this budget can also be used, allowing managers to delve into their operations and cost savings and maximize their resources.

•   Cons: No doubt about it, zero-based budgeting can require considerable time and effort. It may be too detailed for some people’s tastes. They might prefer a simpler approach or to use tech tools to manage their finances.

Recommended: Money Management Guide

The Takeaway

Zero-based budgeting is a technique in which every dollar you earn has a job to do. By managing your money this way, you can have a very in-depth understanding of your finances and your spending and saving habits. However, this technique can be time-consuming and may not suit an individual’s needs. Budgeting in general, though, is an important way to see where money is going and to fund the things you care about most. Your bank may offer valuable tools that can assist with this process.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 much time does zero-based budgeting take each month?

The amount of time it takes to manage zero-based budgeting each month will vary depending on each person’s situation, needs, and speed with organizing their financial details. That said, it may initially take several hours per month to establish this kind of budget, and then a few hours per month to keep it running.

What tools can simplify zero-based budgeting?

There are a variety of tools that can simplify zero-based budgeting. For some people, using a ledger pad or an online file (such as Excel or Google sheets) can be helpful. Others may want to use an online budget calculator, tools provided by their bank, or third-party apps to track and optimize their spending and saving.

Are there challenges to maintaining a zero-based budget?

There are challenges for most budgets, and the zero-based system is no exception. Some people may find tracking their expenses and accounting for every single dollar earned to be a very involved process that takes too much time and effort. In addition, those with a fluctuating income (such as seasonal workers) may find zero-based budgeting to be a challenging technique.

How can I stay consistent with a zero-based budget?

Staying consistent with zero-based budgeting requires diligent tracking of your income, spending, and savings. It can be a detailed process, and it can involve re-evaluating the figures on a regular basis, especially if you earn a fluctuating income. While this sounds as if it must be a time-consuming pursuit, there are tech tools that can help automate this process somewhat.

What should I do if I exceed my budget in a category?

If you exceed your budget in a category, there are a couple of options. You could cut your spending in that category, or you could borrow funds from another category and economize there. For instance, if your spending on dining out is running high, you can either rein it in or borrow funds from, say, your entertainment or travel spending to cover it.

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 12/23/25. 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/.
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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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-Q125-080

If you’re wondering whether you can lower your rent, the answer may be yes in some situations.

The prospect of bargaining down your rent may sound futile or intimidating. But, thanks to a little research and a well-planned approach, it may be possible to land a better deal.

The odds of successfully lowering your rent will probably depend on a few factors, including how much comparable rentals in your area cost, the value you represent to your landlord, and the general state of the economy and the rental market. Learn effective negotiating techniques here.

The Benefits of Negotiating Rent

The obvious payoff of reducing your rent is more cash left over at the end of the month.

But you may also want to consider the longer term benefits. Say you’ve successfully negotiated your monthly rent down by $100. Over the course of a year, that monthly savings adds up to $1,200. There are many benefits to that:

•   If you applied that $1,200 yearly savings to paying down credit cards or a student loan debt (rather than paying the minimum), you might be able to save significantly on interest payments and also build your credit score. That last factor could help you save money in the future by helping you to get loans and credit cards with better terms.

•   You could funnel that monthly $100 saved into a high-yield savings account (these are often offered at online banks) and start building a down payment on a home (if you’d prefer to own vs. rent) or an emergency fund or working towards another savings goal.

•   If you were to transfer money (the extra $100) into your 401(k) retirement fund or other retirement savings each month, it could yield a significant income stream decades from now. (If you’re already contributing to these accounts, be aware of the annual limits.)

In addition, by learning how to negotiate, you’re also developing a lifelong skill of standing up for yourself and cutting better deals as an experienced negotiator, which could pay off in other areas of your life.

9 Tips for Negotiating Rent

If you’re convinced of the value of negotiating and interested in giving it a try, here are some pointers to help you do so effectively. A quick word of caution: Simply saying “I can’t afford my rent” is unlikely to get your rent lowered. You want to illuminate for the landlord good reasons to reduce what you pay and keep you as a valued tenant.

1. Time it Right

Here’s an important tip for how to negotiate rent: As eager as you may want to cut a good deal and do so as quickly as possible, it can be wise to time your approach to maximize your chances of success.

That means negotiating at the right moments, when your landlord may be more amenable to cutting a deal.

