Insights into the 401(k) Student Loan Benefit Program

The amount of student loan debt in the United States is staggering and only continues to rise. As a result, one of the most desired employee benefits in 2018 is help with that student loan debt. And some employers who want to recruit and retain star talent, in 2018 and in the future, are coming up with creative strategies to do just that.

This trend—employers helping with student debt—is expected to increase, say some industry experts . In this post, we’ll share ways employers are helping employees to pay down student loan debt, with a focus on an August 2018 Internal Revenue Service (IRS) ruling that could provide significant relief.

401(k) Student Loan Benefit Program

Repaying student loan debt can sometimes be challenging—and the amount of student debt in the United States is enormous: at least $1.5 trillion .

Perhaps even more alarming, this amount has nearly tripled over the past 10 years , and so people owing student loan debt are understandably looking for help in repayment.

Fortunately, on August 17, 2018, the IRS made a ruling that could start to provide relief. This ruling came in the form of a private letter , #201833012. The IRS was responding to a specific request from Abbott Laboratories, but implications could be much larger in scope, making it much easier for employers to assist employees who have student loan debt.

Abbott Laboratories, the impetus behind this ruling, asked to be allowed to modify the 401(k) program offered to its employees to include student loan benefits. More specifically, they would still put 401(k) contributions into employee retirement accounts when the employee is repaying student loans, but not contributing to the 401(k) plan.

Student Debt Impact on Retirement Savings

The Center for Retirement Research at Boston College delved into whether or not growing student loan debt has affected how much people with this kind of debt are saving for retirement. Results are mixed, yet still illuminating. Findings include:

•  Student loan debt doesn’t seem to have an impact on whether someone actually participates in a 401(k) program
•  Asset accumulation remains about the same for non-graduates
•  Graduates who have student loan debt accumulate, on average, 50% less in their retirement accounts by the age of 30

The amount of the student loan debt owed doesn’t seem to play a role in this reduced retirement account accumulation. Just the fact that the debt exists, the study authors determined, “looms large in their financial decision-making.”

So, it isn’t unreasonable to conclude that, when people get help with their college debt, such as with this student loan 401(k) perk, it might result in a positive uptick in retirement savings, as well. Win/win!

Abbott Laboratories

As the Society For Human Resource Management reports, Abbott Laboratories, in response to the IRS’ ruling, created their Freedom 2 Save program , which allows qualifying employees (both full-time and part-time) who are putting 2% of their eligible pay toward student loan repayment to receive the “equivalent of the company’s traditional 5% ‘match’ deposited into their 401(k) plans, without any 401(k) contribution of their own.”

Abbott started this initiative because they recognized that they were seeking top quality talent—with degrees in science and engineering, business development and so forth—which means they wanted students who likely were being aggressively recruited by other desirable companies.

To attract and retain them, they pursued the right to offer this unique benefit to them. An estimated 2,500 to 3,000 employees currently at Abbott are expected to take advantage of this benefit.

Student Loan Employer Contributions

According to The New York Times , 4% of employers were offering student loan repayment benefits of some kind in 2018, up from 3% in 2015.

While this percentage is still small, it is expected to grow . According to the article, these more typically consist of employees being given a lump-sum, after-tax payment to help with student loan debt. These payments are sometimes paid monthly; other times, annually.

An article in Forbes shares benefits that companies are offering to help employees pay down this kind of debt in 2018. Fidelity, for example, offers eligible qualified employees up to $2,000 annually towards repayment of their student loans, up to $10,000 overall, through their Step Ahead Student Loan Assistance program.

Because this is paid monthly, if an employee receiving this benefit leaves the company, none of the money needs to be reimbursed to Fidelity. The healthcare company, Aetna, offers a similar program, and Penguin Random House is the first book publisher to offer this type of benefit. They provide $1,200 per year/$9,000 total for full-time employees who’ve been at the company for at least one year.

Refinancing Student Loans at SoFi

Whether you work at a company that offers these types of programs or not, it may make sense to refinance your student loan debt, consolidating outstanding balances into one convenient loan—and at SoFi, qualified borrowers can refinance both federal and private loans at one lower interest rate or a shorter term.

