Junk bonds are a type of corporate bond that carry a higher degree of risk and generally have lower credit ratings. The bond issuers are more likely to default, making junk bonds speculative investments.
So why would investors buy a junk bond? For one simple reason: They have the potential to produce bigger returns compared to other bond options.
Junk bonds aren’t necessarily right for every investor, because they are so risky. Understanding how junk bonds work can help you decide if they belong in your investment portfolio.
How Do Junk Bonds Work?
Bonds are a form of debt. When a corporation or government entity issues a bond, they’re doing so for the purposes of raising capital. Investors buy the bonds, providing the capital, and in return, they expect to get paid that money back along with interest.
There’s an implied agreement between the investor and the bond issuer that the latter will make interest payments on time, but in addition, bonds can be secured or unsecured. Treasury bonds, for example, are unsecured bonds that are backed by the full faith and credit of the U.S. government.
Junk bonds, also referred to as high-yield bonds, represent a category of bonds that fall below investment-grade. In simple terms, this means there’s a greater risk that the bond issuer could default or fail to follow through on their promise to repay investors. Whether a bond is considered to be investment-grade or not depends on its credit ratings.
Credit Ratings and Junk Bonds
Bond credit ratings are issued by a number of organizations. These agencies determine which bonds are considered to be investment-grade and which are non-investment grade or speculative-grade.
In the United States, the majority of bond credit ratings are issued by three agencies, on an ABCD scale:
• Moody’s Investors Services
• Standard & Poor’s Global Ratings
• Fitch Ratings
Bonds with a rating of BBB or higher (Baa on the Moody’s scale) are categorized as investment-grade. This means that in the eyes of the rating agency, default risk is low or in other words, investors are reasonably likely to get their money back from the bond issuer.
When bonds fall below the BBB rating range (Ba for Moody’s), they’re considered to be junk bonds. The further the rating drops, the riskier and more speculative the bond becomes. Here’s how junk bond credit ratings compare.
Moody’s
S&P Ratings
Fitch Ratings
High Risk
Ba or B
BB or B
BB or B
Highest Risk
Caa, Ca or C
CCC, CC or C
CCC
In Default
C
D
DDD, DD or D
💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.
Why Do Investors Like Junk Bonds?
The riskier an investment is, the more potential it has to deliver higher returns. That lies at the heart of why some investors might prefer junk bonds over investment-grade bonds. Junk bonds can have varying maturities like other types of bonds. Typically, these are longer term bonds, with maturities lasting in the five- to 10-year range.
Investing in junk bonds could yield returns on the same level as stocks but with less volatility. That’s because you’re getting the promise of a fixed interest payment, rather than depending on which way the market swings on any given day to determine returns. If the bond issuer undergoes a financial turnaround and its credit rating improves, that can reduce the level of risk associated with its bonds.
Junk bonds can be attractive to investors in low interest rate environments as well. That’s because unlike other bonds, they’re less sensitive to interest-rate movements. Bond issuers may be highly motivated to raise capital so they can offer higher rates to attract investors. Investor risk may also be reduced when the economy is growing, since that can be conducive to improvements in the financial health of bond issuers.
Companies that issue junk bonds tend to be newer companies or established ones that may be struggling financially following bankruptcy. For instance, one company that has junk bond ratings in 2023 is Coinbase (NASDAQ:COIN), a cryptocurrency exchange. Because of the speculative and high-risk nature of crypto trading, the company has a junk bond rating. In early 2023, Coinbase’s junk bonds were downgraded even further by Moody’s and Standard & Poor’s Global Ratings.
Advantages and Disadvantages of Junk Bonds
Investing in junk bonds has both pros and cons, just like other investments.
On the advantages side, investors have potential to earn higher yields from junk bonds than other types of bonds. There’s less volatility to contend with compared to stocks, and fixed interest payments could provide a steady source of income. Depending on the credit rating of the bond issuer, it’s possible that a junk bond could actually be less risky compared to a stock.
On the other hand, junk bond investing is speculative, so an investor has to be willing to accept the possibility of losses — specifically, default risk and the likelihood of the bond issuer missing an interest payment. In the worst-case scenario, the company could go bankrupt, meaning an investor may not get their initial investment back, much less the interest. One also has to consider the time component, since junk bonds are not designed to be held for the shorter term.
Junk Bond Advantages
Junk Bond Disadvantages
Investors could earn interest rates above what investment-grade bonds are paying.
Default risk is typically higher with junk bonds vs. investment-grade bonds.
Compared to stocks, junk bonds are less susceptible to volatility and may be less risky overall.
If the bond issuer goes bankrupt, the investment could end up being a total loss.
Fixed interest payments may provide a consistent stream of income for investors.
They’re not suited to short-term investing given the duration of junk bonds and pricing fluctuations.
How to Invest in Junk Bonds
If you’re considering investing in junk bonds, opening a brokerage account is a good place to start. If you already have an investment account, you can move on to purchasing junk bonds. There are a few different ways you can do this:
• Purchase individual junk bonds, if your brokerage offers them.
