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Unless you’ve slept through the last couple of years, you probably know that the housing market has heated up. Purchasing a home in a competitive real estate market can seem intimidating. It can mean touring more homes than usual, putting in multiple offers, and making concessions that you might not undertake if the market were softer. But with patience and some smart strategies, you can succeed.

Here’s how home shoppers can navigate a hot market and snag a great place to live.

What Exactly Is a Hot Market?

To put it in its simplest terms, a “hot” market is one when real estate inventory is low and demand is high, meaning many other buyers are looking to purchase a home as well.

It can often mean that homes enter the market and stay only briefly before selling at or above asking price. In general, if homes remain for sale for four to six months, it’s a balanced market of buyers and sellers.

However, if homes are selling faster than that, say in mere days or weeks, it’s typically considered a hot — or seller’s — market. If homes are sitting for longer than that, it’s regarded as a buyer’s market.

A hot market may sound tough to enter, but there are a few ways buyers can stand out from the pack and, with luck, win over a seller. (Hint: Start the process of getting approved for your home loan so you’re prepared to make an offer when the time comes.)

Hot House Market Buying Tips

1. Hiring an Agent Who Can Take the Heat

Hot market or not, a great agent can make all the difference in the home-buying process. An agent can help a buyer navigate choppy waters and will be the person buyers can turn to with questions about the market, the homes they are looking at, and much more.

A buyer’s agent is legally bound to help the buyer. A good agent will know what to look for in a home, may be able to recommend new neighborhoods buyers haven’t thought of, and can steer shoppers to good deals and away from bad ones.

2. Listing Musts and Wants

In a hot market, buyers may need to be more flexible about their ideal home and location. Before looking at homes, it might be wise to create a list of “must-haves” vs. “nice to have” items on your home-buying wish list.

If buyers know they can’t live without at least two bedrooms and two bathrooms, they should put that on their “must have” list. If they would like to have an in-home office but don’t need it, they can add that to the “nice to have” list.

It will probably help buyers to go through every item — garage, square footage, yard space, fireplace, schools — and draw their line in the sand. If a home doesn’t have everything on their “must” list, they can move on quickly. But if a property meets all the “musts,” perhaps it can have the “nice to have” items later via renovations.

Recommended: First-Time Homebuyer Guide

3. Adding Sweeteners to an Offer

In a hot market, adding a few perks to a home offer can further tempt the seller because every little bit helps when there is the potential for multiple offers.

For example, sellers eager to move on could be enticed to go with buyers who can act quickly. To offer a quick close, buyers can ask their real estate agent to find out the standard closing time for the home and add to their offer that they are willing to close faster.

4. Offering All Cash

This most certainly isn’t an option for everyone, but if a buyer can offer all cash for a home, this may be the thing that tips the odds in their favor of winning a bid.

Sellers typically prefer all-cash offers because they present fewer hurdles than buyers who are going with a lender.

“Cash is king,” maybe you’ve heard. With a cash offer, there is no waiting for preapprovals or approvals.

5. Waiving Contingencies

Looking to stand out further? Buyers could try waiving mortgage contingencies where they can.

There are lower risk contingencies people can waive, such as homeowner association contingencies, but there are also higher risk ones for buyers that could convince a seller to choose their offer.

For example, buyers can waive their right to an inspection. This means they will not require a professional inspector to check over the home for potential repairs. By waiving this contingency, though, buyers will be purchasing a home with many unknowns and taking on the full risk of a property that may need hidden and pricey home repairs.

Before waiving any contingency, it’s a good idea for buyers to have a long talk with their agent to ensure they are still protecting their rights and feel comfortable with any consequences.

Recommended: How to Rent in a Hot Housing Market

6. Giving It a “Best and Final” Offer

In a hot market, odds are buyers won’t win with any bids that are under asking price. If the house is right when it comes time for the best and final offer, buyers may want to consider trying to give it their all. That would mean coming in at asking price and often going over.

This is an important consideration when looking at homes in a hot market. Buyers may want to look at homes under their very top budget so they have room to negotiate up to, or over, asking.

As with contingencies, buyers should never go into a price range they are uncomfortable with or cannot afford in the long run. (Want to see how much a home could cost over the lifetime of a loan? Check out an online mortgage calculator to get an idea.)

7. Writing an Epic Letter

There is one more way to try to win a seller over (perhaps in a bidding war): by pulling on their heartstrings.

When putting in an offer, many real estate agents advise their clients to write a short letter to the seller on why they want to purchase the home.