Those times might include:

•   The end of the month, when other tenants may have vacated the property and your landlord may enjoy the stability of a long-term tenant.

•   90 days or so before your current lease expires. That’s enough time to offer to sign another lease, but only at terms favorable to you. If you’ve been a good tenant, and the market is soft for new tenants, your odds of renegotiating a lower rent may be stronger.

•   At the beginning of the calendar year. Typically, winter is a slow time for property rentals, especially in the colder climates when moving is more difficult, and it may be harder for landlords to find new tenants. Stepping into the vacuum with an offer to stay another year (even at a lower monthly rental price) might give you some new-found leverage.

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2. Do Your Market Research

The next pointer on how to haggle rent: To build your case when approaching your property owner about a rental reduction, it can help to know the lay of the land.

If you can prove that you could live more inexpensively in a nearby rental based on local housing trends, your landlord may be more inclined to grant a discount, rather than lose your business to the competition.

For that reason, it’s a good idea to do a little digging, consider the cost of living, and comb through online listings to find out the rents of comparable units or properties in the area.

If, however, you are living in an area with a tight housing market, this tactic may not yield the results you hoped for.

Perhaps a similar one-bedroom apartment for rent has an amenity that’s not offered at the apartment you’re currently in or considering. You might point out how these factors make the landlord’s current rental terms somewhat higher than the going market rate.

When you speak to the landlord, it may help to have data on comparable apartments that are slightly lower in rent and, if the unit has been unoccupied, have this information on hand as well.
You may also want to check what other apartments in the same complex or rented out elsewhere by the same landlord currently cost. This can help keep you from overpaying for an apartment and may also help you negotiate a lower rent, which could mean automatic savings for you.

Recommended: Reasons to Switch Banks

3. Offer a Lump Sum

If you can afford it, adding a lump-sum payment (say, three months of rent upfront) may strengthen your bargaining power and boost your odds of reducing your overall rent payment.

That’s because many landlords prefer having rent in hand and not having to worry about late or no rental payment from tenants.

What’s more, offering an upfront, lump-sum payment is one way to show a landlord that you’re serious about being a solid tenant. A landlord may be more amenable to doing business with a tenant who is willing to go the extra mile.

4. Consider a Longer Lease

If you particularly like the house or apartment you’re renting, you might consider offering the landlord a longer lease in exchange for lower rent payments.

If, for example, a landlord is offering a 12-month lease to a new tenant, at a fixed monthly rental price, and you agree to extend that lease to 18 or 24 months, you might be in a stronger position to ask for a rental discount.

All things being equal, landlords tend to favor tenants who’ll be around for the long haul, and may be more likely to green-light a lower rent for a longer lease arrangement.

5. Cash in on a Referral

Landlords typically loathe empty apartments, so if you can help fill a rental unit with a referral or two, it might put you in a better negotiating position to ask for a rental price deduction for helping out.

Rental unit owners usually have to pay for classified ads to lease their open units. In addition, landlords often have to put some sweat equity into showing units, chasing down tenant leads, and vetting potential lease applicants.

By bringing your landlord qualified, stable tenants, you may be able to become a valuable asset for your landlord. This in turn can help build a more robust case for a rental deduction in the process.

6. Don’t Just Focus on Price

When working on how to negotiate rent, yes, the primary goal in a rental negotiation is to bring the price down.

But in case that conversation proves fruitless, you may also want to consider some other perks or benefits you could ask for in lieu or a rent reduction.

Some ideas:

A prime parking space (especially in urban areas)

•   New appliances and/or fixtures in your home or apartment

•   New or larger storage space

•   “First dibs” on better apartments or homes in your complex, once they free up

•   A waiver of fees and charges on things like gym memberships, parking privileges, community rooms, water or trash removal, or other services and amenities

•   Extra parking passes for guests

•   Allowing you sublet for the summer (if you plan to be away)

•   One or two months free

Recommended: Passive Income Ideas to Build Wealth

7. Give Your Landlord a Heads-Up

Nobody likes to be ambushed on financial matters. That’s why you might have more success if you call your landlord well ahead of when you need to sign the lease. Politely let them know that you’d like to discuss the terms of the lease and are wondering if they would be open to a price reduction.

You might then suggest having a meeting (in person tends to be best, since it can be harder to say “no” to someone when you’re sitting face-to-face) some time in the next week or two.

This gives your landlord some time to consider the situation while also giving you some time to build your case.