Buying individual junk bonds can be risky, as it concentrates investment dollars in a single security. Higher minimum investments may limit the number of junk bonds an investor is able to purchase.
Investing in junk bond funds or ETFs instead may make it easier to spread out your investment dollars while spreading out risk. Junk bond funds and ETFs can offer exposure to a basket of junk securities which can help with diversification and risk management.
When comparing junk bond funds or ETFs, consider the underlying credit ratings for each security that’s represented. This can tell you whether the fund mostly holds high risk, higher risk or in default bond offerings. Also consider the expense ratios involved and the maturity terms so you’re choosing a fund that fits both your budget and timeline for investing.
💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.
Are Junk Bonds a Good Investment?
Should you buy junk bonds? The answer depends largely on your personal risk tolerance. Junk bonds may be a good investment for investors who are comfortable taking more risk for a shot at higher returns. On the other hand, you may choose to steer clear of them if you’re looking for fixed-income investments that are on the safer side.
What’s important to consider before investing is the entire makeup of your portfolio as a whole and your financial goals. If you’re interested in junk bonds, think about how much of your portfolio you’re comfortable dedicating to them and how that could affect your overall risk profile.
The Takeaway
Investing in bonds can add a fixed-income element to an investor’s portfolio, which may be helpful for diversification. Alongside stocks, bonds may help you devise a more well-rounded investment strategy as you work toward your financial goals.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
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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.
SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
Buy to Open and Buy to Close are options orders used by traders. A trader buys to open using calls or puts with the goal of closing the position at a profit after the options price increases.
Investors use a “buy to open” order to initiate a new options contract, betting that the option price will go up. On the other hand, traders who want to exit an existing options contract, thinking the option price will go down, use a “buy to close” order.
What Is Buy to Open?
“Buy to open” is an order type used in options trading, similar to going long on a stock. Generally, you think the price is going to go up, which is a bullish position. That said, in options trading, you can buy to open a call or a put, and buying a put is taking a bearish position. Either way, to buy to open is to enter a new options position.
Buying to open is one way to open an options position. The other is selling to open. When buying to open, the trader uses either calls or puts and bets that the option will increase in value – that could be a bullish or bearish wager depending on the option type used. Buying to open sometimes creates a new option contract in the market, so it can increase open interest.
A trader pays a premium when buying to open. The premium paid, also called a debit, is withdrawn from the trader’s account just as the value of a stock would be when buying shares.
If a trader has a bullish outlook on XYZ stock they might use a buy to open options strategy. To do that, they’d purchase shares or buy call options. The trader must log in to their brokerage account then go to the order screen. When trading options, the trader has the choice of buying to open or selling to open.
Buying to open can use either calls or puts, and it may create a new options contract in the market Buying to open calls is a bullish bet while buying to open puts is a bearish wager.
Let’s assume the trader is bullish and buys 10 call contracts on XYZ stock with an expiration date of January 2025 at a $100 strike price. The order type is “buy to open” and the trader also enters the option’s symbol along with the number of contracts to purchase. Here is what it might look like:
• Underlying stock: XYZ
• Action: Buy to Open
• Contract quantity: 10
• Expiration date: January 2025
• Strike: $100
• Call/Put: Call
• Order type: Market
A trader may use a buy to open options contract as a stand-alone trade or to hedge existing stock or options positions.
Profits can be large with buying to open. Going long calls features unlimited upside potential while buying to open puts has a maximum profit when the underlying stock goes all the way to zero. Buying to open options carries the risk that the options will expire worthless, however.
What Does Buy to Close Mean?
Buying to close options exit an existing short options position and can reduce the number of contracts in the market. Buying to close is an offsetting trade that covers a short options position. A buy to close order occurs after a trader writes an option.
Writing options involves collecting the option premium – otherwise known as the net credit – while a buy to close order debits an account. The trader hopes to profit by keeping as much premium as possible between writing the option and buying to close. The process is similar to shorting a stock and then covering.
Example of Buy to Close
Suppose a trader performed an opening position by writing puts on XYZ stock with a current share price of $100. The trader believed the underlying stock price would remain flat or rise, so they put on a neutral to bullish strategy by selling one options contract.
A trader might also sell options when they believe implied volatility will drop. The puts with a strike of $100, expiring in one month, brought in a credit of $5.
The day before expiration, XYZ stock trades near the unchanged mark relative to where it was a month ago; shares are $101. The put contract’s value has dropped sharply since the strike price is below the stock price and because there is so little time left until the delivery date. The trader profits by buying to close at $1 the day before expiration.
The trader sold to open at $5, then bought to close at $1, making a $4 profit.
Differences Between Buy to Open vs Buy to Close
There are important differences between a buy to open vs. buy to close order. Having a firm grasp of the concepts and order type characteristics is important before you begin trading.
