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A tradeline is the term used by the three major credit reporting bureaus — Equifax®, Experian®, and TransUnion® — to describe any one of the accounts listed on your credit report. Each account has its own tradeline, and each tradeline contains information about the creditor, your account, and your debt.

Tradelines make up a good portion of your credit report, which means the information within them plays a big role in determining your credit score. And, as you probably know, your credit score is an important number that can prove your creditworthiness and help you snag lower rates on loans, among other benefits.

The more you understand about what a tradeline is and what creditors see when they read your credit report, the better equipped you’ll be to use that information to maintain the best credit score possible.

What Is a Credit Tradeline?

A tradeline in a credit report is a record for each of the credit accounts that you have. This includes revolving credit accounts, such as credit cards, and installments loans, such as student loans, auto loans, mortgages, and personal loans.

Each tradeline may contain a host of information reported by the creditor about themselves and your debt.

Recommended: Tips for Using a Credit Card Responsibly

What Information Is Reported by a Creditor?

When it comes to knowing what a tradeline is on a credit report, you may be surprised by just how much intel is shared. Quite a lot of information is reported about a creditor and your debt. The list includes:

•   Creditor’s name and address

•   Type of account

•   Partial account number

•   Date the account was opened

•   The account’s current status

•   Date of latest activity

•   Original loan amount

•   Credit limit

•   Current or recent balance

•   Monthly payment

•   Payment history

•   Date the account was closed, if this situation applies

By looking at a tradeline, you can view all of the most recent information reported by your creditors to the three credit reporting bureaus, all in one place. This is the information that will have an impact on your credit score.

Recommended: When Are Credit Card Payments Due?

What Other Information Is Gathered by the Credit Bureaus?

In addition to the information listed above, the credit reporting bureaus will also gather:

•   Personal information, including your name, date of birth, Social Security number, home address, phone number and employer

•   Information from the public record, including bankruptcies

•   Who has made recent inquiries about your credit and when (for example, if you’ve applied for new credit and a hard inquiry has been made)

The credit bureaus don’t know everything about you, however. They don’t have access to information such as your income, bank account balances, or marital status, though the report could include a spouse’s name if a creditor reports it.

How a Credit Tradeline Works

Tradelines are like the heartbeat of your credit report. Without them, you can’t have a score. If you are keeping your credit utilization low (that is, keeping your balance low vs. your limit on credit cards), paying your bills on time, and showing that you are a dependable borrower, your tradelines will be positive. Your three-digit credit score number should be in good shape.

If, on the other hand, you pay your bills late, skip payments, and rack up loads of debt, your tradelines will reveal negative information. Your score is likely to be low or decline.

What Are Tradelines for Credit Used for?

Creditors use your score to help them determine whether or not to extend credit to you and what terms and interest rates they’re willing to offer. Good credit is important. For example, if you have a good credit score, your lender may see you as less of a risk and offer a lower interest rate on a loan.

Higher-risk loan applicants with lower scores may be offered much higher rates. In other words, buying a car or home will be that much more expensive if your score is low.

While your credit score gives lenders an overall sense of the shape of your personal finances and credit history, it doesn’t give them any details. For those, they may look at individual tradelines contained within your credit report.

How Tradelines May Affect Your Credit and Banking

Your tradelines have a direct impact on your credit, since activity within the account is used to calculate your credit score.

Here’s a closer look at the five factors used to generate your FICO® score, and the weightings used for each.

•   Payment history: 35%

•   Amounts owed: 30%

•   Length of credit history: 15%

•   New credit: 10%

•   Credit mix: 10%.

Any credit activity that pertains to one of those categories can have an impact on your score when reported in your tradeline. For example, delinquent payments could damage your credit history. Or closing an account may have an impact on your length of credit history.

When Are Credit Tradelines Removed?

From time to time, a tradeline can be removed from your credit report. For example, if you’re an authorized user of a credit card and you are removed from the account, the tradeline will be dropped from your credit report in about two months.

When you close an account, the tradeline isn’t removed immediately. In fact, if that account has a positive impact on your credit score, the tradeline may stay on your report for as long as 10 years. Nice!

Worth noting: If a tradeline was opened fraudulently — someone opened a credit line or took on a loan in your name without your knowledge — you may ask to have the tradeline removed. In fact, it can be a very good idea to do so. It can help build your credit score since many fraudulent accounts contain negative credit information.

What Happens to Your Banking When a Tradeline Is Removed?

Removing a tradeline can be a positive or negative thing for your credit. If the tradeline was associated with positive information, removing it can hurt your credit. Luckily, a positive closed account stays on your report for a decade.

Closing an account with negative information can be a plus for your credit score. If an account is delinquent when it’s closed, the entire account will be removed after seven years.

How Is This Information Collected?

