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Average credit card processing fees can range anywhere from 1.5% to 3.5%. While a few percentage points may seem low, these fees can add up and impact your business’ bottom line.

Whether you’re a merchant who runs your own business or someone with a side hustle, if you accept credit card payments, fees are likely going to eat into your gross profit. Read on to learn more about credit card processing fees and how you can reduce them.

What Is a Credit Card Processing Fee?

A credit card processing fee describes all of the fees charged to accept credit cards as a form of payment. These, which are incurred by merchants that accept credit card payments, can include interchange fees, payment processor fees, and assessment fees.

Processing fees can run over 3% of a total transaction. Rates can vary based on the size and location of a business, as well as the types of transactions and cards that are accepted.

Generally, businesses bake credit card transaction fees into their pricing in the form of credit card merchant fees. However, some businesses may provide a discount if a customer pays with cash. Others may set a minimum payment amount they’ll accept by card. Understanding how credit cards work can give insight into why some businesses don’t accept credit card payments.

Types of Credit Card Processing Fees and Costs

Credit card processing fees actually combine several fees. When talking about credit card processing fees, merchants are generally talking about the following:

•   Interchange fees

•   Assessment fees

•   Payment processor fees

Some of these fees, like payment processor fees, can vary depending on the credit card processor a merchant chooses. Others, like interchange fees, are set by the credit card companies and depend on the cards used.

Recommended: Charge Cards Advantages and Disadvantages

Interchange Fees

Interchange fees are collected by credit card issuers from the merchant when a credit card or debit card is used. Interchange rates vary depending on:

•   The type of card used

•   The type of business

•   The amount of the transaction.

Interchange rates can also vary depending on whether the payment was made online or in store.

Generally, interchange rates are presented as a percentage of the sale, plus a flat fee. For example:

•   If Hailey buys $50 worth of groceries with XYZ card, the grocer would have a set interchange rate based on XYZ card, which may be slightly different than ABC card.

•   XYZ card may have a 1.15% interchange rate, plus a flat fee of $0.30. That would mean that, from Hailey’s transaction, the store would owe $0.88 as an interchange fee.

Assessment Fees

An assessment fee is levied by the credit card network (the brand name on the card a cardholder uses, such as MasterCard or American Express). This fee may vary depending on whether the card is a credit card or debit card, as well as on the volume of transactions a business makes. There also may be larger international fees.

Unlike the interchange fee, an assessment fee is standard across transactions. It is also generally lower in amount than an interchange fee.

Card Processor Fees

Payment processor fees go to the payment processor, which facilitates the transaction. The card processor is the intermediary that communicates between the card issuer and the merchant bank. It may also include the point of sale (POS) system and provide the devices to take credit card payments.

The merchant does have some control over the amount of these fees. Credit card processing fees vary depending on the payment model selected. Costs could include per-transaction fees, a monthly service fee, and equipment rental fees.

Average Card Processing Fees in 2024

As mentioned above, card processing fees in 2024 depend on several factors, including whether payments are primarily processed in person or online. That said, average credit card processing fee ranges are provided below for the major credit card networks:

Average Credit Card Processing Fees By Network
Network	Processing Fee Range
Visa	1.4% – 2.5% interchange; 0.14% assessment fees
Mastercard	1.5% – 2.6% interchange; 0.1375% assessment fees
Discover	1.55% – 2.5% interchange; 0.14% assessment fees
American Express	2.3% – 3.5% interchange; 0.165% assessment fees

In addition, there can typically be a per-use charge (say, 10 to 22 cents) which varies depending on, say, whether the transaction was in-person or online or over the phone.

Note that American Express is considered a bit differently than other credit card companies. Unlike the other three credit card companies in the table above, American Express is a closed-loop network. This means that it is not backed by another financial institution, which gives it more control over its practices and charges. American Express calls the fees it charges “discount fees,” which operate similarly to interchange fees.

If you do have an American Express card, this wouldn’t have any impact on things like your credit card limit or credit card minimum payment, but it may affect where your card is accepted due to generally higher fees.

Recommended: What Is a Credit Card Minimum Payment?

Factors That Determine Interchange Fees

Adding to merchant confusion, interchange fees vary depending not only on the merchant, but also depending on what sort of credit card is used in a transaction. Interchange fees are usually between 1% and 3.5% of the overall sale, but the actual percentage varies on a host of factors that are discussed below.

Credit Card Type

Credit card type plays a role in determining the amount of the interchange fee — even if all cards fall under the same brand. In general, debit cards have lower interchange rates than credit cards, which are unsecured debt.

Part of how a rate is assigned is based on risk level. For a merchant bank, a debit card can be less risky because the money is already accounted for within your account. (This is also why the process of how to apply for a credit card is more involved than it is for a debit card.)

Merchant Category Code

Shopping at a supermarket? Then you may be paying a different interchange rate than you would at the hardware store or dry cleaners. Every merchant has a category code, and those merchants within the same category will have the same fees.

Method of Processing

How a payment is processed will also affect the rate of interchange fees. Card companies assess the risk of the transaction, considering the potential for fraud, chargebacks, and other things that may go awry.

For this reason, they may assign different interchange rates based on whether a purchase was completed online, in person, or even whether the purchase was made via swipe or tapping technology.

