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Applying early decision to your top-choice college can give you an admissions advantage. But you’ll want to keep in mind that this comes with a binding agreement — if you get accepted, you are obligated to attend that school.

There are some acceptable reasons for backing out of an early decision offer, like a change in your financial or personal circumstances. But if you simply have a change of heart, you will likely face negative consequences, such as losing any deposits and potential reputation issues with other schools.

Before applying to a college early decision, you’ll want to make sure you understand the commitment you’re making. Read on to find out if early decision is legally binding and how you can get out of early decision without facing penalties.

What Is Early Decision?

Early decision is a college application process in which students apply to their preferred college early in their senior year of high school, typically by November 1 or November 15, depending on the school.

When you apply early decision, you are agreeing that, if accepted, you will attend that school the following fall. As a result, you should not apply to multiple schools under early decision — if you are caught, it can result in one or both schools revoking your acceptance letters.

Colleges let early decision applicants know if they were accepted or not in mid to late December, giving students enough time to apply to other schools should they get rejected. Typical college application deadlines are in early January to mid-February.


💡 Quick Tip: Make no payments on SoFi private student loans for six months after graduation.

Why Apply for Early Decision?

One of the benefits of applying to college early decision is being able to find out whether or not you’ve been accepted to the school at the top of your list early in the application cycle. If you get in, you can then take a deep breath and relax and not worry about the usual Senior year checklist.

Applying early decision also signifies your commitment to a specific college or university, which may give you a leg up in getting in. Indeed, colleges often have a higher acceptance rate for early decision applicants than for regular decision applicants. For example, Duke University accepted 16.4% of early decision applicants for the class of 2027, while regular applications experienced a 4.8% acceptance rate.

That said, early decision isn’t for everyone. If you’re not sure where you want to go to college, it’s probably not wise to apply early decision. If how to pay for college is a chief concern, keep in mind that you will not be able to compare financial aid packages from other schools if you apply early decision.

How Does Early Decision Compare to Other Admission Deadlines?

Early decision is just one of several college admission deadlines, each with its own pros and cons. Here’s a look at how early decision compares to other admission deadlines.

Early Action

Unlike early decision, early action is non-binding. Students must adhere to the same application deadline as early decision (November 1 or 15), but there’s no obligation to enroll if you’re accepted. Early action applicants can expect a response from the school by mid-December and don’t need to make a decision until May 1. You can apply to more than one school early action, since it’s non-binding.

Regular Decision

Regular decision is the standard application process with a later deadline, typically some time between early January and mid-February. It is non-binding, and students can apply to multiple colleges. Admission decisions for regular decision applicants are usually released in mid-March to early April and require a response by May 1.

Rolling Admissions

Colleges with rolling admission allow you to submit your application within a wide time frame, usually six months or so, and review applications as they come in. Typically, they will then send out admission decisions within four to six weeks, accepting students until all open slots for the incoming class have been filled. Schools with rolling admission generally start accepting applications around September 1 and continue well into the spring semester.

Is There a Penalty for Backing Out of Early Decision?

Early decision isn’t a legal contract, but backing out of an early decision agreement typically has consequences. If a college admits a student under an early decision plan, the expectation is that the student will enroll for the upcoming fall semester and withdraw any early action or regular decision applications from other schools.

Some schools actually require a deposit with your early decision application. If you back out of your agreement, you likely won’t get this money back.

Colleges also communicate with each other. If your early decision school lets other schools know you reneged on your agreement, it could have a negative impact on your applications to schools you are interested in attending.

There are exceptions, however. If you back out of an early decision agreement for a valid reason, you can likely get off the hook without any negative repercussions. For example, you may be able to break your agreement without issue if you receive a financial aid package that’s different from what you anticipated, making it difficult for you to afford the cost of attendance.

Colleges also understand if extenuating circumstances prevent a student from honoring their commitment, including an illness or death in the family that leads a student to defer enrolling for a semester or year.


💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, federal Direct Subsidized and Unsubsidized loans, Direct PLUS loans, and more.

What to Do if You Can No Longer Attend Your Early Decision School

If you find you have to back out of an early decision offer, you’ll want to get in contact with the college’s admissions department as quickly as possible. The sooner you let them know, the more likely they will be to work with you. They can let you know what your next steps should be. Without a good excuse, however, it is likely any deposits or payments you’ve made so far won’t be refunded.

If your reason for backing out is insufficient financing, you may want to discuss this with the college’s financial aid office. Some schools may be willing to reevaluate a student’s financial aid package if there has been a substantial change in the family’s financial situation.

If you stick with your withdrawal decision, you’ll next need to apply to other colleges, assuming you are still planning to go to college in the fall. Most colleges have an application deadline in January, so if you made the decision to back out of early decision sooner rather than later, you likely still have time.

Keep in mind that if you reneged on your early decision application without a valid reason, the school may share this information with other colleges. As a result, you may want to cast a wide net, including plenty of safety schools.

Recommended: 5 Ways to Start Preparing For College

The Takeaway

Applying to a college early decision requires making a commitment. However, the early decision agreement you (and your parents) sign is not legally binding. In other words, the college can’t force you to pay tuition and come to their school.

If you back out of your early decision agreement for a valid reason, such as not getting the financial aid offer you were expecting or unforeseen change in your circumstances, you may be able to get out of the contract without any negative consequences.

If, on the other hand, you back out simply because you changed your mind, you could potentially lose money (if the school required a deposit with your application) and the school may share this negative information about you with other colleges, doing harm to your reputation.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

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

SOIS0124012

ACH payments (or ACH transactions or transfers) move funds between financial institutions electronically, eliminating the need for cash, paper checks, and credit card networks. As with most banking transactions, they can involve a range of costs, which are typically competitive with other payment methods.

The exact amount you end up paying for an ACH transaction will depend on multiple factors, such as the way you use the ACH network and the size of your payments. In many cases, these fees will apply if you are a business owner vs. a consumer. Read on to learn more about how ACH pricing works and compares to other payment methods.

What Is an ACH Transfer?

First things first: ACH stands for Automated Clearing House, the network that powers electronic financial transactions. It’s a hub that includes around 10,000 financial institutions and can support payment processing, such as direct payments, electronic checks (eChecks), electronic funds transfers (EFTs), direct debits, and direct deposits. When considering payment apps, like PayPal and Venmo, know that ACH powers those as well.

ACH transfers work similarly to other payment methods. Take your monthly internet bill, for example. If you signed up for autopay, you had to provide your checking account details. You also needed to agree to a scheduled payment.

After the sign-up, your internet provider requests funds from your bank to pay for the cost. From there, your bank processes the ACH transaction as long as you have enough funds. (It’s worth mentioning that ACH payments are quite secure, but there is fraud out there. ACH Positive Pay offers one way to protect yourself if you are concerned about scammers.)

ACH transfers require an initial setup. Following that, you can make bank-to-bank payments using the ACH network. These payments generally fall into two categories: ACH credit and ACH debit. Either way, you may wonder how long an ACH transfer takes. They usually clear within a few business days and for a relatively low cost.

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Typical ACH Payment Fees

As a consumer, you may not pay for ACH processing, though some providers may try to pass along a service charge. In some cases, using ACH may even earn you a discount. For instance, if you automate a home loan payment for a certain date every month, you might be rewarded with a discount on your rate.

However, as a business, you will likely have to spend a bit to conduct ACH business. The usual ACH transfer cost is $0.26 and $0.50, typically landing at $0.40. This means that ACH payments are one of the more affordable options for businesses, although prices may vary depending on the provider you choose to process your payments. That provider is usually known as a third-party payment processor (TPPP).

Here are some standard ACH fees you should be on the lookout for if you accept these payments.

