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The challenge of identifying a great city to retire in is that retirees have lots of different needs. Proximity to kids and grandkids, if you have them, is a key factor for many retirees. One retiree might want a beach while another wants ski slopes; one wants a small town vibe, another big city culture.

But there are some concerns that many retirees share: For example, is it affordable? The average retirement check for those collecting Social Security at age 65 in 2022 was $1,676, according to figures from the Social Security administration. How far that goes in retirement is dependent on a lot of factors, not the least of which is location, location, location.

But there are other considerations besides cost of living. Are there adequate medical facilities and personnel? Is the state’s tax structure advantageous for retirees? How is the crime rate? How well is the area expected to fare in climate change?

Rather than listing a select few of the more than 100,000 cities and towns in the U.S., what follows highlights some of the best cities to retire to in various categories. Depending on what’s most important to you, you can assign a value to each factor to help you pick the best options. Knowing where you want to retire and how much you will need to live on can help you decide when is a good time to retire. Now, some answers to the question, What are the best cities to retire in?

States with Favorable Tax Environments

If you have planned for your retirement years by opening an individual retirement account and funding it, you may not want to pay out a chunk of that in taxes. So, looking at the tax structure of various states can have a big impact on where you decide to retire.

So when considering the best cities to retire in the U.S., you may want to think about how a state’s sales tax, property tax, estate tax, and income tax stack up. Also think about whether a state you’d retire in will or won’t tax your pension. It has another list of states that won’t tax your pension. Hawaii, Alabama, and Tennessee all score well on these lists, but so do a lot of others that may better fit your lifestyle.

Cities Predicted to Do Well in Climate Change

Climate change threatens to trigger rising sea levels, rising temperatures, drought, wildfires, and more. If you plan to buy a home in your retirement haven, you may find that housing values, mortgage loans, and future mortgage refinancing may be affected by the expected impacts of climate change.

Some places are predicted to fare better than others because of their location, elevation, access to water, and other factors. Among these are Portland, Oregon; Charlotte, North Carolina; and Minnesota’s Twin Cities of Minneapolis and St. Paul. Research shows large coastal cities have generally invested more in resiliency measures to protect against climate change impacts than those in the Midwest.

Moreover, some cities are actively planning climate justice — or racial and social equity — into their climate mitigation plans. Oakland, California; Cleveland, Ohio; San Antonio, Texas; and Baltimore, Maryland all make that list.

Cities with Great Medical Resources

Since retirees may encounter healthcare issues as they age, having the right medical resources available is important. Moving to a quaint town or remote area might seem perfect, until you need a physical therapist or a doctor who specializes in gerontology.

In one ranked list of cities by health resources, Vermont towns do exceptionally well according to this list, but so do Missoula, Montana, and Pittsburgh, Pennsylvania. In addition to seeing where good health facilities are, you should evaluate the cost of those facilities. Healthcare is one of several crucial factors in calculating typical retirement expenses.

Cities with The Lowest Cost of Living

The average retirement age changes depending on where you live and the average Social Security check is about $1,668 per month. Before retiring, it’s important to know your budget and choose a retirement location where money won’t be a stressor.

One way to save is to live in a small town or city where the cost of living is below the national average. Many cities and towns in Alabama check a lot of boxes for retirees including having the lowest cost of living and a favorable tax environment.

Other cities that have a lower cost of living than the U.S. average include Lake Charles, Louisiana at about 14.5% lower than the national average; Topeka, Kansas at 14.7% lower; and Amarillo, Texas, at nearly 20% lower than the national average. Keep in mind, the earlier you retire, the lower your Social Security check will be, so where you want to live could impact when you retire.

Most Diverse Cities

For many people, diversity is a key factor to being able to comfortably settle in a town or city. This might include racial diversity, ethnic diversity, linguistic diversity, cultural diversity and more.

