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It’s not your imagination: Grocery prices are rising, having gone up 2.2% between February 2023 and 2024, after the sticker shock of an 11% increase between 2021 and 2022.

You may think there’s not much you can do about the high cost of groceries (after all, a person has to eat!), but there are many easy ways to slash your weekly spending on groceries. And, saving at the supermarket doesn’t have to mean skimping on quality, taste, or nutrition.

What follows are 31 simple tricks that can help you shop smarter and spend less whenever you visit the supermarket.

Key Principles Behind Saving Money on Groceries

Before diving into the ideas for saving money on groceries, consider the big-picture principles at work when it comes to frugal living for food. Consider these concepts:

•   Plan your meals

•   Understand pricing

•   Don’t shop when hungry

•   Buy in bulk when possible

•   Choose generic products

•   Shop in season

•   Comparison-shop like a pro; no grabbing the first item you see

•   Stick to your list

•   Buy local or grow your own food.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

How Much Do Groceries Cost on Average?

The average household spends about $270 a week on groceries; those with kids spend more, or about $331 per week. Using Census Bureau data, the average monthly costs for groceries therefore tops $1,000.

These costs are strictly for groceries. If you eat out or grab takeout (whether a flat white or fancy salad), your total food costs will of course be higher.

How Can I Determine What My Budget Is?

It’s important to set aside an amount of money for food that fits into your overall financial planning. In terms of how to make a budget, you might try the popular 50/30/20 budget rule. With this plan, you take your after-tax income and allocate 50% to needs, such as housing, utilities, health care, minimum debt repayment, basic transportation, and food. Thirty percent is for the “wants” in life, such as travel, dining out, and cute (but not vital) clothes. The last 20% goes to savings and additional debt payment.

If you use this budget or another method, you will want to make sure that your food costs fall in line with the other necessities of life, perhaps trimming from your spending on “wants,” if needed.

Tips for Grocery Shopping on a Budget

Now, dive in and learn how to trim your grocery bill and live on a budget.

1. Make – and Stick to – a List

Impulse buys can quickly bust your budget. So before going to the supermarket it can be wise to plan out your meals and make a detailed list of all the things you will need, including any household supplies.

At the store, you’ll want to be strict about sticking to the list. Yes, those pineapples look great and they’re on sale, but are they on your list? No? Then you should probably keep walking. Otherwise, you may well wind up blowing your budget.

Shopping with a list not only helps save money but can also cut down on food waste — the items that tend to sit idle in the fridge or on the countertop are often the ones that never had an assigned meal to begin with.

2. Eat Before You Shop

If you enter a supermarket hungry, there’s no telling what you’ll end up putting into your cart because, since just about everything is going to look good. Some popcorn? Why not? Pomegranate juice? It’s healthy, so into the cart it goes. And maybe some cookies as a little treat.

Walk into the grocery store with a full stomach, on the other hand, and you might be shocked by how much lower your grocery bill is.

3. Plan for Leftovers

In America, 80 million tons of food go to waste every year. One reason that food goes to waste is that it can be difficult to buy the exact amount of food you need to make the meals we’ve planned. This can result in leftover ingredients languishing in the fridge or pantry, and then landing in the trash can.

You can help reduce wasted food (and money) by doubling your recipe and then having leftovers for lunch and/or putting some in the freezer so you’ll have a meal at the ready when you need it.

Recommended: How Much Should I Spend on Groceries a Month?

4. Grocery-Shop Online

Think you’ll be tempted to go off-script if you enter a grocery store? You might want to try online grocery shopping instead. Many local supermarkets offer online ordering, and allow you to choose either curbside pick-up or delivery.

Or, you may want to try one of the many online grocery services, such as Instacart or Amazon Fresh. You can often choose one-off delivery, as well as recurring delivery of staples (like toilet paper) so you never run out.

It can be easier to avoid the temptations when you can type everything you need into a search bar. Plus, shopping online makes it easy to compare brand prices, see what’s on sale, and watch the total tally up in real time.

5. Develop a Green Thumb

Even if you’re not much of a gardener, you might want to try growing one or two of your favorite vegetables in a container or a small garden area outdoors. You can then step outside and pick your tomato or bell pepper rather than buying them at the store.

If you don’t have any outdoor space, you might consider starting an indoor herb garden. If you have parsley, basil, or dill right on your windowsill, you can just pick what you need rather than buy a whole bunch at the market. It’s a fun and tasty way to stick to your budget.

6. Shop at Stores You Know

Having a tried-and-true grocery store may be good for your wallet. Walking into a store you’re familiar with means you already know where to get the items on your list.

Head into an unfamiliar store and you may be left wandering the aisles for what seems like an eternity trying to find your goods. That’s because grocery stores are set up to be a little confusing and to drive consumers to have to do a bit of strolling, as that’s when you’re more likely to make random purchases.

7. Bring Your Own Bags

One quick way to potentially drive down the cost of your grocery store run is to BYOB — bring your own bags. Many cities and states have imposed plastic bag bans. If you show up empty-handed, you’ll be stuck purchasing reusable bags at the checkout.

In areas where plastic bags are allowed, many stores will reward customers who bring reusable bags by reimbursing them about 5 to 10 cents a bag at checkout. BYOBing is also kinder to the environment.

Keeping some reusable bags in your car is a good way to avoid forgetting them at home.

8. Join Loyalty Programs

Many stores now offer discounts for regular shoppers and even secret sale items only for those who’ve signed up.

It’s typically quick, easy, and free to join, though some stores like Whole Foods require customers to be part of its Amazon Prime membership service (which comes with a yearly fee). Still, it may be worth it as discounts at the register can add up to real savings.

9. Embrace Meatless Mondays

Here’s another way to buy groceries on a budget: Buy and eat less meat. Reducing meat consumption and eating more plant-based meals has benefits for the environment, your waistline, and your wallet.

Chickpeas, pinto beans, peas, Brussels sprouts, quinoa, tofu, along with many other beans, whole grains, and vegetables are all excellent (and inexpensive) sources of protein without the added saturated fat that comes with animal products.

You may want to consider going meatless at least one day a week, and then building up to a few meat-free meals per week.

10. Buy Larger Containers

Buying the largest size of packaged, canned, and frozen foods can sometimes help you save money on food. That’s because some of the cost of every grocery item is in the packaging.