Creditors report the information collected in the tradelines to the credit reporting bureaus. They do so voluntarily, at their discretion, and on their own timeline, though the credit bureaus prefer that credit information is updated every month.

Each credit bureau may use different sourcing for the information they gather. What’s more, while some creditors will report to all three bureaus, some may only report to two, one, or even none of them.

Why You Should Check for Errors

As we’ve mentioned above, your tradelines are the source of information that determines your credit score. So it’s important to check your credit report regularly to make sure that there are no errors negatively impacting your score. Inaccurate information could also be a sign of identity theft.

You can request one free credit report from each of the three major credit reporting bureaus each year, according to the Fair and Accurate Credit Transactions Act. Since you can get three reports each year, you could even request one report every four months, to help ensure your finances are as up-to-date as possible. A popular site to check your credit report is Annualcreditreport.com .

You may also consider signing up with a credit score monitoring service.

Can You Buy New Tradelines?

Some companies will offer the opportunity to buy tradelines to help build your score. It’s not necessarily advisable to purchase from these third-party services.

First, a little background info: When you’re trying to build credit, one common strategy is to become an authorized user on an already existing account. For example, your parents might make you a user on their credit card. Good credit history and maintaining a low balance on this account could help you build credit.

When you purchase a tradeline, you enter into a similar agreement with a stranger. You’ll pay a third-party service to set up the transaction. You won’t know the person whose account you’re joining, and you will not be able to use the account. The account will usually remain open to you for a short period of time only.

You are paying for the privilege of being on this account, which will supposedly help positively impact your credit rating.

Is Buying Tradelines Legal?

Technically speaking, buying tradelines through a reliable tradeline service is legal. Congress has said that under the Equal Credit Opportunity Act, authorized users cannot be denied on existing credit accounts, even if the person being authorized is a stranger.

That said, there are times when working with a tradeline service can lead to serious issues:

•   A company may say you can hide bad credit or a bankruptcy using a credit privacy number. In reality, this might be someone else’s Social Security number, landing you in the middle of an identity theft scam.

•   You might also find yourself buying into an account that’s gone into default. You could end up as the primary owner of the account, which could hurt your credit.

•   Also, watch out for companies that use a process called address merging in which the company claims the authorized user (that would be you) lives at the same address as the account holder. This is fraudulent, and it indicates that you are not working with a reliable company.

Risks of Buying Credit Tradelines

Whenever you give out your personal information, including to a tradeline supplier, you are putting yourself at risk of identity theft.

By attempting to take a shortcut to build credit, you also won’t be doing yourself any favors. Beyond the risk of identity theft and other entanglements, you’ll be robbing yourself of the chance to build good financial habits. And this could come back to bite you in the end if you never learn to manage debt responsibly on your own.

How Banking Can Improve Your Credit Report

If you’re looking to positively impact your credit score, there are a number of alternatives to buying tradelines that you can pursue.

•   Always pay your bills on time. Your payment history makes up the bulk of your credit score. Pay close attention to your checking account and bills; make sure you can and do make regular debt payments on time and in full. Consider automated bill pay to help ensure you never miss a payment.

•   Pay down debts. Your available credit plays a large role in the calculation of your credit score. Your credit card utilization ratio, as we mentioned above, shows how much or your available credit you’re using. You can calculate your ratio by dividing credit card balance by loan limit. If your utilization rate is over 30%, build your credit score by paying down your balance. If possible, aim to keep your score at under 10%.

•   Check your credit reports regularly. Learn to read your credit report. Alert the credit bureaus to any inaccuracies. Your credit score should change for the better shortly after a mistake is corrected.

Alternatives to Credit Tradelines

If you’re trying to build credit over time, there are also alternatives to tradelines.

•   Become an authorized user. You may wonder, “Isn’t this what purchasing a tradeline is?” The answer is yes, but it’s far better to become an authorized user on the account of someone you know well or are related to. You’ll have the opportunity to use the account and learn healthy credit habits. Just don’t abuse this privilege.

•   Apply for a secured credit card. Secured credit cards require you to make a security deposit to receive a line of credit. This deposit often becomes your credit limit. These cards are easier for people with no credit history to qualify for, and they help you build credit.

•   Get credit for paying bills. You might look into services that allow you to get credit for on-time payment of bills that usually don’t count towards your credit score. This may include bills for everything from your utilities to your streaming service.

The Takeaway

The tradeline for each of your revolving credit or installment accounts contains all the information necessary to generate your credit score. Understanding your tradelines can help you understand the ways in which you can build your score. Manage those tradelines well, and you may unlock lower interest rates on loans and other elements of financial health.

Here’s another way to boost your financial health: Find the right banking partner.

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

FAQ

Are tradelines good for credit?

The information contained with your tradelines is used to generate your credit score. It reflects how well you manage credit and can therefore be either good or bad, depending on such factors as whether you have been paying back debt on time and how much debt you are carrying.