Remember, selling a home can be emotional, and letting go of all the memories built in the space can be hard on the seller. But if they know that the next person to live in the home will love it as much as they do, they may be more willing to part with the property.

Buyers might want to express what they love about the home and how they plan to continue making happy memories there. As a bonus, buyers can try including a picture of their family with the letter so the seller thinks of them as people rather than just an offer.

8. Not Getting Discouraged

In a hot market, it’s important to stay patient. Going through the process could mean putting in multiple offers on multiple properties and losing out more than once.

Prepare Your Finances for a Hot Market

Before putting in an offer on a home in a hot market, buyers will want to have all their fiscal ducks in a row. That could mean shopping for the lender that’s right for them and/or getting a preapproval letter from a mortgage lender to show they are serious buyers who have their financing lined up.

Different lenders will likely offer different rates, terms, and perks, which buyers can weigh to decide which mortgage lender is right for them.

The Takeaway

With some preparation, buyers can effectively compete in a hot real estate market. Having a trusted real estate agent, knowing what you absolutely must have in a home, and preparing your mortgage loan funding in advance can all help buyers compete for and win their dream home. You’ll want to find a mortgage with competitive rates, flexible terms, and low down payments.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What does a buyer do if a seller submits a counteroffer?

If a home seller responds to a would-be buyer’s offer with a counteroffer, the buyer’s first step is to make sure they understand what the seller wants. It isn’t always more money. Sometimes a seller wants the buyer to make a larger deposit or agree to a later closing date. It’s also possible the seller wants the buyer to agree to waive contingencies, such as the right to a home inspection. Read the counteroffer carefully and consult with a trusted real estate agent and/or real estate lawyer to decide if you can agree to the terms.

Can I make an offer below the asking price in a hot market?

It is possible to make an offer below the seller’s asking price in a hot market, but you should be willing to lose the home to another bidder. One thing that will help your low bid: if your offer is all cash, or if you agree to waive contingencies, such as the right to a home inspection.

What’s the best way to submit an offer in a hot market?

When submitting an offer on a home in a hot market, it’s best to accompany your offer with a genuine and heartfelt offer letter. Compliment the property, especially any personal touches in the decor or style of the home that you noticed on your tour. Try to make a connection with the seller — for example, perhaps they raised children in the home and you hope to raise kids there. Thank the seller for considering your offer. Ask your real estate agent to review the letter before it is sent with your offer.

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SOHL-Q225-050

Up to 100 million Americans struggle with medical debt in 2025, according to the White House. What’s more, health insurance costs, which can help control medical costs, are getting more expensive: The price went up 7% year over year in 2025, and 6% the year prior.

If you’re facing financial challenges due to medical debt, learn some options here.

How Much Do Americans Spend on Healthcare Each Year?

Many people receive health insurance through an employer. And even though employers generally help pay for a portion of the costs, the financial burden can still be significant. A typical household spends $513 per month — or $6,159 per year — on healthcare expenses, according to the U.S. Bureau of Labor Statistics Consumer Expenditure Survey. This includes routine things such as health insurance costs, doctor’s visits, medications, and medical supplies. That reflects an uptick of 7.3% year over year.

How Many Americans Struggle With Medical Debt?

Despite employer-sponsored health plans covering some of the costs, some Americans struggle to pay their medical bills.

In fact, estimates as of early 2025 range as high as 100 million Americans — or almost one in three people — struggling with medical debt. Other surveys say the number is closer to 20 million, which is still quite a high number.

Lower-income earners, Black Americans, those with chronic illnesses, and those between ages 35 and 64 typically have the most debt. As you might guess, medical debt can increase with age.

What Happens If Medical Debt Is Not Paid?

Even if you’re facing an overwhelming amount of medical debt, the worst thing to do is ignore it because you don’t have the cash in your bank account. Depending on the state where you live, a medical provider might charge you a late fee for bills not paid on time and may even charge interest if payments aren’t made at all.

After a few months, if medical bills go unpaid, the provider might choose to pass the debt over to a debt collection agency.

If the medical provider does decide to give the debt to a debt collection agency, the debt might immediately appear on the debtor’s credit report and affect their credit score. The debt collector will take steps to collect the bill. If the debt is not collected, the provider may take it even further and take legal action.

While U.S. laws don’t allow debtors to be imprisoned for unpaid debts, they could face another consequence, such as wage garnishment. If the case goes to court and a judge rules in favor of the medical service provider, there’s a chance the debtor’s wages could be garnished. In simple terms, this means that payment will be taken out of their paycheck and sent to the provider. This means less money will turn up in your checking account and can make paying bills more challenging.

