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An electronic check, or eCheck, is an electronic version of a paper check. Instead of writing out a check and handing (or mailing) it to the recipient, you enter your banking information and the payment amount online and authorize a transfer of funds from your bank account to the payee’s bank account.

Electronic checks are a fast, safe, and convenient form of payment, but they do have a few downsides. Here’s what you need to know.

What Is an Electronic Check (eCheck)?

An electronic check, or eCheck, is an electronic money transfer designed to perform the same function as a traditional paper check. You can often use an eCheck to pay bills, shop on an online marketplace, or make other types of payments.

To issue an eCheck, you need to provide your bank account number, bank’s routing number, and payment amount, then authorize the transaction by accepting a website’s terms and conditions. The eCheck is then processed by the Automated Clearing House (ACH), a secure system that facilitates electronic payments and money transfers between banks. Once authorized, the funds leave your checking account and get deposited into the payee’s checking account.

Since an eCheck is in an electronic format, it can be processed in fewer days than a traditional paper check. Electronic checks also generally have more security features than standard checks, including authentication, digital signatures, and encryption.

How Does an eCheck Work?

The process of paying by eCheck involves three basic steps:

•   Authorization: First, you need to fill out your eCheck through an online payment portal. You then click “Submit,” which authorizes the payee to withdraw the payment amount from your checking account. In some cases, you can provide your banking information and authorize an eCheck over the phone.

•   Processing: The business’s payment processor receives the eCheck and sends a payment request to the ACH network. The ACH network confirms that the funds are available in your account.

•   Settlement: Once the transaction is verified and approved by the ACH network, the funds are transferred from your account to the payee’s account.

How Long Does an eCheck Take to Clear?

The time it takes for an eCheck to clear can vary, but it generally takes between three to five business days. The reason for the delay is the ACH network processes payments in batches, not one by one. Once they start processing the eCheck, the network has to verify your bank information and perform security checks, which can take a few days.

Also keep in mind that eChecks aren’t processed on weekends and holidays. So if a you send an eCheck on a Friday, the payee may not receive the funds until the middle or end of the following week

Recommended: Cleared Funds: Definition and Breakdown of Funds Clearing Time

Advantages and Disadvantages of eChecks

EChecks have a number of advantages, but also a few drawbacks. Here are some things to keep in mind.

Advantages

•   Cost-effective: Electronic checks are often more cost-effective than paper checks, since you don’t need to pay for paper checks or stamps. And unlike using a credit card (which may come with a surcharge), eChecks generally don’t trigger a processing fee.

•   Convenience: Electronic checks eliminate the need for physical checks, reducing the time and effort required for writing, mailing, and processing paper checks. They can be easily initiated and authorized online or over the phone.

•   Security: Electronic checks offer enhanced security features, such as encryption and authentication, to protect sensitive financial information. This reduces the risk of fraud and unauthorized transactions.

•   Environmentally friendly: By reducing the need for paper checks, eChecks contribute to environmental sustainability by minimizing paper waste and the resources required for printing and mailing.

Disadvantages

•   Clearing time: Electronic checks can take several days to clear, which may be longer than other electronic payment methods. This can be a drawback for those who require immediate access to funds.

•   Possibility for errors: While eChecks reduce the risk of errors compared to paper checks, there is still a possibility of making a mistake in entering your bank account information or routing numbers. Such errors can delay the transaction process.

•   Limited acceptance: Not all businesses or individuals accept eChecks as a form of payment. This can limit the usability of eChecks in certain situations.

•   Potential for fraud: As with any electronic payment method, eCheck payment may be subject to fraud or unauthorized transactions. You want to be sure to share your bank account information only with trusted merchants.

What’s the Difference Between ACH and eChecks?

The terms ACH and eCheck are often used interchangeably, but they refer to different aspects of the electronic payment process.

ACH (Automated Clearing House): ACH is a network and system used for processing a wide range of electronic payments, including electronic checks. The network facilitates the transfer of funds between banks and ensures the secure processing of transactions.

Electronic check: An eCheck is a specific type of payment that is processed through the ACH network. It is an electronic version of a traditional check and involves the transfer of funds from one bank account to another.

In short, the ACH network is the infrastructure that enables various types of electronic payments, including eChecks. An eCheck is a type of transaction that utilizes the ACH network for processing.

Is Paying by eCheck Safe?

Yes, paying by eCheck is generally considered safe, thanks to several security measures that are in place. Most notably, eChecks use encryption to protect your sensitive financial information during transmission. This ensures that the data is secure and cannot be intercepted by unauthorized parties. Electronic checks also require timestamped digital signatures to help prevent fraud.

Recommended: Are Mobile Payment Apps Safe?

The Takeaway

Electronic checks are essentially the digital version of traditional paper checks. These checks are facilitated by the Automated Clearing House (ACH) network, an electronic network used by U.S. financial institutions. Funds are electronically withdrawn from the payer’s checking account, transferred over the ACH network, and deposited into the recipient’s checking account.