In addition, giving your landlord some lead time shows you’ve put some thought into the matter. It also shows you respect your landlord’s time and schedule.

Keep in mind that you have a right as a renter to negotiate rent, but being diplomatic and respectful to your landlord will likely yield a better result than being aggressive.

8. Highlight Your Value as a Tenant

When you do meet with your landlord to negotiate the terms of your lease, it can be helpful to make a good case for keeping you on (or bringing you in) as a tenant.

For example, you might want to have a record of all your on-time payments or any history of providing referrals for this landlord.

You may also want to mention your willingness to extend your lease, that you’re courteous to other tenants, keep the property in good shape, and any other points in your favor.

Any and all of these factors could help persuade your landlord to give you a better deal.

Get Your New Rental Agreement in Writing

If you’ve successfully negotiated your rent downward or otherwise improved the terms of your lease and have a verbal agreement, it’s a good idea to get the deal in writing.

Having both parties sign off on the new rental agreement provides you with proof that you have a new deal in place, in the event there is any misunderstanding down the road. Congratulations: Getting a rent reduction can give you some breathing room in your budget.

The Takeaway

While rental leases may appear set in stone, they’re more flexible than many tenants think, especially if the rental market is soft in your area (meaning more rentals than renters). You may be able to negotiate a better price if you negotiate well, showing that the rent is higher than similar units in the area and that you are a model tenant who pays rent on time. If you’re successful, you could wind up with more money in your bank account.

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FAQ

Can you negotiate apartment rent?

You may be able to negotiate rent on an apartment or home; the possibility varies depending on your situation. You may be more likely to succeed in negotiating your rent if you can show that comparable rents in your area are lower and that you are a reliable tenant.

Can I pay my rent in a lump sum for a discount?

It’s possible that some landlords will accept rent in a lump sum at a discounted rate. This can have benefits: The landlord gets the cash upfront and doesn’t have to worry about potentially chasing a tenant for a past-due payment. But you would need to make this request from the landlord and hear their response.

When is the best time to negotiate rent?

There are a few times when you may have better luck negotiating rent. Those times include the end of the month, when many other tenants may be moving out; 90 days before your lease expires, which is when renewals are typically made available; and the start of a new year, when people may be moving and, since it’s winter, new tenants could be harder to find.

Is it in bad faith to negotiate rent?

It is usually not considered in bad faith to negotiate rent, provided it is done reasonably, respectfully, and honestly. It’s a practice that does take place in the rental market. That said, if a person were to invent reasons for a rent reduction, such as claiming the appliances don’t work when they do, that would be acting in bad faith.

Can a landlord kick me out if I try to negotiate my rent?

A landlord usually cannot kick you out for trying to negotiate rent. This is considered a typical aspect of the landlord-tenant relationship. In order to evict a tenant, the landlord must follow the guidelines for this process determined by the state. Causes for eviction might be non-payment of rent or violating the terms of the lease, such as damaging the property.

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SOBNK-Q125-079

The meaning of a “rainy day fund” is savings that help you get through bad weather, financially speaking. The bad weather could mean a medical expense that your insurance doesn’t cover, a car repair, or any number of other “uh-oh” moments.

Many people aren’t prepared to cover this kind of surprise expenditure, even if it’s just $100 or so. Perhaps they are living paycheck to paycheck; are focused on paying down debt; or are saving for a big goal such as a down payment on a house. Having funds set aside can keep little financial storms from wreaking havoc with your monthly budget and longer-term money aspirations.

With that in mind, here’s what you ought to know about rainy day funds, including how to start one and a good amount to save.

Examples of a Rainy Day Fund

A rainy day fund is a preset amount of savings set aside to cover extra, one-off expenses that may crop up throughout the year like a car or home repair.

They are called rainy day funds because, just as you need to have a backup plan to accommodate bad weather, you’ll also want to have a backup to accommodate sudden extra expenses.

Just like a thunderstorm, a broken dishwasher can occur out of the blue. Being prepared for little financial upsets can keep them from becoming major stressors and disrupting your financial life and/or causing you to go into debt to cover the costs.

Rainy Day Funds Vs. Emergency Funds

You may wonder how rainy day money differs from an emergency fund. Typically, it’s an order of magnitude.

•   A rainy day fund is generally a significantly smaller amount of savings meant to cover expenses that have a good possibility of coming up, you’re just not sure when. These could also be expenses that always come up once or twice a year, such as annual maintenance of your home heating and air conditioning systems.

