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Grants, scholarships, and student loans can all help you pay for your education. But there are key differences between the three — namely, how they award funds and whether you need to repay those funds. Grants and student loans often depend on financial eligibility and need, while scholarships tend to be merit-based. And while both grants and scholarships don’t need to be repaid, student loans do.

Here’s a breakdown of how student loans and grants vs. scholarships work, as well as some of their key differences.

What Is a Student Loan?

A student loan is money borrowed for educational expenses that has to be paid back (usually with interest). You can take out a loan from a bank, an online lender, a college or university, or the state or federal government. If you’re wondering about grants vs. loans, both are based on financial need, but what sets them apart is that grants don’t need to be repaid and student loans do.

So, how do student loans work? Loan terms for college can vary based on a few different factors: whether they’re federal (offered by the government) or private (offered by a financial institution), whether you choose fixed or variable interest rates, how long it takes to pay the loan back, and how much can be borrowed. Loans offered to you could be based on your credit score or the personal financial information you supply on the Free Application for Federal Student Aid (FAFSA®).

How to Apply for Student Loans

To determine your eligibility for a student loan from the federal government, you must fill out the FAFSA. States and colleges may use information from your FAFSA to determine state and school-specific aid, as will some private financial aid providers.

To fill out the FAFSA form, you’ll need a few pieces of information, including:

•   Your Social Security number or alien registration number (if you are not a U.S. citizen)

•   Your driver’s license number (if you have one)

•   Federal income tax returns, W-2s, and other records of money earned

•   Bank statements and records

•   Records of untaxed income (if applicable)

•   Information on account balances, investments, and assets

•   FSA ID for electronic signature (this is your username and password needed to access and submit your FAFSA online)

If you are applying as a dependent student, you will need all of the above information from your parent(s) as well.

What Is the Difference Between Unsubsidized and Subsidized Loans?

There are two primary types of federal student loans: subsidized loans and unsubsidized loans. The main difference between unsubsidized and subsidized loans is how the interest accumulates through the life of the loan.

Unsubsidized loans are available to undergraduate and graduate students, regardless of any financial need. An unsubsidized loan starts accruing interest as soon as the loan is dispersed. That means if you accept an unsubsidized loan during your freshman year of college, the loan will accumulate interest throughout the rest of your time in school.

You are responsible for starting to pay back an unsubsidized loan six months from when you graduate or if you drop below half-time enrollment. Because of the interest capitalizing on your unsubsidized loan from the day it’s disbursed, your loan balance will likely be more than what you originally borrowed if you don’t make interest payments while you’re in school.

A subsidized loan, on the other hand, is a need-based loan available to undergraduate students on which interest accumulates only after you begin repayment. The government will pay the interest while you’re in school at least half-time or until you graduate and for the first six months after, as well as during a period of deferment.

Like unsubsidized loans, repayment for a subsidized loan typically occurs after a six-month grace period from when you graduate or drop below half-time enrollment. You are responsible for paying back the total outstanding balance, plus interest. There are plenty of ways to pay off federal loans, from the standard 10-year repayment plan to income-based repayment plans.

Pros and Cons of Loans

Pros of student loans include:

•   Access to education: Enables students to attend college who otherwise might not be able to afford it.

•   Flexible repayment options: Federal student loans offer flexible repayment options, including income-based repayment plans.

•   Credit building: Paying back student loans on time each month can help establish and build credit history.

•   Fixed interest rates: Federal student loans (and some private student loans) offer fixed interest rates, making monthly payments predictable each month.

Cons of student loans include:

•   Debt burden: Student loans increase debt load and debt-to-income ratio, which can lead to financial strain and/or make it hard to qualify for other loans in the future.

•   Interest accumulation: Interest starts accumulating immediately on unsubsidized loans and private loans. This increases the overall amount that needs to be repaid.

•   Stress and anxiety: Debt of any kind, including student loans, can cause significant stress and anxiety, which could impact your overall well-being.

What Is a College Grant?

A grant can be beneficial to students because it is financial aid that does not have to be repaid. That’s one main difference between a grant vs. a loan. Grants may be obtained directly from your university, the federal government, state government, or a private or nonprofit organization. It is important to note that you may be required to meet certain financial eligibility criteria, depending on the grant.

When it comes to a grant vs. a scholarship, grants are typically awarded based on need, not on academic achievement or merit. Scholarships are based on merit.

