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Wondering how to lower your internet bill? With families paying roughly $64 every month for high-speed internet services, it can be a significant drain on the monthly budget. But the internet, like a phone plan, has become just as necessary for everyday life as other major utilities, especially with remote working and learning environments.

To help, here are 11 great tips for cutting back costs without getting rid of the internet altogether. In this post, you’ll learn how to save money on internet with tactics like:

•   Negotiating your rate

•   Buying your own equipment

•   Setting up auto pay

•   Downgrading your plan.

How Much Does the Average Household Spend on Internet

The average household spends $64 a month on internet services, according to a recent Parks Associate Survey. But internet prices can vary significantly depending on the speed you require, what other services you have it bundled with, what promotional offers you qualify for, and the way the internet is delivered to your home.

Broadband (cable or fiber) is the high-speed internet connection many of us have come to depend on, but some homes utilize dial-up, cable, or even satellite internet connections. These come at varying price points. Understanding what you have and what your options are in your neighborhood can help you find the best deal.

Recommended: How to Organize Your Bills

11 Money-Saving Internet Tips

With internet prices accounting for a notable portion of your monthly budget, you may be wondering how to cut internet costs — without sacrificing quality. To help you do that, here are 11 money-saving tips for decreasing your internet bill:

1. Shopping Around

Depending on where you live, you may have a handful of internet providers to choose among. If you’re not happy with the cost of your current internet bill, you can research what competitors are charging. They may offer low promotional deals for the first six months, year, or even two years. Often the deal is a lower rate, but sometimes it involves a prepaid gift card or other bonus.

It’s a good idea to read the fine print, as the price may go up when the promotional period ends. There may also be one-time fees to start up the service that could counterbalance any savings. Still, if you find a good offer, it could be an option if you want to find out how to lower your internet bill.

Recommended: Automate Your Finances

2. Negotiating for a Better Rate

If you spot a better offer from another company, you don’t have to jump ship. It may be worth your while to call customer service for your current provider and negotiate your rate down. Letting them know that you’ve found a better deal elsewhere but appreciate their service can go a long way. To retain you as a customer, they may be willing to offer you a discount.

If the conversation with the customer service rep feels like a dead end, you may want to end the call and try your luck with another rep. You can also ask to speak with a manager.

Not comfortable haggling over the phone — or just don’t have time to spend on hold? You might be able to find a third-party service to negotiate your rate for you. Services like Trim, BillFixers, and BillCutterz will call and negotiate on your behalf, but they’ll take a cut of any savings they earn you.

Recommended: 10 Tips for Spending Your Money Wisely

3. Checking Your Internet Speed

Your internet contract should spell out a certain speed that you’re meant to receive. Higher-tier plans offer faster speeds (and cost more). But internet service providers (ISPs) may not be delivering that speed to you at all times; in fact, research shows that 79% of us aren’t getting the speed we pay for.

You can test your internet speed with a third-party test site like speedtest.net, though many ISPs have their own proprietary speed tests. If you discover that you’re not getting anything close to the speed your contract stipulates, you may want to call customer service to demand a discount or faster speeds. Some providers may even offer a bill credit for the time you paid for higher speeds but didn’t receive them.

Recommended: Paying Bills Without a Job

4. Downgrading Your Plan

In some cases, you may be paying for faster speeds than you really need. If you regularly stream 4K videos and rely on Zoom meetings all day for your job, paying for fast internet is likely worth the cost. But if all you use the internet for is checking email, scrolling through Facebook, and occasionally streaming Spotify, you might be fine with slower internet service.

Similarly, individuals who live alone or with one other person are less likely to need internet services as fast as a larger household with multiple users accessing the internet at the same time.

Some ISPs offer “economy tiers” as slow as 3 mbps, though they may not always advertise these. If that sounds too slow for you, there may be a middle ground between the bottom and top tiers. Calling customer service to discuss options could be a good move if you’re ready to downgrade.

Recommended: How to Save Money on Streaming Services

5. Bundling with Another Service

Many ISPs offer discounts when you bundle your internet service with a phone plan or cable TV package. While this technically lowers your internet bill, it could add on new or higher costs for other services, so proceed with caution.

If you want cable TV or have it through another provider, it doesn’t hurt to see how much a bundle can save you. But if you won’t use cable TV, it likely isn’t the right move for you.

6. Using Auto Pay

Often, you can get a monthly discount on your internet bill by opting in to auto pay, sometimes as much as $5 or $10 a month. To avoid overdraft fees, however, it’s important that you ensure there’s enough money in your checking account before the auto pay processes each month.

Recommended: How Bill Pay Works

7. Reviewing Your Bill

Many ISPs offer a temporary promotional discount when you switch to their service, but your costs could go up afterward. That’s one of the reasons why it’s a good idea to review your bill every month, even if it’s on automatic bill payment. Doing so will alert you to changes in your bill total, whether it’s from the end of a promotional period or other unexpected charges.