If your grocery store has a “bulk foods” section you might save even more by buying the amount of food you need in plastic bags.

11. Think Beyond Fresh Produce

Another way to save money at the grocery store is to buy fruits and vegetables in the frozen or canned foods aisle. The savings can add up, especially when the food is out of season.

If you’re looking to add pineapple to a recipe in the winter, for example, you can save money by opting for canned pineapple over a fresh one that’s not in season. Canned and frozen fruits and vegetables also don’t go bad as quickly as fresh, so they may be less likely to get wasted.

12. Try a CSA

A Community-Supported Agriculture (CSA) program can help you save money on fresh produce, eggs, and herbs. You can look for one using the USDA’s CSA directory and see if they’ll deliver to your front door.

Not only will you be saving money but you’ll be supporting local farmers and eating food that’s close by helps ensure it’s fresher.

13. Clip Coupons

While it’s not rocket science, this tried-and-true technique is still one of the best ways to cut your grocery bill. You may want to consider scanning the local circulars that come in the mail to see which stores are having deals on the food items you need that week. You can also look for manufacturers’ coupons (online and in circulars inserted into Sunday newspapers).

When it comes to how to coupon successfully, however, it’s wise to make sure that you’re only buying items you need and usually buy — otherwise you could end up adding to, not shrinking, your grocery bill.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

14. Shop in Season

Another way to spend wisely is to cook and shop seasonally. It’s typically cheaper to buy fruits and vegetables that are in season than ones that have been shipped to the store from a far-away place where it can be grown year-round.

Also, since in-season produce is in large supply, it tends to be sold at affordable prices to maintain demand. In-season produce also tends to be tastier.

15. Use Apps

There are a number of rebate apps you can download onto your phone for free that allow you to get cashback on items you purchased. Options include Ibotta, Checkout 51, and Fetch.

While rebates don’t give you a discount upfront (like a traditional coupon), you should see savings in the long run.

If you frequently shop at large chains like Walmart or Target for groceries, getting their apps may help you earn rewards and get discounts for being a loyal shopper. You just need to scan your mobile app when you check out.

16. Stock up on Shelf-Stable Items

When your grocery store is having a sale on canned goods, dried goods, or other pantry items, you may want to consider buying multiples. Items like beans, sauces, soups, nuts, peanut butter, pretzels, shelf-stable snacks like unpopped popcorn won’t expire for a long time.

You’ll be able to enjoy the cost savings and will likely appreciate having them on hand when preparing meals.

17. Buy Store-Brand or Generic

You don’t have to sacrifice flavor and taste in order to save money while grocery shopping. While It’s easy to overlook no-name or store brands, in many cases these items are actually made by the brand name companies, just with a different label.

And the savings can be real. Using generic (rather than brand name) products can save as much as 40% off your grocery bill. You can put that extra cash right into your bank account.

18. Shop the Outside Aisles

The inside aisles of the grocery store are where pricier processed foods are typically stocked, The outer edges, on the other hand, is where you tend to find fresh fruits and vegetables, grains and beans.

Shopping on the edge — and filling your cart with nutrient-dense items and fresh, seasonal food — can help your wallet, as well as your waistline.

Recommended: Examining the Price of Eating at Home vs Eating Out

19. Portion Food Out Yourself

It can be tempting to buy convenience items where food is pre-portioned into single servings so you can just grab-and-go. Smaller items can also help you keep from overeating. But all of that packaging tends to increase the cost of the item.

If your kids love crackers, you may want to buy a full-size box and portion them out in zip-top bags or reusable containers. You can do the same with other favorite snacks so you won’t be tempted to eat the whole bag in one sitting. You can also spoon yogurt into small containers for school lunches and cut cheese into slices from a block for easy snacks.

20. Drink Tap Water

To avoid spending money on bottled water, you may want to get a filtered pitcher and switch to drinking tap water. Depending on how much you typically sip, you can save a bundle. By drinking from a reusable water bottle or a glass throughout the day, you’ll also reduce the amount of plastic waste you’re putting into the environment.

Getting your kids used to drinking water instead of juice or soda can also reduce your supermarket bills.

21. Use a Smaller Cart

Here’s a little swap that can help you save: If you’re not shopping for a full week’s worth of groceries, consider grabbing a small cart or, even better, a hand-held basket. This will automatically limit how much you can buy because only so much will fit.

When you have a smaller cart — or a basket that will get heavy quickly — you’re forcing yourself to ask, “Do I really need this?” every time you pick up something to buy in the store.

22. Minimize Trips to the Store

One way you can save money on your grocery bill is to only shop when you need to and to minimize the frequency that you set foot in the supermarket door.

The reason is that the less often you’re physically in the store, the less likely you’ll be tempted to buy something you don’t absolutely need. It can be all too common to go to the grocery store for “one thing” and come out with a few items.

23. Shop Off-Peak

Most of us don’t want to spend our weekends grocery shopping, right? Unfortunately, Saturdays and Sundays are the days when many of us have the time to go to the supermarket — along with everyone else in our town.

Shopping during peak times can hurt your budget in a few ways. You might try to speed through the supermarket crush and be more likely to buy an item at the end of the aisle because it’s convenient, rather than grab a similar product on the shelf a few feet away. This could mean they are buying a more expensive version of what they need.

You might also run into trouble shopping during peak times because you’re more likely to get stuck in a long line — and become tempted by miscellaneous items stocked near and along the checkout line.

24. Calculate the Bill While You Shop

Shopping with a calculator or getting out your phone and adding things up as you put them in your cart can help you stick to your spending plan<. (If you’re shopping with kids, you can give them the job to tally what’s in the cart.) By keeping a running tally of how much money is in your cart, you can save yourself from any unpleasant surprises during check-out. Plus, it can make you think twice before putting any extras in your cart.

25. Shop Your Pantry First

It’s easy to accidentally buy an extra item at the supermarket that you didn’t realize you already had stored at home. That’s why after you write your grocery list, it can be a good idea to double-check pantry shelves, spice racks, the fridge, and the freezer to make sure you truly need what’s on your list.

You may even want to shop your pantry and fridge before making your meal plan and shopping list to see if you can think of meals that incorporate foods you already have on hand.