One popular type of college grant is the Pell Grant. Pell Grants are given to undergraduate students with significant financial need, which means they are typically awarded to low-income students.

Do You Have to Pay Back Grants?

In most cases, you do not need to pay back grants as long as you maintain eligibility. If, for example, you decide to drop out of school, you might be required to pay back certain grants.

You might also need to pay back grants if you withdraw early from a program in which the grant was awarded, or if you did not meet a service obligation, as is required for the Teacher Education Assistance for College and Higher Education (TEACH) Grant, for example.

How to Apply for Grants

To apply for grants, start by researching and identifying grants for which you qualify, focusing on those specific to your field of study, background, or needs. Visit the official websites of grant providers, such as federal and state governments, educational institutions, and private organizations, and carefully review their eligibility requirements and application deadlines. Prepare all necessary documents, which may include academic transcripts, letters of recommendation, a personal statement, and financial information.

Also, you’ll need to fill out the FAFSA if you are in the United States, as it is often required for federal and state grants.

Pros and Cons of Grants

Pros of grants include:

•   No repayment required: Grants are essentially free money that does not need to be repaid, making them highly beneficial for students.

•   Financial relief: Provide significant financial assistance, reducing the amount of student loans needed and easing the financial burden of education.

•   Encourages academic excellence: Some grants are merit-based, encouraging students to maintain high academic performance.

Cons of grants include:

•   Highly competitive: Grants are often limited in number and highly sought after, making them difficult to obtain.

•   Strict eligibility requirements: Many grants have specific criteria that must be met, which can exclude a significant number of applicants.

What Is a Scholarship?

Scholarships are a great way to finance higher education, simply because there are thousands of available scholarships based on financial need or merit. That’s the main difference between scholarship and grant: Scholarships are often merit-based. Scholarships can come from a variety of sources and typically do not need to be repaid.

How to Apply for Scholarships

It can be easy to feel overwhelmed with the amount of time it takes to hunt for scholarships — here are a few tips to help you find scholarships to apply for:

•   Start by combing scholarship databases for any scholarship that may align with your interests or background. Don’t be afraid to tell people you know that you are looking for scholarships either — your best friend or neighbor may have heard of a scholarship you could be eligible for.

•   Take a look at your academic achievements. Have you maintained a certain GPA or did you make the Dean’s List? There could be a scholarship for that. List out your community involvements and start researching whether your softball league, for example, offers scholarships.

•   Make a list of all the things that make you who you are. List out your heritage and things that your family members have been involved with over time. Perhaps your grandmother belongs to the National Corvette Club or your grandfather was a veteran, both of which could present scholarship opportunities.

Once you have your list, it helps to stay organized by adhering to deadlines and application requirements. Stick to what feels doable so you can knock out several applications in a row. Scholarship application formats vary from essay writing to creating a video to simply filling out a form.

Important documents you might need when applying for scholarships include birth certificates, SAT/ACT scores, academic transcripts, certifications, or ID cards. Be sure you have those handy prior to hitting search engines and applying for the next available scholarship you find.

Pros and Cons of Scholarships

Pros of scholarships include:

•   No repayment needed: Scholarships provide financial assistance that does not need to be repaid, reducing the overall cost of education.

•   Merit recognition: Often awarded based on academic, athletic, or other achievements, recognizing and rewarding students for their talents and hard work.

•   Boosts resume: Being awarded a scholarship can enhance a student’s resume, showcasing their achievements and dedication.

•   Encourages academic excellence: Incentivizes students to maintain high academic standards and strive for excellence in their endeavors.

Cons of scholarships include:

•   Highly competitive: Scholarships can be very competitive, with many applicants vying for a limited number of awards.

•   Strict criteria to qualify: Strict eligibility criteria may exclude many students from qualifying for certain scholarships.

Grants vs Scholarships vs Loans

Now that you have a grasp on all three forms of financial aid, let’s examine the main difference between scholarships, grants, and student loans.

What Is the Difference Between a Loan and a Grant?

Here’s what makes grants vs. loans different: A student loan — whether it is unsubsidized or subsidized, federal or private — must be repaid with interest. A grant typically does not need to be repaid as long as you maintain eligibility requirements.

What Is the Difference Between a Grant and a Scholarship?

When looking at a grant vs. scholarship, the primary difference between the two is that a grant is typically need-based while a scholarship is usually merit-based. You might receive a scholarship for a number of things, such as high academic achievement, organization or club involvement, or ancestry. A grant is typically awarded based on financial need and can be specific to certain degrees, students, and programs.

