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“No credit check” loans or quick loans for bad credit can look mighty attractive. However, products like payday loans and auto title loans can have major drawbacks, including short repayment periods and sky-high interest rates.

In fact, short-term loans can be so expensive that borrowers often end up paying exponentially more than they would if they’d financed the purchase some other way. And many loan holders end up re-borrowing, starting a vicious cycle that can quickly spin out of control.

What Are No Credit Check Loans?

No credit check loans, as their name implies, are loans that offer quick cash to borrowers without requiring a credit check. This means the lender doesn’t review your credit history or credit score when deciding whether to give you a loan. However, not requiring a credit check makes these loans risky for the lender, which is part of how they can justify high interest rates and fee schedules.

And when we say high, we mean high. It’s not hard to find payday loans with effective interest rates of about 400%, and sometimes they go much higher.

Recommended: What Is Considered a Bad Credit Score?

No Credit Check Loans: Borrower Beware

Rather than a set interest rate, payday loans will often charge $10 to $30 for every $100 borrowed. If a payday lender charges $15 for a $100 two-week loan, that’s the equivalent of a 391% APR.

Here’s how those numbers can work out when it comes to real money. If a payday lender charges $10 for every $100 borrowed, you would owe $50 in interest for a $500 loan, and the $550 would be due on your next payday. If you are unable to repay the loan in full when it’s due, you will typically get hit with a fee, and then the cycle repeats itself. After a few months of rollovers, you can end up owing more in interest than the actual loan amount.

Another word to the wise: The fine print on short-term predatory loans can include a variety of fees, including change fees, mandatory subscription charges, and early repayment fees. These fees can quickly add up. On average, borrowers end up paying $520 in fees on a two-week payday loan for $375.

It’s clear to see how these loans, though small in size, can lead to big financial problems. Even under the best of circumstances, it can be difficult to get ahead of short repayment terms and steep interest rates and fees.

Recommended: What Is Consumer Debt?

Who Offers No Credit Check Loans?

Two of the most common types of these no-credit check loans are payday loans and auto title loans.

•   Payday loans As you might have guessed, payday loans are designed to be repaid on the borrower’s next payday — generally within two to four weeks. Because payday loans do so often carry predatory interest rates and terms, some states have limited the size and interest rate of payday loans, but even small loans with lower interest rates can lead to financial trouble.

•   Auto title loans Also referred to as “title loans,” these are another common type of short-term personal loan that doesn’t require a credit check. In the case of a title loan, the borrower gives the lender the title of their car as collateral for a cash loan of up to about 50% of the value of the car. The borrower is still allowed to drive the car, but the loan principal plus interest is generally due within 30 days — again at astronomical rates. If the borrower is unable to pay the loan, they risk having their car repossessed.

Other lenders offer similar types of short-term, high-interest rate personal loans, sometimes advertising online loans with “no credit check required” or “guaranteed loan approval.”

Even if they aren’t called payday loans or title loans, borrowers would be wise to pay attention to the loan’s terms and conditions, particularly interest rates, fees, and expected repayment schedules.

Generally speaking, too-good-to-be-true financial products are often just that. Staying informed about the full implication of the loan’s terms and doing the math to work out how much you will end up paying over time can help borrowers avoid a potentially disastrous financial situation.

Recommended: Can You Get a First-Time Personal Loan With No Credit History?

Alternatives to No Credit Check Loans

As financially harmful as no check credit loans can be, there still might be instances in which borrowers need quick access to money. Fortunately, there are some alternatives worth consideration.

•   For starters, borrowers might turn their attention to why they need the money in the first place. Short-term loans are often taken out to repay existing debt, an approach that might result in the borrower going even further into debt to try to scramble out of the hole.

   In this scenario, attempting to negotiate the existing debt with current lenders might be a better tactic. Sometimes, credit card issuers and other lenders might offer repayment options to ease the immediate financial burden. It’s a tactic that’s worth asking a creditor about.

•   Another option: borrowing from friends and family. While this can come with its own set of pitfalls, family loans are unlikely to create the same kind of debt spiral short-term cash loans might.

   In order to keep things friendly, you’ll want to set out a formalized loan agreement with interest rates and terms, similar to what you’d expect to sign for a traditional loan from a financial institution. This avoids any confusion and helps keep the transaction as objective as possible.

•   Credit unions are another source of small-dollar, payday loan alternatives — and importantly, credit unions are subject to a federal interest rate cap and other limits that keep these loans from becoming exorbitantly expensive.