   You may also sometimes hear the term “cash cushion” when people refer to smaller savings vs. an emergency fund.

•   An emergency fund is a larger back-up fund typically containing three- to six months’ worth of living expenses. An emergency fund is designed to be used for more extreme financial disruptions, such as a job loss, major medical bill, or the need for a new roof.

Here’s how this information looks as a table:

Why Can’t I Use My Emergency Fund?

Technically, an emergency fund’s uses could include covering smaller, short-term expenses.

However, if you’re wondering when to use your emergency fund, depleting it on lesser expenses can chip away at your ability to cover the larger, truly unexpected expenses that could occur down the line. After all, having an emergency fund waiting when you need it is a cornerstone of good money management.

In that scenario, you might need to resort to using credit cards, a personal loan, or even a payday loan. Due to the high-interest rates on some of these types of loans, you would end up paying much more in the long run.

Or, you might have to withdraw from whatever kind of retirement fund you have or from your child’ s college savings, which could hurt your long-term financial health. Having a rainy day fund available can help you avoid that situation.

Recommended: Emergency Fund Calculator

Do You Need a Rainy Day Fund?

Many people could benefit from having a rainy day fund. It’s a sum of money (often between $500 and $2,500) that’s available for expenses that pop up in a typical year and could otherwise throw a wrench in your budget.

If you have a very well-stocked emergency fund that you don’t mind dipping into, you may not feel as if you need an emergency fund. However, financial experts often advise that you not tap your emergency fund except for true emergencies.

Slowly but steadily, building a small rainy day fund (whether kept at an online bank or a traditional one) can give many people more financial security.

How Much Money Should I Put in My Rainy Day Fund?

As mentioned, a ballpark figure for a rainy day fund could be to have between $500 and $2,500 saved. That can be a reasonable amount to help cover unexpected costs.

How much you’ll want to set aside in your fund, however, is highly individual and will depend on your financial situation and potential upcoming expenses.

One way to figure out a target amount for your rainy day money is to create a list of some possible rainy day expenses that could come up.

For example, if your health care deductible is $1,500, you might want to keep at least that much in your rainy day fund. Car repair prices range, but common fixes on the brakes or alternator cost between several hundred dollars to a thousand (or more). Just in case two rainy days happen close together, it’s a good idea to increase your savings goal.

If you’d like guidance for your unique situation, consider paying the cost of a financial advisor for a bit of advice. They can look at your current finances and help you create an excellent savings plan. They can also help decide how much money to put in a rainy day or emergency fund.

Another way to figure out a target amount for your rainy day fund is to create a list of anticipated larger expenses. These are purchases, costs, and bills that arise only a few times a year, but aren’t always tied to an exact date. They can include:

•   Home gutter cleanings
•   Car maintenance
•   Back-to-school shopping
•   Annual subscriptions
•   Emergency Childcare
•   Emergency room visits
•   Parking tickets
•   Tax bills
•   Birthday and holiday gifts
•   Plane tickets
•   Appliance replacement

You may want to review this list, as well as look at large one-off expenses that came up last year, to come up with a ballpark figure for your rainy day fund.

How Do I Save for a Rainy Day Fund

The process of building up your rainy day fund is similar to saving money for any goal or major purchase. There are several different strategies to choose from, and you may want to combine a few.

•   Cutting back on nonessential spending. You may want to take a look at your monthly outlay of money over the past few months. See if there are any simple places you can cut back, such as cooking a few more meals at home each week, getting rid of a streaming service you rarely watch or spending less on clothing each month. The funds you free up can get funneled into your rainy day savings account.

•   Bringing in some extra income. Picking up a side hustle (like dog walking, babysitting, or food delivery), selling things you no longer use online, or doing some freelance work can help you build your rainy day savings fund.

•   Take advantage of windfalls. A money windfall, or a sudden influx of cash, such as a bonus, cash gift, or tax refund, can be a quick way to build your rainy day fund.

•   Keeping the change. Putting all your leftover change in a jar and watching it add up is an old-fashioned but still effective way to save. When the jar is full you can deposit the money in the bank to give your rainy-day fund a bump. Or use a rounding-up tech function (available at many banks) to add to a savings account.