Account Fee

The ACH account fee covers a broad array of costs. It essentially pays for the services needed to manage a payment processing account. These include recording a monthly statement, compliance costs, system maintenance, and transaction monitoring. Generally, your service provider or processor will collect this fee.

ACH Processing Fees

The ACH processing fee covers the expense to send an ACH payment to the recipient’s bank account after going through the Automated Clearing House network. ACH processing fees break up into three categories: debit, credit, and discount, which you’ll now learn about individually.

Debit Fee

The debit fee pays for a customer to make an ACH debit payment to a business. As mentioned above, this ACH debit fee typically costs between $0.20 and $1.50. The charge depends on the risk of the transaction and the type of business.

Credit Fee

ACH credits come into play when a business makes a payment to a third party, vendor, or employee. It’s similar to a debit fee in terms of cost, meaning between $0.20 to $1.50, and it pays for the transaction to be sent through the ACH network.

Higher-risk businesses (which may cluster in certain fields, from financial and travel services, to auctions and tobacco-based businesses) may face an additional charge as well. This can bring the fee to around 0.5% to 1.5% of the payment. In part, this reflects the fact that ACH credit payments tend to be worth a higher dollar amount than ACH debit transactions. As a result, an ACH credit payment is a greater risk for the merchant services provider.

Discount Fee

The name “discount fee” may be misleading for people just learning about ACH charges. It has no connection to discounted prices. Instead, it’s a fee that applies to certain high-risk ACH transactions based on a percentage. With it, payment processors can increase the cost of the service and lessen the risk of the payment.

Other ACH Fees

There are other fees you should know about with ACHs. Because when it comes to paying for financial services, no surprises is often the best policy.

Setup Fee

In some cases, your payment processor may charge you for setup. This one-time fee can be waived sometimes, though; it’s worth inquiring. You’re most likely to be able to avoid the fee if ACH processing comes as an add-on service to another arrangement you’ve made. Alternatively, you can reduce costs by working with a business that does not collect this setup charge.

Monthly Fee

Those who use ACH may also face a unique monthly fee along with processing charges. However, some may be able to pay both fees wrapped into the monthly fee. Usually, this fee costs anywhere from $5 to $30.

Monthly Minimum Fee

This may sound like the monthly fee we just described above, but there may indeed be a monthly minimum fee as well. This is a minimum processing charge that could be assessed in addition to your regular monthly charge. Or it might replace that monthly fee.

Batch Fee

ACH files can contain one or more groupings, called batches. Batches contain one or multiple transactions, and they are sorted based on certain clusters of data. When your ACH transfers are batched in this way, you are charged a batch fee. It’s assessed per each batch processed and is typically under a dollar per batch.

ACH Return Fee

Returning an ACH transfer is possible. However, it usually comes with an ACH return fee that costs between $2 to $5 per transaction.

ACH Chargeback Fee

Customers use chargebacks to dispute what they believe are erroneous payments. This process comes with a chargeback fee, and it’s typically higher than fees for ACH returns. The ACH chargeback fee tends to cost between $5 and $25.

High Ticket Surcharge

The original intention for ACH fees was to apply them to low-ticket (that is, not too pricey) purchases. As a result, there’s an additional charge added for high-ticket transactions. You’ll find that payment processors likely charge a surcharge on purchases over $5,000.

Expedited Processing Fee

You may need expedited processing for an ACH transfer. Depending on the payment processor, this service can come with an additional charge.

Comparing ACH Fees to Other Payment Methods

When it comes to electronic transactions, you may find that different techniques can sound quite similar. However, processes vary, and so too can fees. Here’s what you need to know about the fees associated with other payment methods.

ACH vs Wire Transfer

Wire transfers are transactions between two financial institutions where each is responsible for verification. In a wire transfer, a bank sends money from one account into another. This process can take little or virtually no time when it occurs within the same bank. However, if the money must transfer between distant or international banks, it can take a bit longer, but it is often viewed as one of the quickest ways to make a payment.

