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With all the talk of rising interest rates, it’s natural for consumers to assume that the rates on their bank accounts are headed up too.

To fight record inflation, the Federal Reserve (the Fed) has raised the federal funds target rate — a key borrowing rate — four times this year, to a current 2.25% to 2.5% and is expected to do so again in the Fall. This comes after years of the near zero or zero rate levels.

Higher rates result in consumers paying more for mortgages, credit cards, auto loans, home equity lines of credit, and other loans. The Fed rates also affect how much interest is earned on savings accounts, certificates of deposit (CDs), and other accounts. Thus, the silver lining to rising rates would seem to be that the interest on your bank accounts would finally rise above near zero levels.

Unfortunately, that’s not always what happens.

While some banks and financial institutions have raised interest rates on savings, many have not. One reason is simply that it takes longer for some banks to respond to rising interest rates than others. Another issue is that, due to high levels of pandemic saving, many institutions aren’t looking to woo new customers (and more deposits) with attractive interest rates.

Here’s a closer look at why your bank account may not be earning the interest you think it should.

How Fed Rates Affect Banks

When you hear that the Fed has raised (or lowered) interest rates, it is referring to the federal funds rate, which is the target interest rate at which banks borrow and lend money to one another. This has a ripple effect across the entire economy.

When interest rates rise, loans become more expensive for banks and, in turn, consumers and businesses. However, it can also mean higher yields for savers. That’s because, when you have a savings account at a bank, you are effectively letting the bank borrow your money, and the institution pays you interest in return.

In a higher-rate environment, banks may start raising the annual percentage yield (APY) on savings accounts and rewards checking accounts to attract new customers. However, that’s not always how it works, at least not right away.

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

How Banking Lending and Borrowing Works

When you — and all bank customers — make a deposit to your checking or savings account, your bank uses that money to make higher interest loans, such as personal loans, car loans, and mortgages. That’s a chief way banks make money.

With people saving more during the pandemic, banks have seen their deposits skyrocket. The result, at least for the short term, is that many institutions don’t need to attract checking and savings customers with competitive interest rates because they already have plenty of cash on hand to use for lending.

Also, when banks pay interest on customers’ savings accounts in a low-rate environment, which has been the case for many years, they may pay more than what they make when they lend to other banks. The result is that some banks have to slash profits to keep paying interest to savers or even go into the red. Now that rates are rising, some of these institutions are holding back on increasing APYs to help make up for those lost profits.

Some Banks Lag Behind the Fed Longer than Others

It may be that your bank will raise rates on your savings or checking account soon. They just haven’t done it in sync with the Fed’s announcements.

Typically, online savings accounts respond more quickly to Fed rate changes. This is because there is generally a lot more competition among online banks for customers (and their deposits). APYs offered by traditional brick-and-mortar banks often react much more slowly to Fed rate increases, and yields hardly ever rise as high as the Fed’s interest rate.

What’s important to remember is that banks don’t increase rates at the same time or at the same rate as the Fed. It’s a good idea to keep an eye on both your savings and your credit accounts to see what moves your bank is making.

A Note About Brick-and-Mortar Banks

Big banks with lots of physical locations generally have higher operating expenses than online banks and, as a result, may be reluctant to offer higher rates that cut into profits.

But that’s only part of the story, says Brian Walsh, senior manager of financial planning at SoFi. Big banks know their customers often experience inertia when it comes to changing banks. “They may have started their account in college or when they were setting up direct deposit at their first job. Those customers tend to just stick around,” he explains. As a result, big banks may determine they won’t lose customers if they don’t raise rates, so they are less likely to do so.

Recommended: Traditional Banking vs. Online Banking: What’s Better for You?

Customers Often Overestimate How Difficult it is to Change Banks

Often banking customers are reluctant to switch because they overestimate the amount of time or paperwork it will take,” says Walsh. They may feel a slightly higher interest rate just isn’t worth the trouble. According to SoFi research from February 2021, a third of 1,600 respondents said they see no benefit to switching their bank or financial institution.

Walsh acknowledges that there is some time involved in changing banks, but notes that the hour or two you spend will likely pay off over time. “The difference between close to zero percent interest on your savings account and 1.80% can add up to a lot of money,” he says.

Recommended: How to Earn More Interest On Your Money

The Takeaway

Even if the Fed is raising rates, banks and other financial institutions don’t necessarily follow, at least not immediately. They may decide it doesn’t fit into their business and profit strategies to raise rates on customer accounts. They may also be counting on the fact that banking customers often experience inertia when it comes to switching to a higher paying bank, especially if they have been using an established institution for a long period of time.