•   Setting up automated transfers. Establishing an automatic transfer from your checking into your rainy day savings account on a set day each month (perhaps after your paycheck gets deposited) can be one of the most effective ways to grow this fund. Even if the amount is small, it will add up quickly because the automatic savings will happen every month no matter what.

Recommended: Benefits of Automating Your Finances

Where Should I Keep My Rainy Day Fund?

You’ll want to keep your rainy day fund in an account that is separate from your spending (so you don’t accidentally spend it) but is still easily accessible.

Good options include a high-yield savings account, which are typically available at online banks, often with no or low fees and without deposit or minimum balance requirements.

Other options include a money market account, which typically offers higher interest than a standard savings account but allows you to access your money when you need it. That kind of liquidity is valuable, since you never know when a minor emergency will crop up.

The Takeaway

Setting up a separate rainy day savings account can help you manage those annoying but essential extra expenses that can crop up throughout the year that might otherwise throw you off balance.

As you use your rainy day fund to cover pop-up expenses, it’s a good idea to fill it back up, so you’ll have financial back-up the next time you need it. What’s more, keeping your rainy day fund in an interest-bearing account can help it grow as it sits there, providing you with a sense of security.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 is considered a rainy day fund?

A rainy day fund is a sum of cash, often between $500 and $2,500, held in an easily accessible account (preferably interest-bearing). The money is to be used for those expenses that crop up during the year, such as purchasing a new dishwasher or paying for holiday gifts.

Is a rainy day fund different from an emergency fund?

A rainy day fund is typically smaller than an emergency fund and designed for smaller-scale expenses, such as home maintenance issues. An emergency fund is usually a sum of three to six months’ worth of living expenses, and it can be used for major medical bills, say, or to pay bills after job loss.

Should I prioritize a rainy day fund over paying off debt?

Both paying off debt and a rainy day fund are important priorities for financial wellness. Some, however, might say that paying off high-interest debt is more urgent than accruing a rainy day fund.

How do I replenish my rainy day fund after using it?

A good way to replenish your rainy day fund after using it can be to set up automatic transfers into your checking account over time or to use a windfall, such as a job bonus or tax refund, to add to it.

Is a rainy day fund different from a sinking fund?

A rainy day fund is typically money that is set aside for fairly predictable (but often overlooked) expenses, such as vet bills or a new water heater. A sinking fund, on the other hand, describes money saved for a specific, planned purpose, such as a home renovation.

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A payable on death account, or POD account, allows you to transfer money to someone else when you pass away without requiring those assets to go through probate. The individual or entity who collects those assets is called a POD beneficiary.

What does POD mean in banking? Broadly speaking, there are a number of deposit accounts that can be deemed payable on death, including checking and savings accounts.

If you’re considering establishing one of these accounts, it’s important to understand how POD accounts work. If you are a beneficiary, it can be helpful to know when and how you’re entitled to withdraw money from a payable on death bank account. Here’s a closer look at POD bank account rules and the pros and cons of setting up this type of account.

Payable on Death Accounts Explained

Simply defined, a payable on death account is a bank account with named beneficiaries. The beneficiaries of a POD account receive the assets held in the account in the event of the account owner’s death. You may also hear POD accounts referred to by other names, including:

•   Totten trust

•   Tentative trust

•   ITF account (which stands for “in trust for”)

•   Revocable bank account trust

•   Informal trust

To create a payable on death account, you generally just need to add one or more beneficiaries to a bank account you own or co-own. Examples of POD beneficiaries can include:

•   A spouse

•   Adult children

•   Siblings

•   A nonprofit

Worth noting: If you co-own the account with your spouse or someone else, they cannot be named as a POD beneficiary. Typically, when one owner of a joint account dies, the other will automatically become the sole owner of the account. In this case, the POD designation only takes effect only when the second owner dies.

Payable on Death Rules

Payable on death accounts have certain rules that set them apart from other accounts. The most significant rule concerns when beneficiaries can access the money in the account. Here are some details to know:

•   If you open a POD bank account, you have full control over the money in the account during your lifetime. Even if you name multiple beneficiaries to the account, those beneficiaries cannot lay claim to any of the funds in it until you’ve passed away.

•   In terms of how the money in a payable on death bank account is divided, each beneficiary typically receives an equal share. So if you have $100,000 in a savings account when you pass away and that account has four POD beneficiaries, each one would receive $25,000.

