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People with introverted personality traits tend to prefer working independently instead of collaboratively with others. Thankfully, there are plenty of jobs that offer that environment, and many don’t require a college degree.

Introverts can find and excel in a variety of high-paying, low-stress jobs — if they know where to find them.

Why It Can Be Difficult for an Introvert to Find Work

Job postings almost never explicitly state “This job is great for introverts!” On the contrary, many job postings use buzzwords and phrases like “cross-collaboration,” “being a team player,” and “working in a fast-paced environment,” which can all be red flags for an introvert. This is because, unlike extroverts, introverts tend to seek out environments that don’t involve a lot of public speaking, group discussion, or collaboration. Instead, they prefer to work independently on tasks that play to their individual strengths and preferences in a more low-stress environment.

It’s a misconception that working remotely is a viable solution for every introvert, when in fact many remote jobs still require a good amount of virtual interaction and collaboration with others.

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What Makes the Ideal Job for an Introvert

According to conventional psychology, introverts prefer to spend time with just one or two people, rather than larger groups or crowds. They’re not necessarily loners; in fact, many introverts have highly acute social skills. However, introverts tend to gravitate toward situations and environments where they feel less pressure to react or respond quickly, or to engage with multiple people.

Therefore, an ideal job for an introvert allows them to:

•   Work independently

•   Work alone or in quiet spaces that allow them to think

•   Focus on one task at a time

•   Engage one-on-one instead of in large groups

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What Kind of Work Does Not Fit an Introvert

Jobs that require a lot of collaborating with or presenting to large groups of people are generally not suited to people with introverted tendencies. Introverts tend to want to avoid group brainstorms or jobs that force them to regularly verbalize their thoughts and feelings to multiple people at once.

30 Jobs for Introverts Without a Degree

Finding a rewarding job as an introvert doesn’t necessarily require a college degree or a lot of deep exploration. You simply need to find jobs that suit your interests and cater to the personality traits of an introverted person.

Here are 30 jobs for an introvert that do not require a college degree, according to the Bureau of Labor Statistics:

1. Web Developer

•   2021 Average Salary: $77,210

•   Primary Duties: Design, code, and develop websites and oversee site performance and functionality.

2. Farmer or Rancher

•   2021 Average Salary: $73,060

•   Primary Duties: Oversee the production of crops, livestock, and dairy products.

3. Blogger

•   2021 Average Salary: $69,510

•   Primary Duties: Write original copy for personal or business websites.

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4. Plumber

•   2021 Average Salary: $59,880

•   Primary Duties: Install and repair piping fixtures.

5. Postal Service Mail Carrier

•   2021 Average Salary: $52,440

•   Primary Duties: Collect, sort, and deliver mail to businesses and private residences.

6. Craft Artist

•   2021 Average Salary: $49,960

•   Primary Duties: Create original works of art for sale and exhibition using a variety of materials.

7. HVACR Technician

•   2021 Average Salary: $48,630

•   Primary Duties: Assemble and repair heating, cooling, and ventilation systems.

8. Drywall Installer

•   2021 Average Salary: $48,350

•   Primary Duties: Cut and hang panels of wallboard inside buildings.

9. Delivery Truck Driver

•   2021 Average Salary: $48,310

•   Primary Duties: Pick up, transport, and deliver packages or goods from one location to another.

10. Carpenter

•   2021 Average Salary: $48,260

•   Primary Duties: Design, construct, and restore building structures and frameworks built from different materials.

11. Embalmer

•   2021 Average Salary: $47,780

•   Primary Duties: Prepare the bodies of the deceased for interment.

12. Paperhanger

•   2021 Average Salary: $47,610

•   Primary Duties: Cover interior walls or ceilings with decorative wallpaper or fabric.

13. Roofer

•   2021 Average Salary: $47,110

•   Primary Duties: Replace, repair, and install roofs on buildings and houses.

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14. Surveying and Mapping Technician

•   2021 Average Salary: $46,910

•   Primary Duties: Collect data and take land measurements in order to create maps of the Earth’s surface.