How Is a Student Loan Different from a Scholarship?

A student loan is different from a scholarship primarily in that a student loan must be repaid and a scholarship does not need to be repaid. Scholarships can come from a variety of sources, including nonprofit organizations, private companies, universities and colleges, and professional and social organizations. Student loans may come from private lenders, federal or state governments, or colleges and universities.

The two types of student loans are federal student loans and private student loans. Federal student loans should be utilized first, as they typically come with better interest rates and borrower protections, such as income-driven repayment plans and student loan deferment. Private student loans can help fill in the gaps between federal loans, grants, and scholarships.

The Takeaway

With a good understanding of scholarships vs. grants vs. student loans under your belt, you can better determine which form of financial aid is right for your situation. Remember that you don’t necessarily have to choose just one.

Once you’ve maximized the money you can get from grants or scholarships that you likely won’t have to pay back, you may consider bridging the remaining gap by taking out a student loan.

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.

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Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

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An intermediary bank is a bank that acts as a go-between, connecting two different banks as transactions are processed. Smaller banks require intermediary banks or correspondent banks to facilitate transactions with other banks, while larger banks may have enough connections to serve as their own intermediaries.

Intermediary banks are commonly used for international wire transfers and handling multiple types of currencies. Generally, retail bank customers do not have to worry about finding intermediary banks — instead, they work behind the scenes with the banks themselves. Read on to learn more about these important financial institutions.

What Is an Intermediary Bank?

An intermediary bank is a third-party bank that helps facilitate transfers and transactions between two other banks. Often, intermediary banks are dealing with international transactions such as wire transfers between different countries. If you are sending money to others abroad, your bank may end up using an intermediary bank.

You may not be aware of how the intermediary banks work behind the scenes, but it’s important to note that you may be charged additional bank fees for the work that intermediary banks are doing.

How Do Intermediary Banks Work

If you are doing a bank account transfer, especially to an account in a different country than the one where your own bank is located, it is likely that an intermediary bank will be involved. During a monetary transfer between accounts at different banks, an intermediary bank works in between the sender’s checking or savings account and the account at the receiving bank.

Here’s how the transaction might work:

•   A person with an account at Bank A wants to send money to another person, a client with an account at Bank B.

•   However, Bank A doesn’t have an account or banking relationship with Bank B.

•   Bank A and Bank B do, however, each have an account with Bank C.

•   Funds can be funneled through Bank C, the intermediary bank, to make the transaction successful.

Intermediary Bank Example

Intermediary banks are like an international travel hub through which transfers flow. They are especially important for fund transfers made via the SWIFT (Society for Worldwide Interbank Telecommunications) network.

Here’s a simple example to show how intermediary banks usually work.

•   Say that John is an importer-exporter based in the United States who banks at the Acme Bank. He needs to make a payment to Angela, a supplier of his based in Germany, who banks with Big Bank.

•   He gives Angela’s bank’s information to his bank to make the transfer. If Acme Bank does not have an account at or a relationship directly with Big Bank (Angela’s bank), it will use an intermediary bank called Central Bank. This intermediary bank will have accounts at both Acme Bank, John’s bank in the United States, as well as Big Bank, Angela’s bank in Germany.

•   Central Bank can transfer the money between the two banks. It will likely charge a fee for its role in the transaction. The transaction will be completed by the three banks working together.

Recommended: How Retail Banking Works

When Is an Intermediary Bank Required?

Any time that money is being transferred between two banks that do not have an existing relationship, an intermediary bank is usually involved. Whether you have a single account or a joint bank account, when you transfer money to a user at a different bank (especially internationally), an intermediary bank will generally be required.

This is likely to occur as a commercial banking transaction. In other words, the use of an intermediary bank is not something the consumer has to initiate.

The Need for Intermediary Banks

Intermediary banks are important as part of the global financial system. Since banks generally do not have accounts with every single bank around the world, there is a need for intermediary banks to help facilitate monetary transfers.

The good news is that you typically do not have to worry about finding an intermediary bank yourself. Instead, the banks themselves have intermediary banks that they use to move money between other banks.

When Will an Intermediary Bank Be Involved in a Transaction?

An intermediary bank will usually be involved whenever there is a need to transfer money between accounts at two separate banks. If the sending bank does not have its own account with the receiving bank, it will usually use an intermediary bank.