You’ll want to decide if you want a shorter term to pay off the debt more quickly and pay less interest over the life of the loan—or a longer term that may lower your monthly payment and free up your cash flow. Whichever you decide, the choice is available at SoFi, and we charge no fees. None.

Ready to refinance your student loans today? Let’s get started!

The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC .
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 about bankruptcy.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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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Maximizing Holiday Deals, Minimizing the Risk

The holiday shopping season seems to start earlier and earlier every year. Come October, and the most eager of stores are already popping up Christmas trees, twinkling lights, and holiday decorations for sale. Before long, the shopping craze will set in fully, Christmas carols ringing in the ears of shoppers filling malls across America.

Between Black Friday, Cyber Monday, and last minute holiday deals in late December—it’s no wonder Americans are spending a decent chunk of change buying gifts for the holiday season. Holiday spending is expected to increase by 4.1% in 2018.

According to the National Retail Federation , consumers plan to spend approximately $1,007.24 this year, up from $967.13 in 2017.

With the barrage of seasonal sales and holiday advertisements, impulse spending on decorations and gifts are almost guaranteed. And with the spike in sales around the holiday, it’s no surprise that fraud and identity theft are also at their peak during the holidays. During the 2017 holiday season, fraud attempts increased by 22% from Thanksgiving to December 31st.

So how are you supposed to get the perfect gift for everyone on your list, while also holiday shopping on a budget? With some careful planning, you can maximize your holiday spending, avoid holiday shopping scams, and keep your budget on track. Use these holiday shopping tips to conquer your gift list, with time to spare so you can enjoy the festive season with family and friends.

Set a Budget and Start Saving Early

If you’re trying to limit your holiday spending, set a budget. Make a list of who you plan to shop for, some gift ideas, and a spending limit for each person. Having a plan of action when it comes to holiday shopping on a budget will go a long way in ensuring you stay on track.

A great way to supplement your budget? Start saving for holiday shopping early. Try saving even just $30 a week toward your holiday shopping expenses. Having a nest egg of cash to spend on gifts can help you stick to your budget and avoid additional holiday-related credit card debt.

One option is to have a dedicated savings account for your holiday savings. SoFi Money® is a cash management account that offers easy access to your money. You can spend, save, and earn, all in one product, so it’s easy to track your budget and keep your holiday spending on track.

Be a Savvy Sale Shopper

The holidays are full of cheer, cozy gatherings, family, friends, and some pretty deep discounts and holiday sales. One of the best holiday spending tips is to have an idea of how much each item you plan to purchase should cost.

That way you know when you’re getting a great deal, or if the so-called super sale really isn’t that super. If you see what you think is a great sale but want to double check before you buy—take a look online at a price comparison site to get an idea of the going rate for an item.

If you find a cheaper price on the item consider ordering from that retailer or ask the store you are shopping at if they offer price matching. A lot of retailers will offer a price match if you can provide documentation of a lower price at one of their competitors.

Become a Couponer

Another holiday spending tip that can help you stick to your budget—become a couponer. If something is already on sale, use a coupon or online coupon code to amplify the savings even further.

Some coupons and certain stores will have policies in place to prevent aggressive couponing, but for the majority of stores, you could stand to score some serious savings by taking the time to find a coupon that applies to your purchases.

While you’re on the hunt for coupons for your purchases be aware of any suspicious coupons . There are quite a few sites that deal solely in providing users coupon codes to use while online shopping and thieves have caught on.

As you’re browsing for online coupons, be sure to never enter any personal information. Legitimate coupon sites won’t require you to buy something or enter personal information to gain access to the coupon code.

Consider signing up for the email list of your favorite stores or the stores where you plan to do the majority of your holiday shopping. Often stores will send sale alerts and coupon details via email to their loyal customers, so it can pay to subscribe.

When you do, be sure that you’re subscribing to the official store list. Phishing is an extremely popular online scam around the holidays, so be aware of any emails that seem suspicious or offer deals that seem unrealistic.