Electronic checks are a safer alternative than paper checks, and also faster to clear and cheaper to issue. However, eChecks take longer to process than paying with a debit or credit card and they aren’t accepted everywhere.

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 do I pay with an eCheck?

The process of paying with an eCheck mirrors that of writing a traditional check, but in a digital format. If the business you’re paying accepts eChecks, you simply need to enter your bank account number, bank’s routing number, and the payment amount on a secure online payment portal. You then authorize and submit the eCheck.

Does it cost money to send an eCheck?

Not typically. Merchants generally have to pay a small processing fee for accepting eChecks but this cost is not usually passed on to the consumer.

Can you reverse an eCheck?

Yes, but you have to act quickly. To reverse an eCheck, you generally want to notify your bank as soon as you know you need the payment halted, ideally within the same day. Once the payment clears, your bank may not be able to reverse the process.

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Photo credit: iStock/kazuma seki

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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you’re finding it hard to be optimistic about increasing your riches, you may want to start adding financial affirmations to your everyday routine. Affirmations specifically targeting money have the power to change self-defeating or negative self-talk when it comes to your finances. And when you start replacing a pessimistic mindset about earning, spending, and getting out of debt with a positive one, you’re more likely to take the needed steps to attract the wealth you want — or so the thinking behind daily affirmations goes.

Reciting affirmations may seem awkward at first and the truth is, some people won’t find daily money mantras a game-changer. The good news is, daily money affirmations don’t cost anything and you control the story. Here’s the lowdown on financial affirmations so you can decide if they’re right for you.

What Are Money Affirmations?

Money affirmations are positive words, phrases, and sentences designed to turn discouraging thoughts about money into positive ones. The hope is by regularly speaking these uplifting statements to yourself, either in your head or out loud, you’ll reprogram your brain. When you swap out the old notions for the new thoughts and they become your new truth, you can get busy putting them into action.

The types of financial affirmations vary depending on what your money goals are. For example, you can create statements about increasing your income, getting out of debt, saving money, and expressing gratitude for the financial abundance you already have.

Creating your own personal affirmations are all about dealing with your specific money issues or blocks and how you can move forward.

While there’s no set rule on how many times a day you should verbalize your money affirmations, it helps to be consistent so it becomes a habit. A good start might be picking one powerful affirmation and repeating it throughout the day. Or you could choose three to five affirmations that you recite for five minutes or several times in a day.

Be forewarned that taking on too many at once may feel overwhelming and scatter your focus. Once you get the hang of it and it feels more doable, you can try adding more.

Optimizing Your Money Affirmations

Positive affirmations may work better if you put them in present tense, such as “I can,” “I am,” or “I have” instead of using language such as “I will,” “I should,” or “I could.” Why? Statements promising future outcomes suggest you could be a certain way instead of dealing with the reality of where you are now.

It can take a while to retool your thinking, so try not to get discouraged if in the beginning, progress seems slow or non-existent. Remember, it took years to shape your current beliefs, so it can take some time to adjust to new ones.

Pros and Cons of Money Affirmations

As mentioned earlier, affirmations don’t always appeal to or work for everyone. Depending on your current state of mind and life circumstances, financial affirmations may seem trivial, frivolous, or simply not a priority. If you’re experiencing some stressful times or financial hardships, you may not have the emotional or mental bandwidth to take them on.

On the flip side, many people find that daily practice empowers them, provides clarity, and motivates them to take more financial control and responsibility.

Before you take the plunge, here’s some pros and cons to consider:

Pros of Using Money Affirmations

•   Give you a wider perspective on your core values surrounding your finances

•   Assist in setting personal boundaries

•   Help in creating a realistic budget

•   Cultivate a positive relationship with money

•   Keep you focused on your vision and financial goals

•   Home in on your strengths

•   Boost your self-image and confidence

•   Celebrate past financial successes and current achievements

•   Encourage problem-solving

•   Allow you to explore other possibilities to expand your wealth

Recommended: Does Net Worth Include Home Equity

Cons of Using Money Affirmations

•   Can feel inauthentic if they fail to align with your personal core beliefs or you don’t believe what you’re saying

•   Put too much self-applied pressure to transform your financial picture quickly

•   Can be time-consuming and easy to let slide if you’re busy

•   Require daily financial discipline, commitment, and persistence

•   May not cause any positive shifts in your thinking and lead you to feel you’ve wasted valuable time

•   May make you feel foolish, self-conscious, or uncomfortable reciting them

•   May bring up painful emotions about money you may not be ready to address, even with with financial therapy

•   Create self-doubt or self-defeating feelings if you’ve chosen affirmations that aren’t realistic or attainable

•   May overwhelm you and zap your emotional energy, especially if you’re going through difficult times

