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Timeshares may be a fun vacation option for a while, but sometimes people want to end the arrangement. Those time share contracts, however, can seem pretty ironclad.

Whether you want out due to buyer’s remorse, a shift in your financial situation or health, or any other reason, here’s some good news: You’re not necessarily stuck.

If you change your mind soon after the purchase, for instance, you might be able to opt out during the “rescission period.” Those who have had their timeshare for years may also have options, including having the resort take it back or perhaps reselling it.

There are also what are known as “exit” companies that help timeshare owners get released from their agreements (though it’s important to vet those companies before signing an agreement).

If you’re ready to say goodbye to your vacation place, read on to learn steps for legally getting out of a timeshare contract.

5 Steps to Escaping a Timeshare

If you’re thinking about getting out of a timeshare or know you’re ready to make a change, here are five options to consider.

1. Checking the Rescission Period

If your second thoughts occur within several days of your purchase, you may be able to rescind the transaction if you’re still within the “rescission period.” If you are, you should be able to get your money back and go on your merry way.

Keep in mind, however, that the rules vary from one state to the next. Depending on where the timeshare is located, rescission periods can be anywhere from three days (the minimum required by the Federal Trade Commission) to two weeks.

In some cases, the rescission period may kick in as soon as you buy the timeshare. In others, it might start when you receive the public offering statement that includes general information about the timeshare.

For a timeshare on an exotic isle somewhere outside the U.S., you’ll need to find out what the laws are there.

If you’re eligible for rescission, you’ll want to follow the instructions in the documents you received when you purchased your timeshare. Most likely you’ll need to send the resort a letter telling them you want out via rescission for a full refund. It’s a good idea to send this letter using certified or registered mail.

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2. Contacting the Timeshare Resort

If rescission isn’t possible because too much time has passed, another option you may be able to take advantage of is a “deed back” program. Also known as “take-back” and “surrender” programs, these programs allow distressed owners to transfer the deed for their timeshare back to the resort developer or management company, effectively ending their ownership and associated obligations.

To find out if your developer offers this type of program, you may want to contact them directly and ask to speak with someone who handles “deed-backs” or “surrenders.” You can also check online resources like ResponsibleExit.com for information about return programs.

Generally, developers will only go for this if the timeshare is fully paid for, and you’re up to date on your maintenance fees. Some developers that accept returns may require owners to pay annual fees for a year or two while the resort finds another buyer. In some cases, you may have to prove financial or medical hardship in order to qualify for a take-back program.

Even if your resort doesn’t have an official take-back program, you have nothing to lose by asking. Who knows; they might go for it.

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3. Reselling The Timeshare Yourself

If you’re considering reselling your timeshare, it’s probably best if you don’t go into it with hopes of making a killing. There are typically many people looking to unload their timeshares and demand isn’t generally high, unless your property is in a hot destination. As a result, reselling can often be a losing proposition.

The best approach might be to think of reselling as someone taking the timeshare off your hands and becoming responsible for the fees moving forward, rather than making a profit.

You can list your timeshare on a general resale marketplace site, such as eBay and Craigslist. There are also sites just for timeshares, such as TUG (the website for the Timeshare Users Group) and RedWeek.

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4. Reselling the Timeshare Through a Broker

If you opt to resell your timeshare, another option is to hire a real estate broker or agent who specializes in reselling timeshares.

If you choose this route, however, you’ll want to pick your broker carefully, cautions the . Some real estate brokers and agents who specialize in reselling timeshares may falsely claim the market in your area is hot and that they’re overwhelmed with buyer requests. They may even tell you that they already have buyers ready to purchase your timeshare, or promise to sell your timeshare within a specific time. It’s wise to be skeptical of all such claims, says the FTC, and also to vet the reseller before agreeing to anything on the phone or in writing.

A good safeguard is to contact the state Attorney General and local consumer protection agencies in the state where the reseller is located, and ask if any complaints are on file. You also can search online for complaints.

You may also want to ask the reselling agency if their agents are licensed to sell real estate where your timeshare is located. If they say they are, you may want to verify it with the state’s Real Estate Commission.

Other questions you may want to ask before hiring a reselling agent:

It’s generally preferable to do business with a reseller that takes its fee (or commission) only after the timeshare is sold. If you must pay a fee in advance, however, it’s wise to ask about refunds, and to get all refund policies and promises in writing.