Understanding why your bank account interest rates don’t move in tandem with the Fed’s actions can help determine if you should make a change. If you’re not satisfied with the interest you’re currently earning on your accounts, you may want to consider an online bank account like SoFi’s all-in-one Checking and Savings account. When you open an account with direct deposit, you can earn a competitive APY. Plus, you won’t pay any account fees.

Ready for a change? Come check out what SoFi has to offer.

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Photo credit: iStock/Brankospejs

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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Money for college doesn’t grow on trees. Or does it? Every year, billions of dollars wait to be plucked from the branches by college students seeking merit-based aid.

The National Merit Scholarship Program alone plans to award more than $28 million in spring 2022. Merit aid is awarded to students based on factors outside of just financial need. These awards generally factor in a student’s skill or ability for a certain specialty.

Brainiacs merit recognition, but a student can earn merit aid based on talent in athletics and other interests, including puppetry and vegetarianism, as well as lineage.

So what’s the catch?

Patience, diligence, and timing come into play. This guide can help students who are starting the search for merit-based aid.

What Is Merit Aid?

College aid can generally be broken down into two categories:

Need-based. Eligibility for need-based aid is based solely on the ability to pay for college. Students can look for state, possibly school, and federal aid by filling out the Free Application for Federal Student Aid, commonly known as the FAFSA®, sharing information about income and assets.

Merit-based. Merit-based aid takes factors beyond financial need into account. According to the Department of Education, merit-based “means that something is based on a student’s skill or ability.”

Students can qualify for merit-based aid, often referred to as merit-based scholarships, with a variety of factors.

Scholarship money does not have to be paid back — it’s a gift. Merit aid can be a one-time payment, or it could be renewable year after year, depending on eligibility and terms of the aid.

Depending on a student’s financial needs, merit aid could cover part or all of their education costs. It might be just one component of a larger financial aid package.

Merit aid can be awarded for both undergraduate and graduate programs, and could be anything from a couple of hundred dollars for books and supplies to thousands of dollars to help cover tuition.

Recommended: FAFSA Guide

Strategies to Find Colleges that Offer Merit Aid

Not all schools offer merit aid. However, at schools where merit aid is offered, on average 22% of the student body received a merit award from the university, according to U.S. News & World Report. Here are a few tips on finding colleges that offer merit aid.

First things first, when you are creating your list of colleges you’re going to apply to — find out which of those offer merit aid. Knowing up front what options may be available to you is helpful and can be important as you prepare to pay for college.

Then, review the typical financial aid offer at your target schools. Some schools publish information on the percentage of students that receive merit aid and the average merit aid amount. Consider contacting the financial aid office if you have specific questions.

Another strategy to potentially improve your chance of merit aid — apply to schools where you are likely to get in. Since merit aid can be awarded on factors such as GPA, standardized test scores, or curriculum, being in the upper echelon of applicants could help put you at the front of the pack for earning merit aid.

In some situations, scholarship money may go unclaimed. Check out this guide to unclaimed scholarships for more information.

Which Schools Offer the Most Merit Aid?

Here’s what students can expect when it comes to merit aid from schools:

•   Generally speaking, private colleges award more merit aid than public institutions.

•   Ivy league schools don’t grant merit aid. No Ivy League institutions offer merit aid to their students. Other competitive universities, such as MIT, Stanford, and Caltech, don’t offer merit aid either.

•   Some higher-cost colleges may offer more merit aid than others. The cost of attending some schools can send a student into shock. However, some costlier schools will offer more merit-based scholarships. Oberlin College, for example, recently offered 42% of its student body merit-based aid, about $17,000 on average, to offset tuition and fees that have reached nearly $57,000.

•   Out-of-state students might be awarded more merit aid than in-state students at a public college or university. Because of the higher cost of attendance for out-of-state students, public schools may offer them merit aid to be more competitive.

•   Honors programs may offer more merit aid. State school honors programs can sometimes come with tuition discounts, or academic scholarships for students who get into the prestigious programs.

Keeping these trends in mind could help students think more strategically about where they’ll attend college based on the chances of being awarded merit aid from the schools.

How to Apply for Merit Aid

While merit scholarships are often referred to as “free money” when it comes to funding education, there is some work involved. Each scholarship will likely have its own requirements and application process, which might include personal essays, recommendations, and interviews. It’s important to read through each application carefully so it’s filled out without error.

Merit-based aid does not hinge on the financial need of the student or family, so should you submit the FAFSA first? Some colleges require students to fill out the FAFSA in order to be considered for school-based scholarships, including those awarded based on academic merit.

Plus, filling out the FAFSA could help you qualify for other types of financial aid, such as need-based Pell Grants or Direct Unsubsidized Loans. A quick aside to note that federal loans offer benefits and protections not necessarily afforded to private student loans. Since the FAFSA is free to fill out, it’s generally worth taking the time to see what other types of aid you qualify for. If financial aid and merit awards aren’t enough, private student loans could help.