Buy to Open
Buy to Close
Creates a new options contract
Closes an existing options contract
Establishes a long options position
Covers an existing short options position
Has high reward potential
Seeks to take advantage of time decay
Can be used with calls or puts
Can be used with calls or puts
Understanding Buy to Open and Buy to Close
Let’s dive deeper into the techniques and trading strategies for options when executing buy to open vs. buy to closer orders.
Buy to Open
Either calls or puts may be used when constructing a buy to open order. With calls, a trader usually has a bullish outlook on the direction of the underlying stock. Sometimes, however, the trader might be betting on movements in other variables such as volatility or time decay.
Buying to open later-dated calls while selling to open near-term calls, also known as a calendar spread, is a strategy used to benefit from time decay and higher implied volatility. Buying to open can be a stand-alone trade or part of a bigger, more complex strategy.
Buy to Open Put
Buying to open a put options contract is a bearish strategy when done in isolation. A trader commonly uses a protective put strategy when they are long the underlying stock. In that case, buying to open a put is simply designed to protect gains or limit further losses in the underlying stock. This is also known as a hedge.
A speculative trade using puts is when a trader buys to open puts with no other existing position. The trader executes this trade when they believe the stock price will decline. Increases in implied volatility also benefit the holder of puts after a buy to open order is executed.
Buy to Close
A buy to close order completes a short options trade. It can reduce open interest in the options market whereas buying to open can increase open interest. The trader profits when buying back the option at less than the purchase price.
Buying to close occurs after writing an option. When writing (or selling) an option, the trader seeks to take advantage of time decay. That can be a high-risk strategy when done in isolation – without some other hedging position, there could be major losses. Writing calls has unlimited risk while writing puts has risk as the stock can fall all the way to zero (making puts quite valuable).
Shorting Against the Box
Shorting against the box is a strategy in which a trader has both a long and a short position on the same asset. This strategy allows a trader to maintain a position, such as being long a stock.
Tax reasons often drive the desire to layer on a bearish options position with an existing bullish equity position. Selling highly appreciated shares can trigger a large tax bill, so a tax-savings play that also reduces risk is to simply buy to open puts.
Not all brokerage firms allow this type of transaction, however. Also, when done incorrectly or if tax rules change, the IRS could determine that the strategy was effectively a sale of the stock that requires capital gains payments.
A trader must decide if they want to go long or short options using puts or calls. Buying to open generally seeks to profit from large changes in the underlying stock while selling to open often looks to take advantage of time decay. Traders often place a buy to close order after a sell to open order executes, but they might also wait with the goal of the options expiring worthless.
Another consideration is the risk of a margin call. After writing options contracts, it’s possible that the trader might have to buy to close at a steep loss or even be forced to sell by the broker. The broker could also demand more cash or other assets be deposited to satisfy a margin call.
The Takeaway
Buy to open is a term that describes when an options trader establishes a long position. Buy to close is when a short options position is closed. Understanding the difference between buy to open vs. buy to close is essential to successful options trading. These option orders allow traders to put on positions to fit a number of bullish or bearish viewpoints on a security.
Thinking about investing in options? SoFi’s options trading platform has an intuitive and approachable design that gives investors the ability to trade options either on the mobile app or web platform. Also, they can learn more by accessing the associated library of educational content on options.
Pay low fees when you start options trading with SoFi.
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SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
SOIN1021429
No one wants to deposit a check that is fake or that bounces. That can trigger fees, not to mention frustration. Verifying a check can help protect you in this situation.
Perhaps you have received a check from someone you don’t know well, or the check appears odd, or you are simply aware of the fake check scams out there and prefer to be cautious with your bank deposits.
To help you avoid counterfeit checks, learn how to verify a check here. This can help cut down on the likelihood that you will be involved with fraudulent activity or simply a check that bounces.
What Is Check Verification?
Check verification is a process in which the payee, or recipient of a check, confirms that the check is valid and good. In other words, you are making sure that the check can be cashed, that it is not fraudulent, and that it will not bounce and trigger fees.
At a time when there’s a significant amount of fraudulent activity and fees, this can be a valuable process, saving you time, energy, and cash.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
Verifying a Check
If you’re curious about how to validate a check, know this: Banks must process check funds quickly, sometimes as fast as two days by law. The bank may say that a check has cleared and the funds are available for use, but this doesn’t necessarily mean that the check is valid.
It can take a few weeks to identify a fake check in some cases, and by that time it might be too late. You, the recipient, may have thought the funds were available and tried to use them.
To determine if a bank check or cashier’s check (vs. an electronic or e-check) is valid, consumers may have to do more than just a physical inspection of the check.
Here are a few ways to identify if a check is fake or valid.
• Ensure a legitimate bank issues the check. Although a valid bank might issue some fake checks, a sure giveaway of a fake check is that a fake bank name is on it. To locate an FDIC insured bank in the US, consumers can use the FDIC BankFind Suite.
• Call the bank the check is from. Look up the bank’s phone number on its website instead of using the phone number listed on the check. The number on the check might be a part of the scam, so it’s essential to call the official direct line to confirm the check’s validity. The bank might need the check number, issuance date, and amount to confirm if the check is real.