26. Pay with Cash

Another idea for grocery shopping on a budget: A simple trick for lowering your grocery bill is to set your budget and then only bring that much money in cash, leaving the plastic at home.

This will help ensure that you stick to your list and avoid grabbing any tempting extras. You can only spend what you have in your wallet. Full stop. (A variation on the theme: Use your debit card, not your credit card, to keep your spending in line.)

Recommended: Envelope Budgeting Method

27. Make Breakfast for Dinner

Eggs are one of the most affordable protein sources out there. By making simple breakfast-style food for dinner, you’re offering your family a fun meal and using up some of your (affordable) breakfast foods.

You might consider making an omelet or frittata with eggs, cheese, and leftover vegetables or creating a bacon, egg, and cheese burrito. Not only are many breakfast recipes a delicious dinner option, but they’re affordable and often quick to prepare.

28. Avoid Eye-Level Items

Grocery stores are designed to get you to spend more money, which is why the most expensive products tend to be stocked at eye level. Brands often pay more money for their products to be displayed prominently so you’re more likely to buy them.

Searching high and low when you’re shopping may help you stop spending money (or at least more than you budgeted for). Once you start looking, you may even notice a price differential between the eye-level item cost and the one at your feet.

29. Bake Your Own Treats

Many impulse buys happen in the bakery and snack sections of the supermarket. Before you succumb, you may want to ask yourself if you could bake it at home. You may already have the baking basics on your pantry shelves and could whip up some muffin or cookies fairly quickly. Or, you might want to buy a mix to save time (you’ll still save money).

Before buying chips and snacks, you may also want to consider if there is a more affordable DIY option, like buying popcorn kernels to cook on the stove.

Asking yourself, “Can I make this?” will likely result in saving money and getting the freshest item possible. This way, you can reward yourself without breaking your budget.

30. Hit the Store on a Wednesday

When it comes to snagging good deals, shopping on a Wednesday may be beneficial. That’s because grocery stores tend to restock their shelves and make new markdowns in the middle of the week. Since they’re in the process of changing the discounts, they may still honor the price cuts from last week’s sale as well as the new ones, which could help boost your savings.

31. Do the Prep Work Yourself

Those packaged baby carrots and bagged pre-washed salads make it easier to eat healthier, but if you’re willing to do the cleaning, prepping, and chopping of fresh produce, and even meats and poultry, you can save money.

A boneless, skinless chicken breast package will cost more than buying a whole chicken. You’re paying for the convenience. By setting aside time to prep and chop your foods after you get home from grocery shopping, you’ll likely reap savings.

The Takeaway

A little planning and knowing some money-saving tricks can help you lower your monthly grocery bill and stick to your budget.

By following these budget shopping tips, you may find that you have more money left over each month to pay down debt, invest for the future, or save for something fun. And those funds can grow if you put them in an interest-bearing bank account.

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

What is a realistic budget for groceries?

The average household spends $270 a week on groceries, but how much you need to spend will vary on family size, location, and other considerations.

Which store is cheapest to buy groceries?

Which grocery store is cheapest will vary from location to location, but among the most affordable are Aldi, Lidl, Market Basket, WinCo, and Trader Joe’s.

How can I make my grocery bill cheaper?

Some ways to go grocery shopping on a budget include buying in bulk, buying generic products, planning your meals in advance, and using coupons, apps, and loyalty clubs.

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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 recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“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, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, 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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If you’re like most Americans, your paycheck turns up in your bank account automatically, without any check to sign or wad of cash to pocket and then get to the bank.

With direct deposit, funds are electronically transferred out of one bank account and (ka-ching!) deposited into another. It’s a convenient way to automate one’s finances, and it’s not limited to paychecks. It can streamline other financial transactions as well.

Here, you’ll learn more about this process, the pros and cons of direct deposit, and ways you might want to put it to work for you.

What Is Direct Deposit?

As mentioned above, direct deposit is a way of electronically transferring funds between bank accounts.

It was pioneered more than 50 years ago. In 1972, the first automated clearing house (ACH) network formed to manage electronic payments, with other networks quickly following. In 1975, the Social Security Administration (SSA) decided to test the system of direct deposit for payments they issued. Today, 99% of SSA’s payments are directly deposited.

Today, nearly 93% of employed people in the United States receive their salaries or wages this way.

What’s more, these automatic bank transfers are used today in ways beyond having paychecks directly deposited, including bill pay, retirement account contributions, and more.


💡 Quick Tip: Did you know online banking can help you get paid sooner? Feel the magic of payday up to two days earlier when you set up direct deposit with SoFi.

How Does Direct Deposit Work?

You’ve now learned a bit about what direct deposit is and how the ACH system facilitates direct deposit, allowing funds to flow seamlessly and quickly from one account to another.

Here, a bit more intel on how this process can be put to work for you and how to set up direct deposit.

Direct Deposit for Payroll

Let’s say that someone is ready to start a new job. The human resources department explains how the company either requires direct deposit or offers the option.

•  If that employee wants to set up direct deposit, they would need to share bank information with their new employer, including the bank’s name, the routing number that identifies the financial institution, and the employee’s bank account number. Sometimes, a voided check is requested.

•  This information would then be entered into the company’s payroll system and, whenever payroll rolls around, the company would send an electronic file to this employee’s financial institute. This file would share how much money should be transferred from the company’s (the “originator’s”) bank account to accounts for each of the employees whose direct deposit accounts are located at that particular financial institution.

•  If, for example, three employees of a company all share Bank A, then let’s say this bank receives an electronic transfer of $4,345. Bank A would then distribute the money appropriately into the proper bank accounts, perhaps:

◦  $2,000 in Person A’s checking account and $500 into their savings account

◦  $1,350 in Person B’s account

◦  $445 in Person C’s checking account and $50 into their savings account.

•  Then, if the employees (known as “receivers”) check their bank balances, they’ll see the deposits made through this direct deposit process. As noted in this example, money may be directly deposited to a checking account or into a savings account. Or some money can be put into a savings account with the rest in a checking account.

•  How long does direct deposit take? Typically, the funds go through like clockwork and are there waiting on payday. Some banks may offer the ability to access your direct deposit up to two days sooner.

What Are the Uses of Direct Deposit?

There are several uses for direct deposit:

•  Payroll. As noted, the vast majority of Americans get paid this way.