•   Although they’re generally not an ideal solution, credit cards may carry lower interest rates than short-term cash loans. Some borrowers might also be able to utilize a promotional 0% interest rate period in order to aggressively pay off debt during the promotional period without paying interest.

•   Another alternative is a traditional personal loan from an online lender. While these loans usually do require a credit check and specific approval requirements, some online lenders will extend loans to applicants with imperfect credit histories. Rates are typically higher. However, they likely won’t be nearly as high as payday loans.

   You may be able to get a better rate by applying for a secured personal loan (which requires using an asset as collateral) or including a co-borrower on the loan agreement.

Recommended: How to Apply for a Personal Loan

The Takeaway

While no credit check loans can certainly be attractive, their high interest rates and associated fees can make them costly over time. Borrowers may not be able to repay the loans plus interest in the short repayment term required, which could lead to a debt treadmill scenario and, possibly, negative credit history consequences.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

Can I take out a loan without a credit check?

Some lenders will let you take out a loan without a credit check, but you will likely pay very high interest rates and fees, which could trap you in a cycle of debt.

What types of loans don’t require a credit check?

Typically, payday loans, auto title loans, and other peer-to-peer lending don’t require credit checks. However, make sure you understand the interest rate and terms to avoid your debt increasing.

What is the easiest type of loan to get quickly?

Typically, the easiest type of loan to get quickly is a payday loan or no credit check loan, but these tend to have extremely high interest rates and/or fees, so proceed with caution.

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Photo credit: iStock/FG Trade

SoFi Loan Products
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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Long-term personal loans can provide an attractive option if you’re facing large expenses, like significant medical bills or home repairs. By spreading out repayment over a longer period of time, long-term loans may allow for lower monthly payment amounts that can make major costs more affordable.

However, long-term loans can have drawbacks, too. They may have higher cumulative interest than short-term loans. What’s more, they can be difficult to qualify for since they’re often unsecured. Learn the full story here.

What Is a Long-Term Loan?

As its name suggests, a long-term loan is one whose repayment period, or term, is fairly lengthy. Generally, long-term personal loans carry terms between 60 and 84 months, or five to seven years, though some lenders may offer terms up to 10 years.

Mortgages and private student loans are also examples of long-term loans. Mortgages, for instance, are frequently repaid over as many as 30 years.

In this article, the focus is on long-term, unsecured personal loans, which borrowers can use for a variety of purposes. These loans can allow consumers to make big purchases or pay expensive bills by paying the total off over several years’ time.

Benefits of Long-Term Personal Loans

There are plenty of reasons why a long-term loan might be a worthy consideration for large expenses.

Large Loan Amounts

While short-term loans and credit cards may cap out at a few thousand dollars, long-term, unsecured personal loans are available at much higher amounts — up to as much as $100,000.

So depending on what you need the money for, a long-term personal loan might give you more leverage than other types of funding.

Affordable Monthly Payments

Since long-term personal loans are paid off over many months, the monthly payments are often lower than they would be with a shorter-term loan.

However, that doesn’t mean a long-term loan is less expensive in the long run.

Flexibility

Unlike secured loans, which are tied to a physical piece of collateral or the need to be used for a specified purpose, unsecured personal loans can be taken out for a wide range of uses. Common reasons borrowers take out personal loans include:

• Home renovations or repairs.

• Medical expenses.

• Wedding loans or funeral expenses.

• Debt consolidation.

Affordable Monthly Payments

Since long-term personal loans are paid off over many months, the monthly payments are often lower than they would be with a shorter-term loan.

However, that doesn’t mean a long-term loan is less expensive in the long run.

Drawbacks of Long-Term Personal Loans

There are also some drawbacks worth considering before you apply for an unsecured personal loan.

Potentially Higher Interest Rates

Although long-term, unsecured personal loans may have smaller monthly payments, they may carry higher interest rates than shorter-term, unsecured personal loans. And even at the same interest rate, they cost more over time.

Personal loan interest rates can currently range from as little as 6.49% to as much as 35.99% annual percentage rate, or APR.

For example, imagine you take out a $10,000 loan at an interest rate of 10%. To repay the loan in a single year, you’d have to pay $879 per month, but you’d only pay a total of $550 in interest over the lifetime of the loan.

To repay the loan in seven years, you’d pay only $166 per month, but you’d also pay $3,945 in interest along the way.

So while long-term, unsecured personal loans can make large purchases feasible, factoring in the total cost over the lifetime of the loan before you sign those papers is also important.