If you have questions about your bill, it’s wise to call customer service as soon as possible. The longer you wait, the more months you’ll pay a higher rate.

8. Buying Your Own Equipment

ISPs usually charge you a monthly rental fee to use their modem and router. Before 2019, consumers might have also paid a fee to use their own equipment instead. Either way, consumers typically paid an extra fee.

But in 2019, Congress passed the Television View Protection Act, which prohibits internet providers from charging you a fee to use your own equipment. You’ll pay an upfront cost for such equipment, but over time, it could save you a lot of money on your internet bill.

Recommended: 15 Creative Ways to Save Money

9. Paying with a Cash Back Credit Card

Not every ISP allows you to pay your bill with a credit card. But if you have a cash back credit card that offers rewards with every swipe, you may want to find an internet provider that does permit it.

For example, if your card offers 3% cash back and your monthly internet bill is $64, that’s nearly $2 in savings every month. It’s not a huge savings, but every bit can help in today’s inflationary times.

10. Researching Low-Income Subsidies

In May 2022, President Biden announced the Affordable Connectivity Program, which offers up to a $30 discount toward internet services for qualifying low-income families. If you’re struggling with your internet bill, it can be a good idea to see if you qualify.

11. Reducing Usage

Some internet plans have monthly data caps. Once you reach these caps, your ISP may charge you extra for usage (or slow down your speeds significantly).

If your bill regularly has fees for exceeding your data cap, you might want to switch to a provider with unlimited data (this may cost more as a monthly fee) or focus on reducing internet usage at home.

Recommended: How to Financially Downsize

The Takeaway

Knowing how to lower your internet bill without sacrificing quality is important. If you’re willing to do some research and make some phone calls to customer service, you might be surprised by how much money you can save — and use elsewhere in your monthly budget.

3 Money Tips

1.    Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

2.    If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

3.    When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

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 much is a good amount to spend on the internet?

The average household spends $64 monthly on broadband internet services. You may be able to spend less for slower internet or by bundling with another service; often, you can also find promotional deals, too. Ultimately, you’ll know if you’re spending a fair amount on the internet by comparing rates from other services and asking your friends and neighbors what they’re paying.

How can you lower your internet bill?

Wondering how to decrease your internet bill? You can try several tactics, including switching providers, negotiating for a better rate, using your own equipment, setting up auto pay, and even looking for low-income plans. Using a combination of strategies may help you get the best internet deal possible.

How much will your budget improve when you save money on your internet bill?

How much your budget improves when you save money on your internet bill depends on how much you’re able to reduce your internet bill by. For example, many people save $5 or $10 by setting up auto pay on their internet bill; this means they have between $60 and $120 extra a year to use elsewhere. Others earn cash back by using a rewards credit card to pay the bill; the earnings might be as little as 1% cash back, but every cent saved helps.

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Photo credit: iStock/urbazon

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.

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.

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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If you’re curious about how banks are regulated and your money is protected, it’s important to understand that multiple agencies help keep America’s financial institutions safe and compliant with the law. Some of the key regulatory agencies you may hear about are the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC), although there are others involved as well.

This topic has been in the spotlight recently. You may have read the headlines and wondered who those agencies were and how they knew when to spring into action to help ensure that customers’ finances didn’t suffer.

Here, you can learn more about how bank regulation works, including:

•   What is the history of bank regulation?

•   What exactly do bank regulators do?

•   Who regulates banks?

What Do Bank Regulators Do?

Now that you have read about a few of the critical moments in U.S. banking regulation history, you may be interested to get a little more insight into what bank regulation accomplished during the ups and downs of America’s economy.

Here are some of the key points to know about what bank regulators do and how they can provide a sense of financial security:

•   Review the financial health of banks and step in as they deem necessary

•   Regulate foreign banks that are in business in the United States

•   Examine banks to make sure their practices are safe, sound, and fair

•   Intervene if banks are failing and ensure that depositors are protected up to the limits of insurance (and sometimes beyond, as mentioned above).

Recommended: Guide to Opening a Bank Account as a Non-US Citizen

Who Regulates Banks?

The next aspect to delve into is who has the responsibility of regulating banks and can intervene when they deem necessary. Here are the three key players when it comes to oversight of commercial banks:

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the U.S. Department of the Treasury. Its role is to charter, regulate, and supervise America’s national banks and federal savings associations.

In addition, the OCC oversees federal branches and agencies of foreign banks doing business on U.S. soil.

The OCC describes its mission as:

•   Ensuring that these institutions conduct business in a safe and sound manner

•   Determining that there is equitable access to financial services and customers are treated fairly

•   Making certain that the banks it oversees are complying with all applicable laws and regulations.