•   Probably won’t provide instant gratification if you want or need a quicker mental money fix

39 Ways to Think Your Way to Being a Millionaire

Want to give daily affirmations a try? Reciting any of these to yourself daily may help transform negative thoughts into positive ones:

1.    I choose to only have positive thoughts about money.

2.    I release my fears around money.

3.    I have the power to create and build the wealth that I desire.

4.    I am open to receiving financial abundance.

5.    I’m worthy and deserving of a wealthy life.

6.    If others can be wealthy, so can I.

7.    Prosperity is drawn to me.

8.    I trust I’m on a path to becoming more financially solvent.

9.    I believe I can achieve my financial goals.

10.    I am capable of handling money.

11.    I’m working to build a strong money foundation and achieve financial wellness.

12.    I find the positives in my current financial situation.

13.    My debt doesn’t control me, I can manage it, and I can become debt free.

14.    I overcome all obstacles that lie in my way of financial success.

15.    I want more money and that’s OK.

16.    Saving money is a positive challenge.

17.    I can make my dreams a reality by sticking to a budget.

18.    Starting an emergency fund to protect myself is something I can do.

19.    Every dollar saved puts me closer to financial freedom.

20.    Each day is an opportunity for me to change my money story.

21.    Money well-spent is a source of good and positive things.

22.    The more I give, the wealthier I become.

23.    I use money to improve my life.

24.    Wealth flows into my life consistently.

25.    There are countless ways I can bring more money into my life.

26.    Everything I need to build wealth is available to me right now.

27.    I choose to focus on money coming to me with ease.

28.    My income can exceed my expenses.

29.    I deserve to increase my income.

30.    There are no limits to the amount of money I can make.

31.    I can profit off of my skills.

32.    I’m happy to pay my bills for all they provide me.

33.    I’m grateful for the money I have now and the money that’s on its way to me.

34.    Money can expand my life opportunities and open me up to new experiences.

35.    The money I earn and spend makes me happy.

36.    My net worth is not my self-worth.

37.    I move from poverty thinking to financial abundance thinking.

38.    My life is full of riches beyond money and my happiness is surging.

39.    I have a millionaire mindset. I think like a millionaire, I act like a millionaire, I feel like a millionaire, I am a millionaire.

The Takeaway

Changing long-held, entrenched beliefs about money can be challenging. Incorporating a regular routine of financial affirmations offers the possibility of changing your mindset to a positive and hopefully productive one. While these affirmations may not appeal to everybody, if you feel stuck and want to take some baby steps toward improving your money picture, affirmations may be worth a try.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

How do you write affirmations for money manifestation?

A review of affirmations on the internet found that they generally have two things in common: they often start with “I” and they are in the present tense. Some people feel money mantras should be short (mo’ money!); others think they just need to resonate with the people who recite them.

How do you attract the abundance of money?

Of course, the idea of attracting something like the abundance of money is based more on belief than anything else. If you believe you can attract it, that belief may lead you to take action – perhaps, to start a business or at least to make a plan. So to attract the abundance of money, you may want to start by believing that you are capable of becoming rich.

How do I get a millionaire mindset?

The first step of getting a millionaire mindset is ridding your mind of self-defeating thoughts. But just being positive isn’t enough. You likely want to develop attitudes associated with successful people: being open to learning, not fearing failure, and being proactive.

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Photo credit: iStock/atakan

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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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Under federal law, you are allowed to dispute information that shows up on your credit report both with the company that reported the information and with the reporting bureau that recorded it. There’s no fee for filing a dispute, and the credit reporting bureaus may make changes based on the information that you provide.

This can be great news if your credit report changes in your favor and your credit score gets a boost. However, it is possible that when information on your reports gets changed, your credit score actually takes a hit.

Here’s a closer look at why your credit score may have dropped after a dispute, plus other common reasons your score might drop.

Can a Dispute Hurt Your Credit Score?

When you dispute your credit report, it’s important to understand that the dispute itself does not cause your credit score to drop. In other words, you aren’t punished for questioning the information on your credit report. That said, the information in the dispute could have a negative impact on your score. For example, if the information in your dispute demonstrates that you have a lower credit limit than previously reported, your credit score could take a hit.

Common Reasons for Credit Scores to Drop

As you manage your credit score and work to build credit, there are a number of reasons your credit score may drop. Here’s what to look out for.

Recommended: What Credit Score is Needed to Buy a Car

Late or Missed Payment

Your payment history — whether you have a track record of paying off your debts on time — is a big part of how your credit score is calculated. In fact, it makes up 35% of your FICO score, which is calculated by the Fair Isaacs Corporation. Your score will likely fall if you make late payments or if you miss payments entirely.

Derogatory Remark on Your Credit Report

A derogatory mark on your credit report is a negative item that indicates you didn’t pay back a debt according to agreed upon terms with your lender. These marks tend to remain on your report for seven to 10 years. Examples include bankruptcies, missed payments, debts in collection, foreclosures, and repossessions.