While this can be a fast method, it’s also costly, often averaging between $25 to $45 when sending money and around $15 when you receive funds in this way. As a result, wire transfers may be best for one-time, large payments.

ACH vs Paper Checks

Paper checks are the traditional route for payment processing and may work well if you want to transfer money between banks in a way that avoids electronic transactions. But the overall cost can vary depending on the business’s size, where the checking account is located, and timing.

It’s not unheard of for banks or financial institutions to offer free checking accounts to small businesses. They may even throw in checks at no additional cost. These two selling points, along with low monthly fees, can make paper checks an incredibly cheap financial method.

However, experiences vary. The financial institution may offer a free checking account, but only if the business maintains a certain minimum balance. Not only that, but monthly fees and the time spent filling out or processing checks can be costly. According to NACHA, sending money via a check results in a cost between $2 and $4 per transaction.

ACH vs Credit Card and Debit Cards

Credit cards are a standard payment method, particularly for businesses collecting online payments. All the cardholder has to do is use their card to purchase the business’ goods or services. When they do, the credit card network verifies that the payer can indeed afford to do so. This is why credit card transactions are considered “guaranteed funds” payments. ACH doesn’t do this vetting during processing, which means transactions can be rejected. Thus, they may result in a penalty fee. Debit cards are another convenient way to pay. A person swipes or taps their card to pay, and funds are automatically deducted from their account.

ACH processing is relatively slow compared to credit card processing. But ACH pricing is lower than credit card and debit fees.

Recommended: What Is a Credit Card and How Does it Work?

ACH vs Online Invoice with Pay Link

If a vendor includes an easy, clickable payment link in an online invoice to customers, that convenience can trigger fees. In terms of processing, this is likely to cost up to 3.3% of the transaction’s total, and you may also pay a 15- to 30-cent fee for each transaction.

ACH vs PayPal

Now, let’s consider how processing via PayPal stacks up. In the U.S., PayPal fees range from 1.9% to 3.49%, depending on whether the transaction was in-store or online, and then there’s an additional fee per transaction, ranging from $0.09 to $0.49. International transactions will be assessed an additional fee. If you use a QR code with your PayPal transactions, you can lower the cost somewhat.

ACH vs Apple Pay Fees

Apple doesn’t assess a fee from merchants to accept and use Apple Pay for payments, but that doesn’t mean you’re getting a freebie. You will have to pay your processing partner at the standard rates for credit- and debit-card transactions.

The Takeaway

Businesses and individuals alike rely on ACH transfers to process transactions. And there’s a reason for it: These digital payments are quick, convenient, and accessible. ACH transfers also have the benefit of being a lower-cost option compared to methods like wiring funds and some other common techniques. Finding the right way to pay bills and collect payments is a personal decision, with many variables. Money matters, of course, but there may be other benefits to consider as well.

When it comes to your personal banking, finding the right partner is equally important.

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FAQ

Do ACH payments have fees?

Yes, ACH payments come with fees. However, these are generally the lowest fees versus any other payment processing option.

Why do banks charge ACH fees?

Banks charge ACH fees to cover the processing service and potential costs, like penalty fees.

How do you avoid ACH fees?

Since ACH fees vary, the best way to avoid them is through research. Reading terms ahead of time can help you find whether a provider is the right option for you. In general, accessing ACH through a third-party can drastically increase the number of fees.

Do US banks charge for ACH transfers?

As a customer, ACH transfers are typically free, and your bank doesn’t collect a fee. As a business conducting ACH transactions, however, you might be charged a fee for an occasional ACH transaction. It’s more likely, however, that if you are completing these transactions regularly that you will work with and pay a third-party payment processing company rather than your bank.

What is ACH on my bank statement?

ACH stands for Automated Clearing House. It is a network used to transfer funds between bank accounts around the United States. When you see it on your bank statement, you know that payment was made electronically through the ACH network.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 during a 30-day Evaluation Period (as defined below).

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 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, 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 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY 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, 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 members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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 Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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