Oakland, California; New York, New York; and Chicago, Illinois often top lists for diversity, but can also be pricey places to live. Luckily there are other cities that are also very diverse including Jersey City, New Jersey; Gaithersburg and Germantown Maryland; Spring Valley, Nevada; and Kent, Washington.

Cities with Lowest Crime Rates

Generally speaking, the smaller the place, the less crime there is. That said, there are also some decent-sized cities that are recognized as being very safe. Columbia, Maryland gets high marks for being a very safe city. Others in that category are Nashua, New Hampshire; Portland, Maine; Gilbert, Arizona; and Raleigh, North Carolina. Least safe cities include St. Louis, Missouri; Memphis, Tennessee; and Oakland, California. That’s what makes the choosing tricky, Oakland fares very well in some categories, but not well at all on crime.

Most Accessible for People with Disabilities

Through the eyes of a person with disabilities, cities can look quite different. There’s the question of affordability, but also questions like whether restaurants, supermarkets, and parks are wheelchair accessible; whether the city is walkable; and the share of accessible homes.

If this is a consideration as you contemplate retirement, know this: Interestingly, Minneapolis, Minnesota — even with its annual snowfall of around 50 inches — tops the list. Other cities that score well on the accessibility scale include Pittsburgh, Pennsylvania; Scottsdale, Arizona; and Overland Park, Kansas.

Cities with Cool Stuff to Do

Another facet of what makes cities great for retirees is the availability of cultural opportunities from outdoor activities to volunteering, theater, and restaurants. One list of such opportunities took into account climate change; but didn’t weigh heavily on cost of living. It scored Austin, Texas high on all counts, though anyone who has lived there can attest to whole chunks of summer spent indoors trying to escape temperatures of 100 or more. Other cities that ranked high included Ashland, Oregon; Boston, Massachusetts; and Hilton Head, South Carolina.

Cities with Over 55 Communities

Some people prefer to live in communities that have young professionals and families, while others prefer to live predominantly around other seniors. Many of these planned communities have clubhouses for fitness and activities, theaters, walking trails and more. The least expensive houses generally start at around $100,000 or $200,000, depending on where they are, and rise up to $1 million. In these communities people own their own homes and function much as they would in a normal neighborhood but most of their neighbors are at roughly the same stage of life they are. Some of the leading over 55 communities include The Villages in central Florida; Sun City — which has many locations including Hilton Head, South Carolina and Huntley, Illinois; and Del Webb Sweetgrass in Richmond, Texas.

Recommended: What’s a Good Monthly Retirement Income for a Couple?

Places with Intentional Co-Housing

Co-housing is different from retirement communities in that people are expected to contribute to the community in the form of gardening, cooking, and generally looking out for one another. Co-housing that is designed for seniors might have medical facilities nearby, shuttles for shopping or the library, community gardens and so forth. Some have special facilities for people who suffer from dementia or other conditions. Retiring near a place where you could receive extra care and support down the road if you need it could be a good long-term option. Co-housing.org offers a list of these communities in states across America.

The Takeaway

Retirement isn’t just a cessation of work; it’s an opportunity to create a new and improved life. Before retiring, you need to understand what will constitute a good retirement income for your needs, as well as the environment you desire, surrounded by activities that really enhance your life. You are the only one who can really define what that environment and activities should be.

Whatever form of retirement beckons, SoFi wants to help you find a way to afford and enjoy it through all the special features of our Checking and Savings account. When you open an online bank account with SoFi, you’ll spend and save in one convenient place, earn a competitive APY, and pay no account fees.

Photo credit: iStock/nortonrsx

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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 11/12/25. 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.
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.

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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Returned item charges are bank fees that are assessed when you don’t have enough money in your account to cover a check (or online payment) and the bank doesn’t cover that payment. Instead, they return the check or deny the electronic payment, and hit you with a penalty fee. Returned item fees are also called non-sufficient funds (NSF) fees. While these fees used to be ubiquitous, some banks have chosen to eliminate them.

Read on to learn exactly what NSF/returned item fees are and how you can avoid paying them.