15. Mechanic

•   2021 Average Salary: $46,880

•   Primary Duties: Inspect, repair, and maintain automobiles and other modes of transport.

16. Bookkeeper

•   2021 Average Salary: $45,560

•   Primary Duties: Produce and maintain financial records for businesses.

17. Transcriptionist

•   2021 Average Salary: $44,030

•   Primary Duties: Transfer words, text or voice recording into formal letters, reports or other documents.

18. Software Quality Assurance Tester

•   2021 Average Salary: $41,950

•   Primary Duties: Test software to identify problems and learn how the software works.

19. Animal Breeder

•   2021 Average Salary: $40,090

•   Primary Duties: Breed and raise a variety of animals that produce meat or material.

20. Photographer

•   2021 Average Salary: $38,950

•   Primary Duties: Produce, record, and potentially edit for personal or professional use.

21. Proofreader

•   2021 Average Salary: $38,716

•   Primary Duties: Read content and correct for spelling, punctuation, and grammatical errors.

22. Landscaper

•   2021 Average Salary: $35,240

•   Primary Duties: Maintain outdoor grounds through mowing, trimming, planting, watering, fertilizing, raking, and other methods.

23. Library Assistant

•   2021 Average Salary: $34,050

•   Primary Duties: Help librarians organize library materials, assist patrons, and perform other administrative tasks.

24. Animal Trainer

•   2021 Average Salary: $31,280

•   Primary Duties: Teach animals skills such as obedience, performance, riding, security, and assisting people.

25. Medical Transcription

•   2021 Average Salary: $30,100

•   Primary Duties: Transcribe voice recordings from physicians and nurses and convert them into written reports.

26. Floral Designer

•   2021 Average Salary: $29,880

•   Primary Duties: Design and arrange decorative displays using live, dried, or silk flowers.

27. Janitor

•   2021 Average Salary: $29,760

•   Primary Duties: Clean and sterilize buildings, schools, hospitals, and other commercial businesses.

28. Crematory Operator

•   2021 Average Salary: $29,610

•   Primary Duties: Perform cremations, including the preparation and transfer of the body post-service.

29. Hand Sewer

•   2021 Average Salary: $29,930

•   Primary Duties: Sew, reinforce, or finish manufactured items usually with needle and thread.

30. Notary

•   2021 Average Salary: $28,889

•   Primary Duties: Serve as an impartial witness for the purpose of signing documents or acknowledging legal signatures on documents.

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The Takeaway

Finding a low-stress job that doesn’t require a college degree isn’t impossible for an introvert. In fact, many high-paying and rewarding jobs are well-suited to the personality traits of an introverted person.

Introvert or not, everyone can benefit from better budget planning and tools that give you back control of your finances.

SoFi can help you track and manage your spending, monitor your credit score, and get financial insights.

FAQ

Is self-employment good for introverts with anxiety?

Jobs that are conducive to self-employment can be a good fit for introverts that get anxiety working within large teams or with multiple people. However, self-employment can also create stress if it requires you to find your own clients or manage a larger workload on your own.

What is a good job for someone with introverted qualities?

Jobs that allow you to work independently and in quiet, low-stress environments are generally better for introverts, who tend to prefer solitude or limited one-on-one interaction.

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Photo credit: iStock/Wiphop Sathawirawong
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.

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One of the appeals of using a credit card is the chance to earn valuable cardholder rewards, such as travel points and cash back. These rewards can add up, which begs the question — are credit card rewards taxable?

In some cases, the IRS does consider credit card rewards taxable income and in some cases, they don’t tax earned rewards. Confused? Don’t worry, we’ll break down when credit card rewards are taxable income and when they aren’t.

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What Are Credit Card Rewards?

To better understand how credit card rewards are taxed, it can help to know what credit card rewards are. When a consumer uses a credit card they may earn different credit card rewards, such as points, cash back, and airline miles.

Depending on their redemption value, these rewards can be worth up to hundreds if not thousands of dollars. Your cardholder agreement should outline the credit card rules for how to earn rewards using a specific credit card, as well as how to redeem them.