Shop Online

When you shop online you can avoid the crowds, long lines, and busy parking lots of the mall. You don’t even need to leave your house, let alone the comfort of your couch. Online shopping is expected to grow in popularity again this year, and it’s expected to account for 57% of all purchases .

Online shopping offers fast, easy, convenient, and nearly hassle-free shopping for customers who would prefer to spend time by cozying up by the fire. Around the holidays there are often online only discounts that can help you keep your holiday budget on track.

As you’re shopping online be sure to avoid popular holiday scams. When shopping online, it’s best to stick with reliable and trusted retailers. If you see an incredible deal from an unknown site there’s a very good chance it is just too good to be true.

Before you make a purchase with an online retailer you’ve never heard of take the time to do a little research. You can protect yourself by looking up the retailer at the Better Business Bureau. You can also do a quick web search to read other customer reviews or complaints about the company.

Be suspicious of retailers that offer extremely low prices and don’t offer an address or phone number. The goal here is to avoid giving your credit card information to a scammer, who could then use your credit card or sell your information to another scammer.

As your shopping this holiday season, it’s a good idea to keep an eye on your credit card and bank statements to make sure there is no suspicious activity. If you see any purchases you didn’t make, contact your credit card company immediately.

Take Advantage of Free Shipping

One of the great perks of online shopping these days is a large number of retailers that offer free shipping. Some retailers even offer free 2-day shipping around the holidays to encourage you to order last minute gifts online and compete with large online retailers like Amazon.

Sometimes though, there can be issues when gifts arrive late, or even worse—not at all. Dishonest vendors will sometimes promise an item is in stock and able to arrive by your desired date when in reality it’s not. To avoid this, pay attention to where the item is shipping from, and order from reliable and trusted retailers .

Another reason packages never seem to arrive? Theft. If you’re concerned about package theft in your area there are a few options. Consider having the package delivered to work, if allowed by your employer. This way there will be someone there when the package arrives.

Another option is to have packages delivered to a pickup location offered by the retailer or carrier. For example, Amazon gives you the option to have packages delivered to an Amazon locker, where you can then pick up the package using a code. This could decrease the chances of package theft and comes at no extra cost.

Simplify Your Holiday Budget with SoFi Money

You’ve made your shopping list and checked it twice. You’re ready to hunt down all the best deals. If you’re looking for a way to make your holiday shopping even easier, consider opening a SoFi Money cash management account.

Plus, when your money arrives at our partner banks it is FDIC insured.

There are no account fees (subject to change) and you can open a SoFi Money cash management account in less than a minute. With SoFi Money you can track your spending and savings to ensure you are staying within your holiday shopping budget.

Ready to elevate your savings? Open a cash management account with SoFi Money today.

Ready to elevate your savings? Open an account with SoFi Money today.

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.
Each business day, cash deposits in SoFi Money cash management accounts are swept to one or more sweep program banks where it earns a variable interest rate and is eligible for FDIC insurance. FDIC Insurance does not immediately apply. Coverage begins when funds arrive at a program bank, usually within two business days of deposit. There are currently six banks available to accept these deposits, making customers eligible for up to $1,500,000 of FDIC insurance (six banks, $250,000 per bank). If the number of available banks changes, or you elect not to use, and/or have existing assets at, one or more of the available banks, the actual amount could be lower. For more information on FDIC insurance coverage, please visit . Customers are responsible for monitoring their total assets at each Program Banks to determine the extent of available FDIC insurance coverage in accordance with FDIC rules. The deposits in SoFi Money or at Program Banks are not covered by SIPC.
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SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.


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How to Build a Credit Card Payoff Plan

Got credit card debt? You’re certainly not the only one. Americans owe a total of $905 billion n in credit card debt alone. Finding your way out of credit card debt can be pretty stressful. But maybe the energy you’re expending watching your balance creep up could be better spent devising a payoff plan.

Paying off credit card debt is a crucial step toward saving for the future. Credit card debt, unfortunately, might slow you down if you’re saving for a house, or trying to open your own business. That’s why knocking out credit card debt now may help your finances in the long run.