Even if a business thought it could get around the need for intermediary banks (and save money; see more on fees below) by opening multiple bank accounts, its main bank would still probably use an intermediary bank at some point to transfer funds on its behalf.

Difference Between Intermediary and Correspondent Banks

When considering how bank transfers work, you may hear two different terms: intermediary banks and correspondent banks. Depending on which part of the world you’re in, there may or may not be a difference between the terms “intermediary bank” and “correspondent bank.”

•   In some countries, the terms correspondent banks and intermediary banks are used interchangeably.

•   In the U.S. as well as in a few other countries, correspondent banks are often ones that handle multiple types of currencies.

•   Intermediary banks may be smaller banks that only typically handle transactions in one currency.

What Are Some Typical Intermediary Bank Fees?

Because intermediary banks typically do not work directly with consumers, they also do not regularly post a breakdown of the fees they charge. Instead, you can look at your own bank’s fees for financial transactions such as domestic wire transfers or international wire transfers.

The wire transfer fees and other charges that you pay for these transactions generally include the fees that your bank pays to the intermediary bank it uses. These bank fees can range anywhere from $15 to $50 or more.

Recommended: How Do Banks Make Money?

Who Pays for Intermediary Bank Fees?

Intermediary bank fees are paid in different ways, depending on the specific transaction. Let’s say Person A is sending money to Person B. There are three ways the fees may be handled, depending on what the parties involved agree upon:

•   “OUR” is the code used when the sender will pay all fees. The fee for an international transfer can be as high as $70.

•   “SHA” is the code indicating shared costs. Person A will likely pay their bank charges (perhaps $15 to $30 on a typical transaction) and then Person B pays the rest: their bank’s and the intermediary bank’s charges.

•   “BEN” indicates that Person B, the recipient of the funds, will pay all charges.

The Takeaway

If a bank customer wants to send money to someone at a different bank and the two banks involved are not connected, an intermediary bank typically plays a role. Intermediary banks work to help facilitate monetary transactions such as domestic and especially international wire transfers. You, as a consumer, usually do not have to hire your own intermediary bank. However, your bank will likely pass along any intermediary bank fees if you initiate a transaction that requires one.

International money transfers are likely just one aspect of the services you use with your bank.

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

FAQ

What is an example of an intermediary bank?

An intermediary bank is one that moves funds between other banks. They do not typically work directly with consumers, so you likely neither need to know their names nor contact them. For instance, Bank of America might offer this service, or it might be provided by a foreign bank with which you are not familiar.

Why do you need an intermediary bank?

Intermediary banks are usually used when someone needs to send money to a person with an account at a different bank. An intermediary bank can serve as a middleman and facilitate the transaction. One common example is sending a wire transfer, especially internationally.

How do you find an intermediary bank?

In most cases, you will not need to find your own intermediary bank. The bank you use will have its own intermediary bank that it collaborates with as needed.

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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.

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SOBK-Q224-1929406-V1

When it comes to managing your financial life, technology can be your friend. By toggling on banking alerts, you can stay on top of your bank accounts and possibly avoid such issues as overdraft, late fees, and unauthorized use of your banking details.

Setting up automated alerts can be quick and easy, but you may need help knowing which are the right ones to use to suit your needs. Here’s a guide to 10 of the most valuable online banking alerts that you may find useful.

What Are Mobile Banking Alerts?

Mobile banking alerts are typically alerts sent by email and/or text that keep you updated on the status of your accounts. They can share important information about your finances (such as, say, you are about to overdraft your account) or they can help protect your account by informing you of a new log-in.

In many cases, you can customize how you want to receive mobile banking alerts, whether by email, text message, and/or push notification. You can also personalize the alerts. For example, one person might want a low balance alert when their account balance falls under $200, while another person might want to be notified when their account gets down to $25.

What Are the Benefits of Online Banking Alerts?

These alerts can help keep your bank account safe online and protect your financial status in the following ways:

•   Allow you to monitor your banking activity

•   Help you avoid unauthorized activity

•   Prevent scams and fraud

•   Alert you to low balances so you can steer clear of overdraft and related fees

•   Help you manage debit card purchase behavior

•   Know when an important payment or debit is made

•   Feel more in control and secure of your finances.

Mobile Banking Alerts You Should Turn On

Here are 10 important mobile banking alerts. See which ones might suit your particular situation and needs.

1. Low Balance

Cars have gas lights to warn drivers when fuel is close to empty, so why shouldn’t bank accounts?