4 Medical Debt Relief Options

While there are no one-size-fits-all solutions to help ease the financial burden of medical debt, the following tips for paying off outstanding debt may be worth considering. It’s also a smart move to contact a professional before taking any action.

1. Medical Debt Payment Plans

Because healthcare services are often costly, contacting medical providers to ask if they offer payment plans might be one plan of action to consider. Some medical providers may offer payment plans to pay off debt in installments instead of paying it off all at once, which might make the debt more manageable.

2. Negotiating Medical Debt

It may feel counterintuitive or inappropriate to negotiate medical bills, but some providers actually expect it. While it may seem awkward at first, negotiating medical bills can help make them more manageable. Additionally, negotiating may even help avoid a credit score ding, or worse, getting sued.

For starters, reaching out to the provider’s billing department directly to see if negotiation of medical debt is possible might be an option. Many providers have financial departments that can determine if patients qualify for discounts or reductions. Remember, when negotiating, try to be as polite as possible. But it can be helpful to be persistent, too.

Another point to remember is that providers may favor cash. So those who can afford to make a lump sum payment might consider asking if the provider offers a discount for a cash payment.

Recommended: What Is Considered a Bad Credit Score?

3. Working With a Nonprofit Advocate

If the medical bills keep piling up, it may be worthwhile to consider finding a nonprofit advocate or reputable credit counseling organization that offers assistance with managing money and debts, creating a budget, and providing resources to help consumers pay off the debt that’s dogging them.

Certified counselors that have been trained to help individuals create a plan to solve financial concerns can be found through the U.S. Department of Justice. These organizations offer counseling and debt management plans and services.

One solution credit counselors may suggest is a debt management plan. These plans may help the borrowers get their debt under control.

With one type of debt management plan, the borrower makes a lump sum payment to the credit organization, and then the organization pays the creditor in installment payments. If you decide to go this route, make sure not to confuse a credit counseling nonprofit organization with a debt settlement company.

In contrast to credit counseling nonprofits, debt settlement companies are profit-driven. They negotiate with creditors to reduce the debt owed and accept a settlement — a lump sum — that’s less than the original debt. However, these companies can charge a 15% to 25% fee on top of the debt settled. While some of these companies are legitimate, consumers are cautioned to be wary of scams.

Some deceptive practices include guarantees that all of a person’s debts will be settled for a small amount of money, that debtors should stop paying their debts without explaining the consequences of such actions, or collection of fees for services before reviewing a person’s financial situation. Researching a company’s reputation can be done through the state attorney general’s office or the state consumer protection agency.

4. Using a Personal Loan

Using a credit card to pay off medical bills doesn’t help anything when you’re trying to reduce your overall debt. Taking out a personal loan could be a way to streamline multiple bills into one monthly payment.

Consolidating medical debt might include a number of benefits. It could help you get a fixed monthly payment and, potentially, reduced interest rates.

It’s important to compare rates and understand how a new loan could pay off in the long run. If your monthly payment is lower because the loan term is longer, for example, it might not be a good strategy, because it means you may be making more interest payments and therefore paying more over the life of the loan.

Recommended: Emergency Fund Calculator

The Takeaway

If you’re steeped in medical bills, you’re hardly alone. While dealing with the debt may not be pleasant, it’s a task you shouldn’t ignore. Otherwise, you may end up with your credit score being negatively impacted or your debt being passed along to a collections agency.

Fortunately, there are some debt relief options you may want to consider. Examples include exploring debt payment plans, negotiating the debt with your provider, enlisting the help of a nonprofit advocate, or taking out a personal loan to help pay off the bills. Having the right banking partner, such as one with favorable interest rates and low or no fees, can be a smart move too.

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

Is there debt forgiveness for medical bills?

Some hospitals offer debt forgiveness, or what may be called charity care, for certain patients.

How can you handle medical bills you can’t afford?

Options can include negotiating your bill, requesting a payment plan, working with an advocate, looking into debt repayment plans, or taking out a personal loan.

Can you negotiate medical bills after insurance?

Yes, it is a common practice for patients to negotiate the remaining balance after insurance with their healthcare provider’s billing office. Politely explaining your situation and asking for discounts or an accommodation is a path to consider.

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

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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.
*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.

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SOBNK-Q225-017

A cash diet, meaning using just cash for daily spending, can help you avoid ringing up more credit card debt.

