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Idle funds are funds that aren’t serving any specific purpose or working for you in any way. This is a term that’s often used when discussing business and government finance. It’s common for government entities and corporations to have idle money sitting in cash reserves until it’s ready to be used for specific expenditures.

It’s also possible for individuals to have idle cash. For example, you might keep a few hundred dollars stashed in your dresser. That money is technically idle, since it isn’t earning you any interest. The good news is that it’s easy to put idle funds to work so your money has a chance to grow.

Learn how to do just that with this guide, which addresses:

•   What are idle funds?

•   How do idle funds work?

•   What are examples of idle funds?

•   What are the pros and cons of idle funds?

•   Where can you park idle funds?

What Are Idle Funds?

In personal finance, idle funds or idle savings refers to money that isn’t being invested or otherwise earning interest. Idle funds may be held in cash or sit in a deposit account at a bank, credit union, or other financial institution. They can be called idle savings, idle cash, or idle money, but it all means the same thing. It’s money that’s doing absolutely nothing. It’s not appreciating in any way or earning you interest.

Here’s another way to think of idle funds. Imagine you’re in a car that’s idling at a stoplight. You’re not moving forward toward any specific destination and you’re not gaining anything; in fact, you’re just burning gas. When you allow your money to sit idle, you’re not getting closer to your financial goals either.

As mentioned, businesses and governments may keep idle savings on hand that don’t earn any interest. They can do so if they plan to spend that money later for a specific purpose, such as an expansion project or funding government contracts. But it’s possible that you might have idle funds without realizing it, which can be a missed opportunity to build wealth.

How Do Idle Funds Work?

Idle funds work by, somewhat ironically, not working for you. Normally, when you deposit money into a savings account, money market account, or investment account, those funds can grow over time. The bank may pay you interest on deposits, or you earn a solid rate of return on the money you’ve invested with your brokerage. Either way, you can end up with more money than you started with thanks to compounding interest.

Compounding means earning interest on your interest. The more often interest compounds and the higher the interest rate earned, the more your money can grow. For example, if you deposit $1,000 into an interest-bearing account and earn a 7% annual rate of return, that initial amount would grow to $7,612 after 30 years, even if you never add another dime.

With idle savings, that doesn’t happen. Your money doesn’t earn interest or any kind of return. If you deposit $1,000 into an idle funds account (or have it sitting in a piggy bank) on Day 1, you’d still have that same $1,000 on day 10,000, assuming you don’t make any withdrawals. Since you’re not putting money into a savings account or another account where it can earn interest, idle funds don’t benefit from the power of compounding.

What Is the Value of Idle Funds?

You might assume that the value of idle funds is the same as the money’s face value. So $100 in idle cash would be worth $100. But it’s important to keep the impact of inflation in mind. Inflation refers to a continuous rise in consumer prices for goods and services for an extended time period. In the U.S., the Consumer Price Index (CPI) is one of the most commonly-used measures for tracking inflation.

When inflation is high (as it recently has been), your money doesn’t go as far. If gas goes from $3 a gallon to $5 a gallon, for example, it costs more to fill up your tank. When you have idle funds that aren’t earning interest, your money can’t keep up with the pace of inflation. That’s why personal finance experts recommend keeping some of your money in a savings account or investment account as a hedge against the toll inflation takes.

Real Life Examples of Idle Funds

Idle money can take different forms but again, it’s all money that isn’t working for your benefit or advantage in some way. Here are some examples of idle funds you might have right now:

•   You get a rebate check in the mail that you forget to deposit. Since this money isn’t being used to grow savings, it’s idle.

•   Every day, you dump out your coins and dollar bills into a jar that you keep in your closet. Even though you’re saving, this is idle savings because you earn a 0% interest rate.

•   Instead of separating some of your money into a savings account, you keep all of your funds in a checking account that doesn’t earn interest. While you might use some of this to pay bills and technically put it to work that way, the rest of your money in the account is idle because it doesn’t grow.

You can also have idle funds if you have money in any type of savings or investment vehicle that doesn’t earn interest. A zero-coupon bond, for instance, doesn’t pay interest to you but instead, allows you to purchase the bond at a deep discount.

Pros of Idle Funds

For governments and businesses, it can make sense to have some idle cash on hand. For example, if there’s a budget shortfall, then a corporation could dip into their idle funds to cover operating expenses.

In terms of why having some idle funds might be a good thing when discussing your personal finances, here are the main pros:

•   Idle funds can be highly liquid, meaning you can access your money when you need it.

•   Keeping idle money in cash at home means you’re not paying steep fees to a bank.

•   Waiting to invest idle savings gives you time to research the best investment options for you.

•   There’s generally very little risk of losing money in idle funds.

•   Putting idle funds to work can be as simple as opening an interest-bearing savings or investment account.

Cons of Idle Funds

While there are some positives associated with idle funds, there are also some drawbacks to keep in mind. Here are some of the biggest cons of idle money:

•   When cash sits idle, it’s not earning interest, and you’re not growing wealth.

•   If you’re keeping idle savings in cash at home, you run the risk of it being lost or stolen.

•   Keeping all of your money in idle funds means you’re not working toward any financial goals.

•   Delaying investment of idle funds can mean missing out on the power of compounding interest.

•   Cash sitting in idle funds can lose purchasing power as inflation rises.

Parking Places for Your Idle Money

If you’d like to put your idle funds to good use, there are several places you can keep that money in order to earn interest. When deciding where to keep idle cash, consider what kind of access you’d like to have to those funds, the interest rates you could earn, and the fees you might pay.

Here are some of the different savings accounts to have for idle funds if you’d like to grow your money.

Certificates of Deposit

A certificate of deposit account is a time deposit account. When you deposit money into a CD, you’re agreeing to leave it there for a set time period, until what is known as its maturity date. The bank pays you interest on your deposit, and, once the CD matures, you can withdraw your initial deposit and the interest earned. Or you could roll it over into a new CD.

CD accounts can be a good place to keep idle funds that you know you won’t need any time soon. Online banks can offer competitive rates on CDs with no monthly fees. Just keep in mind that you might pay an early withdrawal penalty fee if you take money from your CD account before maturity.

Brokerage Account

Brokerage accounts are designed to hold money that you invest. For example, you can open a taxable investment account or an Individual Retirement Account (IRA) at a brokerage. The rate of return you earn on your money can depend on how you choose to invest it.