Long-Term Debt

Along with higher interest rates, long-term loans do, obviously, mean going into debt for a longer period of time — unless you plan to pay off your loan early. A thorough review of the loan agreement will disclose prepayment penalties or other fees that can be costly in their own right.

Furthermore, the future is unpredictable. Five to seven years down the line, that promotion you were counting on might fall through or another life circumstance might supersede your repayment plans.

If you find yourself in a situation where you need to borrow more cash, it can be difficult to increase your personal loan amount.

Although unsecured personal loans can be helpful when life throws big expenses your way, they’re still a form of consumer debt, and, ideally, minimizing debt is a smart thing to do.

Qualification Difficulties

Long-term, unsecured personal loans may have more stringent qualification requirements than other types of credit. That’s because, from the lender’s perspective, they’re riskier than loans for smaller amounts or those that come attached to physical collateral.

Along with your credit score and history, a potential lender might also require proof of income and employment or a certain debt-to-income ratio (DTI). Depending on the stability of your financial situation, you may or may not qualify for the best interest rates and terms or be considered eligible to take out the loan at all, at least without a cosigner or co-borrower.

Alternatives to Long-Term Loans

Ideally, the best way to pay for a large purchase is to save up the cash and pay for it without going into debt at all. Of course, this may not always be possible or realistic.

If you’re not sure about taking out a long-term, unsecured personal loan, there are other alternatives to consider. However, each of these comes with its own risk-to-reward ratio as well.

You might consider borrowing money from friends and family, but those important relationships can suffer if your repayment doesn’t go as planned. A written repayment agreement can go a long way toward making the transaction as transparent as possible, with expectations of both parties clearly outlined.

Another option might be saving part of the money you need and applying for a short-term, unsecured personal loan for the remainder. This means delaying a purchase until savings can accumulate, and might not work if the money is needed sooner rather than later.

Recommended: A Guide to Unsecured Personal Loans

The Takeaway

Long-term loans are those whose repayment periods generally span between five and seven years, which can help borrowers fund expensive purchases while making affordable monthly payments.

However, the longer-term can also mean more interest charges over time, making these unsecured personal loans more expensive relative to shorter-term lending options. And like any form of consumer debt, they carry risk.

Your credit score and/or financial situation can suffer if you find yourself unable to repay the personal loan.

That said, when used responsibly, long-term, unsecured personal loans can be a smart financial choice, particularly if you shop around for a lender who offers affordable, fixed interest rates, low fees, and great customer service to ensure you’ll always be in the know and in control.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What is a disadvantage of long-term borrowing?

When you take out a long-term loan, even one with a low interest rate, it can cost more because you’ll be paying interest for a longer period of time.

What is the risk of a long-term loan?

Aside from mortgages, that can help you build wealth, loans taken out over a long term mean you will take many years to repay the debt. This means you may wind up paying the creditor more interest, perhaps even more than the amount you borrowed.

What are the pros of a personal loan?

Personal loans can get you a lump sum of cash quickly to use for almost any purpose, from a major dental bill to a home renovation. They tend to have lower interest rates than credit cards.

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Photo credit: iStock/Melpomenem

SoFi Loan Products
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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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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Many busy parents find that a traditional 9-to-5 job isn’t the best option while they’re raising young children. Working for yourself can provide more flexibility and control, as well as better work-life balance. But there are trade-offs.

Let’s take a look at some of the best self-employed jobs in 2025. We’ll also provide tips on finding a self-employed job that helps support a family’s needs.

What Jobs Are Considered Self-Employed Jobs?

At one time, self-employed business people typically worked out of a storefront or office with a small staff. Today, many self-employed individuals work from home with no employees. They deliberately keep their operation small to maintain flexibility in their schedule (and keep overhead costs down). Solo entrepreneurs usually have a strong background in a specific service they can offer to clients, such as accounting, marketing, or graphic design.

There are a number of different ways self-employed workers get paid. For instance, they may identify as an independent contractor when they work for larger businesses. They can also start a sole proprietorship or a partnership with another entrepreneur. But regardless of their business structure, it’s important for parents who are self-employed to track their spending.

Because of the amount of time spent attracting and communicating with clients, self-employment may not be the best choice of job for antisocial people.

Examples of Self-Employed Jobs for Parents

Self-employed jobs can be logistical, analytical, creative, or involve a skilled trade. Parents may pursue self-employed work as a freelance writer or a lawyer. As long as the work can be done independently, there’s virtually no limit to the type of services someone can offer when working for themselves.