Network

Each credit card network sets its own fees based on the type of merchant. While the majority of the fee goes to the bank that issued your card, a small amount will go to the card network itself. This money will then be used to fund credit card rewards, perks, and protections offered by the card — all key parts of what a credit card is.

Pricing Models for Processing Fees

There are various pricing models for processing fees, and merchants can assess which one works best for them based on how they do business. There are three common models to consider: flat rate pricing, interchange plus pricing, and tiered pricing. Here’s a closer look:

Flat Rate Pricing

Like the name suggests, flat rate pricing provides a fixed rate for all transactions, which is inclusive of processing fees and interchange fees. This can be convenient, as it makes it easy to predict costs. However, it also could mean that your business is overpaying for transactions that have lower interchange rates, such as purchases made with a debit card.

Interchange Plus Pricing

Interchange plus pricing provides a detailed analysis of fees by breaking out interchange fees, assessment fees, and processor fees. This can be great for businesses looking for a level of detail into the fees they’re paying, and it can also help ensure that you’re not overpaying fees. However, some businesses may find this level of detail overwhelming.

Tiered Pricing

With tiered pricing, prices for interchange rates are separated into one of three tiers: qualified, mid-qualified and non-qualified. Tiering is dependent on how payment occurs (for example, in person or online) as well as how the card processing occurs (a payment may be downgraded based on how the card is processed).

While statements can be easier to read with this model, there’s less transparency than with interchange plus pricing. Additionally, because merchants can’t separate interchange fees from processing fees, it can be challenging to see a fee breakdown and understand the costs at a greater level of specificity.

Other Credit Card Processing Fees and Costs

In addition to the credit card processing fees outlined above, you also may pay a monthly subscription fee for processor use. This is independent of the number of transactions and may include customer service, POS equipment, and more. Sometimes, a higher subscription fee may result in a lower fee per payment.

You may also pay a fee for the initial setup when you sign up for a credit card processing company. What’s more, you could owe fees for if a customer disputes a credit card charge, in the instance of any chargebacks, and for non-sufficient funds.

How Often Do Payment Networks Update Their Interchange Fees?

Interchange fees are typically updated twice a year, though some might only do so annually or could refresh their fees more often.

Typically, rates have been rising by a fraction of a percentage point for payments made by credit card. This may not sound like a lot, but this can add up significantly — especially as more consumers are using cards over cash. Just think if your annual percentage rate (APR) on your credit card was to inch up; it’s a similar situation.

Recommended: When Are Credit Card Payments Due

The Takeaway

Credit card processing fees typically amount to between 1.5% and 3.% of a total transaction. Understanding credit card processing fees isn’t only helpful for entrepreneurs and small business owners. It can also help consumers understand why there might be an additional fee charged for certain payments made with cards. It’s all part of being a knowledgeable cardholder and using credit responsibly.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is the typical fee for credit card processing?

The typical fee for credit card processing in 2024 is 1.5% to 3.5% for transactions. The rate is dependent on the type of transaction (in general, debit cards cost less to process than credit cards) and the processing system the merchant chooses. The actual percentage per swipe varies based on a host of factors.

Can I avoid credit card processing fees?

There are no ways to entirely avoid credit card processing fees, but there may be ways to make fees more manageable. One common way for businesses to manage credit card processing fees is to bake them into pricing and to offer cash discounts. Another way to potentially avoid credit card processing fees is to accept ACH payment methods for services.

Can the type of credit card determine processing fees?

Yes, the type of credit card is one factor that determines processing fees. For example, different categories of cards, such as reward cards, can have different fees than other cards, like debit cards.

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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.

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

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

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While you have to be at least 18 years old to get your own credit card, you can become an authorized user on someone else’s credit card as a 16-year-old. This allows you to have a copy of a credit card with your name on it — though the adult will still be the account holder and be responsible for paying the bills.

Keep reading to learn more about how to get a credit card at 16, which will involve becoming an authorized user.

How Old Do You Have to Be to Get a Credit Card?

Generally, you must be 18 years old to get a credit card on your own. Even after turning 18, you usually must prove that you have independent income or get an older cosigner before the age of 21 in order to get a credit card, due to regulations that govern how credit cards work.

While getting a cosigner (usually a parent) can be doable, many teens may struggle to find a credit card issuer that is willing to accept a cosigner. More often than not, if a teen wants to gain access to a credit card, their best path forward is to become an authorized user on someone else’s credit card.

What Is an Authorized User?

An authorized user is someone who is added to a credit card account by the primary account holder. Becoming an authorized user on someone else’s credit card can make it possible for a 16-year old to have a credit card, as virtually all major credit card issuers accept authorized users who are 16.

If an adult — such as a parent — wants to, they can add a teenager as an authorized user to their credit card. The account holder can then request that the authorized user receive a copy of the credit card with their name on it. This credit card will share the same number as the card of the main account holder.

The teen can then make purchases with the credit card anywhere that accepts credit card payments, but they won’t be legally responsible for paying the bills. Because of this, it’s important that everyone works together to communicate and is aware of what’s being spent and who will pay it off. If the parent is going to put a big purchase on their credit card — such as paying taxes with a credit card — an authorized user’s added spending can drive up the credit utilization ratio.

Recommended: When Are Credit Card Payments Due

Becoming an Authorized User

Becoming an authorized user on a credit card can impact a teen’s credit score and build their credit history. That’s because when a teenager becomes an authorized user on a credit card, the credit card issuer will begin to report the account activity to the three major credit bureaus (TransUnion, Equifax, and Experian).