How the IRS Treats Credit Card Rewards

So, are credit card rewards taxable? In some cases, yes, and in some cases, no. Let’s take a closer look at which types of rewards and in which scenarios credit card rewards may count as taxable income.

Rewards Treated as Rebates on Spending

Is credit card cash back taxable? Luckily, cash back rewards and other rewards like miles or points aren’t considered taxable income when earned by making purchases. The IRS considers these types of rewards as rebates, discounts, or bonuses rather than income.

The trick is that the cardholder has to spend a certain amount to earn a reward in order for the IRS to not classify the rewards as income. For example, if a new credit card offers $200 in cash back when the cardholder spends $2,000 within the first six months of opening their account, that $200 would not be considered taxable income.

Rewards Considered as Income

Certain rewards are considered income. The way to identify which rewards are taxable income is by looking at how they’re earned.

As mentioned previously, if someone spends money to earn rewards, those rewards won’t be taxed. If, however, someone is given a $150 gift card simply for referring a friend for a new credit card, that $150 is viewed as taxable income — because they didn’t spend any money to earn it.

When Are Credit Card Rewards Taxed?

Again, credit card rewards that aren’t earned through spending (such as some introductory bonuses) can count as income that the IRS will expect the cardholder to pay income taxes on. Some scenarios in which credit card rewards may get taxed include:

•   If you received a sign-up bonus simply for opening a credit card or account

•   If you earn a reward for referring a friend

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When Your Credit Card Rewards Are Taxable

As briefly mentioned above, any monetary rewards that a cardholder didn’t earn through spending can be considered taxable income.

Let’s look at how this can work with two different credit card bonus offers. If a cardholder is offered $100 if they spend $1,500 in the first three months of having their account open and they spend enough to earn that bonus, that reward won’t count as taxable income. On the other hand, if a cardholder is offered a $100 gift card simply for opening their new account, they will need to pay income tax on the $100.

When Your Credit Card Rewards Are Not Taxable

As briefly mentioned above, credit card rewards aren’t considered taxable income if someone spends money to earn them. When a cardholder acquires the rewards (cash back, travel miles, etc.) through purchases, then those rewards are classified as a rebate or a bonus, not taxable income.

For instance, this may include:

•   Sign-up bonuses that require meeting a spending threshold

•   Rewards earned from credit card spending

•   Miles earned through travel

Are Business Credit Card Rewards Taxable?

It doesn’t matter if the rewards are earned with a personal credit card or a business credit card — the same rules surrounding income taxes apply.

Where business credit cards can affect taxes is when it comes time to make deductions. For example, if someone bought $2,000 worth of equipment for their business and earned $40 in cash back rewards doing so, they can only deduct $1,960 on their taxes. In other words, they can only deduct the net cost of business expenses, which cash back reduces.

How to Know If You Owe Taxes on Credit Card Rewards

It can be hard to keep track of how much taxes are owed on credit card rewards. If someone earns a bonus without having to meet a spending requirement, the credit card company might send the cardholder a Form 1099-INT or Form 1099-MISC specifying the amount of income they earned.

Whether or not you receive this form, however, you’ll need to report the bonus on your income taxes. To make doing this easier, it can be helpful to keep track of any bonuses not earned through spending. That way, if the credit card issuer doesn’t send a Form 1099-INT or Form 1099-MISC, you can still complete your taxes properly. Reviewing old statements to look for statement credits in the form of cash back or other types of rewards can be helpful.

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Avoiding Taxes on Your Credit Card Rewards: What to Know

To avoid taxes on credit card rewards, all the cardholder has to do is not seek out credit cards that offer bonuses for simply signing up for the credit card. If the rewards are earned through spending, they won’t run into any taxes, thus allowing them to pay less tax.

The Takeaway

It may not be fun to pay taxes on credit card rewards, but it’s an important part of using a credit card responsibly. In general, taxes only apply to rewards that don’t require any spending to earn. If you’ll owe taxes on your rewards, the credit card issuer typically will send a Form 1099-INT or Form 1099-MISC specifying the amount of income you’ve earned and will need to report.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.¹

Take advantage of this offer by applying for a SoFi credit card today.

FAQ

Are credit card cashback rewards taxable?