Recommended: How to Manage Your Money Better

5. Hiring a Timeshare Exit Company

The concept is good. With a timeshare exit company you often get a small army to handle your business. A good one knows the inner workings of the timeshare industry, which could be advantageous to you. One major caveat is that these services generally don’t come cheap — prices vary considerably, but can be upwards of $5,000.^[1]

It’s also important to be aware that there are many bad apples out there. There have been numerous lawsuits against timeshare exit companies that backed out of their payment agreements with customers.

To help ensure that an exit company you’re thinking about hiring is reputable, you may want to check with the Better Business Bureau, and also search online, to see if there have been complaints about the company and (most importantly) how they have handled those complaints.

You can also protect yourself by refusing to make any payments before a contract has been signed by both parties.

Recommended: 5 Reasons to Switch Banks

The Takeaway

Unloading a timeshare property isn’t always easy, but some of your exit options include: backing out during the “rescission period,” reselling it yourself, hiring a broker to resell it for you, and hiring a timeshare exit company to take care of the whole separation process.

It’s important to understand all of your options (and the potential pitfalls of each) in order to choose the best solution for your situation.

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

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

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

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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SOBNK-Q225-036

According to the Federal Trade Commission (FTC), consumers reported losing close to $12.5 billion to fraud in 2024 vs. $8.8 billion to fraud in 2022, reflecting a tremendous increase.^[1] Many of people’s losses were the result of various types of bank account fraud.

Crooks are getting ever more sophisticated in the ways they steal money from financial institutions or their account holders. There are few things as upsetting as seeing your bank account emptied or your credit card used for thousands of dollars in purchases by a scammer.

So if you have a financial life, you’ll want to be on alert and do what you can to protect yourself and your hard-earned money. Here’s help.

What Is Bank Fraud?

Bank fraud is the use of deceptive, often illegal means to steal money, assets, or other property owned or held by a financial institution. It also entails stealing money from people just like you, who keep money on deposit in their bank accounts or use other financial products at banks.

Bank fraud also includes being defrauded of money by criminals who pose as employees of a financial institution.

Bank fraud is different from bank robbery; with fraud, thieves use schemes or deception to snag funds illegally, versus perpetrating outright theft.

Types of Bank Fraud

Unfortunately, bank fraud comes in many varieties, all the better to fool financial institutions and consumers. The law provides a broad definition of bank fraud, and several of these actions can be considered for federal prosecution.

Here’s a look at the six most common types of fraud in banks. Money scams are all too common today; knowledge can help protect you and your funds.

1. Forgery

Forgery includes all forms of using a false signature or other details on financial documents. This includes when a person changes the name, signature, or other information on a check, including the amount (think adding a zero — or two or three). Forgery is also the term used for filling out a blank check or printing fraudulent checks with another person’s account number or a number for a non-existent account.

2. Fraudulent Loans

It is a crime when someone uses a false identity to obtain a loan. This can happen when, say, identity thieves take out loans using victims’ personal and financial information.

Another type of fraudulent loan: When a person takes out a loan with the intention of filing for bankruptcy soon thereafter. This might occur when a dishonest business person works with a complicit bank officer to get a loan. The borrower then declares bankruptcy, often leaving the bank on the hook for the money borrowed.

Fraudulent loans also occur when someone falsifies answers on a personal or business loan application, usually in an effort to improve their chances of qualifying for the loan. An individual may try to hide a blemished credit history, for example, or a business may use accounting fraud to paint a more positive financial picture. As you might guess, this is criminal activity and can leave the lending bank in a bad situation.

3. Bank Impersonation and Internet Bank Fraud

When a person or group of people set up a fake financial institution, that’s known as bank impersonation. When such thieves hack into your account and steal money, whether by impersonation or otherwise, that’s internet bank fraud. Typically, this kind of crime is usually committed by creating a website designed to lure people into depositing funds.

Fake websites like this can also trick you into downloading computer viruses that can steal your personal information, such as your bank account details. These details are then used to rob you of your hard-earned money

Many phishing schemes also come under the umbrella of bank impersonation or internet bank fraud. In these crimes, consumers receive forged emails impersonating an online bank; they then direct the unwitting recipient to a forged website that looks like a legitimate bank site. From there, the bogus site will ask the user to update personal information. That information can be used for identity theft and other crimes.