Change in Credit Utilization Rate

Your credit utilization rate indicates how much of your available credit you are currently using. You can find it by dividing your available credit by your current debt. The higher your utilization rate, the more debt you are carrying in comparison to the amount of credit you have, which may suggest that you’re overextended. Banks might get worried about your ability to pay off your loans. That’s why the amount you owe makes up 30% of your FICO score, and why a higher utilization rate can hurt your score.

Reduced Credit Limit

Your credit limit has an impact on your credit utilization rate. If your limit is reduced, your utilization rate could increase, hurting your credit score. You can lower your utilization rate by paying off some of your debts.

You can also ask one of your credit card companies to raise your credit limit. They’re usually happy to do it as long as your account is in good standing.

Closed Credit Card

The length of your credit history comprises 15% of your FICO score. When you cancel credit cards — when consolidating credit card debt, for example — you may be reducing your credit history. You could also be reducing your credit mix, which makes up 10% of your FICO score.

Recommended: 10 Credit Card Rules You Should Know

Paid Off Loan

Similarly, paying off a loan might have a slight negative effect on your credit score because it can reduce your credit history and credit mix. That said, it could also have a positive effect on your record if it reduced your credit utilization rate.

Multiple Lines of Credit Opened or Applied for

New credit accounts make up 10% of your FICO score. Banks worry that when a person opens several lines of credit in a short period of time, they are at greater risk of defaulting on their loans. As a result, new lines of credit can ding your credit score.

Not only that, but simply applying for new credit can hurt your score. When you apply for a credit card or loan, your lender will make what is known as a “hard inquiry” to view your credit report. Lenders may see those seeking new credit as more risky, so hard inquiries can also have a negative effect.

Checking your own credit doesn’t lower your score. A credit check that doesn’t hurt your record is considered a “soft inquiry.”

Mistake on Your Credit Report

Mistakes on your credit report can lead to a lower score. That’s why it’s important that you monitor your credit report regularly and report errors to the credit reporting bureaus as soon as possible. You can request a free credit report from each of the credit reporting bureaus — TransUnion, Equifax, and Experian — once a year.

Identity Theft

Monitoring your credit report is also a good way to catch fraudulent behavior. If you’ve been subject to identity theft, bad actors may have used your personal information to open fraudulent accounts, which could have a negative effect on your credit score. Report these accounts immediately.

Types of Credit Report Errors to Look Out for

When reviewing your credit report, look out for the following errors:

•   Personal information errors. Check your name, phone number, address, etc.

•   Accounts that belong to another person with the same name.

•   Fraudulent accounts that you didn’t open.

•   Account status errors. Check for closed accounts that are reported as still open, accounts incorrectly reported as late or delinquent, incorrect payment information, and the same debt listed more than once.

•   Balance and credit limit information that is inaccurate or out of date.

Correcting Errors on Your Credit Report

If you spot a mistake on your credit report, you can file a dispute with the credit reporting bureau. The mistake may be on your credit report with each bureau, so you may need to file a separate dispute with each.

You’ll need to file your dispute in writing and use the credit reporting bureau’s dispute form if they have one. Include documents that support your dispute, and be sure to keep a record of what you send.

Recommended: What Is The Difference Between Transunion and Equifax

The Takeaway

Disputing information on your credit report can be an important part of ensuring that your credit score is as accurate as possible. You won’t be penalized for filing a dispute, though in certain circumstances, it is possible that your credit score will drop if information in your dispute has a negative impact on your credit.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Why did my credit score go down for no reason?

Your credit score likely didn’t go down for no reason at all. It’s possible that a creditor reported new information to the credit reporting bureaus that had a negative impact on your credit report. Or there could be a mistake on your credit report. Regularly monitoring your credit report can help you catch errors.

Why did my credit score drop after filing a dispute?

Your credit score may have dropped after you filed a dispute if information in that dispute had a negative impact on your score. You are not penalized for filing the dispute itself.

Does losing a dispute hurt your credit?

Losing a dispute does not necessarily hurt your credit, but it may leave it unchanged if the information you were hoping would boost your score is rejected.

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Photo credit: iStock/pepifoto

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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

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

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While bad financial decisions can set you back, it’s important to remember that mistakes can also be an opportunity to learn and grow. While you can’t go back and undo the things you’ve done or didn’t do (if only!), you can acknowledge where you went wrong and change your behavior moving forward.

Below, take a look at some of the most common financial missteps people make, as well as what can be done to overcome them.

15 Bad Financial Decisions

Here’s a look at where things can go wrong, and how you set them right.

1. Not Paying Down Your Credit Card Debt

Just making the minimum payment on your credit cards each month can drain your pockets and damage your credit. The reason: When you carry a balance, interest keeps on building, making the total balance higher and even more challenging to pay off. Debt also shows up on your credit report and can have a negative effect on your scores.