Recommended: Private Student Loan Guide

Generally, you won’t need to fill out the FAFSA as a prerequisite for applying for a private merit scholarship.

If you’re not sure about the requirements at your school, it can be worthwhile to call the college admissions office to see if a financial aid application is required to apply for any merit scholarships at that school.

When evaluating merit scholarships from other private sources, keep in mind that each one may have different application requirements and deadlines. Some deadlines may be as early as a year before college starts.

Finding Merit Aid Awards for College

Colleges and universities award merit aid, but there are many other ways to find scholarships, including private organizations and state-level scholarship search tools and directories.

You can learn about private merit scholarships by using search engines like CollegeBoard.org, Fastweb.com, and Scholarships.com. In addition, it can be helpful to talk to your school guidance counselor and the leaders of any organizations you participate in to suss out merit scholarships.

Consider exploring a few of the following avenues when seeking merit aid opportunities:

•   Local groups. Local clubs or foundations offer scholarships. Community chapters of the Lions Club or Rotary Club offer aid for students seeking higher education. Because there’s a smaller pool of applicants, local merit scholarships may even be less competitive.

•   Cultural organizations. Students from minority backgrounds have an opportunity for specific merit aid. Students of Native American descent, those who identify as LGBTQ, and women might qualify for scholarships.

•   Foundations and nonprofits. The Bill & Melinda Gates Foundation offers full scholarships for those who qualify. Local nonprofits or educational foundations might offer small awards to students as well.

•   Businesses. National companies, such as Google , offer generous merit aid.

•   Niche interests and programs. Students who have an interest or hobby can search for merit aid surrounding it. Everything from greeting card creators to puppetry enthusiasts and promoters of vegetarianism have a chance to capitalize on their passions.

Once a student is granted merit aid, the funding might be directly credited to the school to pay for tuition, room, board, or other costs. Or the aid might come directly to the recipient via check. The size of the awards will vary, but seeking out aid in unexpected places can help drive down the cost of education.

Some Cautions About Merit Aid

Merit aid can be incredibly helpful for students paying for college. But, it’s important to understand the full picture of the merit aid awards you receive. Understand the terms of the aid award, and any ongoing eligibility requirements outlined by the scholarship or grant.

For example, is the award for one year? Or is it an annual award over your college education? If it is a merit award to cover each year of college, are there ongoing eligibility requirements such as maintaining a minimum GPA?

Understanding how and when the merit aid awards you earned are paid out can be important to help you avoid financial surprises, like suddenly losing your merit scholarship, down the road. College students will be facing a lot of financial-firsts on their journey. Take a look at SoFi’s Ca$h Course: A Student’s Guide to Money with even more tips and strategies on managing your finances through college.

The Takeaway

A pot brimming with billions of dollars in college merit aid sits waiting every year. Stellar students and athletes come to mind as popular recipients, but merit scholarships are awarded based on other talents, too. To apply, deadlines and details require attention.

Merit aid might just be a piece of the puzzle, depending on the size and terms of the scholarship. Once federal and merit aid options have been exhausted, an undergraduate private student loan may help bridge any gaps.

Private student loans from SoFi offer competitive interest rates for qualifying borrowers, and have no fees, and flexible repayment plans. With an all-online application, SoFi private student loans come with membership benefits and resources.

A SoFi private student loan might merit a look.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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

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

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

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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A share draft account or share draft is a checking account that’s held at a credit union. That’s a simple share draft account definition.

Share draft accounts are similar to checking accounts offered by banks, in terms of how you can use them. There are, however, a few differences that set them apart.

Whether a share draft account or a checking account is right for you can depend on your preferences for managing your money. If you’re thinking of opening a share draft at your local credit, it helps to know how they work. Learn more here, including:

•   What is a share draft account?

•   How do these accounts work?

•   What are the pros and cons of a share draft account?

•   How do share draft accounts differ from typical checking accounts?

What Is a Share Draft Account?

“Share draft account” is how credit unions refer to checking accounts. This terminology reflects in part how credit unions work.

When you join a credit union, you become a member of it. You, along with the other members, have an ownership share in the credit union. That’s a key distinction between a credit union vs. bank. Share draft is used to describe checking accounts belonging to credit union members.

You’ll also see the word “share” used with other types of accounts offered at credit unions. For example, a share account is the credit union equivalent of a bank savings account. These accounts can earn interest so you can grow your money over time.

Share certificates, meanwhile, are the credit union version of certificate of deposit (CD) accounts. You deposit money into a share certificate, which then earns interest until the certificate matures. At maturity, you can withdraw the initial deposit and interest earned or roll it into a new share certificate.

How Do Share Draft Accounts Work?