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4. Stolen Checks

Stealing checks is a crime that plays out just as it sounds. Someone at, say, the post office, a company’s payroll department, or anybody else with access to checks may steal those checks. From there, they can open a false bank account, write checks (depleting the account holder’s cash), and deposit them. The cash is then available for them to use as they desire.

5. Money Laundering

This term is used to describe the process criminals use to hide an illegal (or “dirty”) source of income — say from illegal drug smuggling or gambling operations — through a complex series of transfers. These transactions are designed to make the “dirty” money look legitimate, or “clean,” hence the term money laundering. A bit of trivia: Many people believe the term money laundering comes from gangster Al Capone’s habit of using his chain of laundromats to “launder” his illegal cash. This tale however probably isn’t true.

Now, here’s how the crime of money laundering can work: Often the “dirty” money is first deposited into a bank through a restaurant or other legitimate business. Say that business actually did $1,000 worth of sales in a single day but they say they did $2,000. They then deposit the “real” $1,000 they earned plus the same amount of “dirty” money.

Next, to avoid taxes and detection, the money is distributed to other legitimate businesses or complicit companies, or is otherwise subjected to bookkeeping trickery. Multiple transactions can make the money hard to trace, and so it becomes “clean” enough to be used as the fraudster likes.

Banks may unwittingly or possibly complicitly play a role in many stages of money laundering, which is a severe form of fraud.

6. Credit Card Fraud

This term covers a slew of crimes; it refers to all fraudulent payments made with a credit or debit card. The bogus payments may be used to purchase goods and services, to withdraw funds from the account, or to make payments to another account controlled by a criminal. Fraud may happen by stealing the actual credit or debit card or by illegally obtaining the cardholder’s account and personal information.

The latter has become more common as online shopping and bill paying has soared, since there is no longer a need to have a physical card to make purchases. This is why you can still be in possession of your plastic, but be having all sorts of false charges turn up on your statement. As long as criminals can obtain enough personal information about an individual, they can use that information to open new credit card accounts or tamper with existing accounts.

Fortunately, thanks to the Fair Credit Billing Act, your liability for unauthorized charges should be capped at $50.^[2]

How Do Banks Recover Money That Was Fraudulently Taken?

When bank security personnel notice unusual transactions or a customer reports suspicious account activity, banks will typically conduct an investigation. Their goal: To confirm whether fraud exists and, if so, to uncover its details and take legal action against the perpetrators. Once a bank has determined fraud has taken place, most banks will refund stolen funds to customers. This happens as long as it is clear the customer is not an accessory to the crime or was not negligent with account security. In addition, you may want to report the crime to the authorities so they can work on finding and prosecuting those who stole your money. Some banks may require this, in fact, as a step towards catching the criminals.

What to do if you, the consumer, is defrauded of funds? Contact your financial institution’s fraud department and share what has happened. The representative will walk you through the steps required. Remember, the more quickly you alert your bank to any issues or report identity theft, the more likely you are not to lose any money.

Prosecuting fraud is complicated, time-consuming, and unfortunately sometimes impossible. As a result, many banks put extensive efforts into technological security solutions. These card fraud protection measures can help identify fraud quickly to avoid large losses as well as ward off many types of criminal activity in the first place.

Penalties for Bank Fraud

Bank fraud is a serious crime with serious penalties. How serious depends on how much money was stolen and what type of illegal activity was used to steal the money. It must also be proven that a person charged with bank fraud willfully and knowingly committed the crime.

A conviction of money laundering or other types of bank fraud can involve significant fines as well as prison sentences.

How to Avoid Bank Fraud

There are several steps you can take to avoid having money stolen from your accounts in a bank fraud scheme. Here are some of the most important.

The Takeaway

Bank fraud is a criminal activity that can leave you with a big mess to clean up: It can put you at risk for losing money and facing identity theft. Understanding the different types of bank fraud is one important step; knowing how to secure your personal financial information is another one. These moves can help protect you from being a victim. Also double-check that your bank has state-of-the-art security measures.

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

FAQ

How does bank fraud happen?

Bank fraud happens when criminals use deceptive means to steal money, assets, or property owned or held by a financial institution, including banks. It is also considered bank fraud when thieves steal money from customer accounts by posing as a bank or other financial institution or by using personal financial information obtained through identity theft.