The Federal Reserve

The Federal Reserve, or the Fed, is responsible for regulating a different set of entities: some state chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations.

The Federal Reserve is America’s central bank, and has a broad jurisdiction as it works to promote the health of the U.S. economy and the stability of the financial system. Among its key functions are:

•   Conducting on-site and off-site examinations of banks to make sure they are operating in accordance with applicable laws.

•   Making sure that banks have enough capital available to withstand economic fluctuations. This can involve reviewing balance sheets, projections, and other financial materials.

•   Possibly reviewing “resolution plans,” which detail how a financial organization would resolve a situation in which it was in financial trouble or failed.

Recommended: Federal Reserve Interest Rates Explained

The Federal Deposit Insurance Corporation

As mentioned above, the FDIC plays a role in insuring its member banks so that, in the rare event of a bank failure, depositors are covered for $250,000 per account holder, per ownership category, per insured institution.

However, the FDIC does more than this. It also supervises state-chartered banks that are members of the Federal Reserve. It this capacity, it oversees more than 3,500 banks, and does the following:

•   Checks for safe and sound operations

•   Examines institutions to be sure they are complying with consumer protection regulations and laws.

A Brief History of Bank Regulation

America’s banking history has taken some twists and turns, as regulation has gone in and out of favor. Here are some key points in U.S. banking to consider:

•   In 1791, the First Bank of the United States was created, but its charter was not renewed in 1811. The reason? While the bank provided some stability to the new nation’s economy, people worried that it put too much financial control in the hands of the federal government.

•   State banks began to flourish and funded the War of 1812, but, with a large amount of credit being extended, the federal government stepped in again, chartering the Second Bank of the United States in 1816.

•   There were again worries that the federal government had too much power over the nation’s purse strings. In 1836, the Second Bank was dissolved.

•   An era of free banking emerged, without federal oversight or, in many cases, the need to have an official charter to do business. The federal government tried to rein this in with the National Banking Act of 1863; the OCC was formed to charter banks and ensure that they backed their notes with U.S. government securities.

•   The next few decades were a bit of a bumpy ride, with bank panics, such as the Panic of 1907, occurring. The Federal Reserve was created in 1913 to help bring order to the economy.

•   With the debilitating Great Depression, which began in 1929, new regulations were needed. The FDIC was formed in 1933 to help shore up the faltering economy.

•   More recently, after a period of deregulation, the government responded to the financial crisis of 2007 and the subsequent Great Recession. It passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, designed to improve accountability and financial transparency in America’s financial system.

•   In 2021, President Biden signed an executive order that charged federal regulators with improving their oversight of bank mergers, as part of a larger effort to increase competition in the country’s economy.

•   An example of financial regulation in action occurred in mid-March 2023, when the federal government stepped in as two banks faltered. The government even took the step of guaranteeing deposits over the typical FDIC insurance maximum of $250,000 per depositor, per ownership category, per insured institution.

Recommended: How Much Money Do Banks Insure?

Who Regulates Credit Unions?

Not everyone, however, keeps their accounts at a bank. There are other financial institutions, such as credit unions.

If you have an account (or multiple accounts) at a credit union, the institution that holds your money will be regulated at either the state or federal level. The National Credit Union Administration (NCUA) has oversight of federal credit unions. State-chartered credit unions are regulated by their state.

Also, credit union accounts can be insured by NCUA vs. FDIC. It’s NCUA that provides $250,000 coverage per depositor, per ownership category, per insured institution.

Who Regulates Savings and Loan Associations?

As of 2023, there are 624 savings and loan associations (sometimes called “thrifts”) operating in the U.S. While these financial institutions used to be federally regulated by the Office of Thrift Supervision (OTS), that bureau ceased to operate in 2010.

Now, savings and loans are regulated by the Fed and the OCC. These organizations are tasked with ensuring the thrifts are following the applicable laws and operating safely and soundly.

How Do I Know Who Regulates My Bank?

If you are curious about how your own bank is regulated, you can try the following, which will narrow down the field somewhat. The OCC, which regulates national banks and savings associations, has a “Who Regulates My Bank?” website.

If you don’t get the answer you are seeking there, you can call the OCC Customer Assistance Group at 800-613-6743 for further assistance.

The Takeaway

Banking regulation helps keep our financial institutions safe and sound and compliant with the appropriate laws. It also helps protect our economic stability and consumers’ deposits.

Several agencies are involved in banking regulation, such as the Fed, FDIC, OCC, and NCUA. While they rarely need to take action such as overseeing a bank closure, it can be wise to know who they are and how they function. This can help you feel more secure, knowing that they are there, backing you up; transparency in financial matters is important.