What Is a Non-Sufficient Funds (NSF) Fee?

A non-sufficient fund or NSF fee is the same thing as a returned item fee. These are fees banks charge when someone does not have enough money in their checking account to cover a paper check, e-check, or electronic payment. They are assessed because the bank has to put forth additional work to deal with this situation. They also serve as a way for banks to make money. The average NSF fee is $19.94.

In addition to being hit with an NSF fee from the bank, having bounced checks and rejected electronic payments can cause you to receive returned check fees, late fees, or interest charges from the service provider or company you were attempting to pay.

How Do Non-Sufficient Fund Fees Work?

Here’s a basic example. Let’s say that someone has $500 in the bank. They withdraw $100 from an ATM and forget to record that transaction. Then, they write a check for $425, believing that those funds are available:

•   Original balance: $500

•   ATM withdrawal: $100

•   New actual balance: $400

•   Check amount: $425

•   Problem: The check is for $25 more than what is currently available.

The financial institution could refuse to honor this check (in other words, the check would “bounce” or be considered a “bad check”) and charge an NSF fee to the account holder. This is not the same thing as an overdraft fee.

An overdraft fee comes into play when you sign up for overdraft protection. Overdraft protection is an agreement with the bank to cover overdrafts on a checking account. This service typically involves a fee (called an overdraft fee) and is generally limited to a preset maximum amount.

Are NSF Fees Legal?

Yes, NSF or returned item fees are legal on bounced checks and returned electronic bill payments. However, they should not be charged on debit card transactions or ATM withdrawals.

If you don’t opt in to overdraft coverage (i.e., agree to pay overdraft fees for certain transactions), then the financial institution cannot legally charge overdraft (or NSF) fees for debit card transactions or ATM withdrawals. Instead, the institution would simply decline the transaction when you try to make it.

No federal law states a maximum NSF fee. But The Truth in Lending Act does require banks to disclose their fees to customers when they open an account.

The Consumer Financial Protection Bureau has been pushing banks to eliminate NSF fees, and their efforts have paid off. Many banks have done away with NSF fees and others have lowered them.

Are NSF Fees Refundable?

You can always ask for a refund. If you’ve been with a financial institution for a while and this is your first NSF fee, you could contact the bank and ask for a refund. The financial institution may see you as a loyal customer that they don’t want to lose, so they may say “yes.” That said, it’s entirely up to them — and, even if they agree the first time, they will probably be less willing if it becomes a pattern. (Or, they may say “no” to the very first request.)

Recommended: Common Bank Fees and How to Avoid Them

Do NSF Fees Affect Your Credit?

Not directly, no. Banking history isn’t reported to the consumer credit bureaus. Indirectly, however, NSF fees could hurt your credit. If a check bounces — say, one to pay your mortgage, car payment, credit card bill, or personal loan — this may cause that payment to be late. If payments are at least 30 days late, loans and credit cards can be reported as delinquent, which can hurt your credit.

And if a payment bounces more than once, a company might send the bill to a collections agency. This information could appear on a credit report and damage your credit. If you don’t pay your NSF fees, the bank may send your debt to a collection agency, which could be reported to the credit bureaus.

Also, keep in mind that any bounced checks or overdrafts could be reported to ChexSystems, a banking reporting agency that works similarly to the credit bureaus. Too many bounced checks or overdrafts could make it hard to open a bank account in the future.

What Happens if You Don’t Pay Your NSF Fees?

If you don’t pay your NSF fees, the bank could suspend or close your account and report your negative banking history to ChexSystems. This could make it difficult for you to open a checking or savings account at another bank or credit union in the future. In addition, the bank may send your debt to a collection agency, which can be reported to the credit bureaus.

How Much Are NSF Fees?

NSF were once as high as $35 per incident but have come down in recent years. The average NSF is now $19.94, which is an historical low.

When Might I Get an NSF Fee?

NSF fees can be charged when there are insufficient funds in your account to cover a check or electronic payment as long as the bank’s policy includes those fees.