The primary account holder must contact their card issuer to add you. Then, here’s how being an authorized user can benefit you:

•   When the primary account holder makes on time payments and keeps their balance low in comparison to their credit card limit, the teen’s score should benefit. On the other hand, if the account holder is late on their payments, the teen’s credit score could suffer.

•   It’s important for both the account holder and authorized user to know how much they can afford to spend and how much they can manage to pay off each month. Ideally, you’ll be able to pay more than the credit card minimum payment to minimize the interest that accrues.

•   It’s also wise to double-check that the credit card issuer is reporting the behavior of the authorized user to the three main credit bureaus. Some credit card issuers, like Wells Fargo, accept authorized users who are under the age of 18 but don’t report their behavior to the credit bureaus until they come of legal age — which won’t help the teen build their credit history or credit score.

Credit Card Options for 16-Year-Olds

If becoming an authorized user isn’t a good fit, 16-year-olds have other options. Teens may find that a debit card or prepaid card can give them the convenience of using a card without actually having a credit card or borrowing any money.

•   Because debit cards are connected to bank accounts, a teen can use a debit card to make payments without physical cash on hand. However, they can’t spend more than they have in their bank account.

•   They also won’t have to worry about any potential impacts to their credit score when using a debit card.

Another option: prepaid cards, which can be purchased at grocery stores, gas stations, and pharmacies. These can be loaded with a set amount of money. The user can then spend as much as the prepaid card is worth.

Neither a debit card nor a prepaid card will help teens build their credit score, nor do they offer the protections a credit card does, like requesting a credit card chargeback if there’s an incorrect charge. However, these options can get teens used to the concept of not overspending when shopping with a card instead of cash.

Are There Advantages to Getting a Credit Card at 16?

There are some unique advantages that come with getting a credit card at the age of 16 by becoming an authorized user. In addition to the teen gaining a firm grasp on what a credit card is, these are the main benefits worth keeping in mind.

Building Credit Score

As we briefly mentioned earlier, using a credit card responsibly can help teens build their credit history and credit score. Building credit when you’re young can make it easier to qualify for better credit products as well as rates and terms down the road.

Learning Good Financial Habits Early

Another headstart that teens can get by using a credit card at age 16 is learning good financial habits. Using a credit card can help teenagers learn how to budget, pay bills on time, and spend less than they earn. They can also begin to learn about annual percentage rate, or APR, and understand why it’s so important to find a good APR for a credit card.

Access to Emergency Funds

As teenagers gain more and more independence, their parents won’t always be with them when they’re out and about. If an emergency were to arise, like running out of gas, a credit card can give a teen the ability to spend more than just the cash they have on hand.

Rewards for Card Holders

The fun part about credit cards is that it’s possible to earn rewards when you use them. Because the teen will be an authorized user on a credit card, the account holder will be the one to redeem any credit card rewards. Still, this serves as a good opportunity to teach a teenager the benefits of using credit responsibly when it comes time for them to apply for a credit card of their own.

If they want, the primary account holder can even share some of their cash back or other perks with the authorized user.

Convenience for Both Parents and Children

Parents may find that their teen having a credit card saves them a lot of fuss. Do they need money for a yearbook or to buy prom tickets? No worries, they can use their credit card as long as they have permission or know their spending limits. With their own credit card (and the help of a responsible adult when it comes time to pay the bill), teens can use a credit card to manage their college applications, pay for SAT prep classes, or pick up school supplies.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Common Pitfalls for 16-Year-Olds With a Credit Card

Of course, credit cards aren’t all fun and games. Here are some pitfalls that 16-year-olds should look out for when using a credit card.

Overspending

The biggest mistake any of us can make when it comes to credit cards is overspending and not being able to afford our bill. It’s important that parents or legal guardians have serious conversations with their teens about how credit works and what the consequences of overspending can be. This can include credit card interest, fees, and a bruised credit score.

Possibility of Credit Card Fraud

Credit cards come with fraud risks that teens who are used to paying in cash may not know what to look out for, such as credit card skimmers. While credit cards can be more secure than debit cards, it’s important to teach teens about how to use credit cards safely so their card isn’t lost or stolen and they don’t fall prey to identity theft.

The Takeaway

It is possible to get a credit card at 16 by becoming an authorized user on an adult’s credit card account. To get your own credit card, you’ll need to wait until you’re at least 18, and even then, you’ll need to prove you have independent income or get a cosigner. When it is time to get a credit card of your own, you’ll want to make sure you’re ready to manage it responsibly and that you take the time to select a credit card that fits your needs.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is the minimum age to get a credit card?

You must be 18 years old to get your own credit card. Even then, you must prove that you have a steady source of income or else you’ll need to get a cosigner who is over the age of 21.

Can a 16 year old get a credit card with a cosigner?

No, you must be at least 18 years old to get a credit card — even if you have a cosigner. Those under the age of 18 can become an authorized user on an adult’s credit card account, but they can’t get a credit card of their own.

Can you use a credit card to build a good credit score?

When used responsibly, a credit card can help build a credit score. If a teen becomes an authorized user on a parent’s credit card, for instance, and that parent makes on-time payments and keeps their credit utilization low, they can build their credit score as well as the teen’s.

What payment card can you get at 16?