How much will a tradeline build my credit?

Adding a tradeline can actually lower your credit in the short-term. For example, it will lower the average age of your accounts, which can have a negative impact on your length of credit history. However, if you can maintain the account over the long-term and keep up with payments, the new account may help build your credit score.

How do I get tradelines on my credit?

Tradelines are added to your credit report when you open new lines of credit or take out new loans. A tradeline is also added when you become an authorized user on another person’s account.

Photo credit: iStock/miniseries

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

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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 .

SOBNK-Q324-095

Judging from the latest statistics, the most lucrative work-from-home job in America may be Con Artist. Fraudsters are utilizing texts, social media, fake websites, apps, emails, and old-fashioned voice calls to separate Americans from their money — billions every year. They play on our greed, or charity, or desperation. And they take all forms of payment.

The best way to fight back against fraud is to be aware of current schemes so you don’t fall victim in the first place. Below we share the top financial shakedowns, with enough details to help you recognize red flags, and statistics that will blow your mind. Read on to learn how to avoid getting fleeced (and how to report it if you are).

Identity Theft and Credit Card Fraud Trends

If you’ve been the victim of identity theft or credit card fraud, you’re hardly alone.

According to the Federal Trade Commission (FTC), there were 552,000 reported cases of identity theft through the first half of 2024. At this rate, the year is on track to surpass the number of reported cases in 2023.

Meanwhile, there were 214,607 reported cases of credit card fraud by mid-year, up 6% from the previous six months.
The impact of both crimes can be substantial. In 2023 alone, some 2.6 million consumers collectively lost more than $10 billion to fraud — a 14% increase from 2022.

There are several potential reasons for the surge. More people are turning to digital tools to handle everyday tasks, like shopping and banking. At the same time, scam email messages — no, that’s not the U.S. Post Office — have also spiked in recent years. And finally, the rise of crypto seems to play a role: The FTC has warned consumers that no reputable utility or creditor will demand payment only in crypto.

If you’re a victim of credit card fraud, it’s important to report it ASAP. You can get your credit report and find out your credit score for free at AnnualCreditReport.com®.

You can also enlist the help of a money tracker app, which allows you to manage all of your finances from one convenient dashboard.

Recommended: What Credit Score Is Needed to Buy a Car?

33 Identity Theft and Credit Card Fraud Stats

Below we do a deep dive into the most common types of fraud: imposters, online shopping scams, fake prizes and sweepstakes, false job opportunities, fictional charities, investment swindles, and more. All numbers quoted below are from 2023 FTC data.

1 Imposters: Reports Filed

The total reports filed in this one category came to 853,935, with 21% of filers admitting losses. An imposter is a person who pretends to be someone else to steal your personal information or money. They might call, text, or email you and may pose as someone you know. (“I’m on vacation in London and lost my wallet! Can you send me some cash?”).

2 Imposters: Losses

The median loss suffered by victims was $800. The total dollar amount of imposter scam losses was $2.668 billion.

3 Imposters: Scenarios

The most common way imposters approached targets was via email, and victims often paid via credit card.

4 Imposters: Top States Affected

Oregon led with 2,640.7 reports per million people. Washington and Colorado followed close behind.

Recommended: What Is a Tri-Merge Credit Report?

5 Online Shopping: Reports Filed

Total reports filed came to 369,469, with 53% claiming losses. In an online shopping scam, someone pretends to have a legitimate business by creating a phony website or posting fake ads on a real retailer’s site.

(Another form of this fraud is when scammers create and post fake negative reviews of small businesses and then tell owners that they’ll remove the reviews in exchange for digital gift cards.)

6 Online Shopping: Losses

The median loss suffered by victims was $125. The total dollar amount of online shopping scam losses totaled $392 million.

7 Online Shopping: Scenarios

Victims are most often taken in by websites or apps — not surprising, given the nature of this fraud — and are asked to pay via gift card.

8 Online Shopping: Top States Affected

Delaware led with 1,183.4 reports. New Hampshire and Colorado placed second and third.

9 Prizes & Sweepstakes: Reports Filed

Total reports filed came to 157,520, with 13% reporting losses. “Great news!,” a voice over the phone gushes. “You’ve won money or valuable prizes!” All the winner needs to do is provide their bank account information or pay a processing fee.

10 Prizes & Sweepstakes: Losses

The median loss suffered by victims was $878. Total losses equaled $338 million.

11 Prizes & Sweepstakes: Scenarios

Phone calls, texts, and emails are the most common contact method. Gift cards were of the top payment types.

12 Prizes & Sweepstakes: Top States Affected

West Virginia topped the list with 781.2 reports. Delaware and Alabama placed and showed.