Share draft accounts work by allowing you to deposit money that you can then spend or withdraw later. Each time you deposit money, you’re essentially buying shares in the credit union that holds your account.

Generally, with a share draft account you can:

•   Pay bills online

•   Withdraw cash at ATMs (though there may be ATM withdrawal limits)

•   Make purchases online or in person using a linked debit card

•   Manage accounts via online and mobile banking

•   Add funds through direct deposit and/or remote deposit capture

•   Write checks

•   Link your debit card to mobile wallet apps

•   Send money to friends and family through Zelle or another mobile payment app

•   Send and receive ACH transfers or wire transfers

There may be various fees associated with these accounts, including monthly maintenance fees or overdraft fees. You may also pay ATM fees, depending on where you withdraw cash. Some share draft accounts pay dividends to credit union members as they’re declared quarterly, biannually, or annually.

Opening a share draft account is a bit different from opening a bank account. You first need to qualify for membership in a credit union.

The qualification requirements can vary by credit union. In terms of how much money to open an account, initial deposit requirements are usually on the lower side. It might be, say, $5 to $25 in many cases.

Credit unions can impose daily, weekly, and monthly limits on debit card transactions and ATM withdrawals. There may also be limits on check-writing. Customer service availability can depend on the credit union.

Recommended: What Is Monetary Policy?

Pros of Share Draft Accounts

There’s a lot to like about share draft accounts and credit unions in general. Here are some of the main advantages of share draft accounts:

•   Initial deposit requirements are often low

•   Minimum balance requirements may be low or nonexistent

•   Some share draft accounts can earn dividends

•   Banking fees may be lower

•   Benefits and features tend to be similar to bank checking accounts

•   Credit unions can offer numerous ways to access share draft accounts, including online and mobile banking, ATMs, and branches.

There’s one more advantage to opening a share draft account. If you’re a member of a shared branch credit union, you can access your money through a wider network of branches. Shared branch banking means that even if your accounts are held at Credit Union A, you could access them at Credit Union B, which is convenient if you’re traveling.

Cons of Share Draft Accounts

Share draft accounts may not be right for everyone. Before opening one, here are a few potential drawbacks to keep in mind:

•   Membership in a credit union is required to open a share draft account

•   Branch access may be limited if your credit union isn’t part of a shared branch network

•   There may be limits on withdrawals or debit card transactions

•   Dividend rates may be low.

Qualifying for membership in a credit union might be the biggest hurdle to joining one for some people. Credit unions can base membership on things like military affiliation, where you work or attend school, religious affiliation, or employment. The good news is that there are some credit unions that have less stringent requirements and offer membership to a wider range of people. It can be worthwhile to shop around.

How Does a Share Draft Differ From a Traditional Bank Account?

Share draft accounts are similar to checking accounts offered at traditional banks, but they aren’t identical. Here are some of the most important differences between share draft vs.checking accounts.

Fees

Banks are known for charging plenty of fees for checking accounts. Fees are a big part of how banks make a profit. Credit unions, on the other hand, are not-for-profit financial institutions. That means they generally charge their members fewer fees and they can pay higher interest rates on deposit accounts than traditional banks.

Deposit Insurance

Deposits at banks and credit unions can both be insured against institutional failure. Whether your coverage comes through the FDIC vs. NCUA depends on where you keep your accounts. Credit unions are likely insured by NCUA, or the National Credit Union Administration.

The Federal Deposit Insurance Corporation insures deposits at member banks up to $250,000 per depositor, per account ownership type, per financial institution. You may qualify for more deposit insurance if you have accounts in different ownership categories that meet FDIC requirements. This insurance reassures you that your checking account is safe.

The National Credit Union Administration insures deposits at member credit unions up to $250,000 per depositor. Member deposits held in jointly-owned accounts are insured up to $250,000 as well.

Features and Benefits

Credit unions and banks can offer a different range of features and benefits for draft accounts and checking accounts, respectively. There can be a significant difference between what is a premium checking account at a bank and what constitutes a premium share draft account at a credit union, for example. Comparing what’s included with share draft and checking accounts can help you decide which one is better for your needs.

Banking With SoFi

Deciding to open a checking account or a share draft account can help you get a better handle on your money. Both share draft accounts and checking accounts make it easy to deposit funds, pay bills, withdraw cash, or make purchases as needed.

If you’d like to manage money online, you might consider banking with SoFi, where you can get checking and savings in one convenient place. And when you open a bank account online at SoFi with direct deposit, you’ll earn a competitive APY and skip the usual fees.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What is the difference between regular share and share draft?

A share account is a savings account held at a credit union. Share accounts can earn interest in the form of dividends. Share draft accounts, however, are similar to a checking account and allow you to make draft withdrawals by writing checks, making purchases with a debit card, or withdrawing cash at ATMs.