Before the age of 18, teens can get a debit card or a prepaid card on their own. Neither type of payment card will help build their credit score, but they are easier to obtain than a credit card. A teen can also become an authorized user and get a credit card of their own if approved by the main account holder, though this will not be their own credit card account.

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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.

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

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

Photo credit: iStock/cyano66
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Losing your job can be emotionally painful (weren’t you doing a good enough job?) and can throw your finances for a major curveball. How will you pay your bills? How long will this situation last?

Take a deep breath, and arm yourself with knowledge for financially surviving a layoff. Whether you’re going through this situation right now or are worried it might occur, you can likely make adjustments and you can make and tap resources to weather this challenge. It’s a phase to move through but not to define you. Read on to learn:

•   How to budget when laid off

•   How to file for unemployment benefits

•   How to prioritize debt

•   How to bring in income.

Preparing Financially for a Layoff

Unfortunately, layoffs seem to be a part of modern life. In the first nine months of 2023, there were more than 605,000 layoffs, which marked a 198% increase versus the year prior. That’s not heartening, but it’s a way of saying that if you are laid off, you are not alone, and it can also be wise to prepare financially for a layoff if you are currently employed.

Not having a steady income probably means you’ll have to figure out how to pay your bills when laid off. Until you find another stream of income, it’s important to keep your budget in order and learn to live within your means. Being financially prepared means having a clear understanding of what your expenses are so you can stay on track, especially with debt, if you have it. There are also resources you can access that may help with your cash flow during this difficult time.

Steps to Take to Prepare for a Layoff

Here are some smart moves that can help you be prepared and not panic if you do get laid off.

Start an Emergency Fund

A common strategy is to build up an emergency fund prior to an event like job loss. It’s a way of preparing for a layoff before it happens. An emergency or rainy day fund is typically a savings account that you’ve been adding to on a weekly or monthly basis. Having roughly three to six months’ (or more) worth of monthly expenses is helpful. That sum can tide you over at a moment of job loss and give you peace of mind.

•   You may want to automate your savings and have a small amount ($25 can get the ball rolling) transferred from checking to savings every payday. Or have that amount direct-deposited into savings.

•   The emergency fund should only be accessed for emergencies, as its name suggests. (No fair dipping into this kind of savings account when there’s an amazing sale at your favorite store.)

•   If you have the opportunity to contribute more than usual (say, you receive a financial windfall, like a bonus or a tax refund), do boost your emergency savings because you never know when you will need to tap into that account.

Budget, Budget, Budget

If you have an inkling that your company is preparing to lay off some employees or if you lose your job, it’s wise to double-check your weekly budget. This means separating your necessary spending from your discretionary spending.

•   Necessary expenses include things like rent or a mortgage, utilities, food, and health insurance. Don’t forget about minimum debt payments, such as student loan and credit card payments.

•   Discretionary spending may include traveling, dining out, new clothes, and entertainment.

It can be helpful to focus on how much you need to spend each month for necessary expenses (some people refer to this as their monthly “nut.”) Make a list of these basic living expenses and see what they total. Then, pre-layoff, you’ll also see how much you can allocate for activities that you want to do. It’s probably not the best idea to spend every penny each month. You want to have extra money at the end of the month to put toward savings.

If and when a layoff hits, you’ll focus on necessities and minimize your discretionary spending (more details below). You can also tweak your budget when unemployed to, say, cut back on some long-term savings to get you through this moment.

File Unemployment Benefits

If you do lose your job, you may be able to qualify for unemployment benefits. This can get some funds flowing your way to help tide you over.

•   Read the eligibility requirements to see if your situation aligns with the rules for unemployment. The eligibility requirements are likely to vary from state to state and may be determined on a case by case basis; payment amounts will vary as well.

•   If you qualify, filing for unemployment benefits will allow you to receive payments if you are out of a job due to no fault of your own. (There is a possibility that those who are fired because they don’t meet job qualifications may receive funds as well.)

•   Generally, to qualify for unemployment benefits, you should be able and available for work, as well as be looking for employment. Once you’ve determined your eligibility, you can file on your state’s official government office of unemployment compensation website. The site should give you guidance on when to expect benefits.

Ask About Severance Packages

Severance pay can be provided for employees after they are no longer employed at a company. Severance is based on the duration of employment, but your employer is not required to provide severance upon termination.

If you were terminated through no fault of your own, employers may pay, for example, two weeks of salary for each year of employment. Severance may also include health insurance benefits and even services to help you find a new job. These can be very helpful supports when you’ve lost your job.

Use Credit Cards Only for Emergencies

If you become unemployed, it’s wise to stop using credit cards to make purchases. Paying with your credit card creates debt that comes with high interest rates (currently more than 20%). At such high interest rates, debt can really snowball.

Also, when you are out of work, it can be challenging to pay an existing credit card balance. If you manage to pay the minimum balances of your credit card debt rather than paying in full every month, the credit card debt may cost you more over time since you also have to factor in added interest.

If you find yourself in this kind of a bind with credit card debt, take action. Consider a balance transfer credit card that offers no or very low interest rates for a period of time. Or speak with a debt counselor at a nonprofit organization like the National Foundation for Credit Counseling (NFCC).

Make Sure Emergency Funds Are in Order

Emergency funds, as mentioned above, are an important part of a financial plan and can be a lifesaver for someone who is unemployed. If you are in a situation where you unexpectedly don’t have a stream of income until you find another job, you’ll be more at ease if you have built up an emergency fund over time, as mentioned above.