Recommended: Negative Bank Balance: What Happens to Your Account?

What’s the Difference Between an NSF and an Overdraft Fee?

An NSF fee can be charged if there aren’t enough funds in your account to cover a transaction and no overdraft protection exists. The check or transaction will not go through, and the fee may be charged.

Some financial institutions, though, do provide overdraft protection. If you opt in to overdraft protection and you have insufficient funds in your account to cover a payment, the bank would cover the amount (which means there is no bounced check or rejected payment), and then the financial institution may charge an overdraft fee. So with overdraft, the transaction you initiated does go through; with an NSF or returned item situation, the transaction does not go through and you need to redo it. Fees may be assessed, however, in both scenarios.

How to Avoid NSF Fees

There are ways to avoid overdraft fees or NSF fees. Here are some strategies to try.

Closely Watch Your Balances

If you know your bank balance, including what’s outstanding in checks, withdrawals, and transfers, then a NSF situation shouldn’t arise. Using your bank’s mobile app or other online access to your accounts can streamline the process of checking your account. Try to get in the habit of looking every few days or at least once a week.

Keep a Cushion Amount

With this strategy, you always keep a certain dollar amount in your account that’s above and beyond what you spend. If it’s significant enough, a minor slip up still shouldn’t trigger an NSF scenario.

💡 Quick Tip: If your checking account doesn’t offer decent rates, why not apply for an online checking account with SoFi to earn 0.50% APY. That’s 7x the national checking account average.

Set Up Automatic Alerts

Many financial institutions allow you to sign up for customized banking alerts, either online or via your banking app. It’s a good idea to set up an alert for whenever your balance dips below a certain threshold. That way, you can transfer funds into the account to prevent getting hit with an NSF fee.

Link to a Backup Account

Your financial institution may allow you to link your savings account to your checking account. If so, should the checking balance go below zero, they’d transfer funds from your savings account to cover the difference.

Use Debit Cards Strategically

If you use your debit card to rent a car or check into a hotel, they may place a hold on a certain dollar amount to ensure payment. It may even be bigger than your actual bill. Depending upon your account balance, this could cause something else to bounce. So be careful in how you use your debit cards.

Look for No-Fee Overdraft Coverage

You can avoid NSF fees by shopping around for a bank that offers no-fee overdraft coverage.

The Takeaway

Returned item fees (also known as NSF fees) can be charged when there are insufficient funds in your account to cover your checks and electronic payments. When you get hit with an NSF fee, you’re essentially getting charged money for not having enough money in your account — a double bummer. To avoid these annoying fees, keep an eye on your balance, know when automatic bill payments go through, and try to find a bank that does not charge NSF fees.

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

FAQ

What happens when you get an NSF?

If you get charged an non-sufficient funds (or NSF) fee, it means that a financial transaction has bounced because of insufficient funds in your account. You will owe the fee that’s listed in your bank’s policy.

Is an NSF bad?

If a financial transaction doesn’t go through because of insufficient funds, then this can trigger returned item charges (NSF fees). This means you’re paying a fee for not having enough money in your account to cover your payments, a scenario you generally want to avoid.

Does an NSF affect your credit?

An NSF fee does not directly affect your credit, since banking information isn’t reported to the consumer credit agencies. However, if a bounced check or rejected electronic payment leads to a late payment, the company you paid could report the late payment to the credit bureaus, which could impact your credit.

About the author

Kelly Boyer Sagert

Kelly Boyer Sagert is a full-time freelance writer who specializes in SEO-optimized blog and website copy: both B2B and B2C for companies ranging from one-person shops to Fortune 500 companies. Read full bio.

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Photo credit: iStock/MicroStockHub

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. 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.
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.

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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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A high-yield checking account is a secure place to deposit, store, and withdraw money, but with an enhanced interest rate vs. other similar accounts. Typically, money in a checking account doesn’t earn any interest — or maybe a nominal fraction of a percent.