• Complete an ABA routing number lookup. Developed by the American Bankers Association in 1910, the ABA routing number identifies the financial institution responsible for the payment. To make sure a check is valid, use a routing number lookup system for verification.
• Take into consideration the origin of the check. If the check came from an unknown source, it’s wise to be skeptical of the payment. Scammers usually communicate via email or text message, which may contain grammatical errors.
• Confirm the address the check was mailed from. If a check has a postmarked address that doesn’t match the issuing bank, it may denote a fake check. Be extra wary of any check that is sent from overseas.
• Look for watermarks, security threads, or other security features printed on the check. If a scammer copies any of these features, the quality is often questionable.
• Compare the check amount to the request. If the check amount is greater than the expected amount, this is a sign of a hoax the scammer may use to get the check receiver to wire funds back to them when the check is deposited.
Check Verification Services
If you receive a considerable number of checks on a regular basis (say, you run your own business), you might want to look into check verification services that help with this process.
If you hire one of these services, they can help you figure out if the check is likely to be good. They can reveal if the check comes from someone with a record of trying to pass off bad checks. They cannot confirm that a check is written against an account with sufficient funds, but they can help you avoid depositing a check from someone with a suspicious history.
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4 Ways to Tell if a Check Is Fake
Wondering how to know if a check is fake? There may be some telltale signs that a check is bogus. Learn what to look for.
Feel the Check’s Edges
Legitimate checks will have one or more edges that are rough or perforated. If a check feels smooth all the way around, it could be fake.
Inspect the Paper
An authentic check is printed on thick, matte paper, not flimsy stock. Thin paper can indicate a fake check.
Double-check the Check Number
Check numbers appear in two places on legit checks: both the upper right-hand corner and on what’s known as the MICR, or the magnetic ink character recognition line at the bottom.
If the numbers don’t appear in both places and match, you could be holding a bogus check.
Zero in on the MICR Line
As mentioned above, the MICR line contains important information. If the printing there looks raised or shiny, the check could be fake. You could also run a damp finger over the printing. If it smears, sorry: The check is likely fake.
Verify the Bank Address
Checks should have the bank address printed right on it. You can compare this to the official bank address and make sure they match up. Also, a PO box as the bank address can be a red flag that the check is not authentic.
💡 Quick Tip: While checks can get lost in the mail – or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.
Verifying Funds on a Check
As you work to verify a check, it’s important to remember one thing: When you verify funds, that is not a guarantee that the money will be available when you go to cash the check. The funds may be available at that moment, but you cannot put a hold on the cash nor reserve it. When you actually deposit the check, it could bounce.
Although criminals are coming up with new bank fraud ploys all the time, there are a few current common scams to be aware of.
1. Get Rich Quick Scams
In this scam, the scammer contacts a check recipient and says that they won the lottery or are entitled to an inheritance, usually from another country. The scammer says they will send a cashier’s check with the proceeds, but the recipient must pay the fees and taxes. So, they are instructed to deposit the funds and wire money to the scammer for taxes and fees.
2. Online Auction Scams
Some scammers may visit an online auction site or classified listing site and bid on an item; pay in advance for a service; or rent an apartment. The scammer will then send a cashier’s check, usually for more than the price agreed upon. Once you bring this to their attention, they will request the recipient to deposit the check and then send the extra funds back to them before you find out the check was fake.
3. Secret Shopper Scams
With secret shopper scams, scammers pretend to have a job opportunity that allows employees to work from home. The scammer may send a check as a starting bonus and request the employee pay the activation fee. The hope is that the scammer receives the funds from the activation fee before the fake check bounces.
Another way secret shopper scammers take advantage of people is by hiring someone and stating their first assignment is to review retailers that sell gift cards. In this case, the shopper may get a check with instructions to deposit it into their account and then wire the funds to a third party. Unfortunately, once the funds are wired to someone else, the third party vanishes.
4. Personal Assistant Scams
Scammers sometimes try to hire personal assistants online. Once the scammer hires someone, the scammer may send a check and tell the new employer to use the money to purchase gift cards, supplies, or equipment for the client. After the scammer receives the gift card PIN, they can use the funds right away. This will leave the personal assistant without the money when the bank determines the check is counterfeit.
Taking Action If You’re Scammed
If you have wired funds to a scammer, reach out to the company transferring the money as soon as possible, reporting the fraud, and filing a complaint.
Two commonly used money transfer companies are Western Union™ and MoneyGram®, and both have departments dedicated to fraud awareness. If you think you may have been scammed, you can report suspected fraud to the money issuer by phone.
Both companies also have online forms that can be used to report suspected fraud. You can request a transfer reversal and, while it’s unlikely they will do this, it’s essential to ask at least.
If you used a money order to pay the scammer, reach out to the money order issuing company. Ask if you can request a stop payment or if they can track the money order and stop the delivery of the money.
If you sent the money order by US mail, try reaching out to the U.S. Postal Inspection Service® or another service carrier you used.