•   Note that state law may limit the number of beneficiaries you can name to a payable on death account. Your depository institution may have additional rules for POD accounts.

•   To claim their inherited funds, the beneficiary of a POD typically has to present a government ID and a certified copy of the account owner’s death certificate.

Types of Accounts That Can Be Payable on Death

There are a number of account types that can be established as POD accounts. Your options can include:

•   Checking accounts

•   Savings accounts

•   Certificate of deposit (CD) accounts

•   Individual Retirement Accounts (IRAs)

•   Investment accounts

In terms of what accounts cannot be POD, the list includes small business and commercial bank accounts as well as safety deposit boxes.

Credit accounts are not POD accounts either, since there are no assets to leave behind. In terms of what happens to credit card debt when you die, it can become the responsibility of your spouse or your estate, depending on where you live.

Payable on Death vs Beneficiary

Payable on death refers to an arrangement between an account holder and a financial institution in which the account holder designates specific beneficiaries to receive the funds in the account after they die. The term “beneficiary,” however, is used to refer to an individual or entity that’s entitled to inherit assets from someone else. POD beneficiaries fall under the larger beneficiary umbrella.

Similarities

When you name a payable on death beneficiary, you’re telling your bank that you want that person or entity to receive money from the account when you pass away. This is similar to naming a beneficiary to any type of account, including a life insurance policy. Your life insurance beneficiary, for example, is entitled to receive a life insurance death benefit from the policy when you die.

Payable on death beneficiaries and other types of beneficiaries are also generally not entitled to any money during your lifetime. They can’t access your bank account, withdraw money from your 401(k), or cash in your life insurance. But they all stand to benefit financially from your passing in some way.

Additionally, assets that have a named beneficiary are not subject to probate. So, if you open a Roth IRA and name your spouse as the beneficiary, they’d have access to the money in the account relatively quickly when you pass away. The same is true with regard to life insurance.

Differences

The main difference between payable on death accounts and other beneficiary accounts lies in what’s being passed on. With POD accounts, you’re typically talking about bank accounts. So you might leave your checking account or savings account to your children after you’re gone.

There can also be differences between payable on death accounts and other beneficiary accounts with regard to taxation. Someone who inherits a POD account may owe estate taxes, for instance, whereas life insurance proceeds are typically income and estate tax-free. (Determining how to allocate one’s funds and the tax burden that will result can be an important part of estate planning.)

Pros and Cons of POD Accounts

Payable on death accounts can offer advantages and disadvantages. It’s helpful to weigh both sides before opening one.

Here’s an overview of the main pros and cons of POD accounts.

Recommended: Money Management Guide

Payable on Death Account vs Trust

A POD bank account and a trust both allow assets to be transferred to beneficiaries without going through probate, but they serve different purposes and offer varying levels of control and flexibility.

Here a look at some key differences between POD accounts and trusts:

•   Control: A POD account transfers funds immediately upon death, whereas a trust allows for more control over how and when beneficiaries receive the assets.

•   Complexity: Setting up a trust involves legal documents and potential ongoing management, while a POD account is a simple beneficiary designation with a bank.

•   Scope of assets: A trust can hold various assets, including real estate, life insurance, annuity certificates, and investments. A POD account, on the other hand, is typically limited to certain types of assets, such as bank accounts and certificates of deposit.

The Takeaway

You might consider a payable on death account if you’d like to pass assets on to loved ones with minimal fuss. That could be helpful if you’d like to make sure they have easy access to cash to cover funeral and burial expenses or any basic living expenses after you’re gone.

You can typically turn any bank account into a POD account, so it pays to shop around and find the best fit for your needs and goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 does payable on death mean?

Payable on death means that money in a bank account is payable to one or more beneficiaries when the original account owner passes away. A payable on death bank account allows beneficiaries to receive funds without having to go through the probate process.

Is a POD on a bank account a good idea?

Yes, adding payable on death (POD) beneficiaries to a bank account can be a good idea. For one reason, it allows you to choose who will receive the assets in the account after you pass away. For another, POD accounts bypass the probate process (a legal procedure in which your assets are inventoried), giving your heirs quicker access to your account.

What is the difference between a pay on death and a beneficiary?

Payable on death is a designation that applies to bank accounts and other financial accounts. A beneficiary is someone who’s named to receive money from a bank account, retirement account, or other asset (such as a life insurance policy). A POD account can have one or more beneficiary designations.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. 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

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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.

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