13 Internet Services: Reports Filed

Total reports filed equaled 125,118, with 7% admitting losses. This category includes the use of fake messages or copycat sites — ostensibly from someone’s internet service provider — as part of a phishing or spoofing scam used to commit identity theft. It also includes theft of personal information: debit card PINs, credit card and bank account numbers, and passwords.

14 Internet Services: Losses

The median loss suffered was $250. Total losses came to $36 million.

15 Internet Services: Scenarios

Typically, individuals are contacted via social media and send money via payment app.

16 Internet Services: Top States Affected

Delaware was first in line with 418.6 reports per million people. Nevada and Florida came close on its heels.

17 Job Opportunities: Reports Filed

Total reports filed were 110,364, with 32% reporting a loss. Scammers post genuine-looking want ads and business opportunities in print and online. The catch? There is no job. They just want your personal information and your money. As just one example, a “work-from-home career” starts after the target pays for training, certifications, and/or starter kits.

Recommended: Should I Sell My House Now or Wait?

18 Job Opportunities: Losses

Consumers experienced a median loss of $2,137. Total losses reached $491 million.

19 Job Opportunities: Scenarios

People are most often connected by text and pay the scammers via cryptocurrency.

20 Job Opportunities: Top States Affected

Nevada was again the top contender, with 408.3 reports per million people. Arizona and Georgia achieved second and third place.

21 Advance Payments: Reports Filed

Total reports came to 29,878, with 35% of them suffering a financial loss. Advance payments, as the name implies, refer to a consumer pre-paying for a service. Credit service businesses purport to sell information that will allow the consumer to create a new credit file — perhaps after an identity theft occurred.

22 Advance Payments: Losses

The median loss of each victim was $638. The total amount lost was $75 million.

23 Advance Payments: Scenarios

Fraudsters typically communicate with potential victims via websites and apps for this kind of scam, and request wire transfers to collect the money.

24 Advance Payments: Top States Affected

Mississippi is number one this time, with 152.3 reports per million people. Georgia and Florida follow as numbers two and three.

25 Fake Charities: Reports Files

Total reports came to 9,809, with 27% reporting a monetary loss. Scammers pretend to be from a real or fake charity and ask you to make a donation right then for, say, a natural disaster that just occurred.

26 Fake Charities: Losses

The median loss was $392. The total amount lost was $22.5 million. Asking people to support a heartwarming cause has, unfortunately, been quite successful.

27 Fake Charities: Scenarios

Messages go out via social media, and have the potential to go viral. Scammers most often collect their money through a payment app.

28 Fake Charities: Top States Affected

Alaska led the way with 38.0 reports per million people. Georgia and Nebraska came in second and third place.

29 Investments: Reports Filed

Total reports came to 107,699, with 75% claiming a financial loss. With investment fraud, a scammer tries to get you to invest: in stocks, bonds, real estate, whatever. They may provide false information about a real investment or make something up entirely.

30 Investments: Losses

The median loss was $7,768. Total losses equaled $4.642 billion.

31 Investments: Scenarios

These so-called investment opportunities are described on social media platforms, with cryptocurrency being the top payment method.

32 Investments: Top States Affected

Nevada (again!) leads the way, with 289.9 reports per million people. Florida and Arizona trail behind in terms of percentage of population, but are way ahead in absolute numbers: Washingtonians filed 1,074 reports; Californians, 5,349 reports.

33 Bonus Stat: Tax Prep

A missing refund is one sign that someone else may have filed a fake tax return in your name. Here’s more information about what to do when you don’t receive a tax refund.

The FTC notes that 5,949 reports about tax preparation fraud were filed in 2023, with 10% of people reporting a monetary loss. The total loss was $1.9 million with a median loss of $500.

How to Avoid Credit Card Fraud

As these numbers show, there are plenty of scammers out there. Here are some ways to protect yourself against money scammers:

•   Avoid using debit cards, which are directly connected to your bank account. Credit cards and payment apps tend to be safer. Check your banking and credit card statements regularly, watching for errors and suspicious charges.

•   If your bank offers free transaction alerts, sign up now. For example, you can get an alert whenever a large payment (you choose the number) hits your account. Find out more about different types of bank fraud.

•   If you get a call from a company asking for payment data or other personal information, hang up. If it’s a company you normally deal with, call them back directly to see if the call was genuine.

•   Use password protection on your smartphone and computer devices. Keep your browsers up-to-date, and use reputable anti-virus software downloaded from the app store (not an ad, email or website). Avoid using public WiFi.

•   Shop at reputable retailers only, including but not limited to the ones you use online. If you have questions about a store, check them out on the Better Business Bureau website.

•   When pumping gas or using an ATM, watch out for skimmers: devices that capture your account information for fraudulent purposes. If anything looks odd, let the establishment know.

•   Be cautious about clicking on links from unknown sources, checking to make sure that an email or text message really came from the place it claims and is a reputable organization.