How do banks recover money from a scammer?

It is challenging for banks to recover money from a scammer. They can seek to unravel who committed the crime and, with the help of law enforcement, prosecute those individuals. Because this is often so difficult, though, banks also are implementing new, technologically advanced ways of preventing and detecting fraud. This allows them to better protect their account holders.

What is internal fraud?

Internal fraud is fraud that occurs inside a business. It is perpetrated by those who work at the company. While rare, it can have a large impact on everything from travel and expenses to procurement.

Photo credit: iStock/Damir Khabirov

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

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

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

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

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

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

This article is not intended to be legal advice. Please consult an attorney for advice.

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

SOBNK-Q225-020

Having a baby can fill your house with love. It also can take a toll on your finances.

And you can expect the costs to keep growing right along with your baby. In fact, according to a 2025 estimate, it can cost almost $30,000 a year to raise a child.^[1]

That means you’ll likely have to reconfigure your household budget through the years (and then contemplate higher education expenses). If you break down the process and do a little at a time, it can make the task less daunting.

Read on for tips on getting started with the budgeting-for-baby process.

Assessing Your Income

As you create your budget, begin by looking at your household income after taxes and other deductions come out of your paycheck each month. That’s the money you have to work with, not the gross amount.

Also, if one parent plans to stay home with the baby full- or part-time, plan your budgeting accordingly. Be sure to consider the loss of any non-cash forms of employee compensation, such as insurance and retirement contributions. If those go away, the amount of money in your bank accounts will likely drop, which is something to plan for.

Looking at Your Current Expenses

Some things won’t change at all, but there may be costs that will go down or go away after you have the baby. For example, the amount you spend on date nights, dinners out, and travel might be reduced for a while.

If one parent decides to stop working, their wardrobe budget might drop. But you’ll also be adding plenty of expenses. And then there are some forgotten expenses, like maintenance for your home, yard and car, you’ll need to factor in.

This is a good time to identify your priorities and be prepared to make some trade-offs to curb spending. For instance, can you live without some of those streaming subscription services? Can you make coffee at home instead of going out?

Planning Ahead For Recurring New Expenses

Here are some of the expenses that will often turn up once you become a parent.

Child Care

Typically, child care is the biggest ongoing expense for a family with a new baby. The cost will vary depending on where you live, the type of care you choose, and whether you need part-time or full-time care, but according to the Care.com 2025 Cost of Care Survey, national averages ranged from $343 per week for a child-care center to $827 for a full-time nanny.^[2]

Feeding

Even if you plan to nurse the baby, you’ll need to prepare for the possibility that breastfeeding might not work out and formula could become a regular expense. A BabyCenter study in 2025 found that formula can cost $222 or more a month.^[3]

When your baby starts on solid foods, typically at about 4 to 6 months old, you’ll add to that expense.

Diapers

The average baby uses 2,500 to 3,000 diapers in the first year. That could add up to about $839 to $1,000 a year in disposable diapers.

House and Car

Maybe you’re lucky enough to have an extra room in your home that’s ready to be transformed into a nursery. And maybe a baby car seat will fit into your current ride without a struggle.

But if that’s not the case, and you have to make some adjustments for your growing family, you may have to add more expensive house or car payments to your get-ready-for-baby budget.

Recommended: How to Manage Your Money Better

Miscellaneous Expenses

You’ll need to furnish a nursery for your baby, which can range from several hundred to several thousands of dollars. You’ll also need a car seat; stroller; high chair; toys and books; pacifiers, tiny outfits and socks; lotions, shampoos, and creams — the list goes on and on. This is where you can prioritize.

You may get some of these items at your baby shower, and friends and family might supply you with some hand-me-downs, which will help save money on clothes and cut costs. But there will still be plenty of items you’ll need to buy.

Preparing for Some Upfront Costs

Depending on your insurance coverage, you could be going home from the hospital with a bundle of joy and a bundle of bills. Check your health insurance plan to gauge what your costs could be. To give you a sense, many new parents end up paying about $3,000 in out -of-pocket costs for pregnancy and delivery.^[4]

The amount of your hospital bill will depend on a lot of factors, including the part of the country in which you live, the size and location of the hospital, the length of your stay, and how much extra care you or your baby might require.