Some brokerages can also offer cash management accounts to hold money that you plan to invest later. These accounts can function like checking accounts, but they can also earn interest. Depositing some of your idle funds into a cash management account at your brokerage can help you earn some interest until you’re ready to invest it.

Recommended: How to Set up a Health Savings Account

High-Yield Savings Account

A high-yield savings account is a savings account that pays an above-average interest rate and annual percentage yield (APY). Traditional banks can offer high-yield savings accounts but you’re more likely to get competitive rates from an online bank. Online banks can also make high-yield accounts more attractive with low initial deposit requirements and no monthly fees.

Opening a high-yield savings account for idle funds could be a good move if you’d like to keep some of your money liquid and accessible. You can link a high-yield savings account to a checking account for easy transfers. Depending on the bank, you may also be able to get an ATM card with your savings account for added convenience.

I Bonds

An I Bond is a type of savings bond that’s issued by the U.S. Treasury. I Bonds can earn a competitive interest rate that’s based on inflation. Putting money into I Bonds could be a good use of idle cash if you’re worried about inflation eating into your spending power. Just keep in mind that I Bonds, like CDs, are designed to be longer-term investments and cashing them out early could cost you some of the interest earned.

Banking With SoFi

Having idle funds (money that’s just sitting and not appreciating) isn’t necessarily a bad thing. However, it’s important to understand what you could be missing out on if your savings or cash isn’t earning any interest. If you’re unsure what to do with idle money, an online bank account can be a great place to keep your cash while you weigh the options.

SoFi offers a Checking and Savings account in one convenient banking package. You can pay bills and save in one place, while earning a hyper competitive APY on deposits. And you won’t pay any account fees, which can help your money grow faster.

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

What is the best option for me to activate idle funds?

If you have idle funds, depositing them into an online savings account can be the fastest way to put them to use. Online banks can offer savings accounts with great interest rates and no monthly fees. You can link your online savings account to your checking account for convenient access to your money.

Are idle funds always a bad thing?

Idle funds aren’t always a bad thing if you’re planning to invest or save them at some point in the near future. For example, you may have $1,000 sitting in a cash management account at your brokerage that you plan to invest in stocks. Since that money does have an end goal, the fact that it’s idle in the meantime isn’t so bad.

Can idle funds every improve your money?

Having some idle funds could offer reassurance if you’d like to have a go-to stash of cash on hand for emergencies. Whether idle funds can improve your money depends on where you’re keeping them, how you plan to use them, and whether you have other funds that are actively working for you and earning interest.

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Photo credit: iStock/Ivan Halkin

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©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.

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Money values are a set of beliefs about money and how it’s meant to be used. Do you believe that money is meant to be spent and enjoyed in the moment? Or do you believe that watching your pennies so you can retire early is your ultimate financial goal?

Whether someone’s financial values are positive or negative can influence the decisions they make with money. For example, research suggests that children who learn positive money lessons early on are more likely to be better with money and have stronger relationships as adults.

But where do money values come from? And are they set in stone or can they change over time? Understanding the impact of money values is an important step in improving your financial health. Here, you’ll uncover:

•   What are money values?

•   How are money values formed?

•   What are your money values?

•   How can you better align your values and finances?

What Are Money Values?

When talking about values in finance or in general, you’re talking about beliefs. Specifically, values are beliefs that motivate people to action in some way and drive behavior. If you apply that concept to finance, you could define money values as a set of beliefs that drive financial decision-making.

Financial values can be formed in childhood through your first-hand experiences with money. For example, if you grew up in a household that emphasized saving and avoiding debt, then you might be more inclined to value the importance of stashing cash away and delayed gratification as an adult. On the other hand, if you grew up in a home with a parent who was a compulsive shopper, then your money values might tell you that buying things constantly is normal behavior.

Financial values can vary widely from one person to the next, and it’s possible that you may have developed money values without being consciously aware of them. But those values can affect the decisions you make when it comes to saving, spending, and handling debt.

How Do Money Values Work?

Money values work by shaping your decision-making with money. They act as a guide to tell you what’s acceptable behavior for managing money and what isn’t. So again, someone with positive money values might believe that carrying excessive amounts of debt or making unnecessary purchases are bad financial habits to avoid.

If you have poor money values as an adult because of your childhood experiences with money, then you might not see anything wrong with being in debt. Or you might simply think that having lots of debt is a fact of life, and there’s nothing you can do to change it. For that reason, having negative money values can be dangerous to your financial health, today and tomorrow.

The good news is that it’s possible to change your money values over time. It can take an effort to learn new values and behaviors and adopt a new money mindset. However, the effort can be worth it if you’re not happy with your financial situation and you’d like to change it for the better.

Why Are Money Values Important?

There are certain fundamentals for personal finance that can help you to get ahead financially. These include things like budgeting, avoiding high interest debt, and saving consistently. Your money values matter because they can determine how committed you are to practicing good financial habits.

Here are some things that positive money values can do for you:

•   Help you to be more disciplined with your money, rather than allowing money to control you

•   Make it easier to keep track of money because you’re committed to sticking to a monthly budget and avoiding unnecessary spending

•   Give you clarity when setting up financial goals so that you know exactly what it is you want to achieve with your money

•   Underscore your purpose for pursuing those goals so that you stay motivated and on track

•   Make decisions confidently with your money, whether it’s where to invest or what to say to a friend who asks for money

Financial values can act as a guidepoint or compass for you so that you don’t feel like you’re operating in the dark with money. Understanding your personal values toward money can also help with navigating relationships with people who might have different financial values. The clarity you have about how you want to manage your money can help you stay the course to meet your goals.

Tips for Determining Your Money Values

If you’re not sure what your money values are or you’re questioning what they ought to be, figuring it out doesn’t have to be difficult. There are some simple exercises you can do to drill down to your financial values and what money means to you.

Creating a List of Where Money Impacts Your Life

When setting up a financial plan that revolves around money values, it’s helpful to first understand how money affects your life. Making a list of areas where money impacts you the most can give you perspective on what money values you have and how they drive your decision-making.