With a high-yield checking account, there’s the potential to turn your regular deposit account into a passive income machine. While it’s unlikely to make you rich, a high-yield checking account can help pad your pockets with a few extra interest dollars, which can add up over time.

However, these accounts can come with certain conditions that may or may not make them the right choice for you. Here’s what you need to know.

How High-Yield Checking Accounts Work

High-yield checking accounts, as their name implies, are checking accounts that offer a high “yield,” or interest rate, on the balance held in the account.

Whereas the national average for an interest-bearing checking account is about 0.07% APY (annual percentage yield) per the FDIC, a high-yield account might offer 3% to 5% APY or even higher — which still might not make you a fortune, but is a significant upgrade and on a par with some savings accounts.

High-yield checking accounts make it possible to create a passive income stream, albeit a small one, just by holding money in your checking account (which you likely already do). A high-yield checking account can augment interest earnings from other financial products you may hold, such as a high-interest savings account or investments like high-yield bonds.

However, there can be account minimums to contend with or potential fees.

Does a High-Yield Checking Account Come With Fees?

Although some high-yield checking accounts come with monthly maintenance fees that could easily eclipse whatever interest you stand to earn, these fees can commonly be waived so long as you maintain a certain minimum monthly balance or meet other requirements. These may include making a certain number of debit card transactions or receiving a certain threshold in direct-deposit income each month.

These days, there are even some free high-yield checking accounts — usually offered through online banks — but the level of interest you’ll earn may depend on your ability to meet the same kind of transaction minimums we just mentioned. (If you don’t meet the requirements, you might not earn any interest at all.)

So, in short, while you might not have to pay for your high-yield checking account, you’ll likely need to perform the basic minimum monthly transaction requirements in order to glean the full benefits of the account.

Top 3 Pros of a High-Yield Checking Account

High-yield checking accounts can be very beneficial — here’s how.

1. More Earnings

These accounts offer an opportunity for interest earnings simply by holding a checking account. In some cases, the interest rate may rival that of certain kinds of savings accounts.

2. Motivation to Keep More in Your Account

These high-yield checking accounts can incentivize account holders to keep a higher minimum balance due to interest-earning requirements — which can help you generate a cash cushion.

3. Availability

These accounts are becoming increasingly available, especially thanks to the proliferation of online-only banks. You likely don’t need to invest much time and energy in research when looking for one.

Cons of a High-Yield Checking Account

On the other side of the coin (pun totally intended), high-yield checking accounts can have their drawbacks.

Transaction Requirements

These high-yield accounts may come with transaction requirements to secure interest earnings. If the account holder doesn’t meet them, little or no interest will be earned. These obligations might suit your money style, or they might prove to be a major hassle.

Modest Interest (If We’re Honest)

Many interest-bearing accounts generate just a fraction of a percentage in interest. Even the highest-yield checking accounts currently only offer about 5.00% APY. Yes, every little bit helps but this certainly isn’t enough money to retire on.

Additional Fees

In some cases, high-yield checking accounts may come with fees. Waiving them may require holding a significant minimum monthly balance — which can be challenging for individuals and families living paycheck to paycheck.

Here, you can review the pros and cons again in table format:

Recommended: What Is a Certificate of Deposit (CD)?

Is a High-Interest Checking Account Worth It?

Whether or not a high-interest checking account is worth it will probably depend on a couple of key factors.

•   First of all, how high is the interest rate? If it’s just a fraction of a percentage above the norm, it may not be worth it. But if it’s a multiple of the standard rate, it might be a good way for your money to make money.

•   Next, what fees or minimum requirements are involved? If your money would make $10 more in interest per year in a high-yield account but you need to tie up funds that could be working harder elsewhere, then it’s probably not a money-wise move.

Factors to Look For in a High-Yield Checking Account

If you’re shopping for a high-yield checking account, consider these factors:

Interest Rate

Of course, you will likely want to shop around and see what are the highest rates available for a checking account. Currently, the highest rates are 5.00% or slightly higher.