In this case, you can dip into your emergency fund for mandatory expenses to fulfill your short-term needs. If you don’t have emergency funds, unemployment benefits become that much more important. Borrowing from a close friend or a family member might also be an option.

Practical Tips for Saving Money After a Job Loss

Saving money after a layoff can certainly be difficult. You don’t have the usual cash infusion to pay your bills and buy groceries. That is why you need to proceed with caution and learn how to economize when you lose your job. Here are strategies for making ends meet during this difficult time.

Get Back on LinkedIn and Start Networking

If you’re job-hunting, Linkedin can be a great tool for networking. The platform is set up so you can find and interact with former colleagues, alumni from your college, and professionals at companies you aspire to work for.

•   Start commenting on people’s Linkedin posts and have conversations with existing connections.

•   Build up your profile so recruiters know your job history, your professional skills, and that you are looking for work. This can lead to job opportunities.

Prioritize and Negotiate Any Debts if Needed

Continuing to pay down debt while unemployed should still be a priority. One strategy to pursue is paying off debt that has the highest interest rate. Debt with higher interest rates cost more, so paying this off first will have you saving money in the long-term.

But “How can I pay down debt if I don’t have income?” you are probably wondering. One answer: Try to negotiate your debt. It can be possible to work with your credit card company to negotiate interest rates, payment amounts, and the terms on your credit card debt.

Avoid Luxuries Temporarily

Being unemployed can be a frightening experience. You no longer have a steady flow of income and may not feel financially prepared to weather short-term expenses. To ease this burden, work to eliminate spending on luxuries. Now might be a good moment to downsize streaming services and other subscriptions.

Also eyeball what expenses you have on the horizon: If you had booked a vacation house or a cruise for a few months down the line, it may make good financial sense to investigate getting a refund. That money could be allocated toward your everyday expenses as you job-hunt.

Look at Investments and Retirement

If you are temporarily out of a job, do your best to keep your hands off your retirement funds. You worked hard to save that money, and it’s there to fund a long-term financial goal. That said, some people do tap their retirement accounts as a last resort when unemployed.

When you withdraw from your retirement account before the age of 59 ½, you will incur a penalty tax. However, there are some cases where you may be able to withdraw funds when unemployed without paying this.

You may be able to set up what’s known as a substantially equal periodic payments (SEPP) over five years or until you hit age 59 ½, whichever is greater. However, if you do receive this kind of distribution, it will likely count as income and may therefore lower any unemployment benefits you may be receiving. Talk with your plan administrator to learn more.

Start a Side Hustle

You might consider starting a side hustle to bring in some extra cash while looking for full-time work. There are many ways to earn more money. You could rent out an extra bedroom in your home or apartment, sell unwanted items, drive for Uber or Lyft, or market your professional skills on online service platforms such as Fiverr or Upwork. These are viable avenues to get some money coming in until you lock down a new job.

The Takeaway

Figuring out how to manage your finances when you are in between jobs can be stressful, but there are ways to prepare and then actions that can help you get by. Building and then tapping an emergency fund, accessing unemployment, and budgeting are some actions to take.

Also make sure your banking partner is making it easy and profitable for you to do business with them.

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

FAQ

How do you manage the emotional impact of getting laid off?

Getting laid off or fired from your job is a tough challenge. You may feel angry and ashamed. Acknowledge those feelings, and remind yourself that millions of others have navigated this situation. You are not alone. Also, taking action can foster feelings of control and personal agency. Updating your resume, networking, reworking your budget, and engaging in self care rituals (like exercise) may also be positive steps.

How do you recover after being laid off?

Recognize the shock and upsetting feelings that you are likely experiencing. Then, take steps to improve your situation: Seek unemployment benefits, apply for jobs, start a side hustle, cut some expenses, and perhaps volunteer to build new skills and fill free time. These moves can help you move forward from your job loss.

Is it better to be fired or laid off?

In both scenarios, you don’t have a job, but if you are fired, it is typically due to a performance issue. With a layoff, you will likely be able to file for unemployment and you may receive severance pay from your employer. When you are fired, you may or may not be able to receive unemployment funds and you will probably not be eligible for severance.

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

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

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

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

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

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

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

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.

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

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

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While using your credit card can be an easy and convenient way to make purchases, you’ll need to be on the lookout for would-be thieves. The level of credit card fraud that occurs is staggering. According to recent data from industry publication The Nilson Report, payment card losses amounted to $27.85 billion in 2019.

To protect yourself from credit card fraud, you might consider a virtual credit card. We’ll talk about what a virtual credit card is, their advantages and downsides, and how to get a virtual credit card.

What Is a Virtual Credit Card?

A virtual credit card is a temporary, disposable credit card that can be used when making online purchases. Their intent to safeguard your actual credit card numbers from fraudsters. In turn, it could protect your credit card from hackers.

Virtual credit cards are made for temporary use. When you use a card online, the retailer can only see and store the temporary credit card number, adding another layer of protection should a data breach occur.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

How Do Virtual Credit Cards Work?

Not all credit card networks issue virtual credit cards. If a virtual credit card is offered, you can request a temp credit card from the bank through your online account. When you get a virtual credit card, the 16-digit number is randomly generated, and comes with a security code and expiration date. This information is tied to your account.