These days, many people’s spending habits are ruled by plastic. Debit cards, credit cards, and mobile wallets make transactions easy and effortless, but they can also make it easy to wind up with a mountain of debt and risky financial habits. As of 2025, U.S. consumers owed more than $1.21 trillion in credit card debt, according to the Federal Reserve Bank of New York. For some people, it might be worth trying out an all cash diet to help develop healthier spending habits.

Read on to learn some of the pros and cons of a cash diet plan, and how using cash may help you think about your money habits in a new way.

What Is a Cash Diet?

A cash diet plan involves using only cash for all of your day-to-day expenses. This could include paying for your groceries, filling up your gas tank, or covering the bill for a meal out with a friend. Fixed expenses, such as rent, bills, or any existing debt payments, generally aren’t included.

For people who are dealing with debt, a cash diet may provide an opportunity to develop more transparent spending — which may help in getting a handle on existing debt and manage money better.

What Are Some Pros of a Cash Diet?

Here are some advantages of a cash diet:

•  One of the biggest potential benefits of an all cash diet is seeing what you spend. When using cash to pay for daily expenses, you can feel the immediate loss of a dollar spent. When using credit or debit cards, the impact of the money you’re spending is delayed, potentially making it easier to overspend or rack up debt.

•  Another possible benefit of a cash diet is that it may provide more oversight over your expenses and budget. If you take out a specific amount of money, it’s easy to keep track of how much you’ve spent by simply looking at the amount of cash you have left. This could help you learn how to be better with money.

•  Overall, adopting an all cash diet could provide you with more control and awareness over your spending decisions. Even though you are likely dipping into your cash reserves more often, it could help you manage the money in your bank account more wisely.

Recommended: Five Ways to Achieve Financial Security

What Are Some Cons of a Cash Diet?

Next, consider the potential downsides of a cash diet:

•  In some places, restaurants and other businesses are increasingly going cashless. Depending on which establishments you usually go to, an all cash diet could prove to be a challenge.

•  Additionally, unlike many major credit cards and debit cards, cash isn’t covered in case of theft or loss. This is something worth considering depending on how much money you plan to carry with you at a time. (Or you might use your debit card as a way of paying in cash.)

•  Your purchases will not be covered by your credit card’s protection plan.

•  Credit cards often offer perks that can incentivize signing up and spending, such as credit card rewards points and miles, and cash back programs. Using cash comes with no such rewards. If you’re considering switching over to an all cash diet for the long term, it’s worth considering how losing access to these kinds of benefits may impact you.

•  With this diet, you’ll need access to cash. If it’s challenging for you to get to ATMs or retailers that offer cash back, this could be an issue.

•  It’s also worth noting that an all cash cash diet may not build your credit score. That’s because your credit score is derived from data on how you manage credit month to month and over time.

Starting a Cash Diet

If you’ve decided to try out an all cash diet, you might want to start by creating a budget. Once you’ve determined your average monthly net income, outline the fixed expenses you have — such as rent, bills, and debt payments — and figure out how much money you have left over after paying them.

Whatever money is left over represents the maximum you’re able to spend on day-to-day costs, such as food and gas. Cash dieters typically withdraw this amount in cash. Some might prefer to budget for the amount of time between pay periods or to stick to a monthly cash diet plan. The choice is up to you.

From there, a common way of organizing a cash diet is to use the envelope method. This includes outlining each of your spending categories — such as social activities, food and groceries, and shopping — and distributing your money across each area based on how much you typically spend. The cash for each of these categories is put in a separate envelope, which may make it easier to stay on top of your spending.

Since life isn’t exactly predictable, you might want to consider creating an additional envelope for unexpected expenses that may not fall into a regular category. An emergency fund could help cover unexpected costs like a car repair.

Managing an All Cash Diet

Though it may sound simple in principle, using a cash diet isn’t always smooth sailing. For instance, if you run out of cash before it’s time to replenish your envelopes — whether that’s at your next paycheck or at the beginning of the month — a cash diet dictates that you won’t be able to buy anything else.

Though an all cash diet may be helpful in improving your understanding of your spending habits and helping to curb impulse spending, it can also mean that you may have to get creative about how you deal with cash shortages without reaching for your credit card.

On the other end of the spectrum, there is a chance you may have some cash left over. If this happens, you could consider depositing it in your emergency savings account.

If you don’t already have a fund for emergencies, you may want to start one with any cash you have left over. If you have enough to save and put towards your current debt, then you might consider using the cash to make an extra payment on your highest interest debt.