In the event, the scammer requested gift cards, contact the gift card issuing company immediately and explain that the company’s gift cards were used in a scam. If you contact them quickly, they might be able to refund the money. Remember, gift cards are not a form of payment, they are a gift. So, it’s a red flag if someone is trying to pay you using gift cards.
While you can’t prevent fraudsters from attempting to steal your money, you can take steps to keep your money safe by using a secure 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 4.20% APY on SoFi Checking and Savings.
FAQ
How can you verify if a check is valid?
There are several ways to verify if a check is valid, including confirming the bank information, checking the routing number, and inspecting the paper and ink.
Can you verify a check online?
There are ways to validate a check online in certain situations. For businesses that receive a significant number of electronic checks, or e-checks, online verification can be a tool that helps reduce the risk of depositing checks that will bounce.
What is a check verification system?
A check verification system is typically a business that verifies a bank account status in real time to determine if a check is drawn on a valid account. There are also systems consumers can use to verify a check, such as confirming the ABA number and inspecting the ink and the paper.
SoFi members with direct deposit activity can earn 4.20% 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. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Saving money is a common goal. Who doesn’t want more cash available to air out one’s budget, pay off debt, sock away for a future dream (whether that’s a month spent on the Amalfi Coast or an early retirement)?
Saving money is important for an array of reasons. It can allow you to pay for significant expenses without running up high-interest credit card debt.
It can offer peace of mind, since you know you can navigate rough times without hardship. And having more money in the bank can give you freedom of choice. You might leave a job you frankly hate without waiting until you land another one. You can also likely afford some luxuries for yourself and your family.
That said, you may fear that saving money means living so frugally that there’s never a fancy coffee or weekend getaway in your foreseeable future. But in truth, saving money can be fairly painless if you’re smart about it.
Here, learn some clever, simple strategies for how to save money each month.
1. Tracking Your Weekly Spending
Looking at your spending on a weekly basis can feel more manageable than trying to keep track of a month’s worth of spending at a time.
That’s not to say that you shouldn’t budget on a monthly basis, but breaking your timeline into smaller segments can simplify the process.
You can track spending (including every cash/debit/credit card transaction and every bill you pay) by using an app, jotting down every purchase, or collecting all of your receipts and writing it all down later.
You might then set a certain day of the week to look over the week’s spending. This can be an enlightening exercise. Because spending can be so frictionless these days, many of us don’t have a real sense of how much we are actually spending on a day-to-day basis.
Just seeing it all laid out in black and white can immediately make you think twice before you buy something nonessential and inspire you to become more intentional with every dollar.
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2. Creating a Simple Budget
Once you’ve mastered tracking your cash flow, and have a good idea as to your spending habits, you may want to take it one step further and set up a simple budget.
A budget is nothing more than setting limits for spending in different categories. To get started, you’ll want to list all of your monthly expenses, grouping them into categories, such as groceries, rent, utilities, clothing, etc.
If your goal is to save some money every month, you’re going to want to set a budget for yourself that includes an allocation to saving.
Next, you may want to tally up all of the income you’re taking home each month (after taxes), and see how your monthly spending and monthly income compare.
If spending (including putting some money towards savings) exceeds income, the next step is to look at all your expenses, find places where you can cut back, and then give yourself some spending parameters to stick to each week.
3. Automating Savings
If you do nothing else to get yourself on the savings path, consider doing this.
Automating savings is a great way to remove a huge barrier to saving — forgetting to put that money aside, then ultimately spending it.
The reality is, we all live busy lives and while we may have every intention of stashing away cash, there are many reasons why it’s hard to save money. It often doesn’t happen without a plan.
Automating is an easy way to save money without ever having to think about it.
The idea is to have money moved from a checking account and into a savings account on the same day each month, perhaps soon after your paycheck is deposited.
This way, the money is whisked from the checking account before it can be spent elsewhere.
If you are new to automating or have an irregular income, it’s okay to start with smaller dollar amounts. Likely, you won’t even notice that the money is gone from your account, and you’ll be able to increase that amount over time.
You can set up automatic transfers to your savings, retirement, and other investing accounts.
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4. Planning Your Groceries
Here’s another easy way to save money: Spend less on groceries by making a meal plan and a shopping list before you go to the store.
Without a list, you may be tempted to buy things that look good but that you don’t need or can’t use. Plus, you may end up having to go back to the store later, where you may be tempted to buy more things.
You don’t have to be a pro at meal-planning. It can be as simple as picking a few recipes that you want to make throughout the week (making large enough portions to provide for leftovers is another way to save).
You can then write a list of the ingredients that you’ll need, making sure to check your cabinets and use what you have first. Doing so is a life skill that can save you money.
You may also want to list exactly what snacks and/or desserts you plan to buy, so you’re not overly tempted once you get to the chips or cookies aisle.
Another way to save money on groceries is to cut back on pricier items, such as meat and alcohol, and to go with store or generic brands whenever possible. With tactics like these, you could be saving money daily.