If you’re feeling overwhelmed by your monthly credit card payments, creating a debt payoff plan is an excellent way to reclaim control over your debt and your financial life. Even if you’re making multiple debt payments every month, having a plan to get through it all may put you at ease. This guide will help you make a step-by-step plan to getting debt-free.

Organize Your Budget

Before you clean up your debt, you first have to organize it. Start by figuring out your monthly income after taxes, your non-negotiable expenses, and the debt payments you have to make each month.

And when you’re writing this all down, make sure you include every debt, from your student loan payments to that $500 medical bill you you’re paying off over the next few months. When you’re writing out your expenses, don’t forget about utilities, groceries, gas, and your designated take-out budget.

This is a good time to check if there are expenses in your budget that you could easily cut out. Maybe just in going through your bank statements, you’ve noticed you’re spending too much on eating out. To help you easily track your spending, sign up for SoFi Relay. You can keep tabs on your cash flow and spending habits so you know where you stand.

Or perhaps you could save some cash by shopping at a less expensive grocery store, or using public transportation more. The more excess spending you can shave from your budget, the easier it can be to put more money toward your credit card debt.

Based on your monthly expenses, figure out how much money you are able to contribute to your credit card debt each month. If you are just paying the minimum on your credit card each month, determine how much additional cash you could contribute to your debt each month.

Then factor it right into your budget. If you plan to pay $400 toward your credit card debt each month, for example, and you get paid twice a month, maybe you get into the habit of always paying $200 to your credit card debt the day after you get paid.

Choose a Debt Payoff Method

For some of us, our credit card debt isn’t on one card, but is instead spread out over multiple cards. You can either order your credit card debts from smallest to largest (i.e., “The Snowball Method”) or from highest to lowest interest rate.

If you want to use the Snowball Method, you’re going to pay your smallest credit card debt off first, and then turn your attention toward the next smallest, and so on. By ordering your debts from smallest to largest, you build momentum, because you’re potentially knocking out debts more often.

When you are working on paying off your smallest credit card debt, you may want to put any extra resources you have toward getting rid of that debt. In the meantime, don’t forget to pay the minimum balance due to the rest of your credit cards.

On the flip side, the advantage of paying off your credit card debt starting with the highest interest rate card is pretty straight forward: It saves you the most money. Why? Because the cards with the highest interest rates are, naturally, costing you more.

If you want to pay your debt off in the most cost-effective way, start with the highest interest rate credit card, while paying the minimum balance on all the other cards. Once you’re done with the highest interest rate card, turn your debt payoff attention to the next highest interest rate card. Continue until you’re credit card debt free.

And don’t forget to put extra cash toward your debt when you can. Paying additional money toward your debt is called “The Snowflake Method”—there’s a lot of snow analogies when it comes to debt payoff). Holiday bonuses? Put it toward your debt. Birthday cash? Right to your credit card payment. Tax return? Instead of springing for a vacation, re-route that cash to your credit card.

Consolidating Your Credit Card Debt

If you’re not a number cruncher, complicated debt repayment methods might create more stress than they’re worth. Instead of these methods, you could consider replacing your multiple credit cards with a single credit card consolidation loan. That would mean making one monthly payment, instead of trying to keep up with paying off multiple credit cards.

By taking out a personal loan, it’s finally possible to focus on paying off one bill with one fixed interest rate and a set loan term. Depending on your financial history, you could qualify for a much lower interest rate on a personal loan than you’re paying on your credit cards. And paying your credit card debt off with a low-rate personal loan could help simplify and expedite your credit card debt payoff plan.

Got credit card debt? Learn more about how SoFi personal loans can help you get out from under your credit card debt.

SoFi doesn’t provide tax or legal advice. Individual circumstances are unique. Consult with a qualified tax advisor or attorney.
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.
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 on credit.
The information provided is not meant to provide investment, tax or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory and automated services offered through SoFi Wealth LLC. An SEC registered investment advisor. SoFi Securities LLC, member FINRA / SIPC .