Recommended: Emergency Fund Calculator

Understanding Your Spending Habits

Depending on your individual situation and goals, a cash diet may be a temporary experiment or a long-term strategy. You could try it out for a month to see how you feel.

Whether you’re in it for the short-term or the long haul, you may find that a cash diet gives you space to reflect on your money habits and develop a better understanding of where your money is going. A cash diet plan can be a valuable experience and can make it easier to build a more sustainable financial future.

The Takeaway

A cash diet involves using only cash for daily spending to help you control the outflow of money and avoid credit card debt. It can be a good solution for some people trying to manage their money better. The tradeoffs include the challenge of using cash at businesses that prefer plastic and the possibility of losing cash (or having it stolen), among others. If you do try a cash diet, it can be helpful to partner with a bank that has a robust network of ATMs.

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 are the pros of using a cash diet?

A cash diet can be helpful as it encourages mindful spending and helps you avoid racking up high-interest credit card debt.

What are the cons of a cash diet?

Cons of a cash diet include the risk of losing cash or having it stolen, not earning credit card rewards, and not earning credit card rewards.

What is a cash diet?

A cash diet involves using cash for most or all of your daily spending, rather than relying on credit cards. It can help you better track your spending and avoid credit card debt.

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.

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

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

SOBNK-Q225-019

As of early 2025, the average cost of pet health insurance was $60 a month for dogs and $32 a month for cats, according to Met Life. As you might expect, the policy details, where you live, and the type of pet you have are among the factors that can impact pricing.

Pet insurance offers a way to help pay for the care of your beloved animal — whether it’s a routine checkup or an emergency. However, just like health insurance for humans, choosing the right pet insurance policy can be complicated.

There’s a wide range of coverage options and policy costs to consider. And pet insurance may not be the right fit for every pet owner. Here’s what to know.

What Is Pet Insurance?

Though it has a lot in common with human health insurance coverage, a pet policy falls under the property and casualty insurance classification.

Pet insurance has been around for almost 100 years, but has only been available in the United States since 1982, when a subsidiary of Nationwide sold its first policy to cover the dog that played Lassie on TV.

As with health insurance for humans, pet insurance has a range of options and costs to consider.

And it’s growing in popularity: The North American Pet Health Insurance Association reports that, as of 2024, the industry’s revenue grew 22% year over year and passed the $4 billion mark for the first time ever.

Most of the almost 5.4 million insured pets are dogs (80% in 2025) and cats (20%). But some insurers may offer coverage for birds, fish, and other pets.

Pet policies are designed to protect pet owners from the high cost of taking their animal to the vet, dealing with medical emergencies, and treating disease. If a pet needs care, it could otherwise drain their owner’s checking account.

(If a pet bites another animal or person, those costs typically are covered by homeowner’s insurance.)

Types of Pet Insurance

There are a few types of pet insurance. Coverage can be limited to accident-only care for an animal, or it can be more comprehensive and include treatment for injuries and illness.

Some policies also include wellness costs, such as vaccinations, dental care, and medical tests. A few include extra benefits, such as coverage for pet care when an owner has an emergency, or coverage for vet care when the owner travels out of the country with the pet.

But preexisting conditions and cosmetic procedures usually aren’t covered. And policies may come with a waiting period of, say, a few days or a month, which means if a pet is diagnosed with an illness or is injured before that time is up, treatment for that condition won’t be covered.

How Much Does Pet Insurance Cost?

The average cost of an accident and illness pet policy was $56.30 per month for a dog in 2025, or $675 per year, according to the North American Pet Health Insurance Association. For a cat, the average cost was $32 per month, or $384 per year. Adding wellness care and other benefits can increase the cost of a policy. So can the deductible, co-pay, and maximum coverage amounts the pet owner chooses. These costs are something to consider as you’re budgeting for a new dog or cat.

Reimbursement is typically 70%-90%, which means the insured pet owner can be reimbursed for up to 70%-90% of a qualifying claim. The deductible is typically $100, $250, or $500.

•  The cost of coverage also may be affected by where the pet owner lives. In cities or regions where veterinary practices generally charge more for office visits or treatments, the cost of pet insurance may be higher.

•  Coverage may cost more based on a pet’s breed and age as well. Because some purebred cats and dogs may be more susceptible to certain medical conditions, they can be more expensive to insure.

•  Age is a factor. The older a pet is, the more it may cost to get coverage — both at the time of enrollment and as the pet ages.