If you’re looking for a home for your funds, SoFi can be the reliable, transparent banking partner you seek. When you open an online bank account with SoFi, you pay no account fees and earn a competitive annual percentage yield (APY), which can help your money grow faster. Plus, you have tools at your disposal to help increase your savings, such as Vaults and Roundups. And, with our Checking and Savings, you’ll spend and save in one convenient place and be able to track your money with our easy-to-navigate app.

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 I know which agency regulates my bank?

The agency that regulates your bank will likely depend on the kind of bank that holds your money: The Office of the Comptroller of the Currency (OCC) oversees national banks and federal savings associations; the Federal Reserve (the Fed) regulates some state-chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations; and the Federal Deposit Insurance Corporation (FDIC) supervises state-chartered banks that are members of the Federal Reserve.

Does the FDIC regulate banks?

The FDIC regulates state-chartered banks that are members of the Federal Reserve. In addition, an array of banks are insured by the FDIC. This means that clients’ accounts are insured for $250,000 per depositor, per ownership category, per insured institution.

What level of government regulates banks?

Banks are typically regulated by the federal government, with the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC) overseeing many banks. State-chartered banks may also be regulated by their state’s agency.

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Photo credit: iStock/ismagilov
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.

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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It’s the most wonderful time of the year. It’s also the time when Americans tend to go on a shopping spree. The average person spends more than $900 on holiday gifts, according to the latest research. And that’s before factoring in entertainment, food, or travel costs, or the higher inflation rate, which means your dollars don’t go as far as they used to.

Fortunately, it is possible to have a festive season without blowing your budget and starting the New Year in debt. Try the holiday budgeting tips below to help you celebrate the holidays affordably.

20 Holiday Savings Ideas

It is possible to enjoy the holidays on a budget. In fact, you may have even more to celebrate since you won’t be starting the New Year in debt. As you start making your lists for holiday gifts and activities to do, consider these clever ways to avoid overspending and still have fun this season.

1. Create a Holiday Budget

Before you start your holiday shopping, make a budget for gifts, decorations, and experiences. This will allow you to prioritize your spending in advance and identify where you can make cuts.

As a bonus, following a budget can be one way to help achieve financial security, so this could be a good practice to continue after the holidays as well.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

2. Use the Envelope Method

By making purchases with cash instead of credit during the holidays, you could end up spending more thoughtfully. Try the cash envelope system to help stick to your holidays on a budget. To do it, designate a few different envelopes for spending categories like holiday meals, decorations, and experiences, and then put cash for each into the envelopes. When you run out of money, it means you can’t spend any in that category (or you’ll have to dip into the budget for another category).

3. Host a Potluck

Hosting a gathering at your place and asking your friends and family members to bring food to the holiday meal is a good way to cut costs on your grocery bill. It’s also less stressful for you. Just make sure that you ask people ahead of time what they plan to bring so that you have enough different kinds of dishes and options for everyone.

4. Visit a Museum for Free to See the Holiday Decorations

Another holiday budgeting tip: Check out your local museum when there’s no admission fee (many cultural institutions offer a monthly or weekly date) as a fun thing to do for free. The holiday decorations will likely be up, and there may even be an exhibition of holiday ornaments or trees. It can get your seasonal spirit soaring at no cost.

Recommended: 23 Tips on Saving Money Daily

5. Take a Tour of Your Town’s Christmas Lights

There may be an area near you that’s known for looking spectacular at the holidays. Or perhaps you just drive around until you find some fun Grinch inflatables. Whatever the case, hop in the car with a friend or your family and tour the local lights and decor for a festive, free night out.

6. Hold a Cookie Swap

Instead of doing a Secret Santa gift exchange with presents, get together some friends, colleagues, or neighbors and do a cookie swap instead. It’s simple and fun: Everyone bakes a different kind of treat and then shares them, so that each guest goes home with an assortment of sweets. Just make sure each person is making a different kind of cookie so you don’t end up with duplicates.

7. Go Ice-Skating

Local ice rinks typically offer an affordable and fun way to get some exercise, along with helping to put you in the holiday spirit. It can be a great after-work outing with friends or colleagues or a family activity. You can all celebrate (and warm up) with hot chocolate afterward.

8. Head to the Dollar Store

Here’s one secret to not paying full price: Go where the discounts are. The dollar store is full of inexpensive holiday decorations as well as goodies you can put into gift bags or stuff into stockings. You can find low-cost ornaments, lights, balloons, and more to make your home more festive for the season.

9. Give the Gift of Holiday Playlists

A custom playlist is a thoughtful gift for friends and family, and it’s another way of budgeting for the holidays. And now that most music is available online, making a playlist is easier than ever. Just create a playlist on Spotify or another platform, name it, and then share the link. The recipients will appreciate the tunes!