•   Monitor your credit report and watch for inaccuracies. What qualifies as credit monitoring varies, so look for services that send alerts whenever something new hits your report. You may also be able to sign up for free credit monitoring.

How to Report Credit Card Fraud

The first step is to file a dispute with your credit card company. Then you can contact your police station or sheriff’s office. You can also report the fraud to your state’s attorney general (get their contact info from https://www.naag.org/find-my-ag/) You can also submit an online claim with the FTC at https://reportfraud.ftc.gov/#/

The Takeaway

Scammers are reaching out via text, social media, fake websites, apps, emails, and old-fashioned voice calls to separate you from your money. Their stories play on your greed, or charity, or desperation. And they take all forms of payment — but they especially like gift cards and crypto. By learning to recognize the top schemes, you can help protect yourself from getting swindled. More pro tips: Monitor your transactions, avoid using debit cards for purchases, and don’t ever give out your personal or financial info unless you’re 100% sure of who you’re dealing with.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What are some common credit card scams?

Scammers can be pretty creative. Phishing is when a con artist tries to get you to share personal info or credit card information on the phone, by email, or text. Fake online websites can be built to steal credit card info. Skimmers can be set up on ATMs and credit card readers. And people with ill intent can monitor public WiFi for credit card info. And these are just some of the types of financial fraud out there.

How do credit card scams happen?

Sometimes, your physical credit card can be stolen. More often, someone gets your credit card data without having the actual card. Identity thieves can also steal personal information, set up credit cards in your name, and start spending.

How can you spot credit card fraud?

As you monitor bank statements, credit card statements, and your credit report, you may spot information that just isn’t right. Although this isn’t always because of credit card fraud, that’s a common cause. Proactively investigate when something looks suspicious. You can also set up alerts with your bank to flag certain kinds of transactions.

Photo credit: iStock/SaskiaAcht

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

SORL-Q324-038

Cars and trucks tend to lose value as they age and experience wear and tear through everyday use. This loss of value is known as depreciation. How much these vehicles tend to depreciate will vary. For example, trucks tend to hold their value better than cars.

That said, depreciation depends on a number of factors, such as make and model, age, mileage, and accident history. Here’s a closer look at what impacts car and truck value, and how depreciation can differ between the types.

What Is Vehicle Depreciation?

Cars and trucks lose value each year due to normal wear and tear. The rate of depreciation will vary depending on the make and model of a car. However, the first year tends to see the greatest depreciation, when cars lose as much as 20% of their starting value. For that reason, some consumers believe it’s wiser to buy a used car than a new car. Within the first five years of ownership, a vehicle can depreciate by as much as 60%.

Depreciation is not necessarily an accurate representation of wear and tear on a vehicle. You may find that after a number of years, your car has lost significant value even if it’s in pristine, like-new condition. Deprecation will continue to affect the value of your car until it reaches $0 on paper. At that point, your car no longer has any equity, and is not considered a financial asset. The only value left is the value of the metal for scrap.

Depreciation is an important factor to understand whether you are buying a used car, a new car, or if you plan to lease a vehicle. When leasing a car, your monthly payment will cover the cost of depreciation.

How Is My Car Value and Truck Value Depreciation Calculated?

There are various sources that supply car depreciation figures, including Kelley Blue Book and Edmunds. Each company has its own algorithm that accounts for the factors that affect depreciation, such as:

Mileage

How much a car or truck has been driven is often seen as a proxy for wear and tear. The more something is used, the more likely it is to wear out. As a result, vehicles that have been driven less tend to fetch higher values.

Make and Model

You can think of the make and model of a vehicle as the brand and specific product on offer. For example, Toyota is the make, while Tacoma is a specific type of truck the company builds. There may be a series of letters and numbers after the model name that further delineates the trim level of the vehicle. Trim level can refer to different features, engine size, or materials used in the making of the car or truck.

Some makes and models are more popular than others, and some models have higher trim levels. Both can help a vehicle hold its value longer.

Reputation

A vehicle’s reputation for safety and reliability can play a big role in its popularity. The higher the demand for a particular make and model, the more slowly it may depreciate.

Larger vehicles are typically safer than smaller cars, which helps explain why trucks tend to hold their value longer.

Fuel Economy

More fuel-efficient vehicles may also hold their value better than gas-guzzling counterparts, especially when fuel prices are high. Diesel trucks may depreciate more slowly than gasoline-powered cars and trucks because they tend to have more powerful engines, better fuel economy, and emit less carbon dioxide. A gallon of diesel contains roughly 10% to 15% more energy than a gallon of gasoline, and as a result, a diesel engine can go 20% to 35% farther on a gallon of fuel.

Local Market

Your local automobile market can also have a big impact on how much your car depreciates. For example, trucks may be in higher demand in rural areas, while cars may be more popular in urban settings. Vehicles with four-wheel drive may be more sought after in places with snow, while convertibles may be in higher demand in warm, sunny climates.