The good news is, there are typically no “out-of-network” provider charges to worry about with pet insurance. As long as the pet owner takes Fido or Fluffy to a licensed vet, and the expenses for the visit qualify, it’s just a matter of filing a claim. Some insurance companies may pay the vet directly, but most reimburse the pet owner after the claim is submitted and verified.

Recommended: 19 Tips to Save Money on Pets

How Can Pet Owners Find Prices and Plans?

Because every pet and every plan is a little bit different, it can pay to do some research.

An increasing number of employers now offer pet insurance in their benefits packages, which could mean a lower premium. So pet owners may want to check with their human resources department to see what their company has to offer.

It’s also easy to get an online price quote from many of the companies that offer pet insurance. A quick search will turn up several well-known insurers (Nationwide, Progressive, Geico, Allstate) that offer coverage, along with insurance companies that are strictly for pets. The insurer will ask a few questions (the pet’s name, age, gender, breed, any preexisting conditions), and then provide quotes for three or more plans, along with some details about the benefits those plans include.

It also may help to have an idea of what it costs to treat common (and not-so-common) problems a certain type of pet might encounter.

For example, a physical for a dog or cat can cost between $25 to $186 on average in 2025, depending on your location and the pet’s age. Those bills might be daunting but not necessarily devastating for a family’s budget. But an emergency vet visit with multiple overnight stays in an emergency clinic could be as much as $3,500. And surgeries your pet might require can run into the hundreds and even thousands of dollars.

Planning for those costs could help pet owners decide if insurance is something they should consider. (Your vet also may be able to provide some helpful information that pertains to your specific pet.)

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So, Is Pet Insurance Worth It?

As with so many financial decisions, there are pros and cons to purchasing a pet health policy.

Insurance may take some of the stress out of making treatment decisions for a beloved pet based on the ability to pay. Although there still could be out-of-pocket expenses to consider, it might help avoid what the pet insurance association calls “economic euthanasia,” when a pet owner makes the heartbreaking choice to put down a sick or injured animal because the required care is just too expensive.

Insurance also might help a pet owner avoid taking on credit card debt or depleting their savings account to pay for their pet’s care.

Another plus: Because policies can be customized, it may be possible to find one that provides basic coverage and still works within the family budget. And pet owners who love their vet won’t have to switch to a new provider.

But pet insurance typically doesn’t cover pre-existing conditions, and premiums also may be higher for breeds that are vulnerable to costly health conditions. The cost also goes up as an animal gets older, which is when many pets start having problems that require expensive treatments.

And, as is the case for most types of insurance, if policyholders don’t use their benefits, they don’t get their money back. So, for example, if the pet owner opts for an accident and illness policy and the pet stays healthy for several years, the insurance bills could end up costing more than the vet bills. You may want to set up an emergency fund to help cover any healthcare costs for your pet instead.

Recommended: How to Pay for Medical Bills You Can’t Afford

The Takeaway

Pet health insurance currently costs about $60 a month for dogs and $32 a month for cats. It’s wise to look carefully at your options for pet health insurance to see if it suits your needs, considering such factors as price, coverage details, waiting period, and exclusions. You want to be sure you find the right fit, in terms of both the dollars involved and other needs, just as if you were choosing a new banking partner.

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

FAQ

How much is pet insurance?

As of 2025, pet health insurance is typically around $60 a month for dogs and $32 a month for cats. Prices vary depending on the policy details and coverage, your pet’s breed, your location, and other factors.

Is pet insurance really worth it?

Pet insurance can be worthwhile if a pet’s care (such as emergency surgery) would not be covered by your emergency fund and could cause financial hardship. The decision of whether pet insurance is worthwhile has to be made based on your own particular situation.

What age is best to get pet insurance?

As with your own health insurance, you’ll likely find that health insurance for pets is more affordable when the animal is younger. For that reason, it may be a matter of sooner rather than later when it comes to getting pet insurance.

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A promissory note is a written agreement between a borrower and a lender to formalize the lending of money.

Through this legal agreement, both the borrower and the lender consent to clearly defined repayment terms. Promissory notes can be used for a variety of purposes, including personal and commercial transactions.

Here’s a guide to common types of promissory notes, how to create one, and when they may be a good option for borrowing or lending money.

What Is a Promissory Note?

Put simply, a promissory note is a written promise to pay someone a certain amount by a specified time. The type of promissory note and agreement between the issuer and payee dictate the payment schedule and amount. If the borrower is a business, the issuer may wish to see its pro forma income statement when setting up a repayment schedule.