For example, consider how money affects you on these levels:

•   Friendships

•   Romantic relationships

•   Family relationships

•   Work and career decisions

•   Hobbies and recreation

•   Health

•   Long-term planning (whether that means home ownership or retirement)

Also, think about how money affects you mentally and emotionally. If money is a constant source of stress, for example, that could be a sign that your money values might be getting in the way of good financial habits.

Creating Goals for What You Want to Accomplish

Setting goals can motivate you to make changes to your financial outlook, whether big or small. It can also help you to determine what your money values are and how your goals align with those values.

Making two lists — one for short-term goals and one for long-term goals — can give you an idea of what you’d like to do with your money. For example, financial short- term goals might include:

•   Saving an emergency fund

•   Setting aside money for a vacation

•   Saving up for new furniture

Financial long-term goals on the other hand might be things like saving for retirement or putting a large down payment on a home. You can never have too many money goals, but it’s important to be realistic about what you can achieve at any given time.

Visualizing Where You Will Be in 5-10 Years

Many people use a five-year plan to map out their goals and financial progress. If you’ve never tried this before, consider where you’d like to be five or 10 years from now.

The idea is to create as vivid a picture as possible. For example:

•   Where will you live?

•   Will you rent your home or own it?

•   What kind of work will you be doing? Will you be working a 9-to-5 job, be in grad school, or running your own business?

•   How much money will you have in savings?

•   How much debt will you have?

•   Where will you be in terms of progress towards your long-term money goals?

Visualizing your future self is an important exercise because it gives you something to aim for. You can start working toward it now by adapting your money values to reflect where you want to go.

Prioritizing Your Goals

If you have multiple financial goals, you might not be able to knock them all out at once. So you’ll have to decide which ones are most important to focus on first.

For example, many people question whether it makes sense to save or pay down debt. Saving first can give you a small cushion so that you don’t have to turn to a credit card if an emergency comes along. On the other hand, putting off debt repayment can mean paying more in interest over time. Which side of the debate you land on can clue you in as to what your money values are.

You can go through each of your goals and ask yourself how urgent that goal is for you. That can help you to better organize your list so you know what to focus on first.

Living Out Core Values

Once you’ve identified what your money values are, you can work on living them out in your daily life. In other words, that means making sure that your behaviors with money match up with your beliefs about money.

So, let’s say early retirement is one of your long-term financial goals; specifically, you’d like to retire 15 years from now. Ask yourself what you need to do on a daily basis to reach that goal. It might mean finding ways to make more money or prioritizing debt payoff. Or it could be as simple as saying no to a night out with friends in order to save some cash.

When you consider how even seemingly small decisions might affect you financially, you’re living out your core money values. The more consistently you can do that, the easier it becomes to create the kind of financial life you want.

Tips for Aligning Your Values With Your Finances

Getting into some simple routines with your finances can make it easier to align them with your money values. Here are some of the best ways to make sure your financial values are reflected in how you manage your money:

•   Make a monthly budget and and then stick to it

•   Review your spending regularly

•   Use credit cards responsibly by keeping balances low and paying in full whenever possible

•   Start a regular savings plan

•   Contribute to a retirement account if you’re not doing that already

•   Choose investments that match up with your values

•   Consider ways that you can reduce expenses and save money

•   Surround yourself with people who have similar money values.

Communicating about money with your spouse or partner is another important step. If their financial values are different from yours, then talking things over can help you to avoid conflict. You may not be able to persuade them to accept your values or vice versa. However, you might be able to reach a compromise on how to manage your money that you’re both comfortable with.

Banking With SoFi

Having sound money values can pay off if you’re able to feel financially healthy and enjoy the kind of lifestyle you want without racking up debt. Or perhaps positive money values will help you buy a house sooner or retire earlier.

Part of managing your money successfully involves choosing the right place to keep your money. When you open an online banking account with SoFi, you can get checking and savings in one convenient package. SoFi charges no account fees and you can access your money online or via the SoFi app. When you enroll with direct deposit, you can earn a super competitive APY, which can help your money grow faster.

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 be financially stable without money values?

It’s possible to be financially stable even if you aren’t aware that you have any money values. You can still make good decisions with money without realizing that values are driving those decisions. But having clear financial values to follow can help make stability easier to achieve.

What are bad money values?

Bad money values are values that lead to poor decisions with money. For example, someone who carries a large amount of credit card debt or relies on expensive payday loans to cover the bills may never have learned how to properly budget. Poor money values don’t have to be set in stone, however; it’s possible to turn them into positive financial values.

Do wealthy people have good financial values?

Just because someone is wealthy doesn’t automatically mean they have good financial values. A billionaire who runs a Ponzi scheme, for example, might have money values that tell them that it’s okay to defraud others for their own benefit. While having good money values can help you build wealth, you don’t need to be rich to make good financial decisions.

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Photo credit: iStock/MicroStockHub

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©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.

SOBK0722009

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Saving is an important part of your financial health and building wealth, but it can be confusing to understand all the different vehicles out there. For instance, if you want to stash cash away for a good long while, should you open a Roth IRA or a savings account?

A Roth Individual Retirement Account (IRA) offers a tax-advantaged way to invest money for retirement. Brokerages and banks can offer Roth IRAs for investors who want to set aside money that they don’t anticipate spending for the near future.

Savings accounts can also be used to hold money you plan to spend at a later date. The main difference between a Roth IRA and savings account, however, lies in what they’re intended to be used for.

If you’re debating whether to keep your money in a Roth IRA or savings account, it’s helpful to understand how they work and what sets them apart from one another. Read on to learn:

•   What is a savings account?

•   What are the pros and cons of a savings account for retirement?

•   What is a Roth IRA?

•   What are the pros and cons of a Roth IRA for retirement?

•   What are the similarities and differences between these two account types?

•   How can you tell if a savings account or Roth IRA is right for you?

What Is a Savings Account?

A savings account is a type of deposit account that can be opened at a bank, credit union, or another financial institution. Savings accounts are designed to help you separate money you plan to spend later from money you plan to spend now.

Here’s how a savings account works:

•   You open the account and make an initial deposit.

•   Money in your account can earn interest over time, at a rate set by the bank.

•   When you need to spend the money in your savings account, you can withdraw it.

Previously, savers were limited to making six withdrawals from a savings account per month under Federal Reserve rules. In 2020, the Federal Reserve lifted that restriction, though banks can still impose monthly withdrawal limits on savings accounts. Exceeding the allowed number of withdrawals per month could trigger a fee or could lead to the account being converted to a checking account.