•   A low balance alert lets you know when funds have dipped below a predetermined amount—it could be $20, $1,000, or any amount you set. This can help keep you from overspending and triggering expensive overdraft fees.

•   When you receive an overdraft alert, you can then decide if you want to transfer money into your account or hold off on making a purchase until your next paycheck clears. You can potentially avoid having a negative bank balance.

2. Direct Deposit

Constantly checking your account to see if your paycheck has been deposited can be a nuisance, particularly if you only recently set up direct deposit (which can take one or two pay cycles to get going).

If you sign up for a direct deposit notification, however, you’ll know exactly when money sent electronically to your account has been deposited and is ready to use.

Being notified of direct deposits each pay cycle can also help you make sure that your employer is paying on time and that you have enough money in your account to cover bills and automatic expenses.

3. Unusual Activity Alert

Unfortunately, millions of people report fraud and identity theft to the Federal Trade Commission (FTC) each year.

Setting up an unusual activity mobile account alert can save account holders a lot of headaches, as well as time and money, should their accounts ever become compromised.

An unusual activity alert notifies consumers when there’s a change in their account status that’s outside the norm. For example, if a large amount of money gets transferred out of the account all at once and this is something that rarely occurs, you would receive an unusual activity alert.

Or, an alert might let you know if purchases are being made outside your typical travel area.

By alerting you the moment a potential fraud takes place, you can take action quickly, report the transaction, or even freeze your account.

4. New Log-In Alert

Another helpful way to protect your accounts against bank fraud and theft is to set up a new log-in account alert.

This alert lets you know when someone has logged into your account from a computer or device that has never been used to access your account before.

If you weren’t the one logging in, you can possibly stymie the fraudster by immediately changing your password and even freezing your account to prevent spending.

Some financial institutions also allow customers to set up multifactor authentication on their account (which requires users to provide multiple pieces of identifying information, not just a username and password to access an account), which can even further protect your money.

5. Large Purchase Alert

Some banks allow users to set up a customizable large purchase alert. With this kind of online banking alert, you will usually receive a message whenever a purchase over a certain dollar amount (which typically you determine) is about to be charged to your account.

If you see the alert and don’t recognize the purchase, you may then be able to block the transaction.

Having a large purchase alert set up can help prevent fraud, but also human error. If a restaurant server accidentally adds an extra zero to a dinner bill, a large purchase alert could go off. That could save you the hassle of reporting the purchase later and trying to have it reversed.

This mobile bank alert may be especially helpful if you are not in the habit of monitoring your bank account on a regular basis.

6. Overdraft Alert

If you overdraw your account using a check or debit card, your bank might allow the transaction, letting you spend more money than you actually have in your account.

Typically, this comes with a price — an overdraft or NSF fee (which can often exceed $35). And, if you don’t realize you’re overdrafting your account, you might continue to make purchases, and incur a fee on each one.

Depending on the bank, if your account remains in a negative balance for an extended number of days, your account could even be closed.

To avoid these problems, If you get an overdraft alert, you may want to:

•   Add money to your account as quickly as possible to prevent any more overdrafts. If you move quickly, you might possibly be able to avoid the first overdraft fee (check if your bank has a deadline to deposit money that might help you avoid an overdraft fee).

•   Some banks have no overdraft fees up to a certain dollar amount; check and see if yours offers this feature.

7. Profile Changes Alert

Profile change bank alerts notify you if someone has tried to change your password, username, or any personal information in your profile, such as contact information or opting out of bills through mail.

If you see something was changed and you didn’t make the changes, you’ll likely want to change your password ASAP and alert the bank to help protect your account.

8. Large ATM Withdrawal Alert

Setting an alert for withdrawals from an ATM or debit card lets a person know when cash has left their account.

This might be helpful in the event that there are multiple authorized users on the card (so you are aware of a change in the account balance) but also if the card has been stolen.

According to the FTC, the maximum loss for a person who reports their card as lost within two days of discovery is $50. That means even if a thief steals a debit or ATM card and wipes out the account’s balance, the account holder would not be out more than $50.

If a person doesn’t notice their ATM or debit card has gone missing, a withdrawal notification could be the first thing to alert them.

9. Debit Card Alert

This kind of alert clues you in to debit card transactions. It can tell you in real time about your debit card’s usage. It can be especially helpful as it can indicate when someone is using a debit card online that belongs to you.