You may be asked for your zip code when you look up the value of your car. This can help valuation companies zero in on how much your car is worth in your locale. You can also use a money tracker app, like SoFi’s, to discover real-time vehicle values in just a few clicks.

Recommended: What Credit Score Is Needed to Buy a Car?

Average Truck Value vs Car Value Depreciation Comparison

Cars and trucks begin to depreciate as soon as they leave the lot. As mentioned above, they can lose as much as 20% in the first year alone, and up to 10% each year after that. By year five, a vehicle may have depreciated by as much as 60%.

That said, various types of cars and trucks tend to depreciate at different rates. And depreciation can vary a lot depending on current market conditions. For instance, iSeeCars research found that all types of vehicles held their value better in 2023 than they did in 2019, thanks in part to fewer new cars being produced and fewer used cars for sale.

In 2023, the average five-year-old vehicle depreciated by 38.8%, compared to 49.6% in 2019. And trucks held their value best of all vehicles, depreciating just 34.8% over five years in 2023, compared to ​​42.7% in 2019.
Here’s a look at of how different types of vehicles have depreciated over a five-year span:

Recommended: What Should Your Average Car Payment Be?

The Takeaway

While all cars are holding their value better than they did in 2019, recent research confirms that trucks hold their value the best of all vehicles. If you plan to trade in your car or truck after a few years, consider buying a vehicle that is likely to hold its value longer to get a better trade-in value.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

At what mileage do cars lose value?

Cars and trucks unfortunately start to lose value as soon as you drive them off the lot. After that, depreciation is calculated each year.

Does mileage affect car value?

Mileage is one of the most important factors that go into car valuation. The higher the mileage, the more wear and tear the vehicle is presumed to have, and the less the vehicle will be worth.

At what age does a vehicle depreciate most?

Cars and trucks depreciate most in their first year, when they can lose 20% or more of their value.

Photo credit: iStock/timnewman

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

SORL-Q324-004

There’s no one answer that fits all situations. The average American has 3.9 credit cards. But how many lines of credit you should have depends upon your needs, your skill at managing your finances, and your ability to make payments on time.

We’ll explore two types of credit lines, provide definitions of basic credit terms, and offer some broader context so that you can make the choice that’s best for you.

Line of Credit Definition

First, what is a line of credit? A personal line of credit (sometimes called a PLOC) allows consumers to borrow money as they need it, up to a set limit, and pay it off over time. A line of credit can be used to pay bills or make purchases directly or to withdraw cash with no cash-advance fee. As long as borrowers keep paying down the balance, they can keep borrowing. In other words, this is a type of revolving credit.

Lines of credit are usually granted only to people with good credit. Because they’re less risky for the lender, the interest rate can be lower than for credit cards.

How Does a Line of Credit Work?

Many banks, credit unions, and online financial institutions offer lines of credit. A distinguishing feature is the “draw period.” During that time — typically seven to 15 years — funds can be borrowed and repaid in a revolving way. When the draw period ends, users can no longer make purchases or withdrawals, though they can reapply to keep the line open. The repayment period can continue for additional five to 13 years.

To utilize a line of credit, consumers may receive checks, a card, or a direct deposit into their bank account. Funds can be used however they like, but generally go toward large purchases. Personal lines of credit often have a variable interest rate, with interest-only payments during the draw period.

Is It Possible To Have Too Many Lines of Credit?

In this case, a “line of credit” refers to both PLOCs and credit cards. All credit cards are a form of credit line, but not all lines of credit are associated with a credit card.

If a consumer has many credit lines, lenders may see them as high-risk — even if their balances are all zero. As noted above, the average American has four credit cards. New Jersey residents have the most credit cards in the country, with 4.5 on average. Older generations tend to carry more cards than Millennials and Gen Z. So while four lines of credit may be considered normal, it can be “too many” if a consumer has trouble juggling their bills and making payments on time.

Recommended: Should I Sell My House Now or Wait?

Is It Possible to Have Too Few Lines of Credit?

To build a strong credit score, it helps to have a variety of credit types. Credit mix accounts for 10% of a FICO® Score, and the ideal mix includes both revolving credit and installment loans like personal loans, car loans, and so forth. Although each person’s situation is unique, just having credit accounts and managing them well is what builds a good credit score. Having one or two cards can be enough.

Credit Card Definition

You may be wondering, if a line of credit can come with a card, then what is a credit card? Both credit cards and lines of credit are forms of revolving credit offered by many financial institutions. A credit card holder can also make purchases up to the credit card spending limit. However, credit card users can avoid interest charges by paying off the balance in full each month. Essentially, credit cards provide consumers with unlimited short-term loans for free (assuming there’s no annual fee).

Credit cards don’t have a draw period — they remain open as long as the account is in good standing. The average credit card limit, according to the latest report from credit bureau Experian, is $29,855.