Types of Savings Accounts

Banks can offer more than one kind of savings account. The range of savings accounts available can depend on whether you’re dealing with a traditional bank, an online bank, or a credit union.

Typically, these accounts will be insured up to $250,000 per ownership category by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA).

Generally, the types of savings accounts you can open include:

•   Traditional savings. Traditional savings accounts, also called regular, basic, or standard savings accounts, allow you to deposit money and earn interest. Rates for traditional savings may be on the low side, and you might pay a monthly fee for these accounts at brick-and-mortar banks.

•   High-interest savings. The main benefits of high-interest savings accounts include above-average interest rates and low or no monthly fees. For example, online banks can offer high-yield savings accounts with rates that are five to 10 times higher than the national savings rate, with no monthly fee.

•   Money market savings. Money market savings accounts or money market accounts can combine features of savings and checking. For example, you can earn interest on deposits but have access to your money via paper checks or a debit card.

•   Specialty savings. Some types of savings accounts are created with a specific purpose in mind. For example, Christmas Club accounts are designed to help you save money for the holidays. A Health Savings Account (HSA) is a tax-advantaged specialty savings account that’s meant to be used just for health care expenses, though some people use an HSA for retirement.

You could also add certificate of deposit accounts (CDs) to this list, though a CD works differently than a savings account. CDs are time deposits, meaning that when you put money in the account, you agree to leave it there for a set term. If you take the funds out before then, you will likely be charged a fee.

Once the CD matures, you can withdraw your initial deposit and the interest earned. For that reason, CDs offer less flexibility than other types of savings accounts.

Quick Money Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Pros and Cons of Using a Savings Account for Retirement Savings

Savings accounts can be used to save for a variety of financial goals, including retirement. You might be wondering whether it makes a difference if you use, say, a high yield savings account vs. Roth IRA or other retirement account to save, as long as you’re setting money aside consistently.

While savings accounts can offer convenience and earn interest, they’re not necessarily ideal when saving for retirement if your primary goal. Here are some of the advantages and disadvantages of using a savings account to plan for retirement.

Pros	Cons
Savings accounts are easy to open and typically don’t require a large initial deposit.	A savings account does not offer any tax benefits or incentives for use as a retirement account.
Banks and credit unions can pay interest on savings account deposits, allowing you to grow your money over time.	Interest rates for savings accounts can be low, especially if you’re saving at a traditional bank vs. an online bank.
You can withdraw money as needed and don’t have to reach a specific age in order to use your savings.	Banks can impose fees or even convert your savings account to checking if you’re making frequent withdrawals.
Savings accounts are safe and secure; deposits are protected up to $250,000 per depositor, per account ownership type, per financial institution when held at an FDIC member bank.	If you’re putting all of your retirement funds into the same savings account, it’s possible that your balance might exceed the FDIC covered limit.

Recommended: Different Ways to Earn More Interest on Your Money

What Is a Roth IRA?

Before diving into what is a Roth IRA, know this: There are different retirement plans to choose from, including workplace plans and IRAs. A Roth IRA is an individual retirement account that is not a traditional IRA. Traditional IRAs are funded with pre-tax dollars and allow for tax-deductible contributions when doing taxes. Once you turn 72, you’re required to begin taking money from this kind of account.

If you don’t know how the Roth IRA works, these accounts allow you to set aside money using after-tax dollars, up to the annual contribution limit. That means you can’t deduct contributions to a Roth IRA, but you can get something better: tax-free qualified distributions.

You can leave money in your Roth IRA until you need, which allows it even more time to grow. Unlike traditional IRAs, there are no required minimum distributions for Roth IRAs. If you don’t use all of the money in your Roth IRA in retirement, you can pass it on to anyone you’d like to name as your beneficiary.

The IRS allows you to make a full contribution to a Roth IRA if you’re within certain income thresholds, based on your tax filing status. The full contribution limit for 2022 is $6,000, with an additional $1,000 catch-up contribution allowed if you’re age 50 or older. You can make a full contribution for 2022 if your tax status is:

•   Married filing jointly or a qualified widow(er) with a modified adjusted gross income of less than $204,000

•   Single, head of household, or married filing separately and did not live with your spouse during the year with a modified adjusted gross income of less than $129,000

Contributions are reduced once you exceed these income thresholds. They eventually phase out completely for higher earners.

To open a retirement account like a Roth IRA can be a simple, straightforward process. It can even be done online.

Pros and Cons of Using a Roth IRA for Retirement Savings

Roth IRAs are specifically designed to be used for retirement saving. Again, that’s the chief difference between a Roth IRA and savings account. That doesn’t mean, however, that a Roth IRA is necessarily right for everyone. For example, you may need to weigh whether a Roth IRA or traditional IRA is better, based on your income and tax situation.

Here are some of the advantages and disadvantages associated with choosing a Roth IRA for retirement savings.

Pros	Cons
Money in a Roth IRA can be invested in stocks, mutual funds, and other securities, potentially allowing your money to grow faster.	Investing money in the market is riskier than stashing it in a savings account; there’s no guarantee that you won’t lose money in a Roth IRA.
You may be able to open a Roth IRA with as little as $500 or $1,000, depending on the brokerage or bank you choose.	Brokerages can charge various fees for Roth IRAs. Individual investments may also carry fees of their own.
Qualified distributions from a Roth IRA are always 100% tax-free, and you can withdraw original contributions at any time, without a penalty.	Tax penalties may apply if you withdraw earnings from your Roth IRA less than five years after you opened it.
You can save money in a Roth IRA in addition to contributing money to a 401(k) plan at work.	Not everyone is eligible to open a Roth IRA, and there are annual contribution limits.

Similarities Between a Roth IRA and a Savings Account

Roth IRAs and savings accounts do have some things in common. For example:

•   Both can be used to save money for the long-term and both can earn interest. So you could use either one as part of a retirement savings strategy.

•   You can open a Roth IRA or savings account at a bank and initial deposits for either one may be relatively low. Some banks also offer Roth IRA CDs, which are CD accounts that follow Roth IRA tax rules.