You’ll also need some starter equipment — a crib, changing table, dresser, and a baby monitor, for instance.

Smaller ticket items include a diaper bag and pail, a baby bathtub, bedding, and towels. Here’s another place where hand-me-downs and resale shops can help you save.

Recommended: Savings Calculator

Ready, Set, Transition

Remember those current expenses you thought about letting go of, like fancy coffees and some streaming services? You don’t have to wait until the baby arrives to make changes. You might want to practice by giving your new budget a test run before your delivery date.

To take it a step further, if one parent plans to quit working, even for a short while, you could start living on just one salary a few months early and put the extra income into an emergency fund. That money could come in handy later when unexpected expenses crop up.

Recommended: 5 Ways to Achieve Financial Security

Overwhelmed? Take Baby Steps

Preparing for a new baby, especially your first, can be exciting. It also can be a little overwhelming.

Doing a few breathing exercises may help reduce any financial stress you’re feeling as you’re working on your budget. Starting now with baby steps could help get you on track well before your little one arrives.

The Takeaway

The cost of raising a child can be as much as $30,000 a year (or even higher). As you plan for parenthood, it’s wise to develop a budget and see where you can economize. Hand-me-downs can help you save on purchases, and building an emergency fund can help you if an unexpected expense crops up. Having the right banking partner can also help you manage your money well as your family grows.

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

FAQ

How to budget when you have a baby?

One good system for assessing your new spending style once you have a baby is to use the 50/30/20 budget rule. That means 50% of your take-home pay goes to needs, 30% to wants, and 20% to savings or additional debt payments. As you see how much your baby-related expenses are, you can update your budget, trim spending as needed, and find a balance.

What is the biggest expense for having a baby?

Often, the biggest expense for having a baby is child care. The exact amount will depend on where you live and what kind of care you opt for, but costs currently can range from, on average, $343 to more than $800 a month.

How much are diapers a month?

Typically, diapers can cost $70 to $80 a month, though figures can vary depending on the type your choose and where you live.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

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

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

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

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

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

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

SOBNK-Q225-018

Yes, you can direct deposit into a savings account. And it can be a good idea: Putting direct deposits into a savings account vs. checking account allows you to sock away money without manually transferring cash from your checking to your savings account.

As a result, direct deposit can automate your savings strategy and get your money to the right place as soon as your employer pays you.

Can I Direct Deposit into a Savings Account?

You can indeed send a direct deposit straight into a savings account. This can optimize your financial gains and help keep you from overspending out of your checking account. Money sitting in checking can tempt you to go shopping or head out to a pricey restaurant dinner.

In addition, you may be able to split, say, your paycheck or a tax refund to direct deposit some of the funds into checking and some into savings, or you might divide the money into two different savings accounts, if you like.^[1]

Recommended: What Happens if a Direct Deposit Goes to a Closed Account?

Direct Deposits Explained

Direct deposit is how you can receive payments, such as a paycheck, without a physical check, electronic check, or cash. Instead, funds go from the payer directly into your bank account. The electronic processing of your paycheck saves you a trip to the bank and is typically quicker than physical forms of payment.

You probably receive payment via direct deposit, as more than 95% of workers in the United States do, according to National Payroll Week.^[2] This automatic process gets money to your bank account with minimal effort by the employee and a lower cost to the employer. What’s more, you can split your paycheck between your checking and savings accounts to optimize your finances.

How direct deposit works:

How to Set Up Direct Deposits Into Your Savings

Whether you recently started a new job or have worked for the same employer for years, you can put direct deposits into a savings account in a similar way to how you direct money into your checking account.

Step 1. Getting a Direct Deposit Form

As a new hire, you usually complete paperwork during your first week of employment, including a form to set up direct deposit. If you’re not new to your workplace, you can request a new form from your HR or payroll department to add or update your direct deposit information. You’ll then fill out the forms with the necessary information, such as Social Security number and routing and account numbers.

Step 2. Determining How Much to Send to Savings

Next, designate the percentage of your paycheck you’d like to go into your bank accounts, savings vs. checking. For example, you may want 20% of your paycheck in your savings account and the rest deposited in checking.

Step 3. Submitting the Form to Your Employer or Bank

Finally, provide the form along with, if requested, a voided check for your checking account and a deposit slip from your savings account. These documents can help your employer verify the deposits will go to the right place.