Recommended: What Is the Difference Between Transunion and Equifax

Line of Credit vs Credit Card

A credit card — as the name implies — has a card connected to it, which allows the borrower to access funds. A line of credit doesn’t necessarily have a card connected to the account. Lines of credit tend to have lower interest rates and annual percentage rates (APRs) than credit cards and may have higher limits. So they may be better suited to large purchases, as noted above, that can be paid for over time.

Credit cards are easy to use for everyday purchases and often come with an interest-free grace period (from the purchase date until the payment date). Credit cards may provide rewards and perks that personal lines of credit do not. And applying for a credit card is usually a simpler process than the line of credit process.

Credit Score Risk Factors to Consider

How someone manages personal lines of credit and credit cards will have an affect on their credit score and, therefore, their ability to borrow at advantageous rates. Here are some ways your line of credit may negatively influence your credit score:

•   Credit utilization. After a large purchase, your credit utilization percentage will rise. Credit utilization accounts for 30% of your credit score.

•   Payment history. Late or missed payments can negatively impact your history. Payment history accounts for 35% of your FICO score.

•   Credit history length. A new line of credit will lower the average age of your credit history. Length of credit history accounts for 15% of your score.

Consumers who are concerned about their credit score may want to take advantage of a free credit monitoring service to see how their day to day actions impact their score.

Using Multiple Credit Cards

How many credit cards should you have? As long as you can responsibly manage your credit cards and haven’t applied for too many new ones in a short timeframe, then the number isn’t likely to have a negative impact on your credit.

However, the more cards you have, the more payments and due dates you’ll have to juggle. If you’re considering ways to use a credit card wisely, Ask yourself whether any of these issues apply to you:

•   Multiple annual fees are taking a bite out of your budget.

•   Monitoring your cards for fraudulent activity has become challenging.

•   Knowing you have cards with low or no balances makes it easier to overspend.

The Takeaway

The right number of credit lines varies by personal need and financial circumstances. Lines of credit include but aren’t limited to credit cards. What’s most important is to use them wisely to protect your credit score, avoid unnecessary debt, and manage your finances responsibly. It may help to know that the average American has about 4 lines of credit.

For a more holistic view of your finances — including your credit cards — consider enlisting the help of money tracker app. It can help you seamlessly manage your money by connecting all of your accounts on one convenient mobile dashboard.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

How many lines of credit is good for your credit rating?

Specifics will depend upon your financial situation. Elements that go into credit score calculations typically include the borrower’s payment history (making payments on time is the biggest factor), outstanding balance amounts in comparison to limits, credit history length, having a good credit mix, and strategically applying (or not applying) for new credit accounts.

How many lines of credit is too much?

What’s most important is to have the right number for your financial needs and overall situation. Being able to responsibly manage the number of accounts you have is important since making payments on time is the biggest factor in your credit scores. While most Americans have about four lines of credit, that may be “too much” for some consumers.

What are some consequences of having multiple lines of credit?

It can be more challenging to keep track of payment dates and amounts, which may make it easier to make a payment late or miss it entirely. This can have a negative impact on your credit score. Plus, if accounts have annual fees, then having several of them can add up. Multiple lines of credit may also make it more difficult to spot fraud. That said, if someone can responsibly manage multiple lines of credit, then that may be the right number of accounts for them.

Photo credit: iStock/demaerre

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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

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

SORL-Q324-018

The federal funds rate is a key interest rate set by the Federal Reserve, and likely the most closely watched indicator of where the U.S. economy may be headed next. Changes to the federal funds rate provide insight into the Fed’s position on monetary policy and how it plans to respond to economic factors, including inflation and employment levels.

In September, 2024, the Fed announced a rate cut of 50 basis points (a half percentage point), lowering the federal funds rate to 4.75% to 5%. This was the first rate cut made in four years, marking a pivotal shift from the Fed’s policy of holding higher interest rates in place to battle the persistent inflation that followed COVID-19 rate cuts.

The Fed also signaled rates could drop an additional 50 basis points by the end of 2024, with more to follow, as it drives toward a more neutral rate.

Changes to the federal funds rate almost invariably create a ripple effect of changes throughout the economy, impacting interest rates on loans, mortgages, and savings. Here’s a closer look at the Federal Reserve and how its economic outlook and policies can impact your accounts.

Learn more: SoFi’s Liz Young Thomas Looks at the Fed’s September Statement

Q: What Is the Federal Reserve?

A: The Federal Reserve System was founded by Congress in 1913, with the primary goal of promoting the stability of the U.S. banking system. Since then, the Fed’s mandate and methods have evolved — today the work includes regulating financial institutions, directing monetary policy, managing inflation, and keeping employment rates high. And one of the key levers it pulls to those ends is adjusting the federal funds rate.

Q: What Is the Federal Funds Rate?