•   Savings accounts and Roth IRAs held at banks are also FDIC-insured. The FDIC insures certain types of retirement accounts, including Roth IRAs, when those accounts are self-directed and the investment decisions are made by the account owner, not a plan administrator.

•   It’s possible to open a savings account for yourself or for a child. Somewhat similarly, you can also open a Roth IRA for a child if they have income of their own but haven’t turned 18 yet.

When comparing the benefits of Roth IRA vs. savings account, however, Roth accounts have an edge for retirement planning. Whether it makes sense to choose something like a high yield savings accounts vs. Roth IRA can depend on what you want to set money aside for.

Roth IRA vs Savings Account: Key Differences

Comparing a savings account vs. Roth IRA isn’t that difficult once you understand how each one works and what they’re intended to be used for. Here are some important differences between a Roth IRA and a savings account:

	Roth IRA	Savings Account
Purpose	A Roth IRA is designed to save for retirement.	Savings accounts can fund virtually any short- or long-term goal.
Who Can Open	Taxpayers who are within certain income thresholds can open a Roth IRA.	Adults with valid proof of ID can open a savings account, regardless of income or tax status.
Interest	Money in a Roth IRA earns compounding interest based on the value of underlying investments.	Savings accounts earn interest at a rate set by the bank.
Tax Benefits	Roth IRAs allow for 100% tax-free qualified distributions, with no required minimum distributions.	Savings accounts don’t offer any tax benefits; interest earned is considered taxable income.
Contribution Limits	Roth IRAs have an annual contribution limit. For 2022, the limit is $6,000 or $7,000 if you’re 50 or older.)	There are no contribution limits, though FDIC protection only applies to the first $250,000 per depositor, per account ownership type, per financial institution.
Withdrawals	Generally, withdrawals of earnings are not allowed before age 59 ½ unless an exception applies. Original contributions can be withdrawn at any time without a tax penalty.	Banks can limit the number of withdrawals you’re allowed to make from a savings account each month and impose a fee for exceeding that limit.
Risk	Investing money in a Roth IRA can be risky; you may lose money.	Savings are safe, secure places to keep up to the FDIC-insured $250,000 limit detailed above.

How to Decide If a Roth IRA or Savings Account Is Right for You

If you’re unsure whether to open a Roth IRA vs. high-yield savings account, it’s helpful to consider your goals and what you want to do with your money.

You might decide to open a Roth IRA if you:

•   Specifically want to save for retirement and earn a higher rate of return

•   Would like to be able to withdraw money tax-free to buy a home or pay higher education expenses (the IRS allows you to avoid a tax penalty for these distributions)

•   Want to supplement the money you’re contributing to a 401(k) at work

•   Expect to be in a higher tax bracket at retirement and want to be able to withdraw savings tax-free

•   Don’t want to be required to make minimum distributions at age 72

On the other hand, you might open a savings account if you:

•   Have a short- or long-term goal you’re saving for

•   Want a safe, secure place to keep your money

•   Are satisfied with earning a lower rate of return on savings

•   Need to be able to keep some of your money liquid and accessible

•   Aren’t concerned with getting any type of tax break for your savings

The good news is that you don’t have to choose between a high-interest savings account vs. Roth IRA. You can open one of each type of account to save for both retirement and other financial goals.

The Takeaway

Opening a retirement account can be a smart move if you’d like to save money for your later years while enjoying some tax breaks. A Roth IRA could be a good fit if you’re eligible to open one and you’d like to be able to make tax-free withdrawals once you retire.

Having a savings account is also a good idea if you’re building an emergency fund, saving for a vacation, or planning for another big money goal. When you open a SoFi online bank account with direct deposit, you can get checking and savings in one convenient place. You’ll earn a competitive APY and pay no account fees, which can help your money grow faster. You’ll also have access to a suite of simple tools that can make budgeting and socking away savings even easier.

Want your money to work harder for you? Bank smarter with SoFi.

FAQ

Is it better to put money in savings or a Roth IRA?

A savings account can be better for setting aside cash you know you’ll eventually need to spend. A Roth IRA, on the other hand, can be better for saving for retirement if you’d like to invest your money to earn higher returns and gain some tax benefits.

Should I use a Roth IRA as a savings account?

While you could use a Roth IRA as a savings account, that could be problematic if you need to make a withdrawal. Generally, the IRS expects you to wait until age 59 ½ to withdraw money from a Roth IRA. Withdrawing money before then could trigger tax penalties.

What is the downside of a Roth IRA?

The main downside of a Roth IRA is that not everyone can open and contribute to one. If your income is above the thresholds allowed by the IRS, you’d only be able to open a traditional IRA instead. It’s possible, however, to convert traditional IRA funds to a Roth IRA, though that can result in a tax bill at the time of the conversion.

Can I move money from savings to a Roth IRA?

You can link a savings account to a Roth IRA to transfer funds. If you’d like to move money from savings to your Roth account, you’d just log into your brokerage account and schedule the transfer. Keep in mind that Roth IRAs do have annual limits on how much you can contribute.

Are Roth IRAs Insured?

The FDIC insures Roth IRAs held at banks when those accounts are self-directed vs. a plan administrator being responsible for making investment decisions. The same FDIC insurance limits that apply to savings accounts apply to Roth IRAs.

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Photo credit: iStock/dima_sidelnikov

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©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.

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Green banking is a branch of the financial industry that focuses on promoting environmentally-friendly practices. Similar to sustainable investing, green banks emphasize the importance of reducing negative environmental impacts as they go about their business.

The latest data indicates that global warming is likely increasing, and, in response, so is the market for renewable energy sources and other green solutions. The emergence of green banking may also reflect this rising interest in being more eco-conscious.

This is a relatively new concept, and you may have questions about what it really means. In this guide, you’ll learn answers to:

•  What is green banking?

•  How does green banking work?

•  What are examples of green banks?

What Are Green Banks?

There is no standard way to define what is a green bank. According to the Environmental Protection Agency (EPA), green banks are financial institutions that may leverage public funding to attract private capital for clean energy projects. These can include energy efficiency, renewable energy, and other distributed energy resources), as well as other “green” investments.

In simpler terms, green banks are mission-driven. They work to further environmentally-sound goals alongside financial goals. Those objectives can include:

•  Financing projects that will create green jobs

•  Expanding solar power

•  Lowering energy costs

•  Reducing greenhouse gas emissions

•  Building green infrastructure

•  Closing funding gaps for green energy retrofitting projects

•  Advancing sustainability.