Only credit card rewards that cardholders receive without having to spend money to earn them in any way are considered taxable income. If a cardholder earns cash back for spending money using their credit card, it won’t count as taxable income.

Are loyalty points taxable?

If someone spends money to earn loyalty points (such as purchasing airline tickets) they won’t have to pay taxes on those points. If, however, they received the points simply for signing up for a credit card, that would count as taxable income that they’ll need to report.

Are credit card rewards reported to the IRS?

In some cases, yes, credit card rewards are reported to the IRS. When this happens, the credit card company might send the cardholder a Form 1099-INT or Form 1099-MISC specifying the amount of income they earned that they’ll need to report.

Do you have to pay taxes on credit card rewards?

Cardholders need to pay income taxes on credit card rewards they didn’t need to spend money to earn. If they had to spend money to earn a reward, such as cash back, that won’t count as taxable income.

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Photo credit: iStock/Grayscale Studio

¹Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

¹See Rewards Details at SoFi.com/card/rewards.

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

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.

The SoFi Credit Card 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.

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According to the Federal Reserve, the average credit card APR is about 16% — an amount that can significantly impact your budget if you can’t pay off your credit card balance in full each month. In fact, allowing even $1 of your statement balance to roll over into your new billing cycle can activate residual interest.

Credit card residual interest is interest that builds up between when your billing cycle ends and when the issuer actually receives your payment. Read on to learn more about what is residual interest, when it may apply, and how you can avoid it.

What Is Credit Card Residual Interest?

Residual interest, also called “trailing interest,” is one of the ways credit card companies make money. It’s a finance charge that’s applied to any balance that is carried over to the new billing cycle. The charges begin from the date your statement was sent and until the bank receives your credit card payment.

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How Credit Card Residual Interest Works

If you thought you paid your last credit card bill in full, you might be surprised to see a residual interest charge on your next statement. However, this might come up if you’ve kept a rolling balance on your credit card, meaning you’ve carried an unpaid portion of your credit card balance from month to month.

Some credit card issuers charge interest based on a daily periodic rate. To calculate your daily periodic rate, the issuer divides your APR by 360 or 365 days. Then, it adds the result to your daily balance.

Here’s where credit card rules around interest get tricky. Your card issuer is required by law to provide you with your billing statement at least 21 days before your credit card payment due date. If you always make on-time full payments, your card issuer typically won’t charge interest during this “grace period.”

However, if you’ve been rolling over a balance to your new statement, trailing interest on the old charges are applied. You’ll also lose your grace period for new purchases made during the billing cycle so interest charges accrue immediately. Each day that the balance goes unpaid, the residual interest compounds.

Since this residual interest is added during the days after your billing statement was sent, they can feel like unexpected credit card charges on your next billing period despite making the “full” payment the prior month.

Do All Credit Cards Charge Residual Interest?

Generally, the practice of charging residual interest is common across credit card companies. However, how and when it charges trailing interest varies between issuers.

If you’re unsure how your card issuer handles this type of interest charge, review your credit card agreement or contact your issuer directly to learn more about its terms.

Why Is It Important to Keep Track of Residual Interest?

Residual interest can impact your finances in many ways. For starters, you’ll owe more money on interest fees and miss out on a grace period. Additionally, a residual interest charge can easily slip past your radar if you thought you’ve zeroed-out your credit card balance.

If you didn’t add new card purchases during a billing period, you might not even look at your new statement and can easily miss a residual interest charge. This seemingly small issue can snowball into a late payment — or worse, a missed payment — that adversely affects your credit score.

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Tips for Avoiding Credit Card Residual Interest

To avoid this costly mistake, make sure you’re practicing smart habits when using a credit card.

Making the Full Payoff Amount

Given how credit cards work, the best way to know your card’s true outstanding balance is to directly ask your credit card issuer for your “full payoff amount.” Since residual interest is charged daily, your full payoff amount will change each day your account goes unpaid.

On the day you’re ready to make your credit card payment, contact the phone number on the back of your credit card. Ask the associate on the other line for your full payoff amount to date. This is the payment amount you can make toward your bill to fully pay your account.