Minimum Balance

With this kind of checking account, you may be required to make a specific size of deposit to open the account. You may also need to keep a certain balance in order to earn the high interest rate or to avoid fees. If that’s the case, make sure you can meet that number.

Fees

In addition, when opening a checking account, be sure you understand what fees might be charged. These can include maintenance, overdraft, ATM, and foreign transaction fees, among others. You’ll probably want to avoid being charged fees so that they don’t eat away at the interest you are earning. Online banks may be more likely to waive such fees.

How to Qualify for High-Yield Checking Accounts

In order to qualify for a high-yield checking account — and actually get the benefits — you’ll need to be able to fulfill whatever that account specifies as far as transaction requirements or minimum opening deposits.

In addition, if your banking history is marked by overdrafts and other negative factors, this may be reported by ChexSystems, which is kind of like a credit score bureau but for banking. If you have many negative factors (unpaid fees, say, or many overdrafts), you may not be able to qualify for a high-yield checking account — or other types of deposit accounts, either. (If your ChexSystems report contains errors, you can always dispute false information with ChexSystems online.)

How to Open a High-Yield Checking Account

Now that you know what it is, you may wonder how to open a high-yield checking account. The process is similar to opening any other type of account. You’ll be asked to provide:

•   Basic personal information, such as your name and address

•   Proof of address (such as a utility bill)

•   Government-issued photo ID

•   Your Social Security number or other taxpayer identification number

In addition, your chosen bank may also require a certain minimum opening deposit, which you’ll need to provide to activate the account. The bank will offer specific details as far as what documentation is required and how to deliver it.

High-Yield Checking Accounts vs High-Yield Savings Accounts

If you are comparing high-interest checking and high-yield savings accounts, you will likely want to consider the following points:

•   A high-interest checking account does generate money on your deposit, but it may come with minimum transaction or balance requirements. These could be difficult for some people to meet.

•   A high-interest savings account can offer good earning power, but the number of transactions you are allowed could be limited. Although Regulation D, which limits savings accounts to six transactions a month, was largely suspended since the pandemic, some financial institutions may still apply this rule and charge fees if you conduct more transfers.

Depending on your needs, one of these may be a better option than the other. Also, it is likely to be easier to find a solid interest rate with a high-yield savings account than with the checking variety. In other words, many high-interest checking accounts don’t offer all that much earning power.

Opening a Checking and Savings Account With SoFi

A high-yield checking account is a great way to augment whatever passive income you might earn from savings accounts, investments, and other holdings. Some interest is better than none, after all — every little bit of interest earned counts.

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

FAQ

Is a high-yield checking account worth it?

This all depends on whether or not you can meet any minimum monthly transaction requirements. If you can fairly easily do so, a high-yield checking account is an easy way to earn passive income just by keeping an active bank account. But if you can’t, you might not earn any interest at all — or even pay additional fees for the account.

What is the difference between a high-yield checking and savings account?

A high-yield checking account is designed to be the hub of your financial life and typically doesn’t have any limits on the number of transactions you may make; savings accounts may restrict this. However, this kind of checking account likely pays less interest than a high-yield savings account, which may do a better job of helping you generate passive income.

Can you withdraw money from a high-yield savings account?

Yes, you can withdraw money from a high-yield savings account. However, there may be restrictions on how many transactions you can make per month. Going over that number could result in fees or the account being converted to a checking account.

What bank has the highest checking interest rate?

Currently, some of the banks offering the highest checking interest rates are Axos Bank, Presidential Bank, Heritage Bank, and Quontic Bank.

Can you ever lose your money with a high-yield savings account?

A high-yield savings account is typically a very safe place to keep your money, especially if it’s FDIC- or NCUA-insured. The risk of losing money is extremely low.

Photo credit: iStock/MicroStockHub

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 11/12/25. 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.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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.

SOBK0324009

A money order is a valid form of payment, but the average American is likely to be more accustomed to receiving cash, a check, or a peer-to-peer payment through a popular third-party app.