Recommended: Best On-Campus Jobs

Tips to Finding Self-Employed Jobs for Parents in 2025

Parents who are considering self-employment should first ask themselves these questions:

•   How much do I hope to make per hour?

•   How many hours per week do I want to work?

•   What is my strongest skill set?

•   What services can I offer based on that skill set?

Parents have different options for pursuing work. They can apply for posted contract or freelance roles that seem like a good fit for their skills and scheduling needs. They can also advertise their services and work on attracting clients. Or, they may decide to pursue job opportunities by tapping into their existing professional network.

Difficulties Parents Can Encounter When Looking for Self-Employed Jobs

One element of self-employment that many people struggle with is making the transition to boss. Parents who have a lot of responsibilities on their plate may find it especially hard to create a structured workday, or to make time between projects to source new clients.

Many self-employed people find it tough to promote themselves or set appropriate rates. Another money challenge: budgeting with a fluctuating income.

All of these things get easier over time, but the early days of self-employment can be challenging. If money management is a concern for you, check out these financial planning tips for freelancers.

Recommended: Does Net Worth Include Home Equity?

Pros and Cons of Self-Employed Jobs for Parents

There are advantages and disadvantages to working for oneself.

Pros of Self-employment	Cons of Self-employment
•   Flexible schedule •   Work from home — or wherever you work best •   Choose clients you enjoy working with	•   Inconsistent income makes budget planning hard •   Sourcing clients is time consuming •   No paid sick days, vacation, bereavement, or parental leave

7 Self-Employed Jobs for Parents

What are the best self-employed jobs? The fact is, what’s best for one parent may not be right for another. Consider a broad range of possibilities before you settle on one. The following jobs were chosen because they offer flexibility and high wages.

1. Business Consultant

Average hourly pay: $49.27

A business consultant helps other businesses improve a select area of their business (such as their marketing department) or their business as a whole. Consultants can provide support to sales, finance, operations, HR, IT, and other areas. While business consultants can book time to work with clients in a way that fits their schedule, they will often need to do so during business hours since so much of their work involves client communications.

Requirements: Bachelor’s degree, master’s degree (preferred), or a certification from a business consultant association.

Schedule Flexibility [1-5]: 3

Duties:

•   Advising clients

•   Creating business plans

•   Improving employee performance

2. Software Developer

Average hourly pay: $63.20

Software developers write and test code for clients when creating systems software, apps, video games, and other products. Many clients need temporary or ongoing support in this area, which can provide software developers with a lot of flexibility. Developer roles usually appear on lists of ideal jobs for introverts.

Requirements: Knowledge of programming languages.

Schedule Flexibility [1-5]: 4

Duties:

•   Writing code

•   Testing code

•   Project planning

3. Virtual Assistant

Average hourly pay: $22.82

Supporting clients as an administrative assistant virtually. Because so much of this work can be done via email, and immediate responses aren’t expected, virtual assistants can often choose their own hours.

Requirements: Office skills

Schedule Flexibility [1-5]: 4

Duties:

•   Scheduling calls

•   Providing email support

•   Booking travel plans

4. Editor

Average hourly pay: $36.18

Editors polish writing projects across a variety of industries and media formats. This work can be done independently from home, but may require virtual meetings during traditional office hours.

Requirements: Bachelor’s degree and industry experience.

Schedule Flexibility [1-5]: 4

Duties:

•   Writing copy

•   Editing copy

•   Mentoring writers

5. Copywriter

Average hourly pay: $30.64

Similar to editors, copywriters can work from home and do their work independently. Many writers are hired on a freelance basis, which gives them the option of taking on more projects when they have the time.

Requirements: Bachelor’s degree and industry experience.

Schedule Flexibility [1-5]: 4

Duties:

•   Crafting headlines

•   Writing technical guides

•   Creative writing

6. Web Designer

Average hourly pay: $45.85

Web designers create websites for clients from scratch, update existing website designs, and provide ongoing website support. This work can be done independently, but does require meeting with project stakeholders during business hours.

Requirements: Knowledge of design programs, and HTML and CSS programing languages.

Schedule Flexibility [1-5]: 3

Duties:

•   Build and design websites

•   Enhance user interface (UI) and user experience (UX)

•   Bring client’s vision to life

7. Career Counselor

Average hourly pay: $31.32

Working as a career counselor can create really flexible working hours for parents because many clients want to book sessions on nights and weekends when they aren’t working.