What is the difference between a share draft and a checking account?

The difference between a share draft and a checking account is where they’re held. Share draft accounts are offered at credit unions; checking accounts are offered at banks. Share draft accounts can be NCUA-insured while checking accounts at banks have FDIC deposit insurance coverage.

Is a checking account better than a share draft?

A checking account may be preferable to a share draft account if you’d rather keep your money at a bank rather than a credit union. On the other hand, you might lean toward a share draft if you’d rather take advantage of perks that only a credit union may offer. Looking at your money management habits and preferences can help you decide whether a checking account or share draft is the better fit.

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Photo credit: iStock/SDI Productions

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SOBK0622003

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Here’s some nice news: It may be possible to change the due dates of some of your monthly bills.

This can be a huge relief to many people who find that the bulk of their bills are due at the very beginning of the month, which can make cash flow a challenge. Or, alternately, perhaps you may find it very helpful to space your payments out over the course of a month and add some breathing room to your budget.

Or maybe you have some bills that are maddeningly due a couple of days before you get paid, which can also cause money management issues. Being able to scoot that due date a couple of days into the future could be super convenient.

These adjustments to your bill-paying may indeed be possible, though not every company will allow you to change your billing due date. It can be worth investigating which ones will. How exactly? And are there any downsides to making a shift? Read on for answers, including:

•   Why you might want to change your bills’ due dates

•   What are the pros and cons of changing your billing due dates

•   How you may be able to change a bill’s due date.

Can You Change the Due Dates on Your Bills?

You may be able to change the due dates on some — or, if you’re lucky, all — of your bills. Each company likely has its own policy, but it never hurts to reach out to customer service over the phone, in an email, through an online chat portal, or even in an old-fashioned letter. If the service provider is local, you may also be able to make the request in person. Your request may well be honored, down to exactly which day of the month your bill is due.

However, setting your own bill due dates is never guaranteed. A company has the right to reject your request, but many offer this service as a courtesy to loyal customers.

Why Might Someone Change the Due Dates of Their Bills?

So why might you want to change the payment date for some or all of your bills? There are several reasons why a person might request this service:

Aligning Better with Paydays

If your bill dates are not aligned well with your paydays, you may find that you don’t always have enough money to cover your bills when they are due. If you struggle with spending and budgeting, it could be helpful to schedule bills shortly after a payday. That way you can’t accidentally overspend money that should be earmarked for bills later that month. Scheduling your bill paying like this might help you be more responsible, spending more wisely and paying on time.

Recommended: How Much of Your Paycheck Should You Save?

Convenience

Some people like to stagger their bill-paying throughout the month, but others may find it more convenient for all their bills to come at the same time each month. A single due date each month for all of life’s bills could certainly make them easier to track and remember.

Recommended: Splitting Bills with Roommates

Ability to Spread It Out So You Are Not Paying All at Once

While paying bills all at once — like right after payday — might make it easier for some people to stay on top of bill payments, others may prefer that their bank account is not drained on a single day, as was mentioned above.

If that’s the case, you may want to do the opposite: change bill dates so that they are spread out throughout the month. This could be especially helpful if your paychecks are irregular—say, if you are a freelancer who depends on clients paying their invoices before you have cash in the bank.

Remembering Pay Dates Will Be Easier

Regardless of when you arrange for your bill due dates to be, it will likely be easier for you to remember if you get to pick the dates. By picking an important date, like the first or last day of each month or the day after payday, it may be easier for you to remember, even without reminders in your phone or on your calendar. And if you sign up for automatic bill payment, it might be a totally seamless process.

Benefits of a Bill Date Change

So what are the pros of changing a bill due date?

•   It puts you in control of your budget.

•   It can make remembering due dates easier.

•   It might help you avoid missed payments and late fees.

Drawbacks of a Bill Date Change

So are there cons to changing a payment date? If you are making the conscious decision to change your billing schedule, you likely have a good reason for it — meaning you probably won’t encounter any drawbacks with the bill date change itself.

However, you might find that you spend a lot of time trying to get a company to change a bill due date, only for them to say no. The wasted time and effort for something that might be declined could be a drawback itself.

Recommended: How Long Does a Direct Deposit Take?

When to Schedule New Pay Dates

So when should you schedule new bill pay dates? That depends on your own paycheck schedule and personal preferences. The Consumer Finance Protection Bureau (CFPB) offers a helpful worksheet for organizing all your current bills and due dates. Seeing them on paper may help you determine the best date(s) in your calendar month for bills to process.

Tips for Changing Pay Dates

Changing payment dates might seem intimidating, especially if you don’t like talking to customer service on the phone. But doing so may help you get better control of monthly bills like rent, utilities, subscription services, and even credit card payments. Here are a few tips for changing your bill due dates:

1.    Getting organized. It may be helpful if you first make a list of all your recurring payments. When organizing your bills, you can chart out when each bill processes every month. Comparing these to your monthly payday(s) may help you determine the ideal dates for bills to process.