To break the pattern, consider putting any extra money toward the card with the highest interest rate, while paying the minimum on the rest. When that card is paid off, you can tackle the next-highest interest debt, and so, until you’re out of debt.

Recommended: Creating a Credit Card Debt Elimination Plan

2. Putting Important Financial Decisions off to the Side

Delaying important financial decisions, such as saving, investing, and paying off debt, can cost you money and put your goals further out of reach. A good way to stop the procrastination cycle is to break down your financial goals into small to-dos that feel manageable. You might want to set aside time once a month to check in on your finances and make one small change that can help you get closer to your goals.

3. Not Protecting Personal Financial Information From Fraud

Identity theft and financial fraud are all too common these days, and not taking a few steps to protect your personal and financial information can come back to haunt you. The financial damages caused by fraud can last for months or even years. What’s more, the recovery process usually isn’t easy, and may even involve working with the IRS or Social Security Administration to clear your name.

To protect your information, it can be smart to regularly check your credit reports (and report any suspicious activity immediately). You’ll also want to avoid sharing your personal data unless absolutely necessary and never over public wifi.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

4. Overspending so You Can’t Save

Overspending means you’re spending everything you earn (and not putting anything into savings) or, worse, you’re spending more than you’re bringing in. This can be a costly financial mistake that puts your goals further from your grasp. It means you may be living just paycheck to paycheck.

To change course, you may want to take a look at the last three months of financial statements and assess exactly how much you are spending each month and on what. This can be eye-opening, and you may immediately see some easy ways where you can cut back. Any money you free up can then become money saved, and little by little, it will add up.

5. Not Having Any Backup Options

A recent study found that not even 44% of Americans could not afford an unexpected expense of $1,000 from their savings. Without an emergency cushion, many Americans are at risk of going into high-interest debt should they face an unexpected bill or any loss of income.

It’s generally recommended to have enough cash set aside to cover all your living expenses for three to six months. In some situations, this amount should be as much as 12 months. To get there, you may want to put a percentage (10%, for example) of your monthly take-home income into a high-yield savings account or online bank account — online banks often offer higher interest rates than traditional banks. If that doesn’t seem doable, it’s fine to start smaller and gradually work up. Consistently saving a modest amount, such as $25 per paycheck, can be a good habit to start.

6. Paying High Amounts on Multiple Monthly Subscriptions

Subscription streaming services, box deliveries, and apps that bill on a monthly basis can add up to a significant sum. And, since these service providers typically bill automatically, you may not even be fully aware of what you are paying for each month, or that you may be overpaying for some of these services.

To cut your monthly bills, go through your statements and tally up everything you are currently paying for on a recurring basis. Can anything go? Could you get a better deal on some of these services? It never hurts to shop around or call up a service provider and ask for a lower price.

7. Not Investing Any of Your Money

You may think you have to be rich or an expert on stocks to start investing, but this is a common money misconception. And one that can leave you ill prepared for the future.

While investing can be intimidating (and does come with some risk), there are easy ways to get started. If you don’t want to do the work of picking and choosing investments, for example, you might start investing with a robo-advisor. These are digital platforms that provide automated investment services based on your goals and tolerance for risk. Robo-advisors are typically inexpensive and require low opening balances.

8. Not Planning for Retirement

When you don’t plan for retirement, you forgo the factor of time that is key to achieving your goals. Giving your investments a long time to grow is vital to having a nest egg you can retire on. If your employer puts any matching funds towards your retirement fund, that can be a valuable boost, too.

However, there is more to retiring than starting an IRA or contributing to a 401k. You’ll also want to consider when you want to retire, what kind of lifestyle you will want to lead, and how much money you will need. This can help you determine how much you should be putting away each month starting now.

9. Making Small but Unnecessary Purchases

An iced cappuccino here, a pay-per-view there. These little extras may not seem like a big deal, but they add up. Consider that spending just $50 a week eating out costs you $2,600 a year. That sum could go a long way toward paying off your credit card or car and help you take a big step toward achieving financial freedom.

To curb impulse buys and cut back on spending, you might want to set a weekly spending limit for “extras.” (Yes, you are earmarking some money for fun little splurges.) To keep to your limit, consider taking out that amount of cash at the beginning of the week and leaving your credit card at home. That way, when the money’s gone, you can’t spend any more.

10. Allowing Your Credit Score to Drop

A low credit score can keep you from obtaining competitive rates on loans and credit cards. It could block you from housing and employment opportunities. Poor credit can also be costly, since the financing options available to you will be more expensive.

To start building a better credit profile, you may want to put all your bills on autopay, so you never make a late payment. Paying down any credit card debt can also be helpful, since how much of your available credit you are using also factors into your score. If you have an old credit card you rarely use, it can be a good idea to still keep that account open, since the length of your credit history is another factor that impacts credit scores.