If this is an unauthorized transaction, you can take action to contact your bank and freeze your account as needed. Remember, if you report misuse of your card number within two days of the event, you are not liable for more than $50, per the Electronic Funds Transfer Act. In this way, online banking activity alerts could help you avoid having to pay for fraudulent charges.

10. Upcoming Payment Alert

An upcoming payment alert can be a good way to stay posted on recurring or one-time scheduled payments. For instance, if you had scheduled a payment of a medical bill a couple of weeks ago to happen right now, the alert could nudge you to check your balance and make sure you’re in good shape to cover the expense.

Or an upcoming payment alert could remind you that you are paying for, say, a streaming channel you haven’t been watching and you might decide to cancel and save some money.

What to Do After Getting an Online Banking Alert or Bank Notification?

If you receive a mobile banking alert or bank notification, you may or may not need to take action.

•   If the message tells you something you already knew or expected (say, that you received your paycheck or your mortgage was paid per your instructions), no action is needed.

•   If you receive an alert that your bank account is low and/or you are tisk of overdraft, you can transfer funds to avoid problems and fees.

•   If you are informed that a transaction or log-in occurred that you do not recognize, you can (and should) alert your bank’s customer service ASAP to avoid fraudulent activity and consequent issues, such as identity theft. In addition, you may want to change passwords or freeze your account.

The Takeaway

Online banking alerts can help you manage your financial life more conveniently. Automatic bank alerts can provide you with important and timely account information, such as when your account balance falls below a certain amount or when your paycheck has been electronically deposited.

This can help you keep track of your account and your spending, as well as avoid costly overdraft fees. They can also notify you right away if there’s unusual activity on your account, which can help you resolve any fraudulent activity on your account. Setting up alerts is a personal decision and can be changed as your needs evolve.

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

FAQ

What types of bank accounts are eligible for account alerts?

Typically, a variety of bank accounts are eligible for alerts, including checking and savings accounts as well as certificates of deposit (CDs). You can also have alerts for your ATM and debit card.

Is it a good idea to set up mobile alerts on your checking account?

It can be a smart move to set up mobile alerts for your checking account since they can alert you to low balances, direct deposits, upcoming automated payments, and unusual activity. These can help protect your financial wellness.

How do you know if a bank alert is real?

Here are some ways to tell if a bank alert is real or if it’s phishing: Ask yourself if you have opted into this kind of message from your bank. Know that your bank will not ask for confidential information by text. Be aware that a sense of urgency or needing to send money to resolve a “problem with your account” right away can signal a scam. Also look for slight misspellings, such as Citiibank instead of Citibank. You can contact your bank directly to know if an alert is real.

How can you tell if someone is tracking your bank account?

If you are concerned that someone might be tracking your bank account, you can opt into online banking alerts that let you know when there are profile changes or new log-ins.

How do I get bank alerts on my phone?

The process may vary, but typically you get bank mobile alerts by logging into your account and going to your account or account services. Click on “manage alerts” or a similar tab and follow the instructions.

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 11/12/25. 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.
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 Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Catch-up contributions allow individuals 50 and older to contribute additional money to their workplace retirement savings plans like 401(k)s and 403(b)s, as well as to individual retirement accounts (IRAs).

Catch-up contributions are designed to help those approaching retirement age save more money for their retirement as they draw closer to that time.

Learn how catch-up contributions work, the eligibility requirements, and how you might be able to take advantage of these contributions to help reach your retirement savings goals.

What Is a Catch-Up Contribution?

A catch-up contribution is an additional contribution individuals 50 and older can make to a retirement savings plan beyond the standard allowable limits. In addition to 401(k)s, 403(b)s, and IRAs, catch-up contributions can also be made to Thrift Savings Accounts, 457 plans, and SIMPLE IRAs.

Catch-up contributions were created as a provision of the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001. They were originally planned to end in 2010. However, catch-up contributions became permanent with the Pension Protection Act of 2006.

The idea behind catch-up contributions is to help older individuals who may not have been able to save for retirement earlier in their careers, or those who experienced financial setbacks, to “catch up.” The additional contributions could increase their retirement savings and improve their financial readiness for their golden years.

While employer-sponsored retirement plans are not required to allow plan participants to make catch-up contributions, most do. In fact, nearly all workplace retirement plans offer catch-up contributions, according to a 2023 report by Vanguard.