Paying Your Bills on Time

If you haven’t carried a balance between statements and your credit card offers a grace period, making a payment for the full statement balance by the due date is enough to prevent residual interest. This can also help you maintain your grace period.

If you’ve already rolled over a balance, pay off your total account balance before the billing cycle closes. This can help you avoid trailing interest charges that start between the date your statement is sent and when the bank receives your payment.

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Considering a Balance Transfer to a 0% APR Card

A 0% APR balance transfer card can be a useful tool, if you have a balance that’s too large to pay off early or in one fell swoop. Balance transfer cards effectively allow you to pay a credit card statement with another credit card by transferring the prior balance onto the new card at no interest.

Keep in mind that the promotional interest rate is only valid for a short period of time. For example, the transferred amount might incur no interest for six month or a year, depending on the balance transfer terms. After that, the standard interest rate will apply.

When considering this strategy, make sure you weigh the pros and cons of a balance transfer card, such as the cost of a balance transfer fee. This fee might be a fixed dollar amount or a percentage of the amount you’re transferring. Always do the math to ensure that the amount you’ll save on residual interest from your original card outweighs the balance transfer fees.

Recommended: How to Avoid Interest On a Credit Card

How Long Does Credit Card Residual Interest Last?

Typically, if you’re hit with residual interest, it might take about two consecutive statement periods to clear out residual interest charges. However, you can get rid of residual interest faster by contacting your card issuer to request your full payoff amount.

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The Takeaway

Carrying a balance into a new statement results in losing your interest-free grace period on all purchases shown on that statement. You’ll owe residual interest on purchases carried over from the previous cycle, and you’ll also be charged interest immediately on new purchases made within the new billing cycle.

Avoid getting trapped by residual interest credit card charges by always paying your entire statement balance in full. By doing so, you can avoid paying more interest on your credit card purchases.

The SoFi Credit Card offers unlimited 2% cash back on all eligible purchases. There are no spending categories or reward caps to worry about.¹

Take advantage of this offer by applying for a SoFi credit card today.

FAQ

What is credit card residual interest?

Residual interest is the interest that’s charged on purchases you’ve rolled over from one statement into the next. It starts accruing the day after your new billing cycle begins to the date when the bank receives your payment.

Do all credit cards charge residual interest?

Yes, most credit cards charge residual interest when you carry over a balance between billing statements. However, when and how your card issuer applies residual interest can vary; check your card’s terms of agreement to learn more.

How can I pay off residual interest?

If you see a residual interest charge on your credit card statement, the best way to pay it off is by making a payment for the full payoff amount, rather than just the statement balance. This helps you capture daily trailing interest charges as of the day you plan on making a payment.

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Photo credit: iStock/fizkes

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.

The SoFi Credit Card 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.

¹See Rewards Details at SoFi.com/card/rewards.

¹Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points into your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, or Student Loan Refinance, your rewards points will redeem at a rate of 1 cent per every point. For more details please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

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Nowadays there are plenty of options for moving money around, and two of the most common, ACH and checks, have some key differences. Both of these popular payment methods are convenient and secure, so it can be hard to know which one to choose. But in your financial life, there will probably be times when one is a lot better suited to your needs than the other. Don’t worry, we’re going to walk through everything that’s important to know about ACH payments and checks to help you use the right method.

Keep reading for a breakdown of ACH vs. check, the pros and cons of each, and how they stack up. Then you’ll totally understand the differences between the two.

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What Is ACH and How Does It Work?

An ACH transfer (named after the Automated Clearing House network) is an electronic banking transaction that is processed through the ACH network. The network is a major financial hub, made up of around 10,000 institutions. Through the ACH network it is possible to process the following transactions:

•   Direct debits

•   Direct deposits

•   Direct payments

•   Electronic checks (eChecks)

•   Electronic funds transfers (EFTs)

Businesses and consumers have the option of using ACH transfers to make direct payments (known as ACH debit transactions) or direct deposits (ACH credit transactions). Some financial institutions even make it possible to schedule and pay bills electronically via ACH transfers. You are probably familiar with ACH transactions when you set up autopay on an account, whether its a utility bill or your gym membership.