11. Not Making Budgeting an Important Priority in Your Life

Budget may sound like a bad word. But in truth, not tracking how much money you’re making versus how much you’re spending can be a bad financial decision with many repercussions, including never getting ahead and having constant money stress.

Making a budget, on the other hand, can mean the difference between staying in debt vs. getting out of it, remaining in your rental vs. becoming a homeowner, and working overtime vs. going on vacation. Convinced? You can start budgeting by assessing what’s currently coming in and out of your bank each month, and making a plan for how you want to allocate your income, making sure that some money goes to savings each month. There are multiple budget methods and apps; take some time to experiment until you find the right fit.

12. Financing Purchases Rather Than Saving for Them

While some purchases, such as a house, usually require financing, many others can be achieved through saving instead of going into debt. Whether you want a new laptop or a high-end refrigerator, financing can make a big purchase more expensive. Plus, the ease of buying on credit can make you think you can afford a lot more than your income allows.

A wiser strategy can be to determine what you want to buy, how much it will cost, and when you, ideally, want to get it. You can then start putting money aside each month and when you meet your goal, buy the item with cash.

13. Using Savings to Pay Off Debt

It may seem counterintuitive, but paying off debt with your savings is not always a good idea. Draining your bank account can leave you vulnerable to financial emergencies, causing you to plunge back into debt.

A better strategy can be to use a debt repayment method such as the snowball method. This involves putting extra money toward the smallest revolving debt balance each month, while continuing to make minimum monthly payments on your other debt. When the smallest balance is paid off, you can move on to the next smallest balance, and so on. This can help you start saving money right away and motivate you to keep going.

14. Withdrawing From Retirement Savings Early

It can be exciting to watch your retirement account grow throughout your career. And, it can be tempting to want to touch that money before you are officially “retired.” However, taking early distributions from your retirement account can be among the worst money mistakes you can make. For one reason, you will likely have to pay penalties and income tax on the amount you withdraw. For another, you will lose the opportunity to continue accruing gains on that money.

Remember: The main benefit of a retirement account is to let your money compound and grow over time. When you withdraw retirement funds early, you lose that opportunity to secure your future and take a big step backward.

15. Not Recognizing and Avoiding Scams

Yes, it’s getting harder to detect scams; they are becoming ever more sophisticated. And they prey upon both young and old consumers. To avoid scams, you’ll want to be suspicious of any text, email, or snail mail offer that seems too good to be true, and avoid clicking on any links in an email or text claiming to be from one of your financial institutions. If you receive this kind of message, a smart move is to call customer service or log onto your online accounts to see if the information in the email or text is correct.

Also beware of appeals with a sense of urgency; say, that you must pay a fee immediately to unlock your account or receive delivery of an important package.

Since scams are constantly evolving, it’s worth your time to search online every six months or a year to see what’s new and make sure you have your guard up as much as possible.

Tips for Recovering From Bad Financial Decisions

If you’ve made some poor financial decisions, you might feel embarrassed or scared. It can help to remember that one accident or blunder doesn’t spell doom for your finances forever. Here are some ways you can start turning things around.

Acknowledging Bad Financial Decisions and Taking Action

Even if you’ve made one of the worst money mistakes, a smart first step is to simply acknowledge your misstep, take a step back, and at first do nothing. A rash attempt to fix a problem can actually make it worse. Once you’ve accepted and assessed the damage, you can put a recovery plan into action.

Taking Steps One at a Time

Building your credit or paying off a mountain of credit card debt won’t happen overnight. And, if you set your sights too high, you might be tempted to give up before you even get started. A better bet is to break your larger goals into a series of small, achievable steps. Each time you accomplish one of these mini-goals, you’ll likely feel a sense of accomplishment. This can motivate you to save money and crush other goals, little by little.

Do Not Shame Yourself, but Forgive Yourself

Everyone makes mistakes. Even if you have been doing your best, it’s possible to have a credit card balance get out of hand or have your identity stolen after you accidentally click on a phishing text link.

Forgiving yourself is crucial to your emotional health and will help you take positive action to undo your mistake. A bad decision doesn’t have to define you; instead, it can be something you learn from and overcome. The mental energy spent beating yourself up can be better used to help address the problem.

Improving Your Money Mindset

If you have a positive money mindset, you will likely make better money decisions. Having a negative view, on the other hand, can keep you from setting goals and taking positive action. For example, if you think you will never get out of debt, you may not feel motivated to even try. However, putting a positive spin on the situation — that, with a plan, you will be able to one day be debt-free — can motivate you to start (and keep) attacking your debt.

The Takeaway

Though everyone tries to do their best with their money, mistakes happen all the time. No one likes losing money, but it’s vital to remember that one or even several financial slipups can be overcome by keeping a positive mindset and taking the recovery process one step at a time.

If you want to gain better control of your finances, help is available, starting with the right banking partner.