5. Negotiating Your Bills
Some of those recurring bills (such as cable, car insurance, and cell phone) aren’t carved in stone.
Sometimes you can get a lower rate just by calling up and asking, particularly if the provider is in a competitive market.
Before calling, you may want to do a little research and know exactly what you are getting, how much you are paying, and what the competition is charging. You may also want to get competing quotes.
Even a small reduction in a monthly bill can save significant cash by the end of the year.
If you are experiencing hardship, you may also be able to negotiate down your electric and/or other utility bills by calling and explaining your circumstances. It never hurts to ask. The same holds true with doctor’s charges: You may be able to negotiate medical bills as well.
6. Actively Paying Down Credit Cards
This might sound more like spending than saving, but if you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going towards interest. Chipping away at the principal can feel like a tall mountain to climb.
If possible, consider putting more than the minimum payment towards your bill each month. The faster those credit cards are paid off, the faster you can reallocate money that was going out the window (and into interest) into savings.
Can’t seem to make a dent in your credit card debt? You might want to look into a zero-interest balance transfer offer, using a lower-interest personal loan to pay off the debt, or finding a debt management plan.
7. Canceling Subscriptions
It can be all-too easy for money to leak out of your account due to sneaky subscriptions.
From unused gym memberships to shopping subscription programs, subscription bills (even small ones) can rack up quickly because they come every single month without fail.
The first step is to cancel any of which no longer serve you. Try to be honest with yourself: Are you likely to start going to the gym? Could you work out at home instead?
If you’re looking to save money faster, you might consider making a sacrifice on a subscription that you do enjoy. For example, maybe you pay for Netflix, Hulu, and Disney+. Is it possible to use just one or two, instead of three? That could be a good way to save on streaming services.
8. Renewing Your Library Card
If you’re a reader and love books, one creative way to save money is to dig out your library card, or if you don’t have one, stop in to apply for a card.
The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums.
These days, you can typically get many of the benefits of being a card-holder without ever actually going to a branch. You can often get audio books and e-books, as well as access to online publications and online entertainment (via services like Hoopla and Kanopy), all from your computer or phone. Cost: Zero.
9. Shopping for Quality
Buying well-made, durable items instead of cheap, trendy, or single-use items may mean spending a little more up front.
But this can be a shrewd money move that can save you a bundle over the long run because you won’t have to repeatedly make the same purchases.
Buying a few classic, well-made pieces of clothing you will wear for a few years, for example, can end up costing less than picking up eight or ten cheaper, trendier items that you’ll end up replacing next year.
It may also pay off to spend a little more for appliances that are known for being reliable and lasting a long time and have great customer reviews, than buying the cheapest option.
Shopping for quality takes some education and practice, but it can be a worthwhile skill that your wallet will appreciate.
10. Pressing Pause on Big Purchases
Making impulse purchases can wreck a budget. That’s why if you’re tempted to buy an expensive item that is more of a “want” than a “need,” you may want to give yourself some breathing room, and allow the initial rush to wear off.
For example, you might tell yourself that you’ll wait 30 days and if, after the waiting period is over, you still want the item, you can get it then.
During that time you may lose interest in the item. If, however, you still want it in a month, that’s a good sign that this purchase will add substantial value to your life, and isn’t just a fleeting desire. If you can make room for purchase in your budget, then go for it.
This helps you make spending decisions from a slower, more thoughtful place, and can be a huge help in learning to budget and save money.
11. Round up Purchases
A painless and fun way to save money can be by rounding up purchases. You can do this in one of two ways.
• The old-fashioned way is to pay for things with cash and keep the change in a jar. Then, at the end of a week or a month, deposit that change into your savings account.
• Today, there are a variety of apps that allow you to round up purchases. That extra money can then be put into savings or invested. Check with your bank; they may offer a program like this making for a seamless experience.
12. Look into Refinancing Your Loans
Interest rates go up and down, and there may be an advantage to refinancing your loans if you can find a lower rate and/or a shorter term. Doing so could save you considerable money in interest over the life of the loan, whether that’s a mortgage, car payment, or student loan.
13. Bundle Your Insurance Policies
You may be able to whittle down your bills by combining your insurance policies (typically home and auto) with one company. Typically, when you do so, you can reap a solid amount of savings.
14. Gamify Savings
Many people find it helpful to give themselves monthly challenges to save money. It can make the pursuit of spending less more fun and can get your competitive spirit going.
For example, one month, you could vow not to get any takeout coffee and put the savings in the bank. The next month, you could vow to not take any rideshares and instead walk or take public transportation. Again, you’d put the cash saved in the bank.
15. Go Fee-Free
It can be wise to take a look at your financial institution and see how much you are paying in fees. There can be everything from overdraft charges to out-of-network fees to foreign transaction costs. In addition, your account might be hit with monthly maintenance or minimum balance fees. All of that can add up.
You might want to shop around for a new banking partner if you’re getting assessed a number of these charges.
Why Saving Money Is Important
Why go to the trouble of pinching pennies like this? Saving money is important for several reasons.