A: The federal funds rate is a benchmark interest rate that guides the interest rates U.S. banks use when lending excess reserves to other banks overnight. Banks frequently borrow money from one another to ensure they have sufficient reserves to cover consumer withdrawals and other commitments. While changes to the federal funds rate most immediately impact the rates banks use for overnight lending, they influence consumer interest rates as well.

The federal funds rate is set by the Federal Open Market Committee (FOMC), an arm of the Federal Reserve System responsible for setting a range of monetary policies that can influence inflation, economic growth, and the job market. The FOMC is made up of 12 members who meet approximately every six weeks to review their stance on economic policies, including whether they should adjust the federal funds rate.

Q: What Factors Influence the Fed’s Rate?

A: The FOMC determines interest rate policy based on a wide range of economic indicators including inflation, employment levels, and durable goods orders data, which can provide insight into the economic health of a variety of industries such as technology, transportation, and manufacturing.

When these market indicators suggest that the economy is languishing, the FOMC may reduce the federal funds rate to make borrowing less expensive in the hopes of boosting economic activity. More money in consumers’ pockets typically means more spending and more money streaming into the economy.

When prices are rising too quickly, the FOMC may increase its interest rate, making it more expensive to borrow. That can slow spending and, in theory, help keep inflation in check.

Q: How Does the Fed Influence My Savings APY?

A: As mentioned above, the federal funds rate directly influences the interest rates banks use to borrow from or lend money to one another. But secondary effects eventually impact the wider economy, including the interest rates banks and financial institutions use when lending money through credit cards, personal loans, and mortgages. It can also affect the annual percentage yield, or APY, for savings accounts.

A federal rate decrease should eventually translate into lower interest rates when you borrow money to buy a house or car. It may also lead to a lower APY on your savings account.

When the federal rate increases, on the other hand, it becomes more expensive to borrow money, and savings account APYs typically increase.

Because savings account APYs are variable, they tend to rise or fall in the wake of federal rate changes. There are some types of savings accounts with rates that are fixed for a period of time — such as fixed-rate certificates of deposits (CDs). However, federal funds rate changes influence the rates financial institutions offer their customers for new CDs.

Q: Do Other Factors Influence My Savings APY?

A: Federal funds rate changes have a substantial influence on saving account APYs — but they are not the only factor.

Some banks offer high-yield savings accounts with APYs that are considerably higher than the national average rate. Online-only banks and credit unions generally have less overhead than traditional brick-and-mortar banks, which may allow them to offer higher APYs.

Competition among banks for consumer deposits may also drive changes to the APYs they offer. Larger banks tend to be less dependent on deposits than those with a smaller regional presence, for example, so those smaller banks may offer higher rates to attract depositors.

Even among these different scenarios, however, the Fed’s interest rate adjustments can still influence whether these banks’ APY rates rise or fall over time.

Recommended: What Is a Good Interest Rate for a Savings Account?

Q: How Has the Fed Adjusted Rates Recently?

A: After the economic crisis of 2008, the Fed upheld a near-zero rate policy for seven years as the economy normalized. Rates began to tick up gradually in 2015 until the COVID-19 pandemic upended the economy in 2020. The FOMC followed with two steep rate cuts to encourage economic activity, at the time, bringing interest rates down to historic lows.

This maneuver worked, but also contributed to the highest inflation rate the U.S. had seen in decades. In response, the Fed initiated a series of fund rate increases, culminating in a rate of 5.25% to 5.50% in July 2023 — the highest rate in 23 years — which the Fed held in place in a bid to inch inflation toward its 2% target.

September, 2024, however, marked a major pivot in the Fed’s policy as they announced their first rate cut in four years: an aggressive 50 basis points, bringing the federal funds rate down to 4.75% to 5%, with additional rate cuts expected to be announced in upcoming FOMC meetings.

Federal Funds Target Rate (2015-2024)

Source: Federal Reserve Bank of St. Louis

Q: When Will the Next Rate Change Come?

A: The FOMC typically convenes eight times per year. Though it does not necessarily adjust rates at every meeting, the outcome of these meetings is always watched closely, due to the broad impact rate changes have on the national and even global economy. Given that the Federal Reserve’s September 2024 rate drop is expected to be the first in a series of cuts, investors and consumers will almost certainly be closely monitoring the FOMC’s next moves.

In addition, banks and financial institutions sometimes adjust their own interest rates ahead of FOMC meetings, especially when economic conditions or signals from the Fed suggest a rate change may be forthcoming. The Fed publishes the schedule of FOMC meetings on its website.

The Takeaway

While the FOMC sets the federal funds rate to directly influence the rates banks use to lend money to each other, the rate has a broader effect on the U.S. economy, impacting many financial services and products including personal loans, mortgages, and savings accounts.

Photo credit: iStock/Sadeugra

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

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

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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