You may wonder how long ACH transfers take. Because they are electronic, ACH transfers can clear banks in a matter of a few business days as long as there are enough funds in the account. However, there are times where ACH transactions will take longer. This is especially common if a transaction is suspected to be fraud.

However, for something like a direct deposit of a paycheck, ACH can be quite quick. When the payment hits your checking account, it’s immediately available. You don’t have to run around with a paper check that needs to be deposited. That can make a big difference between getting paid by ACH vs. a check, for sure.

Pros and Cons of ACH

Like any financial tool, ACH transfers have some advantages and disadvantages worth considering. Here’s a closer look at some important pros and cons.

Pros	Cons
•   Free. Most ACH transfers are free •   Errors can be reversed. You can sometimes request a transaction reversal for ACH transfers if an error occurs •   Simple and straightforward. Convenient form of payment allowing you to pay without cash	•   Fees can apply. May need to pay a fee to expedite bill-pay services or to make a transfer to an outside bank •   Slow timeline. Can take up to three days for a transfer to go through •   Potential roadblocks. Daily transfer limits apply

What is a Check?

A check is a payment method that involves making a payment using a paper check that has the payment amount and the payee’s bank account information on it. Once someone writes a check, the recipient can cash it and receive the funds.

Pros and Cons of Using a Paper Check

Checks are one of the most basic and time-honored financial tools at your disposal. They allow you to move money around without paying a fee, and they are a secure way to do this. What’s more, checks create a paper trail with proof that funds have been received.

But they can wind up costing you, they can take longer than you might expect, and sadly, there are scams that prey upon those who use checks. Let’s see what some of the pros and cons of using a check to make payments or to receive payments are in chart form.

Pros

Cons

•   No fees. Electronic payments can come with fees but there are no fees associated with checks. •   Safe way to send money. Cash can be lost or stolen. If a check is lost or stolen, the person who finds it will have a hard time cashing it thanks to handy security features. •   Proof of payment. Checks have a paper trail confirming proof of payment.

•   Check scams exist. Check scams can be dangerous and easy to fall for. •   Checks cost money. Typically, you don’t pay a fee when you use a check, but it costs money to buy checks, and depending on your situation, you might have to pay a fee to cash a check at some locations. •   Processing delays occur. Paying by cash, credit, or electronic transfer can occur more quickly than paying by check.

ACH vs Check: The Differences

Now that we’ve examined both separately, let’s look at what the difference is between ACH and checks side by side. It’s important to note that both have their own unique set of advantages and disadvantages, but overall stack up against each other fairly evenly. Much of the choice about which to use will depend on your particular circumstances and preferences. Here’s the difference between ACH and checks.

ACH	Check
•   For the most part, ACH transfers are free unless a rush fee or a fee for transferring to an outside bank applies. •   It is sometimes possible to request a transaction reversal for ACH transfers if an error occurred. •   ACH payments are fairly simple and easy to conduct. •   ACH transfers can take a few days to clear.	•   There are no fees associated with checks, but consumers do have to buy the checks to be able to use them. •   Checks offer a safe way to make payments. Even if they are lost or stolen it’s hard for anyone other than the recipient to cash them. •   Checks provide a conienvent paper trail that cash payments lack. •   Checks can take several days to clear.

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Which Should You Consider Using?

There’s no right or wrong answer when it comes to choosing a check over an ACH transfer. Both have unique advantages and disadvantages. Consider these scenarios:

•   Because it’s possible to set up recurring ACH transfers, that can be a much more convenient option if someone wants to schedule ongoing payments such as rent or bills.

•   Checks, which are very secure and convenient, may be a better fit for one-off payments such as paying the babysitter or a hairdresser.

As you see, the decision depends on what best suits your needs for a particular transaction.

The Takeaway

It’s worth understanding the difference between check and ACH payment options. Both ACH transfers and checks offer benefits. They are very secure, can transfer money within a few days, and provide easy ways to make payments. Neither is better than the other; they’re just different. Which one is the “best” will often depend on the unique preferences of both parties involved in the transaction. You may well find yourself toggling between the two during your everyday financial life.