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 are the consequences of poor financial decisions?

Poor financial decisions can lead to a low credit score, lack of savings, and overreliance on debt. It can also make you vulnerable to financial emergencies and limit your access to loans and credit cards with favorable rates and terms.

Do bad financial decisions lead to bad financial habits?

Yes, if left unaddressed, bad financial decisions can lead to bad financial habits. Not putting money aside for emergencies, for example, can cause you to rely on your credit card to cover a large, unexpected expense, and lead to a cycle of high interest debt that can be hard to get out of.

Can bad financial decisions be overcome?

Yes, you can overcome bad financial decisions by identifying where you went wrong and coming up with a realistic plan to address the problem moving forward. You can also likely benefit from budgeting and managing debt well.

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Photo credit: iStock/bob_bosewell

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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

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 .

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While business checks and personal checks may seem like the same thing, there are actually some important differences. Sure, all checks can be used to pay bills or cover other expenses using funds in a linked checking account. But the main difference between a personal check and a business check is the source of funds. Personal checks are drawn on personal accounts; business checks are drawn on business checking accounts.

Learn more about how these checks work and how they differ.

What Is a Business Check?

A business check is a check that’s written from a business checking account. Banks and credit unions can offer business checking accounts to sole proprietors, limited liability companies (LLCs), and other kinds of businesses that need a safe, secure place to keep their money. Business checks are often one of the features included with these accounts.

Business bank accounts can also offer a debit card for making purchases or cash withdrawals. They typically allow for ACH transfers of funds to pay bills or vendors. But there are some instances where it could make sense — or even be necessary — to use business checks instead. For example, you may need to write or print paper checks to cover payroll for employees.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

How Does a Business Check Work?

When someone opens a business bank account, the bank may give them a set of business checks and a checkbook. If you are wondering what a checkbook is, they are simply a small folder or book that contains your checks and a check register, which is where you’ll write down deposits and credits for your account. Check registers can help you balance your checkbook.

To use a business check, you’d simply make the check out to the payee, then fill in the required information. That includes the date and amount of the check, as well as a signature. Business checks typically have a memo line where you can record what the check is being used for.

The payee can then take that business check to their bank to deposit it or cash it. The amount written on the check is then deducted from the business checking account on which the check is drawn. When the check is deposited, it typically takes two days to clear (or for the funds to become available).

What Does a Business Check Look Like?

Business checks look much like personal checks, in terms of the type of information they include. On the front of a business check, you should see the following:

•  Business name and address

•  Check number (in the upper right hand corner)

•  Payee name (where it says Pay to the Order of)

•  Date

•  Dollar amount, in numbers

•  Dollar amount, in words

•  Payer’s signature

•  Memo line

•  The bank’s routing number

•  The account number

•  Bank’s name and address

Business checks may also include room to include the business logo or a watermark.

There may be an attached transaction stub on the left hand side of the check. You can use this stub to record the details of the transaction, including the date the check was written, the amount, and to whom it was paid.

Business checks can be hand-written like personal checks, or they can be filled digitally and printed out.

What Is a Personal Check?

A personal check, on the other hand, is a check that’s drawn against a personal checking account. Most but not all checking accounts offer checks and check-writing; some even offer free starter checks to new customers.

Personal checks are paid using personal funds. So you might write a personal check to repay a friend you borrowed money from, for example, or to pay your rent. Likewise, you could receive a personal check made out to you that you could deposit into your bank account or cash it. In terms of where to cash personal checks without a bank account, the options include check cashing services, supermarkets, and convenience stores.

Personal checks are not the same as other types of checks, including certified checks and traveler’s checks. (If you’re unfamiliar with how to use traveler’s checks, these are paper certificates that can help you pay for things overseas without having to exchange hard currencies.)

How Do Personal Checks Work?

Personal checks work by allowing individuals to pay bills or make other payments to individuals, businesses, and other organizations. When you open a checking account, the bank may give you paper checks with your name and account number printed on them. You can then use these checks to make payments.

When someone receives a personal check and deposits it in their account, their bank requests the transfer of funds from the bank on which the check was drawn. These transfers are processed electronically. Processing times can vary, though it typically takes a couple of business days for a check to clear.

If someone writes a personal check and doesn’t have sufficient funds in their account to cover it, that check will bounce. When a check you write bounces, it may be returned unpaid or your bank may cover the amount for you but they can charge overdraft or non-sufficient funds (NSF) fees for that convenience.

Bounced checks typically don’t show up on consumer credit reports or affect credit scores, though banks may report them to ChexSystems. A consumer credit reporting agency, ChexSystems collects information about closed checking and savings accounts.

Can I Use a Personal Check for a Business Account?

Personal accounts and business accounts are separate banking products. That being said, you could use personal checks to pay for business expenses. For example, you could write out a personal check to pay a business lease or make payments to a business loan. And you could use funds in a business account to pay for personal expenses.