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What to Know Before Renting out a Room in Your House

Is it finally time to work on fixing up that unfinished spare room and start turning your extra space into extra cash? The potential return on the time and money you put into prepping a room to rent can make it more than worthwhile. Half the battle is just getting started, which means coming up with a plan to get the space ready to rent.

The first thing to consider is what potential income can be derived from renting out a room compared to any lifestyle adjustments that come from sharing your living space. Most likely, there will be a number of questions to work out regarding access to a bathroom, kitchen, or common space. Here are a few things to consider before renting out a room in your home:

Estimating the ROI of Renting a Spare Room

Each individual design element you focus on can add value to the room you’re renting out. The more appealing the space, the more confident you can be about charging a higher rate. Set a timeline for getting the room up and running, and a budget for how much you’re going to spend on renting out a room. Think about how much you’ll charge and how long it will take to recoup the cash you put in before turning a profit.

Here’s a basic example to see how a typical model might work. If you could find a renter to pay $400 or $500 a month (a bargain in certain urban locales or off-campus areas), this translates into a potentially $4,800 to $6,000 a year. Suddenly, investing a few thousand dollars on improving the space may offer a considerable return on your hard work.

Starting with the Essentials

Before breaking down the costs of potential items on your punch list, it’s important to consider what additions to the space are necessary, and why. A fresh coat of paint can make a huge difference in brightening up a space. Be sure to choose colors that are reasonable. Dark or bold colors tend to be less welcoming than something more natural, such as light blue or gray. (Also, beware the terracotta wall—home buyers might be turned off by them as a color.)

Providing a bedframe and a good mattress goes a long way in creating a comfortable environment. You’ll also probably want to include a dresser, a nightstand or two, and some nice lights. Check to make sure the windows are well sealed, secured, and in good working order. You can choose blinds or shades, and possibly curtains.

Some additional options to consider are an area rug or two, sheets and bedding, and maybe even a few sets of towels. If there’s still a bit of room left, you may even want to consider adding a desk. Of course, if you have a space to rent that includes a kitchen or living room, there are additional things to deal with such as a kitchenware, couches, televisions, and other appliances.

Calculating the Costs of Furnishing a Spare Room

When it comes to furnishings, you can be thrifty while still finding great pieces. Local thrift stores often have good finds, and Craigslist or Facebook Marketplace have an ever-changing array of options. Maybe there’s a neighborhood flea market not far from you. When you’re fixing up your spare room, don’t be shy about telling your friends and family; they might be helpful when it comes time to find a tenant.

Whatever direction you choose for your space, it’s important to take care when creating a budget, making online purchases, and keeping receipts. When renting a room in a house, receipts are useful not only for returning an item, but also for tax purposes .

The money you spend on fixing up and maintaining your home could be eligible to be deducted as a percentage of the square footage used or number of total rooms in your home. (Definitely check with a qualified tax professional or accountant for all the ins and outs of tax write-offs for this purpose.)

Here are 12 things to prep before putting your room up for rent:

Bed Frame – $100 to $300 and up. Depending on the size and style you choose, there are reasonable finds to be had. If you’re looking for a bargain, but want to avoid a thrift store frame, try checking sales at the big box outlets.

Mattress – $200 to $600 and up. There are tons of mattresses available online, and some are delivered right to your door in a box. Plus, there are plenty of other mattress stores, but prices can quickly sneak up into the $1,000+ range. One idea while you’re at it might be to put your old mattress in the rental room, and keep the new one for yourself.

Dresser, Nightstands, Chair – Each piece is likely to run $200 to $400 and up. There are plenty of online and brick-and-mortar stores that will allow you to buy long-lasting, nice pieces without spending too much, however. Look at Target, Ikea, Home Goods, and Wayfair for good-quality furniture that will fit into your budget.

Lights – $50 to $100. It doesn’t have to be too fancy, just nice-looking and functional.

Blinds, Shades, Curtains – $100 to $300 and up. You don’t need all three, of course. A simple shade can make all the difference.