Requirements: Bachelor’s degree or master’s degree (preferred)

Schedule Flexibility [1-5]: 5

Duties:

•   Advising clients on job search process

•   Helping clients plan career trajectory

•   Resume consulting

The Takeaway

Being self-employed can be very rewarding — especially for parents. Working for yourself can make it possible to have flexible working hours and to work from home. Almost any service can be offered on a freelance or consulting basis. The key is to evaluate your skills and give yourself time to build a client base.

Challenges may include creating your own workday structure, making time for administrative tasks that aren’t billable, no paid time off, and a fluctuating income. Before making the leap into self-employment, it can be helpful to take a good hard look at the family’s financial situation.

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

See exactly how your money comes and goes at a glance.

FAQ

How can a stay-at-home mom make money in 2025?

There are plenty of ways a stay-at-home mom can earn an income from home in 2025. One popular option for busy moms who need a flexible schedule is working as a virtual assistant on a part-time basis. These roles make it possible to work from home during times when children are napping or at school.

What is the best job to have as a parent?

There is no one best job for a parent to have, but there are some very desirable traits that appeal to most parents. Moms and dads are likely to value job opportunities that have flexible schedules, are remote, and have a high enough wage to support a family.

What job can I do from home with a baby?

Nowadays, many job opportunities are remote, which can make it possible for people to work from home with a baby. Some parents may choose to create their own job by going the self-employed route. Others may pursue careers as a virtual assistant, bookkeeper, copywriter, web designer, or another role that they can perform from home.

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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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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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If you’re married or in a committed relationship, you may be wondering whether combining your finances with a joint bank account is the right choice, or if it’s better to keep things separate.

Opening a joint checking account can simplify budgeting and spending, especially if you’re sharing household expenses. In SoFi’s 2024 Love & Money survey (which included 450 adults who live with their partners and plan to marry in the next few years), nearly 30% said they already had a joint account with their significant other, and 39% said they were planning to open one.

But joint accounts also have some drawbacks, including loss of financial privacy and independence. If you are mulling over this decision, read on to learn the pros and the cons of opening a joint bank account, as well as what’s required to open this type of account.

 

What Is a Joint Bank Account?

A joint bank account is an account that is shared between two or more people. It allows all account holders to deposit, withdraw, and manage funds, and is often used by couples, family members, or business partners.

Sharing a checking account comes with a number of benefits, including the convenience of managing household expenses and promoting transparency between couples. However, joint accounts also have some potential downsides, such as increased risk for financial disputes and potential strain on the relationship.

One of the biggest decisions a couple will make is whether they decide to treat their money as a shared asset or as separate entities. As with any discussion about money, every individual or couple will have different goals and experiences, so it’s helpful to take a look at both sides. Considering the pros and cons of joint vs separate accounts may help you decide if this kind of account suits you.

How Does a Joint Account Work?

A joint account functions just like an individual bank account, except that more than one person has access to it.

Everyone named on a joint account has the power to manage it, which includes everything from deposits to withdrawals. Any account holder can also close the account at any time. In addition, all owners of a joint account are jointly liable for any debts incurred in relation to the account.

You can open a joint account with a spouse or partner you live with, but you don’t have to be a married couple or even live at the same address to open a joint checking or savings account. For example, you can open a joint account with an aging parent who needs assistance with paying bills and managing their money. You can also open a joint account with a friend, roommate, sibling, business partner, or (if your bank allows it) a teenage child.

What Are Some Pros of a Joint Bank Account?

Here are some of the benefits of opening a joint account:

•  Ease of paying bills. When you’re sharing expenses, such as rent/mortgage payments, utilities, insurance, and streaming services, it can be a lot simpler to write one check (or make one online payment), rather than splitting bills between two bank accounts. A shared account can simplify and streamline your financial life.

•  Transparency. With a joint checking account, there can’t be any secrets about what’s coming in and in and what’s going out, since you both have access to your online account. This can help a newly married couple understand each other’s spending habits and talk more openly about finances.

•  A sense of togetherness. Opening a joint bank account signals trust and a sense of being on the same team. Instead of “your money” and “my money,” it’s “our money.”

•  Easier budgeting. When all household and entertainment expenses are coming out of the same account, it can be much easier to keep track of spending and stick to a monthly budget. A joint account can help give a couple a clear financial picture.

•  Banking perks. Your combined resources might allow you to open an account where a certain minimum balance is required to keep it free from fees. Or, you might get a higher interest rate or other rewards by pooling your funds. Also, in a joint bank account, each account holder is typically insured by the FDIC (Federal Deposit Insurance Corporation), which means the total insurance on the account is higher than it is in an individual account.