As of 2022, there were 22 financial institutions in the U.S. operating as green banks, according to the Green Bank Consortium. Collectively, those banks have helped to drive $9 billion in clean energy investment since 2011.

Recommended: Green Investing Guide

How Do Green Banks Work?

Broadly speaking, green banks work by adhering to practices that promote sustainability. Sustainable banking encompasses two different things:

•  Green banking

•  Sustainable finance

So what does that mean? When you’re talking about green banking, you’re referring to implementing practices that are designed to reduce a bank’s environmental footprint.

Sustainable finance, on the other hand, involves the use of financial products to support or encourage environmentally-friendly behavior.

Green banks work by incorporating aspects of sustainability into their operations. That spans everything from the products and services the bank offers to its IT strategy to the way it hires and retains employees. It may encompass socially responsible investing as well.

It’s important to note that it can be easy to confuse banks that are authentically green with financial institutions that engage in greenwashing. Greenwashing happens when companies have the appearance of being environmentally-friendly or sustainable, based on their marketing claims, but in reality are not. It may require a bit of consumer research to make sure you can differentiate what is a green bank and what isn’t.

Recommended: A Guide to Ethical Shopping

Sustainable Banking Examples

The number of green banks in the U.S. is still relatively low, and they don’t exist in every state yet. You may not see them among your local retail banks. However, there are some notable examples of financial institutions that are focused on sustainable banking. These include:

California Infrastructure and Economic Development Bank

The California Infrastructure and Economic Development Bank (known as IBank) offers a variety of paths to sustainable banking. The bank offers infrastructure loans, bonds, small business financing, and climate financing in order to create jobs, bolster the economy, and improve quality of life for Californians. IBank financing accounts for more than $52 billion in infrastructure and economic development within the state.

Connecticut Green Bank

Connecticut Green Bank is the nation’s first green bank, established in 2011. The bank evolved from the Connecticut Green Energy Fund and bases its business model on the use of sustainable financing to maximize the use of public funds. As of 2022, the bank and its partners have helped $2.26 billion in capital to find its way into clean energy projects across the state.

NY Green Bank

NY Green Bank is a state-sponsored financial institution operating in New York that works with the private sector to increase investments into clean energy markets. The bank is specifically interested in projects that are both financially sound and focus on creating energy savings or clean energy that helps reduce greenhouse gas emissions. Many of the bank’s funding projects revolve around the expansion of solar energy.

Recommended: How Are Local Small Banks Different from Large Banks?

Advantages and Disadvantages of Green Banks

Green banks and sustainable banking aim to play a role in environmental preservation. However, they aren’t the same thing as your standard traditional bank or online bank. While you may never use a green bank directly, it’s important to understand how they can still affect you. Here’s what to know about the advantages and potential downsides associated with sustainable banking.

Banking Advantages	Banking Disadvantages
•   Green banks help to advance the use of clean energy technology. •   Clean energy projects funded by sustainable banking can help to increase job growth and promote economic development. •   Green banking can attract large-scale private investment, which can help to accelerate clean energy projects.	•   Green banks are not widespread, and their reach may be limited. •   Sustainable banking is still a relatively new subset of the banking industry, which can translate to higher credit risk. •   Banks that engage in greenwashing can taint the image of sustainable banking and lead investors to look elsewhere.

Recommended: 19 Ways to Save Money While Living Sustainably

The Future of Green Banking

Predicting the future of sustainable banking is difficult, though signs indicate a growing interest in how green banks might help create a cleaner environment. At the federal level, for instance, the passage of the 2022 Inflation Reduction Act notably included a provision allowing for the establishment of a national green bank.

Globally, sustainable banking is increasingly in the spotlight in emerging markets. There’s growing interest in the positive environmental gains that may be made through green banking. That said, there are still questions about how to encourage sustainable finance in economies that are still developing. This could in turn lead to more global collaboration among banks in furthering sustainable finance worldwide.

One potential result of sustainable banking: There may be greater carryover in the traditional banking sector. For example, there may be a push for banks to offer personal or small-business banking products and services that have a sustainable or green angle. Green loans and mortgages could end up being another byproduct of enhanced attention on sustainable finance.

As the spotlight on green banking grows, you may begin to notice changes at the retail banking level. For example, Citigroup issues an annual report on its ESG (Environmental, Social and Governance) program results. And it’s not just traditional banks showing dedication to this topic; online banks are part of the effort, too. In March 2022, SoFi announced the launch of its ESG Committee to help formulate strategies for positive environmental, social, and governance impacts.

Recommended: Online vs. Traditional Banking: What’s Your Best Option?

The Takeaway

Many people are adopting a greener lifestyle and finding ways to reduce their carbon footprint. Where you choose to bank could make a difference in your efforts if you’re keeping your money at a financial institution that advocates sustainability. Green banking is the term used to describe financial institutions that try to both make their business practices more sustainable as well as invest funds towards eco-conscious goals. This segment of the market may well grow in the years ahead.

Switching to an online bank is something you might consider if you’d like to streamline the way you manage your money. Instead of driving to a bank or receiving paper statements in the mail, you could track your finances online without leaving home. When you open a checking and savings account with SoFi, you can get all the banking tools you need to stay on top of your finances. Sign up with direct deposit, and you’ll enjoy the terrific combination of an and no fees, which can help your money grow faster.

Bank smarter with SoFi today and enjoy a hyper competitive interest rate, plus zero fees.

FAQ

What is sustainable banking?

Sustainable banking encourages environmentally-friendly practices, products, and services. A sustainable bank or green bank may be committed to specific environmental goals, such as reducing greenhouse gas emissions, promoting the advancement of clean energy, or funding green building projects.

How can banks be more sustainable?

Banks can encourage sustainability by reviewing their environmental footprint and addressing areas that could improve. The types of changes banks can implement may be large or small, but the end goal is fostering a cleaner environment. Reducing paper waste, for example, is one simple way to be more sustainable.

Which banks are green banks?

There are a handful of banks operating in the U.S. that are designated as green banks, according to the Green Bank Consortium. Whether a bank is considered “green” or not can depend on the type of certifications they hold. Examples of green banks include IBank, Connecticut Green Bank, and NY Green Bank.