10. Check Out Your Town’s Calendar

Your town likely hosts lots of events you can participate in during the holidays. Search for Christmas tree lightings, concerts, parades, and outdoor movie nights, which are usually free or low cost.

11. Volunteer at a Soup Kitchen

What better way to celebrate the holidays than to give back? Look for local opportunities to volunteer at a soup kitchen or local animal shelter, for instance. Your community will benefit from your kindness, and you’ll feel great for volunteering.

12. Donate Toys to Families in Need

Another way you can give back — and get the entire family involved — is to donate toys your kids no longer use to children and families in need. Search for local toy drives happening in your community to find the best place to donate them to.

13. Get Friends Together to Regift

Here’s another alternative to a Secret Santa get-together: Host a regifting party with you pals. Everyone brings a gift they received but didn’t like or use, and then swaps them. After all, one person’s trash is another’s treasure.

14. Host a Game Night

Have some board games in your closet? Invite over friends and neighbors, and host a game night. Buy some snacks like popcorn, chips, and pretzels, and serve some beverages like soda, water, beer, or wine to stay on budget.

15. Use Your Credit Card Points

If you have credit card points racked up, the holiday season can be a good time to use these rewards to purchase gifts as well as book hotels and flights at a discount.

16. Make Your Own Decorations

If you log onto Pinterest, you’ll find a number of DIY holiday decorations you can make yourself for a fraction of the price of store-bought. For instance, you could create a wreath out of cranberries or string up popcorn on your Christmas tree.

If you have a natural area nearby where pinecones are abundant and yours for the taking, consider a winter walk to gather some. You’ll get some fresh air and exercise, plus these and any pine boughs on the ground can make a festive seasonal display at home.

17. Get Creative with Gift Wrap

Rather than buying expensive wrapping paper and ribbons, find some low- or no-cost ways to make your gifts look great. For example, you could use craft paper that you decorate with a few colorful flourishes with a marker. Yarn or twine can work well in place of ribbon and save you money.

18. Make Some of Your Gifts

You can construct some great gifts at home without having to spend much on materials — and at the same time, get the satisfaction of practicing a more sustainable way to shop. For example, you could make a family cookbook with treasured recipes and stories about the person they came from. If you sew or knit, you could whip up items like scarves or tote bags, and if you’re a whiz in the kitchen, you could make jams and jellies, and more.

19. Save Your Shopping for the Biggest Sale Days

Black Friday and Cyber Monday are great times to save on certain items. The key is knowing in advance what price actually constitutes a deal. Many stores advertise their upcoming sales around this time of year, so you should have plenty of time to research and comparison-shop.

20. Avoid Last-Minute Purchases

If you put off shopping until the last minute, you’re much more likely to blow your budget. Schedule time to shop before the holiday season is in full swing to help you avoid the impulsive overspending trap.

The Takeaway

The holidays don’t have to be expensive for you and your family to enjoy them. Focus on spending time with loved ones, investing in your community, and exploring your DIY side to get the most out of the season while spending the least.

It can also be helpful to start saving up money ahead of time. You could designate a certain bank account for the holidays, for instance, and contribute a little bit to it each week.

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.

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 much does the average person spend during the holidays?

The average person spends more than $900 on gifts alone, according to the latest research. That doesn’t include decorations, holiday entertainment, or travel.

Is it possible to celebrate the holidays on a tight budget?

Yes! There are many ways to celebrate the holidays without spending much money. For instance, you can make gifts and decorations yourself. Rather than buying and cooking an elaborate holiday dinner, you could host a potluck and ask each guest to bring a dish. And you can take advantage of no-cost seasonal activities like free nights at a local museum, holiday parades, and outdoor movie nights in your town.

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Photo credit: iStock/Tijana Simic

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.

4.60% APY
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.

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Life can occasionally throw you — and your finances — a curveball. During those times, it might be too much of a stretch to make a payment on a personal loan. But what are the consequences of missing a loan payment?

What can happen if you miss one payment, of course, is quite different from what can happen if you miss several, so let’s take a look at possible ramifications.

What Does It Mean to Default on a Personal Loan?

Just as with a mortgage or student loans, defaulting on a personal loan means you’ve stopped making payments according to the loan’s terms. You might be just one payment behind, or you may have missed a few. The point at which delinquency becomes default with a personal loan — and the consequences — may vary depending on the type of loan you have, the lender, and the loan agreement you signed.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.

How Does Loan Default Work?

Even if you miss just one payment on a personal loan, you might be charged a late fee. Your loan agreement should have information about when this penalty fee kicks in — it might be one day or a couple of weeks — and whether it will be a flat fee or a percentage of your monthly payment.