While you’re thinking about which kinds of payments work best for you, consider this great way to bank better with SoFi. Our linked checking and savings accounts, when opened with direct deposit, offer an easy way to help your money grow. You’ll earn a super-competitive APY, pay no account fees, and get access to your ACH paycheck 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

Is an ACH payment a check?

No, ACH payments are an electronic transfer processed through the Automated Clearing House network, which is a network made up of around 10,000 financial institutions. A check is a different kind of payment, using a paper document and being processed in a different way.

Is ACH better than checks?

Not necessarily. Whether or not an ACH is a better payment method than a check depends on the unique preferences of the two parties involved in the payment. That being said, generally ACH payments are free whereas it costs money to buy checks for use.

Is ACH cheaper than checks?

When it comes to check vs. ACH costs, ACH payments can be cheaper than checks in some cases, but not always. ACH payments are free, whereas consumers generally need to buy checks to use for payments. However, you may run into fees when doing an ACH payment.

Is ACH safer than a check?

Both checks and ACH transfers are very secure, but ACH payments are known to be more secure, thanks to the extra layers of protection in place due to encryption that occur during the transfer. Both checks and ACH transfers do require that the identity of the recipient be verified before the transaction can complete. Fraud and mistakes can occur for both payment types.

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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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There are two common ways to use margin in a trading account. Cross margin involves margin that is shared between open positions. Isolated margin, on the other hand, is margin assigned to a single position that is restricted from being shared.

Cross margin helps prevent quick liquidations and has a better capability to withstand portfolio losses. Isolated margin offers better flexibility in that other portfolio holdings will not be affected if a single position is liquidated.

What Is Cross Margin?

Cross margin was introduced in the late 1980s to reduce systematic risk in the market and to help traders better manage their portfolios when engaging in margin trading. At the institutional level, cross margin offsets the value of hedged positions maintained by firms at multiple clearinghouses. Cross margining recognizes intermarket hedged positions, thus it allows for reduced initial margin requirements, fewer margin variations, and smaller net settlements.

For individual traders, cross margin provides more leeway in how open positions in a portfolio move. Cross margin takes excess margin from one margin account and gives it to another to satisfy maintenance margin requirements. That sharing of margin allows the trader to use all available margin balances across their accounts.

How Does Cross Margin Work?

Cross margin is not a simple calculation, and it runs on sophisticated algorithms. By sharing margin across accounts, traders can access more exposure without depositing more capital. Clearinghouses, central counterparties, and brokers determine cross margin amounts and automatically move margin between accounts that have registered for the service. Traders might prefer cross margining, as a single losing position might not be liquidated quickly when market conditions change. Excess margin is transferred from another account to meet a minor shortfall in minimum maintenance. Cross margin helps to avoid quick margin calls and forced liquidations.

How to Use Cross Margin

Cross margin is best used when a trader has multiple margin trading accounts. A cash account and margin account work differently, and cross vs. isolated margin only apply to the latter type. For traders concerned about a single position being stopped out, it is generally better for them to use cross margin vs. isolated margin, as the former is a tool to help prevent unnecessary forced liquidations. So a trader must trade with a broker who offers this service.

Volatile markets demonstrate the benefits of cross vs. isolated margin. With cross margin, when there are extreme movements in single securities, it is hard to keep a handle on individual positions’ margin requirements. Cross margining can calculate amounts automatically and move excess margin to other accounts that need it.

What Is Isolated Margin?

Isolated margin is the margin assigned to a single position that is restricted to a specific amount. When the allocated margin drops below an unrealized profit and loss threshold or the maintenance margin requirement, the position is automatically liquidated. The upshot is that other positions in the account are not affected. Isolated vs. cross margin offers better flexibility because it can divide the trader’s funds, but stop-outs can happen quickly in volatile markets. Isolated margin vs. cross margin are different from each other, and both are used in crypto trading. It’s important to know what decentralized exchanges are when using either margin type when buying and selling crypto.

How Does Isolated Margin Work?