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Photo credit: iStock/baona

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.

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©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.

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If you’re interested in bringing in more cash, you may be happy to know there are countless weird ways to make money, from selling your hair to testing food to beekeeping. With the median weekly income hovering around $55,640 and inflation chipping away at Americans’ paychecks, many consumers seek extra income by starting part-time work or a side hustle. In fact, 40% of Americans currently have a side hustle, according to Zapier data.

So, if you want to pad your wallet with extra cash, here are some odd ways to make money in your spare time.

Benefits of Weird Ways to Make Money

Generating additional income is a key benefit of starting a side hustle, and sometimes you need to be creative about how to do that. When you hit on an idea that pulls in more cash, you can use that to afford some small splurges (go ahead and get that pricey salad you love twice next week), but it can also help in more lasting way.

Granted, there are pros and cons of getting a second job or multiple side hustles, but if you bring monthly income (whether $100 or $1,000 per month), you’ll reap the following advantages:

•   Repay debt. High-interest debt, especially from credit cards, can gobble up your income and inhibit financial growth. Paying off debt is a huge step forward in your financial health.

•   Boost retirement savings. Take advantage of the power of compounding interest by stashing more money into your IRA or 401(k) – your retired self will thank you!

•   Achieve financial stability. Your extra money can build an emergency fund that allows you to handle unexpected expenses or survive for a few months without work, protecting you from the consequences of sudden job loss or a downshifting economy.

•   Follow your passion. While your day job might not be the career path of your dreams, a side hustle allows you to explore what you love and earn money along the way. For example, your woodworking hobby or love of knitting can become a profitable business.

•   Accomplish a financial goal. Whether you want to take an overseas vacation or update your kitchen, making extra money can help you afford a financial goal without taking on debt or dipping into your savings.

•   Grow professionally. Although your second job might be unusual, such as becoming a professional eater, it will allow you to make new connections, acquire new skills, and open the door for career opportunities.

•   Structure time intentionally. Another job will cut down your free time, but this can be a net positive – for example, it can help you direct the hours you have to yourself to what matters most, such as spending time with friends and family. Hard work can help highlight the good times with the ones you love.

Quick Money Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield online savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Making Money: 27 Unusual Ways

If you’re looking for ways to make money from home or in the outside world without loads of special training, check out this list of weird ways to make money.

1. Renting Your Backyard for Campers

No matter where you live, if you’re in a house, your lawn could be a sought-after destination for adventurers and budget vacationers. Via websites like Hipcamp, you can advertise a comfortable, affordable place to stay for a couple of nights for backpackers or vanlifers. Bonus points if you’re near popular attractions. At Hipcamp, the average active host pulls in between $8,000 to $15,000 per year.

2. Becoming a Professional Sleeper

Another one of the strange ways to make money is by sleeping (seriously!). Despite its necessity and benefits, sleep is mysterious to us, and the scientific community has much to research about it. For instance, you could become a subject for researchers trying to better understand sleep. One University of Colorado study paid almost $3,000 for a study to be completed in less than a day. Sleeping also has commercial utility in various situations. For example, you might try out a company’s products, such as a prototype pillow or sleep mask. To find gigs, set up some search-engine alerts with keywords such as “sleep study” or “sleep tester” and also comb job boards, especially at universities doing research.

3. Renting Out a Shed

Have enough room on your property for extra boxes, appliances, or tools? An app like Neighbor lets you rent out your extra storage space for other people’s possessions, processes payments for your services, and is free to use. It’s like Uber or Airbnb – but with your attic or garage.

Recommended: What to Know About Renting Out a Room in Your House

4. Test Websites

You can be a professional web surfer by testing websites for companies wanting to improve their online capabilities. Tasks range from clicking a link to finding a specific page on a website. A few minutes a day could earn you income (anywhere from 10 cents to 10 dollars per assignment, depending on the time required), and payments usually come to you through a convenient app like Venmo or PayPal.

5. Being a Professional Mover

Moving is a challenge and can be a very stressful experience. People will pay big money for help packing, cleaning, and transporting items. This job is physically demanding, so it may not be for everyone. You can work weekends for a moving company or become an independent mover with a company like U-Haul. You might also advertise your services locally if you have a van and access to moving supplies.

6. Professional Eating

Here’s another odd way to make money: If you can gulp down food in a matter of minutes, professional eating is a viable side hustle. Local restaurants might give rewards for accomplishing food challenges. In addition, Major League Eating hosts food challenges across the United States with cash prizes for winners. Want to aim high? The annual Nathan’s hot-dog eating contest pays a $10,000 prize.

Recommended: How to Manage Your Money 11 Tips to Do It Right

7. Cuddling

Today’s modern, fast-paced world can deprive people of physical touch, a vital factor in mental and emotional health. Cuddle Comfort is a secure website that sets up platonic cuddling sessions. At $80 per hour or more, you could be well-compensated for helping others snuggle up and feel less isolated.

8. Befriending a Stranger

If you’re personable and love embarking on new experiences, being a professional friend may be right for you. RentAFriend.com is a website helping those lacking companionship. Whether you’re walking through a park or attending an evening event, your job is to spend time with people looking for friendship, make interesting conversation, and let your personality shine. Rates typically range from $10 to $50 an hour.

9. Being a Test Subject

Looking for more crazy ways to earn money? Ziprecuriter estimates that working full time as a test subject can earn you over $80,000 annually. By participating in market research, psychology studies, and more, you can turn your spare time into profitable experiences where you can reap the financial rewards.

10. Selling Plasma

Blood plasma is helpful for medical studies and healthcare procedures. It can save lives during surgery complications and aid scientific breakthroughs. Your body naturally produces this valuable substance, which you can sell twice per week in a process that’s similar to donating blood. For most people, the process has no side effects.

Plasma donors receive payment in a prepaid card and can earn hundreds of dollars monthly. Plus, companies like CSL Plasma pay new donors $1,000 for their first month of service to sweeten the deal.

11. Joining Writing Contests

If you have a way with words, a writing contest could be right up your alley. Whether you write as a creative outlet or to explore new ideas, you can get paid for your passion by entering a writing contest. Dozens of free and fee-based contests exist, meaning you can find your niche, enter your pieces, and hopefully win the top prize. As a bonus, you’ll receive reviews of your work and pointers for sharpening your craft. Search online for opportunities.