Area Rug – $50 to $200. Your house may already have carpeting. Or if you want to skip this expense, hardwood floors are in right now.

Sheets, Bedding, Towels – $50 to $100. You probably don’t have to provide 1,800 thread count, Egyptian hotel-style linens. However, if you’re hosting on Airbnb, offering towels and shower supplies is a plus.

Paint – $50 to $200. Doing the painting yourself, as opposed to hiring someone, can help cut down on costs. But don’t skimp on painting needs, including rollers, trays, brushes, and tarps.

Miscellaneous Repairs – $100 to $500. You will have to be realistic about all the little things that can add up quickly. Is there patching and sanding necessary on the walls before you paint? Does the floor have issues? Also, consider locks for all the doors, both as a courtesy to your guest/tenant and as a safety precaution for your family.

Rental Agreement – Depending on where you live, there may be local or state requirements related to renting a room in your house. So you should do a little research to ensure your project gets off on the right foot.

A typical agreement adheres to local laws and typically includes topics such as maintenance, utilities, home and bathroom access, insurance, length of term, and any other key details. Ultimately, you want to be sure it is fair and legal and protects both you and the person staying in your home. To make sure all your bases are covered, it’s probably a good idea to run the rental agreement by an attorney.

Posting Your Rental – Fortunately there are many outlets where you can promote renting out a room or in-law suite online. You can consider posting on Airbnb, Craigslist, Zillow,,, and local campus housing websites.

Digital Photography – Do you have a friend with a hi-res digital camera? Getting quality photos can make a big difference. You might want to consider paying a photography-savvy friend to help you, or even bite the bullet and hire a professional. Make sure the place is clutter-free and filled with light when you take photos.

Covering the Cost of Making Your Room Rental Ready

All told, getting a room or part of your house ready to rent could cost several thousand dollars. But if you’re savvy, you can keep the costs down, and take advantage of possible tax write-offs. And while you may have to put money in, it may help to think of this as an investment, and the returns of renting a room have the potential to be high.

Finally, there is the question of how are you going to pay for all this. If you don’t have cash on hand, you could put all these expenses on one or more credit cards or tap into your savings. But because credit cards carry such high interest rates, you might want to avoid racking up a credit card bill you can’t pay down any time soon.

You can also borrow money against your house (if you own it) by taking out a home equity loan (also known as a Home Equity Line of Credit or HELOC).

However, then the loan is secured, and your house is used as collateral. The application for these can be arduous and usually require an appraisal of your home—not exactly ideal if you want to start renting sooner than later.

Another option is to apply for a personal loan. Personal loans are considered “unsecured loans,” which means you don’t have to put up any collateral to qualify for them. Many personal loans also have reasonable fixed monthly interest rates, which means they might be a better financial choice than a credit card.

To help understand your potential return on investment, you can use a personal loan calculator to see an estimated monthly payment and compare it to your estimated rental price.

Thinking about a personal loan so that you can transform that spare room? SoFi personal loans could help you make those home renovation dreams a reality—and you can check your rates in just two minutes.

SoFi does not render tax or legal advice. Individual circumstances are unique and we recommend that you consult with a qualified tax advisor for your specific needs.
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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stack of hundred dollar bills

How To Switch Banks in 3 Easy Steps

Choosing to switch banks can be a difficult decision. Many Americans are devout loyalists when it comes to their checking accounts, even when those checking accounts charge hundreds of dollars in fees each year pay almost nothing in interest.

In fact, just finding a fee-free place to stash your money could save you a whopping $750 a year . Fortunately, you do have choices for better checking and savings.

Because of the many options that are available to consumers, now is a great time to transfer funds from one bank to another and ditch the fees once and for all. If you’re in the market for a new account, follow these steps to find a new one, close your old bank account, and transfer your money to your new account:

Step 1. Choose a New Account for Your Money

There’s good news for those looking to find a better place to stash their cash, however. There are more options than ever when it comes to banking. Instead of staying stuck with an account that charges exorbitant monthly fees or offers abysmal interest rates, you can switch to an account that meets your needs and doesn’t charge any account fees at all.