A major perk of a virtual credit card is that they’re intended for temporary use. These cards typically expire after a day, although some have a 12-month expiration date. A new 16-digit credit card code can be generated for each transaction.

Virtual Credit Card vs Digital Wallet

The major difference between virtual wallets and digital wallets is that with a digital wallet, you would store the exact credit card numbers as what’s on your credit card. When you make a purchase with a digital wallet, however, many digital wallets store a temporary card number.

Another major difference between the two is where they can be used. You can use a virtual credit card for any online purchase where credit cards are accepted. A digital wallet, on the other hand, can only be used at retailers where digital wallet payments are accepted, which might not be everywhere.

Recommended: When Are Credit Card Payments Due

Pros and Cons of Virtual Credit Cards

Here’s an overview of the advantages and drawbacks of using virtual credit cards, which we cover in more detail below.

Pros and Cons of a Virtual Credit Card
Pros	Cons
Greater protection from fraudsters	Generally only useable online or over the phone
Flexibility in use	Can be more challenging to use for certain purchases
Ability to customize how long the virtual credit card is active	May be more difficult to receive a refund
Transactions show up on your account	Requires extra legwork to get

Recommended: Tips for Using a Credit Card Responsibly

Pros

Here are the major upsides of using virtual credit cards:

•   Greater protection from fraudsters: Your actual 16-digital credit card number, payment information, and personal information is safeguarded when using a virtual credit card. In the case that a hacker steals your virtual card number, that number will expire shortly. Plus, the hacker won’t have access to your personal information or identity.

•   Flexibility in use: You can change your temp card number as often as you like, at the drop of a hat, and create new card numbers for different retailers. You can even set spending limits or freeze your account without the same changes being reflected in your actual credit card account.

•   Transactions are posted to your account: While the credit card number is a temporary one, credit card charges made with your virtual card do show up on your credit card statements. In turn, you can keep better track of all purchases, whether using a virtual card with temporary numbers or your actual credit card number. This tie to your account also means you can get cash back rewards with a credit card even if it’s temporary.

•   Ability to customize how long the number stays active: Depending on the credit card issuer, you might be able to customize the length of time a virtual card number stays active. Or, you can set a specific spending limit. This might come in handy if you’re using a joint credit card, or if you use a virtual credit card for recurring monthly purchases.

Cons

There are also drawbacks to virtual credit cards that are important to take into account as well. These include:

•   Generally can only be used online or over the phone: Due to their nature and intent, virtual credit cards generally can only be used online and for some over-the-phone purchases. So it won’t offer fraud protections when you use your credit card for brick-and-mortar purchases. However, if you link your virtual credit card to your digital wallet, you might be able to use your virtual credit card at select physical locations.

•   Might be more challenging to use for certain purchases: If you’re using a virtual card to book a flight or hotel reservation, and the card number expires after 24 hours, it could get a little prickly when the hotel asks for the same credit card number. In those cases, you might need to call your bank, or consider using a permanent credit card.

•   Might be harder to get a refund: Another scenario when using a virtual credit card can be more complicated is when a refund is issued and the retailer can’t refund the amount to a virtual card after it has expired. In that case, you might have to opt for a store credit instead.

•   Requires extra legwork to get: If you want to take advantage of the added security of a virtual credit card number, you might have to make a bit more effort than just swiping your card. You’ll have to contact your issuer each time you want to get a temp credit card number, and stay on top of short usage windows.

Recommended: What is the Average Credit Card Limit

How Is a Virtual Credit Card Number Generated?

Virtual credit card numbers are randomly generated sequences that are linked to your existing credit card account, just like an authorized user on a credit card would be. In some cases, to access the virtual card number, you’ll need to download the virtual card issuer’s app. Other issuers may allow you to do so through their website or through the existing banking app.

Depending on the credit card issuer, you might receive a virtual card number for different merchants. Or, you might receive a randomized 16-digital credit card sequence to use for any merchant.

The number might be good for 24 hours, after which you’d need to request a new number. Some virtual credit cards allow you to choose when a credit card is set to expire. For instance, you might choose for it to expire after a day of use, or after several months so you can use the same virtual card for recurring purchases.

Tips for Protecting Your Identity Online

Even using a virtual credit card number doesn’t make you immune to theft. Here are some ways to protect your identity and virtual credit card online:

•   Sign up for a credit monitoring service. This will help you detect any suspicious behavior.

•   Use a virtual private network (VPN). For a more secure connection, connect to a VPN when using public WiFi.

•   Create unique passwords. Passwords to online merchant accounts should not only be unique, but a combination of letters and numbers.

•   Set up alerts on your virtual credit card. Setting up alerts on your credit card for online purchases can make you immediately aware of fraudulent activity.

•   Use trusted, known sites. For instance, check to see if the site is secure and has “https” instead of “http” in the URL.

•   Don’t buy into credit card loss protection. If you receive an unsolicited email or call from someone claiming to be from the security department of a credit card company and asking you to activate the protection features on your card, beware. It’s a scam. You don’t need it, as credit cards typically have built-in liability protection.

Recommended: What is a Charge Card

Virtual Credit Card Alternatives

If your credit card issuer doesn’t offer a virtual credit card, or you don’t think it’s a good fit for you, here are some other options:

•   Prepaid credit cards: If concern when using a credit card for a purchase is top of mind, a prepaid credit card is a reloadable card that you can use for purchases. Note that while these are a safe way to make purchases, prepaid credit cards come stacked with fees and don’t help you build credit.