12. Being a Food Tester

Who doesn’t love to eat? This delicious pastime could become a weird way to earn money if you become a food tester. You might test new snacks and meals for a large corporation like Apex Life Sciences, sample high-quality products, or write reviews as a freelance food taster. A typical fee might be $15 for a 15- to 45-minute session.

13. Reviewing ‘Sensitive Content’

Another unusual way to make quick cash is to review sensitive content for websites like YouTube and Reddit. Millions of users post content every day, making it almost impossible to review all of it. Therefore, large companies hire people to review sensitive content to ensure everything is appropriate for the internet.

Remember, though; you may have to view some vulgar and upsetting content. So, if you have a weak stomach, this might not be your side hustle.

14. Recommend Items You Love

We all have our go-to essentials, like a preferred makeup brush or olive oil brand. Rather than just waxing poetic to your friends about them, you can write or post videos about your recommendations. Affiliate links online can earn you commissions. As a result, you can direct your web audience to your favorite company’s website and receive cash rewards when they make purchases.

15. Cleaning Pet Poop for Others

While not the most appetizing of propositions, that poop needs to get taken care of somehow. Pet owners without the time or physical ability to clean up after their beloved animals can make good use of your services. All you need is transportation and cleanup equipment to get started. You can build your clientele base by posting flyers around your neighborhood or advertising online. Consider charging between $40 and $100 to clean up a messy yard.

16. Host City Tours

Another unusual way to make money: If you live in a town that attracts tourists, you can conduct tours for visitors. You might have a passion for your city’s beloved parks or knowledge of its history. Whatever your specialty, you can build a website advertising your services or use an app like Showaround or FreeTour (where you earn money via tips) to put your skills to work.

17. Waiting in Line for Someone

While it’s boring when doing this for yourself, waiting in line in someone else’s place can be a profitable side hustle. Apps like Spotter or TaskRabbit allow you to connect with customers looking for someone to wait in line for a concert ticket, new tech gadget, or parking permit renewal. The more popular the event or product, the more you can charge (some people report having made $80 per hour). Plus, you can listen to an audiobook, podcast, or music while you wait.

18. Losing Weight

Here’s a weird way to earn money that’s also potentially healthy. Shedding pounds can also mean big capital gains with websites like HealthyWage. Here’s how it works: you set your weight loss goal and then wager a dollar amount of your choice that you’ll be successful. This setup gives you extra motivation by putting your money where your mouth is. If you hit your goal, you win prize money and receive your initial investment back. However, failing to hit your goal means losing your wager.

Recommended: 39 Passive Income Ideas to Build Wealth

19. Selling Your Hair

This opportunity is more selective, as you’ll have to grow your hair at least 10 inches long in most cases to sell it for a significant profit. However, if your hair grows quickly, you can pair this side hustle with others to generate income. Human hair is excellent for weaves, wigs, and scientific uses, and you can sell yours on websites like Hairworks.com or eBay.

20. Give Your Opinion With Online Surveys

If you love giving your opinion, filling out online surveys is a great way to earn extra cash. Platforms like One Opinion and Survey Junkie want anyone to share their detailed opinions on specific topics. Surveys can take anywhere from 5 minutes to one hour to complete. You can expect to make about $1 per survey.

21. Selling Digital Templates

Folks with a knack for design can enjoy selling digital templates and make thousands of dollars monthly. You can create e-book page layouts, brand kits, social media packages, and more. Using a site like Canva you can create endless digital templates that you can sell digital templates right from the comforts of your own home.

22. Beekeeping

Here’s another offbeat way to bring in money: Beekeeping is the practice of caring for bees so they can contribute to the growth of your garden or the environment. Before you can start making money, you will need to gain some experience (if you still need to). Once you gain experience, you can make money by selling bee products such as honey, providing pollination services, or educating others on beekeeping.

23. Organize Other People’s Things

We can thank The Home Edit and Marie Kondo for encouraging everyone to live a life of organization. But, while it comes easy for some, others may struggle to get started. So, if you enjoy organizing the closet, cabinets, papers, or anything, you could make between $30 and $130 per hour organizing people’s homes. To get started, sign up for sites like Thumbtack and Westtenth and let people know about your services.

24. Being a Statue

Believe it or not, you can make money without even lifting a finger, or actually moving at all. Acting as a statue on a busy street can help you earn some extra dough from passers-by and tourists who leave tips. Depending on the time and traffic of the location you choose, you can make as much as $60 to $80 per hour.

25. Taking Notes for Others

Another unusual way to make money is to sell your college lecture notes. Sites like StuDocu let you sell your notes to students who missed a lecture or need help getting through course material. Keep in mind that notes need to be typed, not handwritten. The top pay is around $22 for an upload.

26. Mystery Shopping

When you become a secret shopper or mystery shopper, you can earn cash by shopping at local retailers, completing shopping surveys, or taking photos of displays. Registering for an account with apps like Mobee or Marketforce can help you start earning extra money shopping.

27. Review Music

Music lovers can make extra money by reviewing unsigned artists online at Slicethepie. Some categories will pay more than others. However, all payments will be listed at the top of the category page so you can decide if the review is worth your time. Typical pay for those just starting out is less than 20 cents per review, but if you love listening, this could bring in some extra pocket change.

The Takeaway

Using these weird ways to make money can help you boost your savings, pay off debt, or allow you to get paid for doing something you love. So, whether you make extra cash sleeping, eating, shopping, or giving your opinion, you can inch one step closer to your financial goals.

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

Where can I sell weird things?

Websites like Ecwid, Facebook Marketplace, Etsy, and eBay are just a few platforms where you can sell weird items like keychains, eccentric jewelry, or clothes. People have even marketed air on some of these sites.

How much money can I make from these weird ways to make money?

The amount of money you make in these weird ways will depend on the gig you choose and how much time you invest in it. For example, if you choose to start reviewing music and only post a few critiques, you might only make a dollar; if you clean up someone’s messy yard of dog poop, you might earn $100 per session after proving to be a competent and reliable provider.

Are any of these weird ways to make money illegal?

No, all of the crazy ways to make money above are legitimate and legal.

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Photo credit: iStock/Diamond Dogs

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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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.

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