You may wonder what to do if you receive a money order. You can cash it at various locations, such as your bank or a post office. Typically, you’ll need a valid ID to do so, and, depending on where you cash it, you may have to pay a fee. Learn more about the process here.

What Is a Money Order?

A money order is a secure way to pay another person or a business that offers a guarantee beyond what a paper check offers.

While paper checks can bounce if there’s not enough money in the check writer’s bank account, a money order has already been paid for. The funds exist in a secure account, and thus they cannot bounce when the recipient goes to cash the money order.

Advantages of Using Money Orders

Money orders offer several advantages for both the payer and the recipient:

•   No bank account needed: Those without bank accounts can’t send checks, and they may have difficulties using peer-to-peer payment apps, which typically require a checking account or debit card. This can make it challenging to send someone money without stuffing cash in an envelope, which is inherently risky.

An alternative? A money order. Because you can purchase and fund a money order with cash, you don’t need to open a checking account to complete the transaction.

•   No risk of bouncing: Because money orders are prepaid, you don’t have to worry about it bouncing. This makes it a safer way of accepting payment, particularly from a stranger.

•   No sensitive info: Checks contain personal information, including your name, address, phone number, and bank account and routing number. In the wrong hands, this can be risky and could leave you vulnerable to fraud. A money order shares much fewer details — typically, just the payer’s and recipient’s names.

Recommended: How to Transfer Money From One Bank to Another

Disadvantages of Using Money Orders

Money orders do have drawbacks to consider before purchasing:

•   Fees: The person purchasing the money order will need to pay a small fee (usually less than $5) to issue the money payment form. The recipient may need to pay a cashing fee as well, depending on where they go to cash the money order.

•   Limitations: Money orders are ideal for small transactions. Usually, they’re capped at $1,000. If you need to pay more, consider a cashier’s check.

•   Scam and loss risks: There are some risks involved with money orders. For instance, it’s difficult to cancel a money order; if the recipient has already cashed it, you’re out of luck. If not, you’ll likely have to pay a fee to have the money order canceled. Another major risk? Money orders are at the heart of many common bank scams.

Where to Purchase Money Orders

A huge benefit of money orders is how easily you can purchase them at common locations all around town. You can even purchase digital money orders without leaving the couch.

If you’re looking for a traditional paper money order, however, here are your main options:

Banks and Credit Unions

You can purchase a money order from most banks and credit unions. Often, you don’t even need to be a member of that financial institution, though you can inquire about discounts if purchasing from a bank or credit union where you’re already a customer.

Recommended: Can You Buy a Money Order With a Credit Card?

Post Office

The United States Postal Service (USPS) also sells both domestic and international money orders at many locations. You’ll want to visit its website to find a location near you that offers money orders; use the filter function to find offices that sell domestic and/or international money orders.

Grocery Stores and Retail Outlets

Many grocery stores, convenience stores, and other retail outlets (such as Walmart) also sell money orders, often through financial transfer services such as Western Union or MoneyGram. It’s a good idea to call a specific location in advance before driving there, just to be sure.

Step-by-Step Guide for Cashing a Money Order

Here’s how to cash a money order in four simple steps.

1. Verify the Money Order

Look over the money you received to ensure it appears valid. The USPS offers several tips to verify that your Postal Service money order isn’t a fake:

•   Check the limit: Domestic money orders are capped at $1,000. A money order for more than that might not be legitimate.

•   Look for security features: You should see a Benjamin Franklin watermark and a dark line (vertical) repeating USPS when holding the money order to the light.

•   Check the dollar amount for discoloration: If the money order looks odd, specifically where the dollar amount appears, it’s possible the payer changed the dollar amount after purchasing.

•   Make sure your name is correct: The name on the money order needs to match the name on your ID.

Other money order providers like banks and Western Union recommend such methods of verification as:

•   Double-check any watermarks that should be present for authenticity. Western Union and other providers may have watermarks or holograms to ensure their validity.