•   Gift cards: A gift card is also a safe way to make purchases online without fraudsters accessing your personal information or credit card number. Gift cards can be used for particular merchants or anywhere the credit card network with which the gift card is associated is accepted.

The Takeaway

A virtual credit card can provide an extra layer of protection and prevent your credit card and personal information from getting into the wrong hands. However, you can typically only use virtual credit cards for online purchases and some purchases over the phone. Plus, they usually can only be used temporarily, often for one day.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is a virtual credit card secure?

A virtual credit card offers added protection as you aren’t using your actual credit card number when making purchases. This helps prevent fraudsters from accessing your actual credit card number and sensitive information. Instead, you receive a temporary 16-digit code with its own expiration date and security code.

Can I get an instant approval for my virtual credit card?

Some virtual credit cards do offer instant approval. Once you receive your random credit card code, you usually can use it right away.

Can you get a virtual credit card anonymously?

No, you won’t be able to obtain a virtual credit card anonymously. You’ll need to request a virtual credit card by logging on to your existing credit card account. Once you make a request, you’ll receive your virtual credit card.

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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.

Photo credit: iStock/nesharm
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According to the Federal Trade Commission (FTC), consumers reported losing close to $8.8 billion to fraud in 2022, a 30% jump over the previous year. Many of people’s losses were the result of various types of bank account fraud.

Crooks are getting ever more sophisticated in the ways they steal money from financial institutions or their account holders. There are few things as upsetting as seeing your bank account emptied or your credit card used for thousands of dollars in purchases by a scammer.

So if you have a financial life, you’ll want to be on alert and do what you can to protect yourself and your hard-earned money. Here, we’ll help you by sharing:

•   What bank fraud is

•   Types of bank fraud

•   How banks respond to fraud

•   Penalties for bank fraud

•   How to avoid bank fraud

What Is Bank Fraud?

Bank fraud is the use of deceptive, often illegal means to steal money, assets, or other property owned or held by a financial institution. It also entails stealing money from people just like you, who keep money on deposit or use other financial products at banks.

Bank fraud also includes being defrauded of money by criminals who pose as employees of a financial institution.

Bank fraud is different from bank robbery; with fraud, thieves use schemes or deception to snag funds illegally, versus perpetrating outright theft.

Types of Bank Fraud

Unfortunately, bank fraud comes in many varieties, all the better to fool financial institutions and consumers. The law provides a broad definition of bank fraud, and several of these actions can be considered for federal prosecution.

Let’s take a look at the six most common types of fraud in banks. Money scams are all too common today; knowledge can help protect you and your funds.

1. Forgery

Forgery includes all forms of using a false signature or other details on financial documents. This includes when a person changes the name, signature, or other information on a check, including the amount (think adding a zero — or two or three). Forgery is also the term used for filling out a blank check or printing fraudulent checks with another person’s account number or a number for a non-existent account.

2. Fraudulent Loans

It is a crime when someone uses a false identity to obtain a loan. This can happen when, say, identity thieves take out loans using victims’ personal and financial information. Another type of fraudulent loan: When a person takes out a loan with the intention of filing for bankruptcy soon thereafter. This can happen when a dishonest business person works with a complicit bank officer to get a loan. The borrower then declares bankruptcy, often leaving the bank on the hook for the money borrowed.

Fraudulent loans also occur when someone falsifies answers on a personal or business loan application, usually in an effort to improve their chances of qualifying for the loan. An individual may try to hide a blemished credit history, for example, or a business may use accounting fraud to paint a more positive financial picture. As you might guess, this is criminal activity and can leave the lending bank in a bad situation.

3. Bank Impersonation and Internet Bank Fraud

When a person or group of people set up a fake financial institution, that’s known as bank impersonation. When such thieves hack into your account and steal money, whether by impersonation or otherwise, that’s internet bank fraud. Typically, this kind of crime is usually committed by creating a website designed to lure people into depositing funds.

Fake websites like this can also trick you into downloading computer viruses that can steal your personal information. These details are then used to rob you of your hard-earned money

Many phishing schemes also come under the umbrella of bank impersonation or internet bank fraud. In these crimes, consumers receive forged emails impersonating an online bank; they then direct the unwitting recipient to a forged website that looks like a legitimate bank site. From there, the bogus site will ask the user to update personal information. That information can be used for identity theft and other crimes.

4. Stolen Checks

Stealing checks is a crime that plays out just as it sounds. Someone at, say, the post office, a company’s payroll department, or anybody else with access to checks may steal those checks. From there, they can open a false bank account, write checks (depleting the account holder’s cash), and deposit them. The cash is then available for them to use as they desire.

5. Money Laundering

This term is used to describe the process criminals use to hide an illegal (or “dirty”) source of income — say from illegal drug smuggling or gambling operations — through a complex series of transfers. These transactions are designed to make the “dirty” money look legitimate, or “clean,” hence the term money laundering. A bit of trivia: Many people believe the term money laundering comes from gangster Al Capone’s habit of using his chain of laundromats to “launder” his illegal cash. This tale however probably isn’t true.

Now, here’s how the crime of money laundering can work: Often the “dirty” money is first deposited into a bank through a restaurant or other legitimate business. Let’s say that business actually did $1,000 worth of sales in a single day but they say they did $2,000. They then deposit the “real” $1,000 they earned plus the same amount of “dirty” money.