If you feel you must use personal checks for a business account or business checks for personal expenses, proceed with caution. Many personal checking account agreements specifically prohibit using this kind of account for business purposes. Familiarize yourself with your account guidelines. This should only happen in very limited circumstances and not as a regular practice.

What’s more, mixing your accounts this way can complicate matters when it comes time to pay your taxes and figure out personal vs. business deductions. If you ever need to review your business or personal account (say, for legal reasons or an audit), it can be hard to remember which funds were used where.

Using Business Checks vs. Personal Checks

When you need to write a business check vs. personal check can depend on the circumstances. For instance, some of the most common uses for business checks include:

•  Employee payroll

•  Federal and state tax payments

•  Making payments to vendors

•  Paying operating costs, such as rent or utilities

•  Repaying a business loan

•  Making any large purchases that are necessary for the business.

Personal checks can be used to meet a different set of needs. Examples of when you might write a personal check include:

•  Paying utility bills, rent, or the mortgage

•  Buying groceries

•  Repaying personal debts

•  Making payments to loans

•  Covering school-related expenses if you have kids (like lunch money or PTA fundraisers)

•  Paying college tuition

•  Covering doctor bills.

Whether you need business checks or personal checks, it helps to know where to order checks safely. You can get checks online from check-printing companies or order them through your bank.

Recommended: How Do I Sign Over a Check to Someone?

Differences Between a Business and Personal Check

Whether you’re using business checks or personal checks, one thing is true: They can be a dependable, convenient way to move money. They provide an alternative to using a debit card, credit card, ACH transfer, or wire transfer. But if you’re still wondering how business checks are different from personal checks, here are a few other noteworthy distinctions.

Size of the Check

Personal checks are usually somewhere around 6″ x 2″ x 3″ in size. Business checks, on the other hand, might or might not be larger in size. For example, they may be 8″ x 2″ x 3″ instead. The larger size allows for easier printing and more room for writing out checks by hand.

Security of the Check

Check fraud can threaten a business’s bottom line. For that reason, many check printers include built-in security measures to minimize the chances of a business check being stolen or otherwise used fraudulently. Those measures can include holographic features, thermochromatic ink, and chemically sensitive paper. These features all help to verify a check’s authenticity.

How Much Each Check Costs

As mentioned, banks can sometimes offer starter checks for free when you open a new checking account. This benefit may not be included with business checking accounts, which means you might need to buy checks yourself. The amount you pay can depend on the type of check, any added features you choose to include, and the number of checks printed. You might pay three cents per check or a quarter or more per personal check, depending on where you order from, the features you want, and how quickly you want them printed and delivered.

Business checks range in cost, but many online retailers charge 20 to 30 cents each.

There can be other charges associated with checks. For example, you may also pay separate fees when purchasing cashier’s checks for a business or personal account. Cashier’s checks are drawn against the bank’s account, not yours, though a cashier’s check looks very much like a personal or business check.

Check Conversion Protection

Check conversion is a process in which paper checks are converted to electronic ACH debits. Both consumer and business checks can be converted in this way. Converted checks usually clear faster, but it’s possible that you may not want this for checks written from a business account. In that case, you could order business checks that include an optional Auxiliary On-Us field to exclude them from conversion.

Why to Consider Having Separate Checks

Using one bank account for business and personal expenses might seem simpler and less stressful, since you’re moving money in and out of the same place. However, as noted above, which kind of check to use is not typically a matter of personal choice. Personal checking accounts usually have restrictions against use for business purposes.

What’s more, establishing a business account has other benefits:

•  Writing checks with your business name can add credibility to your venture, since it looks more professional.

•  A business account helps you keep track of business finances and expense reporting for tax purposes.

•  Establishing a business checking account could make it easier to get approved for business loans or lines of credit if you have a good banking history.

•  Having separate business and personal checking accounts can provide an added protection against creditor lawsuits. Depending on how your business is structured, money in a personal checking account may be safe from collection efforts if you’re sued by a creditor.

The Takeaway

Business checks and personal checks serve similar functions; they both transfer funds from one account to another. However, they do have some important differences, and you typically cannot use a personal check for business purposes.

For your personal bank accounts, 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.

FAQ

Can you cash a business check?

You can cash a business check if your bank allows it. You’ll need to endorse the check properly and show proof of identification to cash it, the same as you would with any other type of check.

What should be on a business check?

A business check should include the business name and address, the payee’s name, the amount of the check, the date, and the payer’s signature. The check will likely be pre-printed with the bank’s name and address, a routing number and account number, as well as a check number. A business check may also include a memo line to record the purpose of the check.

Do checks need to say LLC?

Checks do not need to say LLC unless your business is structured as an LLC. If your business operates as a sole proprietor, partnership, S corporation, or anything other than an LLC, then you wouldn’t need to include that designation.

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Photo credit: iStock/fizkes
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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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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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