•  Fewer legal hoops. Equal access to the account can come in handy during illness or another type of crisis. If one account holder gets sick, for example, the other can access funds and pay medical and other bills. If one partner passes away, the other partner will retain access to the funds in a joint account without having to deal with a complicated legal process.

Recommended: Money Management Guide

What Are Some Cons of a Joint Bank Account?

Despite the myriad advantages of opening a joint account, there are some potential downsides to a shared account, which include:

•  Lack of privacy. Since both account holders can see everything that goes in and comes out of the account, your partner will know exactly what you’re earning and how much you are spending each month.

•  Potential for arguments. While a joint account can prevent arguments by making it easier to keep track of bills and spending, there is also the potential for it to lead to disagreements if one partner has a very different spending style than the other.

•  No individual protection. As joint owners of the account, you are both responsible for everything that happens in the account. So if your partner overdraws the account, you will both be on the hook for paying back that debt and covering any fees that are charged as a result. If one account holder lets debts go unpaid, creditors can, in some cases, go after money in the joint account.

•  It can complicate a break-up. If you and your partner end up parting ways, you’ll have the added stress of deciding how to divide up the bank account. Each account owner has the right to withdraw money and close the account without the consent of the other.

•  Reduced benefits eligibility. If you open a joint account with a teenage child who is going to, or is already in, college, the joint funds will count towards their assets, possibly reducing their eligibility for financial aid. The same goes for an elderly co-owner who may rely on Medicaid long-term care.

How to Open a Joint Bank Account

If you decide opening a joint account makes sense for your situation, the process is similar to opening an individual account. You can check your bank’s website to find out if you need to go in person, call, or just fill out forms online to start your joint account.

Typically, you have the option to open any kind of bank account as a joint account, except you’ll select “joint account” when you fill out your application or, after you fill in one person’s information, you can choose to add a co-applicant.

Whether you open your joint account online or in person, you’ll likely both need to provide the bank with personal information, including address, date of birth, and social security numbers, and also provide photo identification. You may also need information for the accounts you plan to use to fund your new account.

Another way to open a joint account is to add one partner to the other partner’s existing account. In this case, you’ll only need personal information for the partner being added.

Before signing on the dotted line, it can be a good idea to make sure you and the co-owner know the terms of the joint account. You will also need to make decisions together about how you want to manage and monitor the account, such as which account alerts you want to set up.

Should I Open a Joint Bank Account or Keep Separate Accounts?

As you consider your options, know that it doesn’t have to be all or nothing. You might find that the best solution is to pool some funds in a joint account for specific purposes, from paying for basic living expenses to saving for the down payment on a house or building an emergency fund.

You might keep your own separate accounts as well, where you can spend on what you like without anyone watching (or judging). In SoFi’s Love & Money newlywed survey (which included 600 adults who have been married less than one year), the most popular banking set-up, chosen by 42% of couples, was a hybrid approach — having both joint and individual accounts.

Recommended: Emergency Fund Calculator.

The Takeaway

Opening a joint bank account offers convenience by allowing shared access to funds for bills, savings, or everyday expenses. Joint accounts also promote transparency and can simplify money management for couples who share financial responsibilities.

But joint accounts also come with some downsides and potential risks. All transactions on the joint account are visible to both account holders, which can lead to a lack of privacy regarding personal spending habits and potential conflict. Plus, either holder can withdraw money without the other’s consent. If one person mismanages funds, both may be affected.

Some couples choose to maintain separate accounts alongside a joint one for shared expenses to achieve a balance of independence and collaboration.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What are the disadvantages of a joint account?

A joint bank account can create financial complications if one account holder mismanages money or racks up overdraft fees, as both parties are equally responsible. Disagreements over spending habits may also come up, which could strain a relationship. Also, in the event of a breakup or divorce, separating funds can become more complicated.

Are joint bank accounts a good idea?

Joint accounts can be a good idea for couples, family members, and business partners who share financial goals and trust each other fully. They simplify bill payments, budgeting, and managing shared expenses. However, they also require communication and mutual agreement on spending. If that trust breaks down or if one person is less financially responsible, problems can arise. Whether it’s a good idea depends on the relationship and financial compatibility.

Is it better to have joint or separate bank accounts?