Next, to avoid taxes and detection, the money is distributed to other legitimate businesses or complicit companies, or is otherwise subjected to bookkeeping trickery. Multiple transactions can make the money hard to trace, and so it becomes “clean” enough to be used as the fraudster likes.

Banks may unwittingly or possibly complicitly play a role in many stages of money laundering, which is a severe form of fraud.

6. Credit Card Fraud

This term covers a slew of crimes; it refers to all fraudulent payments made with a credit or debit card. The bogus payments may be used to purchase goods and services, to withdraw funds from the account, or to make payments to another account controlled by a criminal. Fraud may happen by stealing the actual credit or debit card or by illegally obtaining the cardholder’s account and personal information.

The latter has become more common as online shopping and bill paying has soared, since there is no longer a need to have a physical card to make purchases. This is why you can still be in possession of your plastic, but be having all sorts of false charges turn up on your statement. As long as criminals can obtain enough personal information about an individual, they can use that information to open new credit card accounts or tamper with existing accounts.

Fortunately, thanks to the Fair Credit Billing Act, your liability should be capped at $50.

How Do Banks Recover Money That Was Fraudulently Taken?

When bank security personnel notice unusual transactions or a customer reports suspicious account activity, banks will typically conduct an investigation. Their goal: To confirm whether fraud exists and, if so, to uncover its details and take legal action against the perpetrators. Once a bank has determined fraud has taken place, most banks will refund stolen funds to customers. This happens as long as it is clear the customer is not an accessory to the crime or was not negligent with account security. In addition, you may want to report the crime to the authorities so they can work on finding and prosecuting those who stole your money. Some banks may require this, in fact, as a step towards catching the criminals.

What to do if you, the consumer, is defrauded of funds? Contact your financial institution’s fraud department and share what has happened. The representative will walk you through the steps required. Remember, the more quickly you alert your bank to any issues or report identity theft, the more likely you are not to lose any money.

Prosecuting fraud is complicated, time-consuming, and unfortunately sometimes impossible. As a result, many banks put extensive efforts into technological security solutions. These card fraud protection measures can help identify fraud quickly to avoid large losses as well as ward off many types of criminal activity in the first place.

Penalties for Bank Fraud

Bank fraud is a serious crime with serious penalties. How serious depends on how much money was stolen and what type of illegal activity was used to steal the money. It must also be proven that a person charged with bank fraud willfully and knowingly committed the crime. A money laundering conviction could result in:

•   A fine of up to $500,000 or twice the value of the property involved in the transaction, whichever amount is greater.

•   A sentence of up to 20 years in prison.

When bank fraud of other sorts is involved, the penalties can be worse still, according to the FDIC :

•   A fine up to one million dollars

•   A prison sentence of as long as 30 years

How to Avoid Bank Fraud

There are several steps you can take to avoid having money stolen from your accounts in a bank fraud scheme. Here are some of the most important.

•   Check your account activity regularly. With online banking, this is easy to do. It’s a good idea to log in at least once a week so you evaluate your bank accounts and your debit card and credit card histories. Report any unexpected or suspicious transactions. While you’re at it, why not make sure your bank offers debit card fraud protection, too? It’s important to secure that aspect of your banking.

•   Keep your PIN and passwords secret. Do not give them to anyone and never write them down in an email or text message that could be easily intercepted. Avoid using public wifi networks for any banking, from checking your balance to paying bills. You could be leaving yourself vulnerable.

•   Use a strong password for online banking. And everything else for that matter. Remember to use numbers, capital letters and symbols. Change passwords regularly, and please: Don’t reuse passwords.

•   Beware phishing schemes. Do not give out your account information over the phone or through email. Anyone legitimate would not be asking for account information by either means. Don’t click links embedded in emails either; they could lead to a fraudulent website posing as your bank. If you receive an email that looks as if it is legitimately from your bank, it’s still better to visit your bank’s website and proceed from any message you receive there.

•   Keep your computer protected. Use anti-virus protection software, firewalls, and spyware blockers to protect your electronic information. Make sure you keep your computer updated with the most recent security upgrades.

The Takeaway

Bank fraud is a criminal activity that can leave you with a big mess to clean up: It can put you at risk for losing money and facing identity theft. Understanding the different types of bank fraud is one important step; knowing how to secure your personal financial information is another one. These moves can help protect you from being a victim.

When you open a bank account with SoFi, we work overtime to protect your money. Sign up for our Checking and Savings account with direct deposit, and you’ll earn a competitive APY. What’s more, you won’t pay any of the usual charges like account, monthly, and minimum balance fees.

Bank better and smarter with SoFi.

FAQ

How does bank fraud happen?

Bank fraud happens when criminals use deceptive means to steal money, assets, or property owned or held by a financial institution, including banks. It is also considered bank fraud when thieves steal money from customer accounts by posing as a bank or other financial institution or by using personal financial information obtained through identity theft.

How do banks recover money from a scammer?

It is challenging for banks to recover money from a scammer. They can seek to unravel who committed the crime and, with the help of law enforcement, prosecute those individuals. Because this is often so difficult, though, banks also are implementing new, technologically advanced ways of preventing and detecting fraud. This allows them to better protect their account holders.

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Photo credit: iStock/Damir Khabirov

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

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

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

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

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

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

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

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

This article is not intended to be legal advice. Please consult an attorney for advice.

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

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