•  Tax refund. This can be among the quickest ways to get your tax refund. The IRS can process a direct deposit refund for an electronically filed return in as little as seven to 10 days of receipt.

•  Government benefits. Social Security and Supplemental Security Income benefits, VA, unemployment, and other benefits can be paid via direct deposit.

•  Commissions, rental income, vendor payments and other earnings can be automated with direct deposit.

•  Dividends. Shareholders may receive dividends by direct deposit.

•  Child support. This may also be automated.

Benefits of Payroll Direct Deposits

Direct deposit has many benefits. Here’s a closer look:

•  Convenience: With a direct deposit of their paycheck, employees can skip the step of physically depositing a paycheck into their accounts, which can be a timesaver.

This can be especially true if the employee telecommutes from home, is on vacation, or is otherwise out of the office when payday comes, because that employee doesn’t have to go into the office to retrieve the paper check.

•  Speed: With direct deposit, the money is typically in an employee’s bank account at the start of the designated payment date, which gives them access to the funds that day. No waiting for checks to clear.

•  Security: With paper checks, there’s always the possibility that they will get lost or stolen. So, payroll direct deposit can add a layer of security to the process.

Many times banks will waive fees for customers who have direct deposits set up.

•  Savings: Many times banks will waive fees for customers who have direct deposits set up, although there may be a minimum deposit amount required for this to happen.

•  Better money management: If an employee puts a percentage of each paycheck automatically into a savings account, this can get them into a regular savings habit.

Downsides of Payroll Direct Deposit

Now, for the other side of the coin, the cons of direct deposit:

•  Inconvenience: When people receiving direct deposits decide to change banks, it may be a hassle. It may take workplaces a period of time to change where paychecks are sent, which means that the old account might need to be kept open longer to make sure all paychecks are received.

How long that period of time may be can vary. But, before you close your old account, ensure that all direct deposits are being put into the new account. Also make sure that all withdrawals and checks have cleared at your old bank and that any automated payments are coming out of the new bank.

•  Scheduling: With direct deposit, it’s important to make sure the correct deposit dates and amounts are recorded. Otherwise, account holders could write checks beyond what’s available, which could trigger overdraft or non-sufficient fund (NSF) fees — which can be costly, especially when they add up.

•  Lack of access: Not everybody in the United States has a bank account. If someone doesn’t but their employer requires direct deposit (more about that next), then employees without a bank account would likely receive their paychecks through a prepaid debit card. These can come with fees and, like paper checks, can be lost or stolen.

Here are the pros and cons in chart form:

Pros of Direct Deposit	Cons of Direct Deposit
Convenience receiving funds	Inconvenience if you change banks
Speed (no waiting for checks to clear)	Scheduling; must be sure funds arrive
Security (no carrying around cash or checks getting lost in the mail)	Lack of access for those who are unbanked
Savings; banks may offer discounts or bonuses if you receive qualifying direct deposits
Better money management

Employers Requiring Direct Deposit

Just as there are benefits to payroll direct deposit for employees, there are also benefits for employers. For instance, it’s cheaper to manage payroll payments this way, versus physical checks.

Plus, they have a record of accounts, which makes it easier for companies when they’re reviewing expenses — and they don’t have to reissue a check if an employee loses one.

And, after a person’s payroll information has been entered into the system, paying employees can be faster and easier with direct deposit.

Laws governing payroll direct deposit vary by state and, if a state has no specific laws on this subject, it defaults to federal regulations. Federal law states that employers must give each employee using direct deposit a summary of rights and liabilities and must get their signature on an authorization form along with relevant banking information.

Some states allow employers to actually require direct deposit for payroll, as long as the program is administered in a way that’s consistent with federal regulations. (In some cases, the rule only applies to public sector workers.) Most states, however, still give employees the choice between direct deposit and receiving a physical check.

A handful of states have laws that are unique to them, ones that don’t fit into any of the broad categories already described.

Automating Your Finances

The concept of electronic funds transfers is at the heart of payroll direct deposits, but goes beyond that. Here are additional ways to benefit from automating your finances.

•  Automation is a tool that can also help people to build an emergency savings account. In general, traditional wisdom says this account should contain three to six months’ worth of living expenses.

That way, if an emergency arises (whether that’s a job loss, an unanticipated repair, or unexpected medical expenses), a financial cushion exists. By setting up a regular funds transfer to a savings account, this can make it easier to build up that emergency fund.

•  Another way to streamline your financial life: paying bills through autopay. In some instances, lenders may offer a discounted interest rate for borrowers who use automated payments to pay their bills. Autopay can help borrowers make their payments on time, rather than forgetting them when life gets hectic. This can mean fewer or no late fees.

Autopay can help borrowers to make their payments on time, rather than forgetting them when life gets hectic.

•  Because payment history plays a key role (35%) in a person’s FICO® Score, autopay can help you establish and maintain your credit score. By automating payments (as long as enough money is in their checking or savings account when the payment is due) you can optimize this aspect of your cash management.

•  Autopay helps to reduce the number of paper bills that need to be sent out and the number of paper checks that may be written to pay those bills. This means that automated funds transfers can therefore be an eco-friendly choice to make.

•  Whenever funds are electronically transferred, either in or out of a bank account, a digital record is automatically created. This can be helpful when balancing accounts, creating a budget, looking for tax deductible items, searching for ways to trim discretionary spending, and more.

•  Autopay might also be a good strategy to use to contribute to a retirement account. Employers may automatically deduct an amount from employee paychecks to transfer it into a retirement account that’s set up by the company. That can make saving super easy.

Types of Accounts for Direct Deposits

For people who decide to use forms of automated funds transfers, here are some options to consider for receiving direct deposit:

•  Checking accounts

•  Savings accounts

•  Money market account

•  Investment accounts

•  Some prepaid debit cards

•  Some payment apps, such as PayPal or Cash App.

Getting Direct Deposit With SoFi

If you’re interested in opening a bank account to receive direct deposits, take a look at what SoFI offers and see if SoFi direct deposit is a good fit for you.

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

What is the meaning of direct deposit?

Direct deposit refers to the automated transfer of funds from one bank account to another. This means cash doesn’t need to change hands, nor does a check need to be written and then deposited.

How do you get direct deposit?