The agreement also should tell you when the lender will get more serious about collecting its money. Because the collections process can be costly for lenders, it might be a month or more before yours determines your loan is in default. But at some point, you can expect the lender to take action to recover what they’re owed.

What Are the Consequences of Defaulting on a Personal Loan?

Besides those nasty late fees, which can pile up fast, and the increasing stress of fretting about a debt, here are some other significant consequences to consider:

Damage to Your Credit

Lenders typically report missing payments to the credit bureaus when borrowers are more than 30 days late. This means your delinquency will likely show up on your credit reports and could cause your credit scores to go down. Even if you catch up down the road, those late payments can stay on your credit reports for up to seven years.

If you actually default and the debt is sold to a collection agency, it could then show up as a separate account on your credit reports and do even more damage to your credit scores.

Though you may not feel the effects of a lower credit score immediately, it could become a problem the next time you apply for new credit — whether that’s for a credit card, car loan, or mortgage loan. It could even be an issue when you try to rent an apartment or need to open new accounts with your local utilities.

Sometimes, a lender may still approve a new loan for borrowers with substandard credit scores, but it might be at a higher interest rate. This means you’d pay back more interest over the life of the loan, which could set you back even further as you work toward financial wellness.

Dealing with Debt Collectors

If you have a secured personal loan, the lender may decide to seize the collateral you put up when you got the loan (your car, personal savings, or some other asset). If it’s an unsecured personal loan, the lender could come looking for payment, either by working through its in-house collection department or by turning your debt over to a third-party collection agency.

Even under the best conditions, dealing with a debt collector can be unpleasant, so it’s best to avoid getting to that stage if you can. But if you fall far enough behind to be contacted by a debt collector, you should be prepared for some aggressive behavior on the part of the collection agency. These agents may have monthly goals they must meet, and they could be hoping you’ll pay up just to make them go away.

There are consumer protections in place through the Fair Debt Collection Practices Act that clarify how far third-party debt collectors can go in trying to recover a debt. There are limits, for example, on when and how often a debt collector can call someone. And debt collectors aren’t allowed to use obscene or threatening language. If you feel a debt collector has gone too far, you can file a complaint with the Consumer Financial Protection Bureau (CFPB).

You Could Be Sued

If at some point the lender or collection agency decides you simply aren’t going to repay the money you owe on a personal loan, you eventually could end up in court. And if the judgment goes against you, the consequences could be wage garnishment or, possibly, the court could place a lien on your property.

The thought of going to court may be intimidating, but failing to appear at a hearing can end up in an automatic judgment against you. It’s important to show up and to be prepared to state your case.

A Cosigner Could Be Affected

If you have a cosigner or co-applicant on your personal loan, they, too, could be affected if you default.

When someone cosigns on a loan with you, it means that person is equally responsible for paying back the amount you borrowed. So if a parent or grandparent cosigned on your personal loan to help you qualify, and the loan goes into default, the lender — and debt collectors — may contact both you and your loved one about making payments. And your cosigner’s credit score also could take a hit.

Is There a Way to Avoid Defaulting on a Loan?

If you’re worried about making payments and you think you’re getting close to defaulting — but you aren’t there yet — there may be some things you can do to try to avoid it.

Reassessing Your Budget

Could you maybe squeak by and meet all your monthly obligations if you temporarily eliminated some expenses? Perhaps you could put off buying a new car for a bit longer than planned. Or you might be able to cut down on some discretionary expenses, such as dining out and/or subscription services.

This process may be a bit painful, but you can always revisit your budget when you get on track financially. And you may even find there are things you don’t miss at all.

Talking to Your Lender

If you’re open about your financial issues, your lender may be willing to work out a modified payment plan that could help you avoid default. Some lenders offer short-term deferment plans that allow borrowers to take a temporary break from monthly payments if they agree to a longer loan term.

You won’t be the first person who’s contacted them to say, “I can’t pay my personal loan.” The lender likely has a few options to consider — especially if you haven’t waited too long. The important thing here is to be clear on how the new payment plan might affect the big picture. Some questions to ask the lender might include: “Will this change increase the overall cost of the loan?” and “What will the change do to my credit scores?”

Getting a New Personal Loan

If your credit is still in good shape, you could decide to get proactive by looking into refinancing the old personal loan with a new personal loan that has terms that are more manageable with your current financial situation. However, be sure to factor in any fees (such as origination fees on the new loan and/or a prepayment penalty on the old loan) to make sure the refinance will save you money. You’ll also want to keep in mind that extending the term of the term of your loan can increase the cost of the loan over time.

You can use an online personal loan calculator to see how much interest you might be able to save by paying off your existing debt with a loan.

Or you might consider consolidating the old loan and other debts into one loan with a more manageable payment. This strategy would be part of an overall plan to get on firmer financial footing, of course. Otherwise, you could end up in trouble all over again.