That could mean no overdraft fees, no account minimum fees, atm fees, and no foreign transaction fees. Sounds good, right? More people are moving away from traditional checking and savings accounts, in favor of “deposit accounts,” which let you keep access to your cash while simultaneously earning a higher interest rate.

Step 2. Close Your Bank Account

In order to move your cash to a from one bank to another, or into a deposit account, you’ll need to close your old account. While this process can seem daunting, three easy steps will help you break up with your old bank once and for all.

Cancel Automatic Payments and Direct Deposits

If you’re like most of us, you rely on autopay to simplify your banking. This means that each month your various bills and subscriptions are automatically deducted from your primary account on their due date. To avoid falling behind on bills or accidentally getting your streaming service suspended, you need to turn off or redirect every automatic payment that currently comes out of the account you wish to close.

Take a look at your monthly account statement and make a list of every automatic deduction, from your electric bill to newspaper subscriptions. Once you’ve made your list, log in to your each of your service provider accounts and change your payment information.

You can either update your monthly payment, so they are deducted from your new account or choose to forego automatic payments until your new account is in order. If you cancel your automatic payments instead of transferring them to your new account, make sure to add each bill due dates to your calendar to avoid accidentally missed payments.

Additionally, you’ll need to re-route any paycheck direct deposits you have set up at the bank account you want to close. You can ask your employer to either issue you a paper check or redirect your paychecks to your other account.

Setting up direct deposit into SoFi Money
is easy with our pre-filled forms.

Wait For Any Pending Transactions To Clear

After you’ve canceled or rerouted all the automatic payments that deduct from the account you want to close, you will need to wait for any pending transactions to clear. These pending transactions are usually for bills or subscriptions that have one remaining payment left before the company can change your payment information.

Waiting for all pending transactions to clear ensures that your bills will be paid and your subscriptions will continue without facing any overdraft fees. Make sure there is enough money in the account you wish to close to cover any pending payments and then wait two weeks to one month for any automatic payments to be deducted.

Visit Your Bank

As millennials, most of us want to avoid frustrating interactions with salespeople and would prefer to figure out how to close a bank account online. Unfortunately, most big box banks have made it almost impossible to close a bank account online without visiting a bank branch in person.

Commissions for bankers have historically meant that the person behind the counter at a big bank might try to convince you to keep your account open, or even open a different account with the same institution. When you visit your bank, ask to close out your account.

They will likely require you to provide identification, sign a form consenting to the closure of your account, and will work with you to set up a transfer of your funds to a different account or issue you a check for the value of the money remaining in your account.

Fortunately for some of us, a few banks now allow you to close your bank account online, either by sending an email requesting to close the account, or chatting with customer service through the bank’s website. Check your bank’s FAQs to see if you can close your bank account online.

Whether you close your account online or in person, make sure to request written confirmation that the account has been closed. When you receive the letter confirming your bank account is closed, make sure to save it somewhere safe for future reference.

Step 3. Transfer Funds From One Bank Account Into Another

The bright spot in the often very long process of closing a bank account is getting your new, improved account funded. First, make sure to set up direct deposit from your employer directly into your new account. This will ensure that your pay appears in your account without having to deposit a physical check.

To set up direct deposit for a new account, visit your HR or pay office and provide them with the new account information, including the new account number and routing number.

To transfer funds from one bank account into another, you have a few options. If you close your account in person, you can ask your bank to transfer the remaining balance to your new account. Just make sure to bring along the new account and routing number. These transfers may take several days, so make sure to ask how long you should expect to wait.

You may also be able to get a check for the amount remaining in the account you’re closing directly from the bank, or even cash if it is a relatively small amount of money. If you get your remaining balance in cash or check form, make sure to deposit it in your new account right away. Funding your new account means your payments will remain interrupted and you can take advantage of any new perks right away.

Switching your money from one place to another can be hassle, but finding the right place to store your money can potentially help you save more and earn more. If you’re ready to spend, save, and earn, in one product, learn more about the SoFi Money® cash management account.

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.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

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