Typically, signing up for direct deposit involves sharing your bank account and routing number with, say, your employer or the government so they can direct deposit funds in your account. In some cases, you may be asked to share a voided check.

Is direct deposit only for paychecks?

Direct deposit is not only for paychecks. It can also be used for government benefits (such as Social Security), commissions, tax refunds, investment dividends, and other forms of payment.

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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 recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“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, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, 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.

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

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.

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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Getting a credit card with no deposit can be easy if you have an established credit history with a good or excellent credit score. But if you’re just establishing your credit history or are trying to build your credit score, it can be much more challenging to apply for a credit card with no deposit.

For some, a secured credit card (one requiring a security deposit) might seem like the only option, but there are other paths to building your credit history. In this guide, we’ll cover how to find and apply for credit cards with no deposit — and what steps you can take to get closer to approval if you’re getting denied.

What Is a Credit Card Security Deposit?

Because of their established credit history and decent credit scores, many borrowers can open credit cards with no money down (or any other kind of collateral). This is called an unsecured credit card. However, if you don’t have any credit history or have a low credit score, you might find that credit card issuers will only offer you a secured credit card — meaning it requires a security deposit.

A credit card security deposit is refundable and often equal to the value of the credit limit on the card. Typically, the deposit amount ranges from $50 to $300.

While going this route can’t help you with unexpected expenses (as with a debit card, you are technically only able to spend money you already have), it can be a good way to build credit. However, you’ll want to ask the card issuer if they report to the credit bureaus, just to ensure they do.

Eventually, you may be able to graduate to an unsecured card if you consistently make on-time payments — one of the cardinal credit card rules.

Applying for a Credit Card With No Security Deposit

Applying for a secured credit card requiring a deposit might not be appealing to every potential borrower, especially because you need the money for the deposit upfront. These cards also typically have higher interest rates and fees. Fortunately, you have other options when shopping for a credit card.

Checking Your Approval for a Card

There’s no such thing as guaranteed credit card approval with no deposit. However, if you’re receiving emails or snail mail with credit card offers saying you’re preapproved, you might find success when you apply. You’ll still have to go through the formal application process and could ultimately get rejected, but getting a preapproved offer is a good start towards getting a credit card.

You can also proactively check your approval for a credit card online. Take a look at your credit score and then search online for offers for credit cards with no deposit that include your credit score in their target range.

Becoming an Authorized User

If you aren’t having success getting approved for a credit card on your own, ask a parent, family member, or trusted friend about being an authorized user on their credit card. As an authorized user, you’ll receive a credit card with your name on it and can use it like a traditional credit card, but you will not be the primary account holder.

The primary account holder is the one responsible for making on-time payments and monitoring credit usage. As an authorized user, you won’t have control over things like credit limit, and the primary cardholder can even set spending limits on your card.

However, if the primary cardholder uses the credit card responsibly — making regular, on-time payments and keeping credit utilization low — you will likely see a positive impact on your own credit score. Eventually, your score might improve enough for you to try applying for your own card again.

If someone makes you an authorized user on their card, however, it’s important to pay them what you owe each month. Never rack up credit card charges beyond what you’ve discussed with the cardholder. If you abuse your card privileges, it will affect your credit score and the score of the account holder — and the friend or family member will be solely liable for paying off your debts.

Getting a Student Credit Card or a Subprime Card

If the thought of affecting someone else’s credit score as an authorized user makes you uncomfortable, you aren’t out of options. You might be eligible to apply for a student card or a subprime card.

•   Student credit card: Most student cards do not require a security deposit and are designed for students who have no credit history. Some cards might even offer cash back rewards and no annual fees. However, as the name implies, you must be able to prove you are a student as part of the application process.

•   Subprime credit card: A subprime card is an unsecured card (i.e., no-deposit card) designed for borrowers with bad credit (generally a score below 580 in the FICO® score model). While subprime credit cards provide a way for bad-credit borrowers to get a credit card with no deposit, they often come with their own drawbacks. Typically, subprime cards charge an application fee; some might have annual or even monthly fees. Credit limits tend to be low.

Transitioning to an Unsecured Card

If you have no luck with a student or subprime card and can’t become an authorized user, you may need to consider applying for a secured credit with a deposit after all. Although it might not be ideal, it can be a good first step toward building your credit history.

If you make regular on-time payments, the credit card issuer might eventually transition you to an unsecured card. Alternatively, you can be proactive: After building your credit history and score over several months with a secured credit card, you can apply for a credit card with no deposit through another issuer. You might find that you’re more successful this time around.

Recommended: When Are Credit Card Payments Due

What to Know About the Effects of Your Credit Score

An unsecured credit card can potentially affect your credit score if the credit card issuer reports to the credit bureaus. Before opening a credit card with a security deposit, ask the issuer if they report to the bureaus.

If they do, regular on-time payment could build your score over time. On the flipside, late or missed payments could adversely affect your score.

Getting a No-Deposit Credit Card: What You Should Know

So, should you get a no-deposit credit card? In general, these unsecured cards offer greater flexibility at the start because you aren’t required to pay a security deposit.

However, opening a credit card of any type is a big decision — and not one to be taken lightly. It’s important to consider the potential effects of opening a credit card and to be aware of how much a credit card costs. For example, if you max out a credit card with a high interest rate, you might find yourself drowning in the fast-growing debt it creates.

Before opening a no-deposit credit card (or any credit card), think about the implications it can have on your finances. You might consider alternate ways of establishing credit, like credit-builder loans or even small personal loans.

However, these options don’t offer some of the same perks and protections that a credit card does, such as credit card chargebacks. If a credit card feels like the right step for you, begin your research process online.

Recommended: What is a Charge Card

The Takeaway

Credit cards without a security deposit, called unsecured credit cards, can be appealing because there is no money down at the start of the loan. However, borrowers without a credit history or who are struggling with bad credit may find it challenging to get approved for a no-deposit credit card. If applying for a secured credit card (i.e., one with a security deposit) is not ideal for your financial situation, you can ask to become an authorized user on someone else’s card or apply for a student or subprime credit card.

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

Do all credit cards require a deposit?

Only secured credit cards require a security deposit. Those with no credit history or bad credit scores might only be eligible for secured credit cards. If you have a good credit score, you can apply for a credit card without a deposit.

Can I get a credit card if I have no credit history?