But if your income is higher now and/or your credit scores are stronger than they were when you got the original personal loan, you could potentially improve your interest rate or other loan terms. (Requirements vary by lender.) Or you might be able to get a fresh start with a longer loan term that could potentially lower your payments.

If you decide a new personal loan is right for your needs, the next step is to choose the right lender for you. Some questions to ask lenders might include:

•   Can I borrow enough for what I need?

•   What is the best interest rate I can get?

•   Can I get a better rate if I sign up for automatic payments?

•   Do you charge any loan fees or penalties?

•   What happens if I can’t pay my personal loan because I lost my job? Do you offer unemployment protection?

💡 Quick Tip: With average interest rates lower than credit cards, a personal loan for credit card debt can substantially decrease your monthly bills.

Is There a Way Out of Personal Loan Default?

Even if it’s too late to avoid default, there are steps you may be able to take to help yourself get back on track.
After carefully evaluating the situation, you may decide you want to propose a repayment plan or lump-sum settlement to the lender or collection agency. If so, the CFPB recommends being realistic about what you can afford, so you can stick to the plan.

If you need help figuring out how to make it work, the CFPB says, consulting with a credit counselor may help. These trained professionals can work with you to come up with a debt management plan. While a counselor usually doesn’t negotiate a reduction in the debts you owe, they might be able to get your interest rates lowered or have loan terms increased, which could lower your monthly payments.

What’s more, a credit counselor can also help you create a budget, advise you on managing your debts and money, and may even often offer free financial education workshops and resources.

But consumers should be cautious about companies that claim they can renegotiate, settle, or change the terms of your debt. The CFPB warns that some companies promise more than they can deliver. If you’re interested in exploring credit counseling, a good place to start is browsing this list“>this list of nonprofit agencies that have been certified by the Justice Department.

Finally, as you make your way back to financial wellness, it can be a good idea to keep an eye on two things:

1. The Statute of Limitations

For most states, the statute of limitations — the period during which you can be sued to recover your debt — is about three to six years. If you haven’t made a payment for close to that amount of time — or longer — you may want to consult a debt attorney to determine your next steps. (Low-income borrowers may even be able to get free legal help.)

2. Your Credit Score

Tracking your credit reports — and seeing first-hand what helps or hurts your credit scores — could provide extra incentive to keep working toward a healthier financial future. You can use a credit monitoring service to stay up to date, or you could take a DIY approach and check your credit reports yourself. Every U.S. consumer is entitled to a yearly free credit report available at annualcreditreport.com, which is a federally authorized source.

The Takeaway

If your debt seems daunting right now, and you’re struggling to make payments, some proactive planning could help you avoid falling so far behind that you default on your personal loan. That plan may include talking to your current lender about modified payment terms — or it might be time to consider a new personal loan to consolidate high-interest debt.

The good news is there’s help out there. And the sooner you act, the more options you may have to protect your credit and stay away from the serious consequences of defaulting.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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

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.

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

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You’ve likely made some impulse purchases in your life — or at least purchases you later realized weren’t all that wise or well thought out. It can be easy to get caught up in the excitement of buying something new or “just marked down,” that you lose sight of your better instincts — not to mention your budget.

One way to avoid making impulsive or bad buying decisions is to hit pause just before you make a purchase to ask yourself a series of simple questions. This extra step forces you to step back and honestly consider how the potential purchase fits into your life. You might ultimately decide you don’t want the item after all. And, if you do decide to buy it, you can feel confident that you’re doing it for the right reasons.

9 Questions To Ask Yourself Before Buying Something

Knowing some key questions to ask yourself before you buy something can help ensure that you spend according to your values and cut down on purchases you’ll regret later. After all, the last thing you want is to spend money on things that don’t really enhance your life — and may add to your debt (especially if you’re already paying off some debt).

Here are some key pre-purchase questions to consider.

1. Is This a Want or a Need?

A great first question to ask is whether your prospective purchase fulfills a need or is just something you want. If it’s an item you need — and you can afford it — then you might just go ahead and buy it. If, on the other hand, it fills a want, it’s a good idea to continue vetting the purchase with the questions that follow.

2. What Do You Gain From Buying This?

Consider what you hope to gain from making the purchase. Is it the admiration or approval from other people? Does someone you know or follow on social media have it? Is this something that will genuinely improve your quality of life?

Research suggests that people feel more satisfied when they spend money on things or experiences that mean something to them and reflect their values.

Recommended: What Is FOMO Spending?

3. Is This Something That Will Actually Sell Out?

Though retailers will often make you think you need to act quickly (due to low stock), there’s a good chance that the items that you’re thinking of buying will still be available at a later date. If you’re feeling pressured to buy due to a limited-time sale, keep in mind that sales pop up all the time. Waiting for the next one could save you even more money, as you may decide you don’t really want it that much.