💡 Quick Tip: Want to lower your taxable income? Start saving for retirement with an IRA account. The money you save each year in a Traditional IRA is tax deductible (and you don’t owe any taxes until you withdraw the funds, usually in retirement).

Catch-Up Contribution Limits: 2023-2024

Each year, the IRS evaluates and modifies contribution limits for retirement plans, primarily taking the effects of inflation into account. The standard annual contribution limit for a 401(k) in 2023 is $22,500, and $23,000 for 2024. For a traditional or Roth IRA, the standard contribution limit is $6,500 in 2023, and for 2024 the limit is $7,000.

Catch-up contributions can be made on top of those amounts. Here are the catch-up contribution limits for 2023 and 2024 for some retirement savings plans.

This means that you can make an additional $7,500 in catch-up contributions to your 401(k) for a grand total of up to $30,000 in 2023 and $30,500 in 2024. And with traditional and Roth IRA catch-up contributions of $1,000 for both years, you can contribute up to $7,500 in 2023 and $8,000 in 2024 to your IRA.

Catch-Up Contribution Requirements

In order to take advantage of catch-up contributions, individuals need to be age 50 or older — or turn 50 by the end of the calendar year. If eligible, they can make catch-up contributions each year after that if they choose to — up to the annual contribution limit.

Certain retirement plans may have other allowances for catch-up eligibility. For instance, with a 403(b), in addition to the catch-up contributions for participants based on age, employees with at least 15 years of service may be able to make additional contributions, depending on the rules of their employer’s plan.

To maximize the advantages of catch-up contributions, it’s a good idea to become familiar with the rules of your plan as part of your retirement planning strategy.

Benefits of Catch-Up Contributions

There are a number of benefits to making catch-up contributions to eligible retirement plans.

•   Increased retirement savings: By helping to make up for earlier periods of lower contributions to your retirement savings plan, catch-up contributions allow you to increase your savings and potentially grow your nest egg in the years closest to retirement.

•   Possible tax benefits: Making catch-up contributions may help lower your taxable income for the year you make them. That’s because contributions to 401(k)s and traditional IRAs are made with pre-tax dollars, giving you a right-now deduction. And contributions beyond the standard limits could lower your taxable income for the year even more. (Of course, you will pay tax on the money when you withdraw it in retirement, but you may be in a lower tax bracket by then.)

•   Additional security: Making catch-up contributions may give you an extra financial cushion as you approach retirement age. And those contributions may add up in a way that could surprise you. For instance, if you contribute an additional $7,500 to your retirement account from age 50 to 65, assuming an annualized rate of return of 7%, you could end up with more than $200,000 extra in your account.

How to Make Catch-Up Contributions

To make catch-up contributions to an employer-sponsored plan, contact your plan’s administrator or log into your account online. The process is typically incorporated into a retirement savings plan’s structure, and you should be able to easily indicate the amount you want to contribute as a catch-up.

To make IRA catch-up contributions, contact your IRA custodian (typically the institution where you opened the IRA) to start the process. In general, you have until the due date for your taxes (for example, April 15, 2024 for your 2023 taxes) to make catch-up contributions.

Finally, keep tabs on all your retirement plan contributions, including catch-ups, to make sure you aren’t exceeding the annual limits.

The Takeaway

For those 50 and up, catch-up contributions can be an important way to help build retirement savings. They can be an especially useful tool for individuals who weren’t able to save as much for retirement when they were younger. By contributing additional money to their 401(k) or IRA now, they can work toward a goal of a comfortable and secure retirement.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Help grow your nest egg with a SoFi IRA.

FAQ

Do you get employer match on catch-up contributions?

It depends on whether your plan allows employer matching for catch-up contributions. Not all plans do. Even if your employer does match catch-up contributions, they might set a limit on the total amount they will match overall. Check with your plan administrator to find out what the rules are.

Are catch-up contributions worth it?

Catch-up contributions can be beneficial to older workers by helping them potentially build a bigger retirement nest egg. These contributions may be especially helpful for those who haven’t been able to save as much for retirement earlier in their lifetime. Making catch-up contributions might also provide them with tax benefits by lowering their taxable income so that they could possibly save even more money.

How are catch-up contributions taxed?

For retirement savings plans like 401(k)s and traditional IRAs, catch-up contributions are typically tax deductible, lowering an individual’s taxable income in the year they contribute. However, catch-up contributions to Roth IRAs are made with after-tax dollars. That means you pay taxes on the money you contribute now, but your withdrawals are generally tax-free in retirement.

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

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