2.    Deciding which bill dates should change. Once you have a list of all your recurring bills and ideal pay dates, you can more easily identify which bills need to change. From there, the CFPB recommends calling each company or searching their website to see if they even allow you to change bill dates.

3.    Making the necessary requests. To get your due dates changed, you might be able to contact the company by phone, email, online chat, or letter — or even talk to a representative in person. The CFPB offers a useful script if you aren’t sure what to say: “I am requesting a change in my bill payment due date for my [company] bill. I would prefer to have my bill payment due date be on the __th of each month. Thank you for your assistance.”

4.    Setting up autopay. If a service provider has an automatic bill pay option, it might be a good idea to schedule this. How bill pay works is that you schedule electronic payments in advance so you don’t have to manually transfer funds or write a check as your due date approaches. It can be an especially good option if you have a bank account with no-fee overdraft coverage. Because of the risk of overdrafting when you set up autopay, however, it might only make sense if you regularly keep more than enough funds in your checking account to cover monthly bills.

5.    Scheduling reminders. Even if you have changed payment dates to a schedule that fits your monthly budget, it’s a good idea to schedule reminders in your phone or on your calendar ahead of the payment date. This allows you to ensure you have the funds in your account ahead of an automatic payment or reminds you to manually complete the payment (in person, in the mail, or online) if you don’t have autopay set up.

Can You Always Change Bill Dates?

Many companies will allow you to change bill dates to a schedule that makes sense for your finances. However, no company is required to do this. You may encounter some service providers that do not allow you to change bill dates.

What if You Can’t Change Your Due Date?

If you cannot change your due dates, you can still take some actions to ensure you pay all your bills on time, such as:

•   Setting reminders: If you often forget to pay your bills on time but have the funds available, you may just need to schedule reminders for yourself ahead of the due date. Putting a recurring reminder in your calendar (perhaps the one on your phone) can be a wise move.

•   Setting money aside until you need it: If you can’t resist the temptation to spend the money available in your checking account and often struggle with a low current or available account balance on the day that bills are due, it might be wise to move money to a separate account for paying bills. And of course, don’t touch those funds for any other sort of spending.

Banking With SoFi

Are you looking for a high-yield bank account that makes it easy to pay your bills on time each month? Consider SoFi’s online bank account. When you sign up with direct deposit, you’ll earn a competitive APY, and eligible accounts can get paycheck access up to two days early — which could help you take care of your bills on time.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

How easy is it to change the due date for your bills?

Changing the due date for your bills can be as easy as making a phone call or sending an email to the service provider. However, not every company allows you to change your bill due dates. It is solely done at the company’s discretion.

Can I pay my bill before the due date?

If you are worried about missing a payment or spending too much money before a bill is due, you can make an early bill payment. Paying credit card bills early in particular may not only help you avoid late fees but also improve your credit score.

Is it better to have your bill dates close together or spread out?

The ideal schedule of your bill dates depends on your own financial situation, including your payday schedule and spending habits. Some people may prefer their bill dates to be close together (even on a single day per month) while others might benefit from having them spread out throughout the month.

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Photo credit: iStock/Tatomm

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

SOBK0822007

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Inflation. The high cost of gas. Ever-more expensive trips to the grocery store. If you’re feeling a pinch in your wallet, you’re not alone. It’s harder than ever to afford daily expenses and to save for financial goals, like having an emergency fund.

A startling 35% of adults would have trouble covering a $400 emergency expense entirely with cash and would have to use a credit card or borrow money, according to a 2021 survey from The Federal Reserve. And emergencies can be more expensive than that $400 figure.

Beyond emergency funds, saving for other goals, like the down payment on a house or one’s retirement, are also feeling as if they are hard to achieve. These are worthwhile goals that build wealth. But how do you begin saving when everything is so expensive?

Read on to gain a better understanding of why it is so hard to save money and hopefully to learn to manage your money even better. Here are 14 reasons why you’re likely having trouble saving money plus tips for how to start stashing away more cash.

Challenges of Saving Money in Today’s Economy

1. Not Focusing on Paying Down Debt

Having debt is one of the reasons many people have difficulty saving money. The urge to pay it off vs. save is strong. That’s especially true if you’re carrying revolving debt, like debt from credit cards. Interest rates on these types of accounts can change, which may mean that you’re owing even more money in interest than you may have thought. Right now, the range of interest rates on credit cards is around 15% to 19%.

American household debt hit a record high of $14.6 trillion in 2021, according to the Federal Reserve. This debt includes student loan debt, credit card debt, mortgage debt, and personal loan debt. Some of this debt can be low-interest, like many mortgages, which also help a person build equity.