4. Can You Get It Used or for a Better Price

If you’re thinking of pulling the trigger on a full-price item you don’t need right away, consider whether you may be able to find a better deal. For example, you might:

Buy Used

If you’re looking at a piece of equipment (like sports, exercise, or baby gear) or furniture, keep in mind that you may be able to find it in great condition on a second-hand marketplace online or even a yard sale.

Find Discounts

While buying used is not everyone’s cup of tea, buying on sale should be. These days, there are websites and apps that can help you do quick price comparisons to find the best deals. Some apps will even alert you when the price for a wanted item drops.

5. Do You Own Something Similar?

If you were to look at what you already own, you might be surprised to find how often you purchase nearly the same items over and over again. Buying similar items is totally understandable. We all know what makes us comfortable and what we tend to wear or like, so we gravitate to similar-looking clothes, shoes, home decor, and so on.

If you already have several coffee mugs, jean jackets, baskets, whatever that are similar to your prospective purchase, you may want to pass.

Recommended: 7 Strategies to Stop Spending Money

6. Why Do You Want to Buy This Now?

Sometimes there is a clearcut reason to make a purchase, even an impulse purchase. You might be at a store and remember you need hand soap or a certain tool to make a repair. But if there isn’t a clear reason for making this purchase right now, you may want to pass.

Recommended: How to Stop Overspending: 9 Tips

7. How Often Will You Use It, Really?

If you will only use or wear the item you’re thinking about buying once, or even a handful of times, you may want to rethink the purchase. It’s possible you can get by with something you have, can rent the item, or can borrow it from a friend or neighbor. This can end up saving you money — and potential buyer’s remorse.

8. If the Item Was Full Price Would You Still Buy It?

A sale price can make an item look particularly appealing. You might even think you’d be a fool to pass it by. But it’s important to put the price tag to the side for a moment and consider whether or not you really want and love the item. Would you even be considering it if it were full price? If the answer is no, it’s likely you can forgo it.

9. Would It Be Better To Put the Money Elsewhere?

If you can ask yourself this question, then you’ve arrived. You’re thinking of the big picture and wondering whether there may be other things that are more important than what’s in front of you. This involves delaying gratification and knowing how to control your spending habits.

The Psychology Behind Reflecting Before Purchasing

One common reason why we shop for new (and often similar) things is because we don’t fully appreciate the things we already possess. But there is a way you can turn this psychology around.

Before you make a purchase, consider whether or not you already own something that can fulfill the same purpose. If you do, next think about whether there is a reason you need something similar. If you can’t, you can probably easily pass on the purchase. The process of reflection not only avoids an unneeded expense but allows you to re-focus on the item you already have and appreciate it more.

How Budgeting Can Curb Compulsive Spending

Creating a budget involves looking at where your money is currently going and making sure that your spending aligns with your priorities. There are many different kinds of budgets but one simple framework is the 50/30/20 rule.

The idea is to divide your monthly income into three categories, spending 50% on needs, 30% on wants, and 20% on savings (and debt payments beyond the minimum). This set-up helps curb compulsive spending because you only have so much “fun” money to spend each month. It also allows you to spend money without feeling guilty, since it’s baked into the budget.

Budgeting and Saving With SoFi

If you like the idea of managing both your spending and saving all in one account, take a look at SoFi.

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.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How do you determine if you should buy something?

A good first step is to determine whether a prospective purchase fulfills a need or is simply something you want. If it fills a need, you can go ahead buy it, as long as you can afford it. If it’s a want, you might next consider why you want to buy it. Also think about whether you may already have something similar, and whether the money might be better spent on something else.

Should a budget include flexibility for impulse purchases?

Yes. A budget will typically allot a certain amount of money just for “fun” each month. This frees you up to make the occasional impulse purchase without feeling guilty or worrying that it will hurt your long-term financial health. In fact, building in flexibility to your spending plan can help you stick with it.

What questions should you ask yourself before buying something?

Some key questions to ask yourself before you make a purchase include:

•  Do I need it?

•  What do I gain from buying this?

•  Do I own something similar?

•  If the item was full price would I still buy it?

•  How often will I use it, really?

•  Could I get it used or for a better price elsewhere?

•  Is there a better way I could use this money?

How do you stop impulse buying psychology?

One effective strategy is to establish a waiting time before you make any discretionary purchases. If you see something you want to buy, put the purchase on pause for a week (or more). Tell yourself that if, at the end of the waiting period, you still want the item and can afford it, then you can go ahead and buy it. You may find, however, that by delaying gratification (and the purchase), you lose interest in the item and opt not to buy it after all.

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Photo credit: iStock/Talaj

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.

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