•   Verify the accuracy of the name and the dollar amount.

•   For Western Union money orders, you can phone For Western Union money orders, you can call 800-999-9660 to verify the funds.

•   For bank-issued money orders, you can visit a branch of the bank for authentication.

These steps can help ensure that your money order is legitimate and avoid issues down the line.

2. Endorse the Money Order

Assuming the money order is legitimate, take it to a bank or credit union, post office, qualifying retailer, or check-cashing location to cash it. You can cash it wherever it was issued (this should be evident on the money order), but you may be able to avoid fees by taking it to your own financial institution.

Once you’re there and at the counter, sign the money order to endorse it.

3. Present Valid Identification

Present your ID to the person behind the counter. They’ll compare your name to the name on the money order.

4. Pay Any Applicable Fees

Depending on where you are cashing the money order, you may have to pay a fee. Walmart, for instance, says it won’t charge more than $4 to cash a money order. However, fees can be particularly high at check-cashing services and retailers. To avoid these charges, you can take the money order to your own bank or credit union — or make sure the payer proactively sends extra funds with the money order to cover the cost of cashing it.

In addition to cashing a money order in this way, it’s worth noting that you can often cash a money by depositing it in an ATM. You can deposit an endorsed money order at an ATM at many bank once you’ve endorsed it, like a check.

Important Tips and Precautions

If you’ve received a money order, here are some tips to keep in mind:

Expiration Dates and Time Limits

While money orders don’t expire, it’s a good idea to cash or deposit yours as soon as possible. The longer you wait, the more you risk losing the money order or having it stolen. In addition, the value of the money order could decline due to fees being deducted if it sits for over one to three years.

Recommended: Tips for Tracking a Money Order

Fees and Charges

Where you choose to cash a money order can impact how much you pay in fees, if any. Your best bet for avoiding fees is taking it to your own bank or credit union. Go elsewhere, and the fees can cost a few dollars or more to cash a money order.

Handling Lost or Stolen Money Orders

If you’ve lost a money order you received or had it stolen, you’ll need to reach out to the money order’s issuer. That typically allows you to track the status of the money order or fill out a search request if the receipt is missing (which can involve a higher fee) if you don’t have the necessary details to quickly track it. Depending on what you learn, you might request a replacement and/or request a replacement if it’s been cashed fraudulently.

Avoiding Fraud and Scams

Fraudsters frequently use money orders to scam people out of money. If you’re selling goods online, don’t ship the items until you’ve received the money order and verified that it’s legitimate. Sometimes scammers will use the “overpayment” ruse in which they send you a money order for more than you were expecting and ask you to refund the difference. This should always be a red flag. The money order could prove to be fraudulent and, if you “paid back” the overpayment, you’ll be out some money.

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The Takeaway

Cashing a money order is fairly easy, involving just a few steps, including bringing it to a cashing location with valid ID. Always thoroughly review the money order to ensure it is legitimate before endorsing it and attempting to cash it. Also, to avoid potential fees, try cashing it at your own bank or credit union.

Speaking of banks, see what SoFi offers.

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

FAQ

What is the difference between a money order and a cashier’s check?

While both a money order and a cashier’s check offer secure ways of sending money to another person, there are several key differences between the two. Cashier’s checks are available in larger sums than money orders, which are typically capped at $1,000 each. However, you can purchase money orders at more locations (making them accessible to those who are unbanked) — and usually at a lower fee.

How long is a money order valid for?

Money orders do not expire. The funds that are attached to the money order remain in an account until they are claimed by the recipient. However, if a money order stays uncashed for more than one or three years, a service fee could be assessed and could eat away at its face value.

Can I cash a money order at any bank or credit union?

You may be able to cash a money order at any bank or credit union, but you could also be charged a fee to do so. You can typically avoid this kind of fee by taking it to your own bank or credit union or the issuing institution.

Photo credit: iStock/Sergey Dementyev

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 11/12/25. 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.

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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