The kind of debt that typically prevents a person from saving is high-interest credit-card debt. Paying that down by consolidating debt with a low- or no-interest card or by taking out a lower-interest personal loan can be good solutions.

2. Budgeting is a Non-Factor

Budgeting can sound intimidating, but assigning a dollar to all aspects of your cash flow can ensure that you don’t lose track of money. Recently , the average household earned $84,432, before taxes. Of that money, expenditures — housing, food, health insurance — equaled $61,334. That left $23,018 in free cash flow.

This “free cash flow” isn’t free, of course. It’s money to be put toward paying down debt, building an emergency fund, as well as paying for extras, like vacations and nights out. Knowing exactly how much you have and tracking your spending can help you put some money into savings. Try one of the popular budgets, like the envelope system or the 50/30/20 rule, to take control of your cash.

3. Trying to Impress Friends With Money

Maybe friends invite you to a pricier-than-expected restaurant and you go along, only to split the painfully expensive check. Or perhaps you get a bonus and blow it on a status wristwatch to feel as if you fit in with your big-spender pals.

If you feel like you’re always spending money with friends, consider ways to potentially minimize that outflow of cash. Hikes, potlucks, and checking out local events can all be ways to cut down on these costs. They are relatively easy ways to save money. Or you might go back to that budget you created (see #1) and make sure you stick to it when it comes to splurge-y spending.

4. Not Earning Enough Money

It’s important that the money you earn be able to cover all your expenses. And sometimes, when your expenses increase unexpectedly, your paycheck doesn’t stretch as far as you need. Keeping a budget can help you understand how much you’re spending each month, and can clue you into increases.

For example, let’s say your rent renews 10% above what you were paying last year or your auto insurance increases. That money needs to come from somewhere. You might consider the benefits of a side hustle. Maybe you can sell the jewelry you make on Etsy, get a weekend job at a nearby cafe, or drive a ride-share from time to time.

5. Not Having an Emergency Fund

Saving for emergencies is important for many reasons, one of which is to have an emergency fund. An emergency fund is what it sounds like: Cash that can cover an emergency, which can be anything from a blown tire to a trip to the vet to covering expenses if you were unexpectedly let go from your job. Having an emergency fund relatively liquid and easy to access in a high-yield savings account (rather than in investments) means you can tap into it relatively quickly if you were to need it.

Most financial experts advise having three to six months’ worth of basic living expenses in an emergency fund. Set up regular transfers from your checking account to fund that; even $25 a week or a month is a start. Consider putting a windfall, like a tax refund, there as well.

6. Shopping Too Much

Shopping too much doesn’t mean always filling your online cart or always having packages at the doorstep. It could just mean that you’re not being strategic about how much you’re paying. For example, buying groceries every day at a nearby gourmet grocery could be much more expensive over time than doing a weekly or bi-weekly shopping trip to a warehouse club.

Making lists, tracking items over time, and making sure you get the best price by using coupons and cashback offers are all ways that can help you save money and even have fun while doing so.

7. Inflation in Housing, Education and More

Sky-high housing prices. Rising tuition costs. And interest rates that are increasing. Inflation can make everything more expensive. This can make it challenging to figure out how much to save, especially if you’re saving for a house or putting aside money for tuition. Inflation can also make smaller things, like grocery runs, more expensive too. Overall, rising prices can make it feel difficult to save money.

Take a deep breath and remind yourself of the cyclical nature of the economy. America has had recessions, a Great Depression, and plenty of inflation before. Persevere and be money motivated: Do your best to control spending and save, if possible, 10% of your take-home earnings towards your future goals.

8. Paying for Items We Don’t Use

How much stuff do you own? Probably way more than you regularly use. And it’s not only physical stuff. Unused digital subscriptions and wasted food…all of it adds up to spending money on things we don’t need.

One quick way to get that money back: Go through your last month of bank account payments and note any money you spent on subscriptions. Chances are, there are at least one or two you either don’t use or use so rarely you can let them go without missing them. For instance, check out how many streaming channels you are paying for. It could save you hundreds of dollars a year if you lose one or two.

9. Saving Money is Not Our Priority

If you wait until the end of the month to put aside whatever you have left, chances are …there’s no money left. That’s why prioritizing saving is so important. Learning to save can be a skill, and employing smart strategies can help you make sure that you keep that skill strong.

For example, you can automatically transfer money from your paycheck into savings, so you don’t see it sitting there and aren’t tempted to spend it. Budgeting apps can also be helpful to curb spending so you have more money to save.