Recommended: APY Interest Calculator

Is It Better to Direct Deposit to Savings or Checking?

Direct depositing into your different account types isn’t an “either-or” proposition; it may be a “both-and” scenario. In other words, depositing money into both accounts has advantages, so it’s a matter of what amount to deposit. Here are some points to consider:

Here’s a tip: It can be an excellent idea to deposit as much into your savings account as you can afford. You might follow the 50/30/20 budget rule and allocate 20% of your take-home pay towards your savings.

It can be hard to save money today with the rising cost of living, so automating the process can help you be successful in achieving this goal.

In addition, your deposit allocations should ensure your checking account has the minimum balance your bank requires, if any, so you can avoid banking fees.

Recommended: How Much Should an Emergency Fund Be?

Difference Between Checking and Savings Accounts

Understanding the difference between checking and savings accounts is critical to deciding how much to deposit to each account. A quick overview of checking accounts:

Savings accounts are quite different:

Direct Deposit With SoFi

Direct deposit is an excellent way to grow your savings account. Once you submit your direct deposit information to your employer, you’ll automatically receive payments. You can define the percentage of your paycheck you’d like to go to your checking and savings account every time you’re paid. This way, you can accumulate savings without having to transfer money between accounts or risk spending too much from your checking account.

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

FAQ

How do I automatically deposit into my savings account?

You can automatically deposit into your savings account by assigning a percentage of your paycheck to your savings account when you set up direct deposit with your employer. In addition, you can update your direct deposit preferences with your employer if you want to start automatically moving money into your savings account.

Can I automatically transfer money from checking to savings?

Most banks offer automated savings for customers. This feature allows you to arrange for your bank to automatically transfer a specific amount from your checking to your savings account every month.

Can I deposit monthly in a savings account?

Direct deposit allows you to contribute a percentage of your paycheck to your savings account. As a result, your savings account will receive a specific amount as often as your employer pays you. If this doesn’t suit you, you can check with your bank about setting up automatic monthly transfers from checking into savings.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

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

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

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

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

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

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

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

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

SOBNK-Q225-014

Prepaid debit cards can be used to buy almost anything, whether you’re shopping online or in person. They may also be a helpful budgeting tool, and they don’t affect your credit. You may even be able to recover your money if you lose the card.

However, prepaid debit cards do have some disadvantages, including possible fees. Learn how these cards work to help determine if a prepaid debit card makes sense for you.

What Is a Prepaid Debit Card?

A prepaid debit card shares some features of a credit card, debit card, and gift card. It’s a debit card that’s been preloaded with money that you can generally use at any retailer (online or in person) that accepts credit cards.

Like credit cards, prepaid debit cards may be associated with credit card networks. So a prepaid Visa debit card, for instance, can be used anywhere that accepts Visa.

Each purchase you make on a prepaid debit card will deduct from the amount that’s been preloaded onto the card. When you reach the end of your preloaded cash, you can’t buy anything else with the card.

It may be possible to add more money to the card when the balance gets low via cash or direct deposit, depending on the card. However, there might be a fee to reload the card with money.

Pros of Prepaid Debit Cards

Like most financial products, there are pros and cons to consider when it comes to using prepaid debit cards. Here are a few of the benefits.

No Interest or Bills

A prepaid debit card is not a credit card, and you generally can’t carry a balance on it. That means you pay no interest when you use the card, and there is no bill to pay at the end of the month. A prepaid debit card is basically the plastic equivalent of cash.

Limited Loss

It used to be that losing a prepaid debit card was like losing cash — you were out of luck. But legislation by the Consumer Financial Protection Bureau (CFPB) that took effect in 2019 required card issuers to provide protection against fraud and errors. In order to access this protection, you must usually follow instructions to register your card with the prepaid card issuer and report any theft or loss promptly.^[1]

Security for Personal Information

While you may need to provide personal information to activate or register a prepaid debit card, the prepaid cards don’t typically carry any of your personal or financial information. So if your card falls into the wrong hands, it’s generally not possible for someone to access your sensitive information. That said, protecting your account number, PIN, and CVV code can prevent others from accessing your balance.

Automatic Budgeting

Prepaid debit cards typically offer a hard stop on spending, meaning that if there’s $100 on the card, you can’t spend more than $100, which can be a helpful tool for managing your money.