It is possible to get a credit card with no credit history. A secured credit card requires a security deposit but makes it easier for borrowers with no credit history to get approved. Students can also consider student credit cards, which are often issued to student borrowers without any credit history.

What credit score is required for approval?

While having a good to excellent credit score (typically 670+) is ideal for getting the best credit cards with the lowest rates, some credit card issuers do offer cards for borrowers with fair or even poor credit (meaning scores between 580 and 669). These cards might have higher fees and fewer perks and may require a security deposit.

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Photo credit: iStock/Prostock-Studio

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.

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

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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Bank accounts can be frozen for such reasons as your financial institution suspecting fraud or illegal activity. Your funds can also be made inaccessible if your bank is adhering to a court order about unpaid debts you owe. In addition, the government can freeze your account if you have unpaid student loans or taxes.

Regardless of the reason, having a bank account locked can be an upsetting situation that makes your basic financial life difficult. You might be left scrambling to pay bills and cover daily expenses.

Read on to take a closer look at this situation, including why bank accounts are frozen and what you can do if you find yourself facing this scenario and want your money unlocked.

What Is a Frozen Bank Account?

When a bank account is frozen it means the bank will no longer let you perform certain transactions. You can still access your account information and monitor your account. You will still be able to make deposits, including manual or direct deposit of your paycheck.

However, you won’t be able to make any withdrawals from the account or transfer money from the account to a different account.

Typically, any previously authorized payments or transfers will not go through either. That means that any bills you have set up on autopay likely won’t get paid.

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

Why A Bank Would Freeze Your Account

Banks have the authority to freeze, or even close, a bank account for a range of reasons. These reasons generally fall into the following three categories.

1. Suspected Fraud

A bank’s reputation relies heavily on its ability to keep money safe, so account security is typically taken very seriously.

Banks are familiar with how you tend to spend your money, so an unusually large purchase or cash withdrawal can indicate fraud and trigger an account freeze.

Banks are also familiar with where you typically spend your money. A transaction that occurs in a different city or especially a different country can be a red flag that could trigger an account freeze.

It can be a good idea to inform your bank about travel plans both nationally and internationally to help prevent any account freezes during a trip.

If your bank flags suspicious behavior you’re certain you weren’t responsible for, it could be due to identity theft.

2. Unpaid Debts

Missing a single bill payment isn’t generally something that would disrupt access to your bank account, but a longstanding overdue bill might.

Collection agencies that purchase unpaid debts can secure court judgments for those debts, giving them the power to freeze (or “attach”) the bank accounts of debtors until they paid the money they are owed.

Most creditors can not have your account frozen unless they have a judgment against you. However, not all. Government agencies that collect federal and state taxes, child support, and student loans do not need to have a court judgment to attach your account.

Recommended: Debt Buyers vs. Debt Collectors

Any of the following types of outstanding debt could be the cause of a frozen account.

•   Unpaid Taxes

•   Student Loans

•   Mortgages

•   Car Loans

•   Personal Loans

•   Civil Lawsuits

•   Divorce Settlements

•   Child Support.

3. Illegal Activity

A bank account that is used to conduct criminal activity, or shared with someone who might be, can lead to the account being frozen.

Banks also work directly with law enforcement agencies and will freeze accounts of individuals that have been convicted of a crime or are under investigation.

Some specific activities that could lead to an account freeze include:

Writing Bad Checks. A single bounced check isn’t cause for alarm, but knowingly writing multiple checks from a bank account that doesn’t hold the funds to support them is illegal. If a bank observes too many bad check transactions, they may be inclined to freeze the account and alert the police.

Money Laundering. This is the process of generating money through illegal activity, and attempting to make it appear legal via multiple financial transactions. All banks and financial institutions are required to comply with federal anti-money laundering regulations and report any suspected activity directly to the authorities.

Terrorist Financing. Funding or organizing funds for terrorist groups and organizations is an illegal activity that can also result in an account freeze. Banks comply with federal laws that help prevent terrorism by freezing and reporting any accounts that exhibit suspicious activity related to terrorists.

How Long Can A Bank Account Be Frozen?

Banks don’t typically follow any set rules regarding how long an account can be frozen. The length of time generally depends on how long it takes for the account holder to notice the freeze, contact the bank, and can resolve the issue that caused the freeze.

How Does a Frozen Bank Account Affect You?

Having a frozen bank account essentially means not having access to your money, and it can be especially difficult if it is your primary bank account.

Frozen funds means not being able to make purchases with a debit card, or withdrawals from an ATM. It can also mean that any auto-payments linked to that account will likely not be fulfilled, and any scheduled transfers won’t be completed.

Because these payments can bounce, you could also incur a non-sufficient funds charge, which may be deducted from your account.

If you don’t have enough in the account to cover it, you could end up with a negative balance, putting you into an overdraft. In this case, you could end up having to pay additional bank fees and interest to cover the shortfall.

Recommended: How to Avoid Overdraft Fees

Those with frozen accounts often must resort to using credit cards and can end up accumulating debt in order to cover their expenses while they sort out the issue with their bank.

If the bank suspects you’ve been using the account illegally for any reason, it could close your account completely. It can also report your account activity to authorities.

Recommended: Bank Fees You Should Never Pay

How Do You Unfreeze a Bank Account?

It can be a good idea to contact your bank as soon as you notice a freeze on your account. When discussing the issue, it can help to have a clear account of your most recent locations and transactions, and be prepared to share any information and supplemental documentation that can help clear up the issue.

If you can show that there’s no reason for the freeze, the bank will likely release the suspension and grant you full access to the account again.

If your account is frozen over unpaid debts, it can be a good idea to get the creditor’s contact information from your bank and then reach out to them directly. Once you have a better idea of what’s going on with your account, you may be able to work out a payment arrangement.

The Takeaway

When a bank freezes your account, it can mean there is something wrong with your account or that someone has a judgment against you to collect on an unpaid debt.

The government can also request an account freeze for any unpaid taxes or student loans.

Once the bank account is frozen, you cannot make withdrawals but can only put money in your account until the freeze is lifted.

If your account is suddenly inaccessible, it can be a good idea to contact your bank immediately to find a resolution.

Consider Opening a SoFi Checking and Savings®

If you’re on the hunt for a new type of bank account, see what SoFi offers.