• It can help you build wealth.
• It can give you security.
• It can reduce money stress.
• It can help you achieve short- and long-term financial goals.
• It can allow you to navigate bumpy times (such as job loss).
• It can give you breathing room to splurge at times on the fun stuff of life.
Finding a Good Place to Grow Your Savings
Even if you’re only putting a small amount of money into savings each month, over time, that account will grow.
One way to help it grow faster is to park the money in a place where you won’t accidentally spend it and where it can earn more interest than a typical savings account.
You might consider opening up a high-interest savings account, money market account, online savings account, or a cash management account.
You may find that separating your savings, and watching it grow, keeps you motivated to save.
In some cases, you may be able to create “buckets” within your account, and even give them fun names, such as “Sushi Tour in Japan” or “My Dream House” that can help keep you motivated.
The Takeaway
Saving may not seem nearly as fun as spending, but it can give you the things you ultimately want, whether that’s a posh vacation, a downpayment on a new home, or a comfortable retirement.
And, there are plenty of ways to save money that don’t require sacrifice. You can use a mix of short-term strategies (like spending less every time you go to the supermarket) and long-term moves (like paying down debt and buying higher quality goods) to achieve your goals.
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FAQ
What is the 50/30/20 rule?
The 50/30/20 budget rule says that, of your take-home pay, 50% should be allocated to needs, or basic living expenses and minimum debt payment; 30% should be for wants, or discretionary spending; and 20% should go into savings.
What is the 30 day rule?
The 30 day rule is a way of avoiding impulse purchases and helping you take control of your money. If you find yourself about to make a significant impulse purchase, agree to wait 30 days. Right down the item, its cost, and where you saw it in your calendar for 30 days in the future. If that date rolls around and you still feel you must have it, you can see about buying it, but there is a good chance the sense of “gotta have it” will have passed.
How much should you save a month?
Many financial experts advise saving 20% of your take-home pay, but of course the exact amount will vary depending on such factors as your income, your debt, your household (how many dependents, for instance), and your cost of living.
SoFi members with direct deposit activity can earn 4.20% 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. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
When the recipient of a payment wants reassurance that a check is valid and will not bounce — especially in large transactions like a car purchase or a down payment on a house — a cashier’s check can be a good solution. In fact, in some financial transactions, a cashier’s check is required.
If you need a cashier’s check but don’t have a bank account, you will likely have to put some time and effort into getting the form of payment you need. You might open an account ASAP, find a financial institution that will issue a cashier’s check to those who aren’t account holders, or else consider using a money order.
The reason why cashier’s checks can be so restrictive and desirable is that they are a very secure form of payment, issued against a financial institution’s own funds. That is why they are not given out casually.
If you don’t have a bank account but need a cashier’s check, this guide will walk you through your options.
Key Points
• A cashier’s check is a form of payment that is issued by a bank from its own account and signed by a representative of the financial institution.
• It can be challenging to get a cashier’s check without an account, but local banks and credit unions may be willing to accommodate this request.
• If a financial institution does issue a cashier’s check to someone without an account, they will likely have to pay in cash.
• Money orders are an alternative to a cashier’s check and typically have a maximum of $1,000.
• Other options include using a P2P app to transfer funds, such as PayPal or Venmo.
What Is a Cashier’s Check and How Does It Work?
A cashier’s check is a type of check that is issued by a bank from its own account and signed by a representative of the financial institution. Because the funds are guaranteed by the bank as opposed to the check writer, recipients of a cashier’s check can be assured of its security. They can feel confident that it won’t bounce.
(This is assuming, of course, that it’s not a fake or forged document — not even cashier’s checks are immune to fraud, which is why it’s important to verify a check.)
When a consumer buys a cashier’s check, the bank will typically withdraw funds from that person’s checking or savings account and then deposit them into its own account. From there, the bank will write the cashier’s check from its own account.
You may wonder what the difference is between a cashier’s vs. a certified check. With a certified check, the money is withdrawn from an account holder’s check and then certified by the bank. This certification indicates that there are enough funds in the account to cover the check and verifies that the account’s owner’s identity was confirmed by the bank. However, the money is not placed into the bank’s own account as an interim step.
Procedures involving checks, like ordering checks or having a cashier’s check prepared, often involve a fee. For cashier’s checks, this could be a flat fee of $10 or $15 or sometimes a percentage of the check’s amount. The fee may be waived for clients who have premium accounts.
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Can You Get a Cashier’s Check Without a Bank Account?
Bank policies can vary, but it can be more challenging to get a cashier’s check without an account. Credit unions may be more willing to offer this service than banks, but it’s important to check with an individual institution to find out whether they’ll offer a cashier’s check without an account.
Keep in mind that you can only get a cashier’s check through a financial institution like a bank or credit union. You cannot purchase one at, say, the post office or Western Union.
If you do find a financial institution that will issue a cashier’s check to non-customers, the rest of the process will be largely the same as it is for customers — except that you will need to pay in cash because the funds can’t be withdrawn from an account.