10. Cost of Living is Rising

We’ve touched on inflation hitting the large things we’re saving for, and the small things we buy every day. Inflation is notable across so many spending categories: The World Economic Forum found that food prices increased worldwide by nearly 10% from January to April 2022 — the largest 12-month rise since 1982. It’s a cost of living crisis that 16% of people in the U.S. find quite difficult or very difficult to deal with, according to a poll from the World Economic Forum.

There are various ways to manage this. One way to get a quick cash infusion is to sell things you have but no longer need or use. This might be gently used clothing, a laptop that’s sitting unused, or that mountain bike that is gathering dust. You can try a garage sale, Nextdoor, Craigslist, or local Facebook groups, or (if it’s something small) eBay or Etsy.

11. Spending Too Money On Social Activities

All too often, hanging out comes with a price tag. After dinner, or a show, or drinks you’ve depleted your bank account. Setting up a budget for socializing can help you spend money wisely. You might check out the restaurant in your neighborhood you’ve been dying to try when they have a reasonably priced prix fixe menu; that way, you’d still have space to save. Thinking of cheap activities and researching free things going on in your community (music, fairs, and more) can help you go out without the steep price tag.

12. Lifestyle Creep

If you’re not familiar with the expression, lifestyle creep is when increased income leads to increased spending. As your pay goes up, you may feel justified in moving up to a rental home with more amenities. You may be more likely to go to more expensive hotels when traveling and join pricey gyms. Lifestyle creep can make it tough to pay down debt and boost savings.

Upgrading your leisure habits when you make more money isn’t a bad thing — but it can be something to be conscious of, especially if you feel like you aren’t saving enough. This may be a good moment to pick and choose your perks. If you are moving to a more expensive apartment, say, maybe you skip that quick vacation you were thinking of taking. Or you could come up with fun ways to save money, like monthly challenges. For instance, don’t buy any fancy lattes for a month and put the money in savings. You may be surprised by how much you save.

13. Not Thinking Ahead

As you wonder, “Why is it so hard to save money?” one big reason is that we are so rooted in the present. It’s a real challenge to imagine our toddler needing college tuition money or ourselves being old enough to retire. It can be easier just to put those thoughts to one side for a while.

But when that happens, the opportunity for compound interest is lost. For instance, if Person A were to save $1,000 a month from age 25 to 35 and then let that $120,000 sit until age 65, accruing 7% interest, they would have more than $1.4 million in the bank. If Person B saved the same $1,000 a month between ages 35 and 45 and then let the $120,000 sit earning 7% interest until they turned 65, they would have about $735,000, or half as much!

By budgeting, planning ahead, and saving, you can have financial discipline and enjoy these kinds of results. It’s important to remind yourself to take care of tomorrow as well as today.

14. Spending Money is Easy

Whether you’re out and about or scrolling through your phone, opportunities to spend money are everywhere. You see a delicious poke bowl while running errands, or you’re looking at your friend’s baby on Instagram, and there are those vitamins everyone is talking about. Ka-ching.

It’s definitely a challenge to grow your money mindset and be able to ignore all of these temptations and focus on longer-term financial goals. Namely, saving for “out of sight, out of mind” future needs. Here’s where your budget can once again be helpful. By having a small stash of cash for fun, on-the-fly expenditures, you can treat yourself (something we all need now and then) without blowing your budget. You will likely be a more mindful and careful consumer if you know, say, that you have $25 this week for a reward.

Save Smarter With a SoFi Bank Account

As you focus on saving money, you’ll find more and more ways to maximize the money you do have. One of the ways to do so is to look for a checking and savings account that has minimal — or no — fees. It’s also a good idea to consider APY, the interest that helps your money grow.

Take a look at what SoFi offers: When you open a SoFi bank account with direct deposit, you’ll pay no account fees, enjoy a competitive APY, and have automatic savings features at your fingertips. Plus, if you’re still finding your budget stretched tight between paychecks, SoFi Checking and Savings can give eligible accounts paycheck access up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall. Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

What are the challenges of saving money?

An increased cost of living, lack of a budget, and other factors can make it hard to save. Add in temptations to spend, social pressure, and the fact that a purchase can momentarily lift your spirits, and you have plenty of reasons why saving can be challenging. The good news: A few behavioral tweaks (such as finding a budget you can really follow) can help you save money and make the most of every dollar.

Do millionaires struggle to save money?

Yes. Studies and surveys have found that even high earners live paycheck to paycheck. Fortunately, there are always ways to save, regardless of the size of your bank account. The same rules of budgeting, setting up automatic transfers into savings, and being a smart consumer can help anyone.

How do you stay motivated when it’s so hard to save money?

Motivation varies. Some people find it motivating to see their credit card balance go down, other people like to see their retirement account balance grow, and still others like to mix it up and give themselves a different saving challenge each month. The trick is finding a strategy that works for you.

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Photo credit: iStock/sorrapong
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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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