Similar to loans, promissory notes may be secured or unsecured. Unsecured notes are issued based on the borrower’s ability to repay, whereas secured notes use collateral such as real estate or a vehicle.

A promissory note may be issued by a financial institution, but this financing is commonly provided by individuals or businesses, too. Essentially, promissory notes allow anyone to act as a lender, which can be useful for creating legal documentation of a lending agreement between family members and friends.

Core Components

Promissory notes generally include the principal amount, interest rate, date and place of issuance, and signatures from the lender and borrower. There may also be provisions for late fees and recourse if a borrower defaults.

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Types of Promissory Notes

There are several types of promissory notes. Usually, the nature of the loan determines the appropriate type. Let’s take a closer look at some of the most common varieties.

Line of Credit Promissory Note

Borrowers can withdraw any portion of funds from a line of credit, up to the established maximum loan amount. Once the money is taken out, the borrower is liable for repaying the lender.

A promissory note can be used to guarantee that the borrower repays money withdrawn from the line of credit. The promissory note can specify the interest rate, repayment schedule, and whether the line of credit is secured or unsecured.

Investment Promissory Note

Businesses looking to access capital can sell promissory notes to investors instead of taking out a conventional business loan or a line of credit. As with a conventional loan, however, the company will typically be expected to show the lender its balance sheet indicating that it is solvent.

Through an investment promissory note, businesses receive capital from investors in exchange for fixed repayments. In the event a business is unable to repay, the investors may acquire the company.

Generally, investment promissory notes are sold at a discount to account for the impact of inflation on future payments. Promissory notes may be sold publicly in some cases but are most often purchased by corporate entities and experienced investors with high net worth who can handle the greater level of risk.

Real Estate Promissory Note

Promissory notes can be used in mortgages and other real estate purchases. In practice, borrowers use a home or other property as collateral for a real estate promissory note.

While promissory notes can accompany a mortgage, they are in fact different. The note provides legal documentation of the borrower’s promise to repay the loan, whereas the mortgage outlines the lender’s recourse for foreclosure in case the borrower cannot pay. Qualifying for a mortgage may also require a loan contract and more detailed financial information.

Real estate promissory notes can be used outside a mortgage. For example, two individuals could create such an agreement. Although the lender may not have the power of foreclosure, they can secure the agreement with the authority to place a lien on the property if a borrower defaults. A property lien creates a public record of a borrower’s unpaid debt.

Keep in mind that real estate promissory notes can be traded through brokerages without the borrower’s consent.

Recommended: A Guide to What Mortgage Notes Are and What They Do

Student Loan Promissory Note

College students will likely be required to sign a promissory note for both private and federal student loans.

For private lenders, each student loan may carry its own promissory note, as terms can vary. Anyone taking out federal student loans must sign a Master Promissory Note to promise repayment of loans, fees, and interest to the U.S. Department of Education. The MPN can cover multiple loans within a 10-year time frame for authorized schools.

Recommended: Understanding Your Student Loan Promissory Note

Vehicle Promissory Note

A vehicle promissory note creates a binding document that promises a borrower will pay a lender for a car or other type of vehicle. This agreement can be between two individuals or a borrower and a conventional lender, such as a bank.

Aside from repayment terms and conditions, it’s important to include the vehicle’s make, model, year, body, and VIN in a promissory note.

Personal Loan Promissory Note

It’s not uncommon to sign a promissory note when acquiring a personal loan from a traditional lender.

A promissory note can also be used for a personal loan between friends and family. Formalizing the loan amount and repayment terms through a promissory note can help avoid disagreement and protect both parties down the line. Compared with typical personal loan requirements, a promissory note can be a more flexible financing option.

Having financial information like credit score and proof of income at the ready can streamline getting approved for a personal loan.

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Promissory Note Repayment Options

Besides type, promissory notes can differ by repayment method. Borrowers can expect to repay money and interest through one of the following options:

•  Lump sum: This requires the entire amount to be repaid in a one-time payment on a specific date. Lump-sum payments are more common with small loans.

•  Due on demand: The borrower must repay the loan upon the lender’s request. Due on demand payment is used frequently for promissory notes between friends and family members. Any promissory note without written payment terms is considered due on demand.

•  Installment: Installment payments follow a specified schedule (monthly, for instance) to pay back a loan over a longer period of time. Usually payments are structured as equal amounts and include interest.

•  With (or without) interest: A promissory note can define the interest rate and any related contingencies.

In some cases, a promissory note may employ a combination of repayment options. For example, a vehicle promissory note may include an upfront lump sum followed by installment payments.