Isolated margin works by setting aside a margin amount for a single position. Volatile and speculative positions are sometimes good candidates for the use of isolated margin. It can be helpful when you don’t want other portfolio holdings to be impacted by a change in the value or margin requirements from that single position.

How to Use Isolated Margin

Traders have the flexibility to adjust their isolated margin amounts, which can be useful when managing their portfolio positions. You should consider isolated margin when you want more flexibility with a single position and seek to restrict a potential loss to only a small piece of your account. Isolated vs. cross margin can also require more nimble attention to the market, as you might need to actively adjust the isolated margin amount.

Cross- vs Isolated-Margin Compared

Let’s review the similarities and differences in cross vs. isolated margin. In general, cross margin is preferable for long-term strategies, as market- and single-asset volatility could always strike. Cross margin helps portfolios endure volatility with fewer automated stop-outs. The downside is that if there is an extremely volatile event, and liquidations occur, then total portfolio losses could be severe.

Similarities

Initial and maintenance margin rules apply to your account whether you use cross margin or isolated margin. The two strategies help to reduce the risk that your overall portfolio will experience fast liquidations.

Differences

The key difference between the two is that cross margin shares margin between positions and accounts. This can be a helpful feature for long-term investors and during periods of market volatility. Overall, cross margin can be a better risk-management tool for complex portfolios that consist of cryptocurrencies, options, and other derivatives.

Cross Margin	Isolated Margin
Margin shared between open positions	Restricts margin to single positions
Reduces the risk of liquidations	Tighter liquidation thresholds — more stop-outs possible
Ideal when used with intermarket hedged positions, as margin requirements can be offsetting	Traders can actively manage margin amounts on single positions

Advantages and Disadvantages of Cross Margin

Cross Margin Advantages	Cross Margin Disadvantages
The entire portfolio can be used to margin a position, as excess margin is transferred from one position to another	Cross margin amounts cannot be adjusted like isolated margin amounts can
The available balance can be added to isolated holdings	Higher liquidation total portfolio losses if the market moves against the trader in an extreme way
Useful in a volatile market to avoid quick stop-outs	One position change can negatively impact other holdings

Advantages and Disadvantages of Isolated Margin

Isolated Margin Advantages	Isolated Margin Disadvantages
Liability is limited to the initial margin posted	Excess margin won’t be transferred to a losing position
Ideal for a single speculative position	Volatility can cause fast liquidations
Dividing funds between assets can reduce risk of major loss across a portfolio	Leverage can be adjusted quickly

The Takeaway

It’s important that traders who engage in margin trading understand the concept of cross- vs. isolated margin. Cross margining is a feature that increases a firm’s or individual trader’s liquidity and trading capability by reducing margin requirements and lowering net settlement values. It provides flexibility when owning many positions. Isolated margin is the margin assigned to just one position — if it is liquidated, the account positions are not affected.

If you have the experience and risk tolerance and are ready to try out trading on margin for yourself, SoFi can help. With a SoFi margin account, you can increase your buying power, take advantage of more investment opportunities, and potentially increase your returns.

Get one of the most competitive margin loan rates with SoFi, 10%*

FAQ

How is cross margin calculated?

In options trading, cross margin is calculated by clearinghouses and their clearing members, including prime brokerages that offer margining services. At the end of each trading day, organizations such as the Intercontinental Exchange and the Options Clearing Corporation (OCC) perform routing calculations and run reports for their clearing members.

Sophisticated algorithms calculate cross-margin levels. The OCC uses a program known as System for Theoretical Analysis and Numerical Simulations (STANS).

Is isolated margin the same as isolated leverage?

Isolated margin and isolated leverage are similar concepts. Isolated leverage is sometimes employed in cryptocurrency trading.

In isolated leverage mode, each cryptocurrency pair has a specific isolated margin account. Each margin account can only use margin on a specific trading pair.

What is the main benefit of cross margin?

Cross margining is when excess margin is transferred to another margin account to satisfy maintenance margin requirements. It allows traders to use their available margin balances across all their accounts. It makes it possible to have more exposure without extreme risk of liquidation should the market move against the trader.

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*Borrow at 10%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.
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.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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