Whether to have joint or separate bank accounts depends on the relationship and financial habits of the individuals involved. Joint accounts offer transparency and make shared expenses easier to manage, which can work well for couples or family with aligned goals. Separate accounts allow more financial independence and privacy. Some people prefer a hybrid approach — maintain both joint and individual accounts. The best setup depends on trust, communication, and lifestyle needs

Who owns the money in a joint bank account?

In a joint bank account, both account holders have equal legal ownership of the funds, regardless of who deposits the money. This means either person can withdraw or use all the money at any time without the other’s permission.

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

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.

¹SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.

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The marginal propensity to save (MPS) is an important concept in economics that describes how much of each additional dollar of income a person (or economy) chooses to save rather than spend. It plays a central role in Keynesian economic theory and helps economists understand how changes in income affect savings, spending, and overall economic activity.

But beyond theory — does MPS matter to you as an individual saver? Absolutely. Understanding MPS can help you become more mindful of how you handle income increases, whether from a raise, bonus, or side gig. What follows is a more in-depth look at marginal propensity to save, including what it means, why it matters, and how it applies to your personal financial life.

The Keynesian Economic Theory, Explained

British economist John Maynard Keynes revolutionized economic thinking with his 1936 book, The General Theory of Employment, Interest, and Money. His core idea was that economic downturns result from insufficient demand for goods and services, and that government spending can help stabilize the economy.

Keynes advocated for an increase in government spending during recessions and depressions, which would boost the production of goods and services to minimize unemployment rates and enhance economic activity. This theory went against the prevailing and long-held view that markets are self-regulating and any interference by the government could be harmful.

There are three main elements of this theory:

•   Aggregate demand: This is the total demand for goods and services in an economy. If demand drops too low (in other words, there is a lull in spending), a recession may follow.

•   Sticky prices and wages: Prices and wages are often slow to respond to changes in supply and demand, which can prolong unemployment or inflation.

•   Government intervention: Keynes advocated for government interventions like increased spending and lowering taxes to stimulate demand and pull the economy out of a downturn.

The Keynesian Multiplier describes the effect of increased government spending/investment as an economic stimulus. According to the multiplier, an increase in government spending leads to a greater-than-proportional increase in total economic output. In other words, the overall gain of government intervention is greater than the dollar amount spent.

The multiplier effect is directly influenced by the marginal propensity to save (MPS) and its counterpart, the marginal propensity to consume (MPC).

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

Calculating Marginal Propensity to Save

MPS measures how savings behavior changes in response to a change in disposable income. The lower the MPS, the higher the multiplier effect of government spending or investment on total output, or gross domestic product (GDP). A low MPS supports Keynes’s premise that government spending can have a powerful effect on increasing aggregate demand and reducing unemployment during recessions.

Knowing the MPS helps policymakers estimate how effective spending or tax changes will be in stimulating the economy. A lower MPS (meaning people spend more and save less of their additional income) amplifies the effects of fiscal policy, which is central to Keynes’s approach to managing economic downturns.

Recommended: 7 Tips to Managing Your Money Better

Marginal Propensity to Save Formula

MPS is calculated with a specific formula:

MPS = Change in Savings / Change in Income.

Marginal Propensity to Save Example

Let’s say you receive a $1,000 bonus at the end of the year. Of that $1,000 increase in income, you decide to spend $300 on new clothes, $200 on a fancy dinner out, and save the remaining $500.

•   Change in income = $1,000

•   Change in savings = $500

•   MPS = $500 ÷ $1,000 = 0.5

This means you saved 50% of your additional income.

Marginal Propensity to Consume

Conversely, the marginal propensity to consume (MPC) is the change in the spending, or consuming amount. If someone’s income increases, the MPC measures the amount of income they choose to spend on goods and services instead of putting into different forms of savings.

The MPC formula is:

MPC = Change in Consumption / Change in Income.

By using the example above, the MPC would be 500 ÷1000 = 0.5.

Since income must be either saved or spent, the following must always be true:

MPS + MPC = 1

What MPS Means for You as a Consumer

While MPS is a tool economists use to measure national saving behavior, it also has implications on your personal finances. Understanding your own MPS can help you evaluate your spending vs. savings habits and take better control of your finances.

For example, if you find that you increase spending in line with any increases in income (meaning your MPS is at or near zero), it’s a sign you may be succumbing to lifestyle inflation, also known as lifestyle creep, which is the tendency to increase spending as income increases. It also indicates that you may want to consider increasing your savings rate — especially for emergencies, retirement, or other financial goals.

💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Other Factors That Influence Saving

While MPS looks at changes in savings that result from changes in income, consumer savings behavior is influenced by other factors. Here’s a look at some other things that can affect saving and spending that are unrelated to income.

1. Wealth

Wealth (assets and investments) is separate from income. If your wealth increases — say through an inheritance, stock gains, or home appreciation — you may feel more comfortable saving less and spending more, even if your income hasn’t changed.

Alternatively, a decline in wealth might lead to reduced consumption and increased saving as a precaution.

2. Expectations

Future income expectations are also known to influence consumer spending and saving habits. For example, if you expect to get a raise or bonus, you may spend more now. If you fear a job loss or recession is looming, you might decide to tighten your budget. These shifts affect your saving behavior even without actual changes in income.

Debt

People also tend to adjust their consumption and savings if they’re in debt. For example, if you’re carrying high levels of credit card debt, you might be inclined to cut spending and increase savings to pay it down, even if your income hasn’t changed. Conversely, when debt levels are low and borrowing is easy, you may feel more free to spend.

Recommended: What is the Average Savings by Age?

Why Marginal Propensity to Save Matters

Using the data from MPS and MPC helps businesses and governments determine how funds are allocated. For example, economists can assess this data to determine whether increases in government spending, or investment spending, is having an influence on consumer saving and spending.

But understanding MPS isn’t just for economists and policymakers. Here’s why it may matter to you:

•   It helps you analyze how you use extra income.

•   It shows if your current spending habits align with your savings goals.

•   It can help you adjust behavior to avoid lifestyle inflation.

If you receive a raise or a financial windfall (like a bonus, inheritance, or cash gift), recognizing your personal MPS can help you make more strategic decisions, rather than impulsively spending the entire amount.

How to Start Saving Money

Whether you’ve recently experienced a boost in income, expect a raise or bonus in the future, or simply want to amp up your savings rate, these strategies can help.

Identifying Your Savings Goals

Consider what you’re saving for in the near-, mid- and long-term. For example:

•   Short-term goals: These might include building an emergency fund or saving for a small vacation.

•   Medium-term goals: This could include buying a car, a home improvement project, or a wedding.

•   Long-term: These are goals that are many years, even decades, away, such as retirement, sending a child to college, or achieving financial independence.

Once you’ve set some goals and timelines, you’ll want to figure out how much you need to set aside each month to reach those goals. If your goal is short-term, you might consider keeping your funds in a high-yield savings account. Online banks and credit unions tend to offer the highest rates.

“For money you’ll use in three to seven years, you may be prepared to take slightly more risk than a savings account,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “You might choose to use a brokerage account where you can invest that money in stocks, bonds, cash, or other asset classes. Just be sure to keep your comfort with risk in mind.”

For retirement saving, you’ll want to utilize retirement accounts, such as an employer-sponsored 401(k) or an individual retirement account (IRA).

Recommended: Emergency Fund Calculator

Creating a Budget

To free up funds for saving, it’s important to make a basic budget. You can do this by gathering up the last several months of financial statements and using them to determine your average monthly income and average monthly spending.

If you find that your average monthly cash outflow is the same or close to your average monthly cash inflow (meaning you’re not saving much or anything each month), you’ll want to comb through your expenses and look for places where you can cut back. Any money you free up can be siphoned into savings.

Alternatively, you might look for ways to increase your income, such as asking for a raise, freelancing, or starting a side hustle, then funnel those extra earnings right into savings.

The Takeaway

The marginal propensity to save, or MPS, is more than just an economic formula — it’s a practical tool that can help you reflect on how you manage your money. Whether you’re building an emergency fund, saving for home, or hope to retire some day, consider increasing your savings rate any time you get a raise, bonus, or any other increase in income.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Can MPS be greater than 1?

No, the marginal propensity to save (MPS) cannot be greater than one. This is because MPS represents the proportion of an additional dollar of income that is saved, and it’s impossible to save more than the total amount of additional income received. MPS always ranges between 0 and 1.

How do you calculate the marginal propensity to save?

The marginal propensity to save (MPS) shows how much of an increase in income is saved rather than spent. You calculate it by dividing the change in savings by the change in income. The formula is: MPS = Change in Savings / Change in Income.

What is the difference between average and marginal propensity to save?

The average propensity to save (APS) is the proportion of total income that is saved. It’s calculated by dividing total savings by total income. The marginal propensity to save (MPS), on the other hand, indicates how much of an increase in income is saved. It’s calculated by dividing the change in savings by the change in disposable income.

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Photo credit: iStock/MarsBars
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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