Structured Repayment Strategies

Here are some effects of the various repayment plans to consider.

•  Amortized payments: The borrower makes equal payments each month, paying down principal and interest together. The plus: The consistency makes it easy to plan and budget. The minus: The monthly installments may be costly.

•  Equal monthly payments and a final balloon payment: Installments are likely smaller than with full amortization, because the borrower pays less toward principal; the balloon payment resolves that at the end. Upside: Lower monthly payments preserve more cash on hand for other needs. Downside: If the borrower plans to refinance the loan before the balloon’s due date, they run the risk that interest rates may go up.

•  Interest-only payments and a final balloon payment: With monthly payments applied only to interest, the borrower owes the entire principal until the final balloon payment. Pro: This method allows for the lowest monthly payments. Con: The borrower pays more interest because they have possession of the full principal throughout the term of the loan.

•  Single payment of principal and interest: This is the lump sum method, where everything is paid back on the specified date. For the most part, only friends and family members will accept this arrangement. Good news: Borrowers need not pay anything toward the loan each month (though escrowing money would be wise). Bad news: If the business cycle is in a contraction phase when the note comes due, repayment of a large sum all at once could be very tough.

Legal Implications of Repayment

Signing a promissory note makes the borrower legally liable for the loan according to the terms of the note. In many states, defaulting on a promissory note that’s part of a mortgage contract could allow the lender to foreclose on the house and then sue the borrower personally for any deficiency.

What Does a Promissory Note Look Like?

There are different laws in every state regarding promissory notes. One common feature of promissory notes is that they must be written. A verbal agreement between two parties will not qualify as a promissory note or carry the same legal enforceability.

Standard Template

Promissory notes must include language outlining an agreement and unconditional promise for the borrower to repay the loan. Additionally, the repayment must be money, rather than labor, professional services, or other capital.

Other details and elements generally needed in a promissory note include the following:

•  Amount or principal: How much was borrowed and is to be repaid

•  Payor: The party promising to repay the debt

•  Payee: The party lending the money

•  Interest rate: States how much interest is charged and how it is calculated

•  Start date: The date the promissory note becomes effective and funding is released to the payor

•  Maturity date: When the interest and principal must be repaid in full

Without these elements, lenders may have trouble enforcing the promissory note.

Risks and Protections

Like any loan contract, a promissory note involves financial risk to both borrower and lender.

Unsecured promissory notes will likely entail a higher interest rate than secured ones. A higher interest rate makes paying off a loan more expensive, increasing the possibility of default.

Promissory notes secured with collateral tend to have lower rates, but borrowers who can’t pay the debt risk having their collateral seized.

Depending on due diligence, providing capital based on a promissory note may expose the lender to some financial risk if the borrower is untrustworthy. As noted, having collateral helps mitigate that risk.

As for protection, a promissory note safeguards the lender by recording the terms of the loan in a valid and enforceable contract. It protects the borrower by providing documentation of the loan in case of an audit.

Both parties should make sure the note follows state or federal laws governing loans or investments to ensure additional safety.

The Takeaway

Promissory notes create a binding promise to repay borrowed money. This financial agreement can be used when borrowing money from individuals, financial institutions, or both. To be valid, the note must contain all the important details about the principal, the loan term, the interest rate, and must be signed by both parties to the agreement.

If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.

FAQ

What makes a promissory note legally binding?

A promissory note is legally binding if it includes the date of the loan, the dollar amount being borrowed, the signatures of both the lender and the borrower, the rate of interest, any collateral involved, the start date, and the repayment time frame. The note must also comply with any applicable state laws.

How is a promissory note different from a loan agreement?

A loan agreement is more comprehensive than a promissory note, with specific terms and defined rules and restrictions. Promissory notes usually suffice for loans from one person to another. If a business is involved or the loan amount is large, a loan agreement is more appropriate.

Can a promissory note be transferred?

Yes, it is possible to transfer ownership of the promissory note. If the borrower defaults, for example, the lender may sell or transfer the note to a debt collector. Or, if the lender needs to raise cash, they can negotiate with a buyer and sell the note.

What happens if someone defaults on a promissory note?

If a borrower defaults, the lender usually sends them a demand letter. If the borrower still does not pay, the lender can hire a collections lawyer to sue and get restitution through a court judgment. The lender may also have the right to seize any collateral and sell it at auction.

How long is a promissory note valid?

Depending on your state, the statute of limitations for promissory notes can range from three to 15 years.

Photo credit: iStock/fizkes

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

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.

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