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.

Photo credit: iStock/happyphoton

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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 recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“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, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, 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.

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.

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Situations can crop up all the time where you want to send money to someone you know. Perhaps your coworker brought you back a cold brew (nice) or you need to pay your roommate for your share of the utility bill. Fortunately, there are plenty of ways to move cash from your account to theirs, from using mobile payment apps to traditional money transfer services like Western Union.

Which method you choose to transfer funds will depend on to whom you are sending the money, where the recipient is located, how much money you need to send, and how fast the money needs to get there.

Read on to learn all about several safe, quick, and easy ways to send someone money.

1. Money Transfer Services

Money transfer companies have been around for decades, and some — like Western Union and MoneyGram — still have locations all around the world where you can send money to a person so they can go and pick it up. In some cases, you may be able to send money directly into a person’s bank account or mobile wallet.

•   What you need: The recipient’s full name, phone number, address, bank name and account details for electronic transfers to them. For a recipient who will pick up the money in person, you may just need the person’s full name and address.

•   Fees: The fees for money transfer services can vary based on how you’re paying (with a credit or debit card, or directly from your bank account), where you’re sending the money, and how much you’re sending.

•   Timing: Depending on the delivery and payment methods, the money may arrive within a few minutes or in a few days.

•   Reach: Unlike many other money transfer options, these services typically offer both domestic and international transfers. Western Union, for example, specializes in the ability to send or receive cash quickly overseas.

Worth noting about these services: Since they allow you to send money via money orders and other methods, they can be a good way to transfer funds to or from someone without a bank account.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

2. Bank-to-Bank Transfers

Knowing how to transfer money from one bank to another can be valuable when you want to move funds.

•   What you need: You will likely need the routing number and account number where you are sending funds to, and you may have to verify your identity before completing the transfer.

•   Fees: Many banks allow you to click on their transfer feature and send money to a bank account at another bank, often with no fees involved.

•   Timing: It usually takes just a day or two to move the funds.

•   Reach: These are typically done domestically. If you want to send funds internationally, you may need to complete an international wire transfer.

3. Send a Check Via Your Bank

Although they may not be as popular as they once were, checks are still a reliable way to send money to someone.

•   What you need: You will need the name of the person receiving the check (the payee) and possibly their mailing address if you are sending a check.

•   Fees: Checks are typically included at no charge when you open a bank account. If you don’t have any checks handy, you can order checks from your bank or retailers. This can be done online, and check prices can range from five cents to more than 20 cents per check.

•   Timing: Once deposited, the money should move into the recipient’s bank account and be available in a couple of days or possibly up to a week, depending on such factors as when it is deposited and how.

•   Reach: In the US, it should be no problem to deposit a check (even if it’s from an international account). However, if you are planning to mail a check to someone in a foreign country, you may want to check with them to make sure they can deposit it at their bank without any issues.

4. Wire Transfers

Wire transfers offer another way to send money to someone. They can be a good option for sending a large amount of money that is needed extremely quickly, for both domestic and international transactions.

•   What you need: In terms of how to wire money, you can call, visit, or go online with your bank or a wire transfer company. For a domestic transfer, you will need the recipient’s name, address, and bank account and routing number.

For international transfers, you will also need the bank’s SWIFT code plus possibly the International Payments System Routing Code.

•   Fees: Domestic wire transfers may be free for some banking customers, but the median charges tend to be $25 for outgoing wire transfers and $15 for incoming wire transfers (meaning your recipient may be assessed a fee for receiving funds this way).

Internationally, the figures are a median of $15 for incoming international wire transfers and $45 for outgoing international wire transfers.

•   Timing: Typically, domestic wire transfers can be completed in one day (perhaps even within hours or sooner), and international ones can take up to a few days.

•   Reach: Bank policies vary; some may offer only domestic wire transfers, others also do international transfers, and some offer neither service.

5. Third Party Person-to-Person (P2P) Apps

A growing number of P2P services (also known as person-to-person or peer-to-peer services) allow customers to use an app or website to send money from a bank account, a credit card, or a debit card to someone else.

You are probably familiar with these apps. If you went out with friends for dinner but didn’t have money on you, your pal might pay for the whole meal. You could then pay your friend without cash by using an app to send them what you owe. These services can possibly provide an answer to the questions, “How to send money instantly to a friend or family member?”

The set-up, services, and transaction times can vary somewhat from one app to the next. Generally, however, they’re easy to use and are typically free, although there may be fees involved (say, to expedite the transfer of funds to a bank account, or when paying using a linked credit card).

Some, though not all, providers may require both the sender and receiver to set up an account within the same transfer service.

Here are some popular P2P providers to consider:

PayPal

PayPal is the grandaddy of money transferring apps. It remains popular because it’s so ubiquitous, tends to be easy to use, and offers a variety of payment methods.

•   It’s free to register for an account, and when you send money to another PayPal account holder, the money can be transferred to that person’s bank account as soon as the next day.

•   Sending money to someone in the US through a PayPal account balance or linked bank account is free, but there may be extra costs if you use a credit or a debit card, or if the money is going overseas.

Cash App

Cash App is another P2P money transfer app that’s used in the US and the United Kingdom.

•   Both parties involved in a transaction must download the app and log in.

•   There are no extra charges to send funds, although your bank might assess a fee if you move money internationally, and you’ll be assessed a fee if you use a credit card to fund your transaction.

•   There are limits to how much you can send at first: $250 during the first seven days after you sign up, but after a month, you can send up to $1,000 at a time.

Venmo

Venmo is a subsidiary of PayPal, and the process and costs for sending money to someone work in much the same way.

•   There’s also a social aspect to Venmo that has made it popular. You can add friends, share posts, and use emojis. Or you can change your settings to keep things a bit more private.

•   Transfers between Venmo accounts are instantaneous.

•   If you realize you made a mistake, the transfer cannot be undone.

Recommended: How to Transfer Money from Your Credit Card to Your Bank Account

Facebook

Facebook allows users to send and receive money free of charge through both the Messenger app and Meta Pay (previously known as Facebook Pay).

•   Both the person sending and the person receiving the money need to live in the U.S. and link a debit card or PayPal account to Facebook or Messenger.

•   Meta Pay works similarly to Messenger, but unlike Messenger, it allows users to send and receive money across its platforms (Facebook, Messenger, Instagram, and WhatsApp).