For people who have a hard time with impulse purchases or those who are trying to stick to a strict budget, prepaid debit cards may provide a helpful tool to prevent overspending.

There are some prepaid cards that allow account holders to overdraft and spend more than the balance on the card. They may charge a fee for this. If going over the limit is a problem for you, it may be worth considering a card that doesn’t allow overdrafting.

Available to Those With Less-Than-Stellar Credit

There is no credit check required to get a prepaid debit card. This makes prepaid debit cards one option to consider for consumers who are unable to qualify for a traditional credit card.

If your credit is subpar, you can get a prepaid debit card and use it where major credit cards are accepted.

Teaching Tool

Those with children may find that prepaid debit cards could be a useful tool to teach them about money.

Prepaid debit cards could be used by parents to introduce concepts of spending within limits, to help children understand using plastic instead of cash, or to dole out allowances so kids can practice their money management skills.

Spending Tracker

Some cards offer email or text alerts based on card activity, or they’ll notify you when the card has been reloaded or the account balance is getting low.

Possible to Deposit Paychecks

You can have funds (like paychecks) directly deposited onto some prepaid debit cards, skipping the need to manually reload the card as the balance runs low. This could mean that funds are available faster than they would be if you were cashing a paper check.

Cons of Prepaid Debit Cards

Here are a few downsides to consider when it comes to prepaid debit cards.

No Credit Effect

Although there’s no credit check required to get these cards, it means prepaid debit cards aren’t connected to a line of credit like credit cards are.

Because the company that administers the prepaid debit card is not reporting your payment activity to the credit bureaus, these cards aren’t helpful for establishing or strengthening your credit history.

High Fees

Depending on the card, a prepaid credit card may come with a host of attached fees. Some prepaid cards may charge fees for certain activities including:

If you’re considering using a prepaid debit card, you may want to shop around and review the costs and fees associated with different types of prepaid debit cards.

Another option for your money — and one that could help it grow — is to open an online bank account that offers a high yield for your savings. With a bank account, you’ll typically also have access to ATMs and online and mobile banking for added convenience. And some bank accounts come with no fees, unlike certain debit cards.

Potential for Loss

If you don’t register your prepaid card and something happens to it — loss, theft or fraud — there may be no way to recover your cash.

Getting a Prepaid Debit Card

You can purchase prepaid debit cards at a variety of locations, including grocery stores and drug stores, online, or from some banks and credit unions.

Purchasing a prepaid debit card usually requires you to load money onto the card at the time you buy it. For example, if you want to buy a $50 prepaid Visa debit card at the drugstore, you would pay the fee to activate the card, plus the $50 you want to load onto it.

If you’re shopping for cards, pay attention to the card fees, which should be displayed on the card’s packaging. There may also be a toll-free number or website you can visit for complete fee information. To the extent possible, it’s worth trying to find prepaid debit cards with fewer fees.

After purchasing the card, to be protected against fraud, loss or theft of your card, you’ll usually need to register it.

The prepaid card will generally come with instructions for doing this. The card provider may request information such as your full name, contact information, date of birth, and Social Security number or tax ID.

The Takeaway

Sticking to a budget and avoiding excessive spending can be daunting. Balancing your income against your expenses and savings goals takes dedication and commitment.

Fortunately, the right tools can make it easier. Consider choosing a high-yield bank account that allows you to manage your spending and saving all in one place.

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

FAQ

What is a prepaid debit card and how does it work?

A prepaid debit card is loaded with a specific amount of money you can use for purchases, generally wherever credit cards are accepted. Each transaction deducts from the preloaded balance. You can’t typically spend more than what’s on the card, though some cards allow you to reload funds. It functions similarly to a debit card but isn’t linked directly to a bank account.

Do prepaid debit cards help build credit?

No, prepaid debit cards do not help you build or establish credit. Since they are not a line of credit, your usage and payment activity are typically not reported to the major credit bureaus. Therefore, they don’t impact your credit score.

What are the main advantages of using a prepaid debit card?

Prepaid debit cards are accessible to most individuals, since a credit check is not necessary. They can also help you stick to a budget, since you typically can’t spend more than the balance on the card, which helps to avoid interest charges, as well. Prepaid cards also offer fraud protection if they’re registered and the loss is reported promptly, and some of them can even receive direct deposits.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

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

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q225-010