The steps will likely involve:
• Providing proper identification
• Giving the financial institution the cash to deposit into its account
• Letting the bank employee know the amount of the check you’ll need
• Supplying the correct spelling of the recipient’s (payee’s) name
• The bank prints all of the information; this means you can’t make any changes or handwritten corrections
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Where to Get a Cashier’s Check Without a Bank Account
As far as where to get a cashier’s check without a bank account, most financial institutions won’t accommodate this request. You will likely have to do a bit of research to find one that does. You might try smaller local banks and credit unions in your area to see if they will accommodate this request.
Here is another work-around:
Opening and Closing an Account
If you know you’ll need to have a cashier’s check in the near future, opening a checking account now can position you for this financial transaction. To do so, you will typically need to provide information confirming your identity and choose which type of account you wish to open. From there, you can fill out an application and make an opening deposit, if required.
Then, once the account is up and running, you can request a cashier’s check. Make sure not to get one too far in advance of when it’s needed, because how long a check is good for is typically six months.
When you’re ready to close the account, be sure to transfer funds and move automatic transactions over to a new one, if that’s your plan, or to find other ways to handle these matters.
Can You Get a Cashier’s Check at Any Bank?
Virtually all financial institutions (traditional and online banks, credit unions) will issue cashier’s checks. The challenge can be that they typically only create these financial instruments for account holders.
If you just walk into or contact a bank where you do not have an account, they may not be willing to issue a cashier’s check for you. That’s true even if you have enough cash on you to cover the amount of the check you’re seeking.
Is There a Maximum Amount for a Cashier’s Check?
There is typically no upper limit for cashier’s checks, though policies may vary from one financial institution to the next.
The fact that there isn’t usually a maximum amount for cashier’s checks makes them particularly useful for larger purchases. For example, when undertaking a real estate transaction or buying a car, a cashier’s check may be a preferred form of payment for both parties involved.
Money Order: An Alternative to a Cashier’s Check
If you’re struggling to get a cashier’s check without a bank account or are simply curious what alternatives there may be, you may consider a money order. A money order is a type of paper check that can’t bounce because it’s been prepaid by the sender. Typically, there’s a limit to these, a maximum of $1,000. One big advantage of them is that you don’t need a bank account to get one. This can make it an important option for unbanked people.
For instance, you can go to the post office and do the following:
• Purchase money orders using cash, a traveler’s check, or a debit card (though not a credit card)
• Pay the face value of the money order, plus a fee of a couple of dollars (for a domestic money order)
• Fill out the money order to the payee and complete the transaction
Many banks and credit unions also sell money orders for a small fee of $50 or $10, which may be waived for certain customers.
Money orders are also available at some retail locations, such as pharmacies, convenience stores, Western Union, Moneygram, and more. While fees may vary from location to location, they are usually no more than a few dollars.
Another Options to a Cashier’s Check
If a money order isn’t the right vehicle for you, there may be another way to move money if you cannot access a cashier’s check. You might be able to use a P2P app to transfer funds, such as PayPal or Venmo. These services can have transaction limits and fees, so do your research first.
The Takeaway
A cashier’s check is a form of payment that must be issued by a financial institution. Typically, funds are taken out of a customer’s savings or checking account and deposited into the bank’s account. Then the check is issued from the bank’s account, which provides a significant amount of security.
As far as the answer to this question, “Where can I get a cashier’s check without an account?,” some banks or credit unions may allow you to buy a cashier’s check even if you are not a customer, but you may need to call around to determine where this is available. Money orders, meanwhile, can be purchased at the post office and some retail and convenience stores.
Still, the easiest way to get a cashier’s check is to open a bank account. If you’re looking to open an online bank account, see what SoFi Banking has to offer. Our checking and savings account offers a competitive annual percentage yield (APY) and charges you absolutely no account fees. Those two features can help your money grow faster. Plus, you’ll enjoy the convenience of spending and saving in one place, and qualifying accounts can get paycheck access up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.
FAQ
Can you get a cashier’s check without a bank account?
Many financial institutions do require a bank account to issue a cashier’s check. You may be able to get one without an account, perhaps through a credit union. It’s likely easier to buy a money order if that form of payment is acceptable to the recipient. This type of check is more widely available, including at the post office and some retail and convenience stores.
Can I get a cashier’s check somewhere other than a bank?
No. By definition, a cashier’s check comes directly from a bank’s account. You can, however, get a money order from a variety of establishments, including the post office and some stores.
Can I use a money order instead of a cashier’s check?
That depends upon the recipient. Both forms of payment are considered safer than a personal check, but you’ll need to verify that your payee will accept a money order instead of a cashier’s check if that’s what they requested.
Can you get a cashier’s check at the post office?
Only a financial institution can issue a cashier’s check because it comes directly from the bank’s or credit union’s own account. Thus, you cannot get a money order at the post office. The post office does issue money orders, however. If your recipient will accept a money order, you can buy that at a post office location.
SoFi members with direct deposit activity can earn 4.20% 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. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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