•   Meta Pay also enables users to purchase things, such as games and items for sale on Facebook Marketplace and Instagram, and to link a major credit card, in addition to a debit card or PayPal account.

•   As with other services listed here, you can’t cancel a payment after you send it.

Apple Cash

Apple Cash is a digital card that is built into the wallet of iPhones. It allows you to spend in stores and online and in apps with Apple Pay.

•   You can load the card with cash and use it where Apple Pay (the technology behind it) is accepted.

•   You can send and receive Apple Cash from friends and family with iPhones through Messages or your Apple Wallet.

•   You can use Siri to send money using spoken instructions.

•   Within a seven-day period, you can send or receive a maximum of $10,000.

•   Children with iPhones can send and receive cash this way.

•   There’s no fee to send, receive, or request funds with Apple Cash.

•   You may be able to cancel an Apple Cash transaction if the recipient hasn’t yet accepted the payment.

Google Pay

Google Pay is another service you can use to send money. You’ll need either the Google Pay or Google Wallet app, plus at least one form of payment, such as a debit card or a credit card. Not all cards are compatible yet with Google Pay so do a bit of research to see if yours are.

•   You can use Google Pay in stores and online.

•   Within a seven-day period, you can send up to $5,000 if you’re verified (or $500 if your identity hasn’t been verified).

•   It’s a free service to pay for goods and services.

•   Google Wallet is currently available in dozens of locations globally.

•   It may be possible to cancel some Google Pay transactions.

Is It Safe to Transfer Money Online?

You may wonder, “Are mobile payment apps safe?” Overall yes, but remember: Any time your personal information is online, the possibility exists that someone could access it and use it to steal your money.

So even though banks and other major money transfer networks are taking state-of-the-art steps to prevent hacking and cybertheft, no financial site or mobile app is entirely without risk. Bank account fraud and similar crimes can happen when scammers get a hold of your financial details.

Fortunately, there are some simple steps you can take to help safeguard your money:

Only Do Business with a Secure Network

If you’re making a transfer using a website, it’s a good idea to make sure the URL starts with (https://) and there’s a little padlock in front of the web address in the search bar. This shows that the site is secure and the data you enter will be encrypted.

If you don’t see these signs of a secure transaction, there is a chance that your personal and banking details could be visible to others during the transaction. This can in turn lead to fraud and identity theft.

Make Sure Your Device Is Protected

Even if you believe you’re dealing with a secure site, it’s wise to make sure you have the most up-to-date antivirus and antimalware programs enabled on your devices and run regular scans.

Yes, this may seem like a hassle, but the trouble caused by malware can be devastating. Malware can be downloaded onto your device, say, when you plug in to charge your phone at an airport or other public venue or when you click on a fraudulent link. It can then pull highly personal data off your phone and lead to you having to report identity theft.

Don’t Download Any App You Haven’t Vetted

Before you download a financial app, make sure that it’s the one intended. There are plenty of lookalike, sound-alike apps out there.

Then, make sure that you feel confident in the security protocols it has in place. Most financial apps list their security measures somewhere on their description in the app store (it might be under the privacy policy). You’ll also find reviews there.

Use a Strong Password

Here’s another important security protocol for financial apps or any app that involves your personal information. It’s a good idea to make your password as long and complicated as possible. Consider using a mix of numbers, upper- and lowercase letters, and throw in a symbol or two. Don’t use the obvious “password123” option, nor your birthdate, which could easily be available on social media sites.

Also, it’s best not to use the same password for every account you have. Use a well-reviewed password manager if you could use some help handling your passwords.

Vet People and Companies Before You Send Them Money

Do your research before hitting “send.” On some payment apps, you can friend people before you send any funds. This can help you make sure that you are sending money to the person you intend to vs. someone else with a very similar name or handle.

Also, because it’s so easy to transfer money to someone, it’s also easy to get scammed. And often there’s no going back on a transfer once the money is in the other person’s account. So be wary when using these apps to make purchases online.

Double-check All Your Info

Making sure you have the right name, address, account information, and other details for the person you’re sending money to. That can help keep your money from going to the wrong place. It’s easy to make a typo on mobile devices (and actually anytime you’re typing), especially when multitasking or transferring funds while on the go.

If you’re sending a large sum, you may want to send a small test amount first to confirm you have everything correct.

Keep a Record of the Transaction

Consider holding onto the proof of transfer until your recipient confirms that he or she has access to the money. The transfer might take a few minutes or a few days.

Typically, with wire transfers, you have hard copies from a brick-and-mortar bank or downloaded receipts via your banking app or website that you can keep on hand. With checks, the canceled check (or an image of it) can serve as proof that funds were accessed.

Recommended: Guide to ACH Routing Numbers

The Takeaway

Transferring funds to another person has become increasingly quick and easy as technology and financial services have evolved, with such alternatives as a payment app, a wire transfer, a bank transfer, or money transfer service. Depending on the particulars of your transaction, whether you’re repaying a friend for the sushi they got you or making a purchase, there’s likely an affordable and reliable option or two.

Having the right banking partner can help make money transfers as well as all your other everyday financial transactions fast, simple, and safe.

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

Can someone send me money if I don’t have a bank account?

If you don’t have a bank account, you can still receive money via services like Western Union (which can give you cash), and Cash App, PayPal, and Venmo (which can likely give you prepaid debit cards).

Can you send money by text?

Apple Cash and Google Pay (and possibly other services) make it possible to send money by text.

What is the fastest way to send money electronically?

If you want to start sending money online, services like Google Pay can be very quick ways to transfer money electronically. The money can be delivered within minutes. Wire transfers are also regarded as a fast way to move large sums or make international transfers.

How can I send money to someone instantly with routing and account numbers?

You can likely use your financial institution’s transfer feature as a way to transfer money to another account if you have the routing and account numbers. However, you will usually also need the recipient’s name and address, as well as their bank’s name.

How can I send money to someone instantly without a bank account?

If you don’t have a bank account, you can use a money transfer service (such as Western Union or Moneygram) and pay in cash. The funds will be then forwarded as you direct them. Services like Venmo and Cash App may be another good way to move money; you can link them to a prepaid debit card or a credit card.

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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 recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“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, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, 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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