A clearinghouse is a financial institution that acts as a middleman between buyers and sellers in a market, ensuring that transactions take place even if one side defaults. If one side of a deal fails, a clearinghouse can step in to fill the gap, thus reducing the risk that a failure will ripple across financial markets. In order to do this, clearinghouses ask their members for “margin,” or collateral that is held to keep them safe from their own actions and the actions of other members.
While often described as the “plumbing” behind financial transactions, clearinghouses became high profile after the 2008 financial crisis, when the collapse of Lehman Brothers Holdings Inc. exposed the need for steady intermediaries in many markets. Regulations introduced by the Dodd-Frank Act demanded greater clearing requirements, turning the handful of clearinghouses in the country into some of the most systemically important entities in today’s financial system.
Key Points
• Clearinghouses act as intermediaries in financial markets, ensuring transactions complete even if a party defaults.
• Clearinghouses manage the clearing and settlement process, transferring assets and funds between parties.
• Margin requirements and default funds help provide layers of protection against financial instability.
• Clearinghouses gained prominence after the 2008 financial crisis, enhancing market stability.
• Regulators have raised concerns that clearinghouses may be too big to fail, concentrating financial risk.
How Clearinghouses Work
Clearinghouses handle the clearing and settlement for member trades. Clearing is the handling of trades after they’re agreed upon, while settlement is the actual transfer of ownership, or delivering an asset to its buyer and the funds to its seller.
Other responsibilities include recording trade data and collecting margin payments. The margin requirements are usually based on formulas that take into account factors like market volatility, the balance of buy-versus-sell orders, as well as value-at-risk, or the risk of losses from investments.
Because they handle investing risk from both parties in a trade, clearinghouses typically have a “waterfall” of potential actions in case a member defaults. Here are the layers of protection a clearinghouse has for such events:
1. Margin requirements by the member itself. If market volatility spikes or trades start to head south, clearinghouses can put in a margin call and demand more money from a member. In most cases, this response tends to cover any losses.
2. The next buffer would be the clearinghouse’s own operator capital.
3. If these aren’t enough to staunch the losses, the clearinghouse could dip into the mutual default fund made up from contributions by members. Such an action however could, in turn, cause the clearinghouse to ask members for more money, in order to replenish the collective fund.
4. Lastly, a resolution could be to try to find more capital from the clearinghouse itself again — such as from a parent company.
Are Clearinghouses “Too Big to Fail?”
Some industry observers have argued that regulations have made clearinghouses too systemically important, turning them into big concentrations of financial risk themselves.
These critics argue that because of their membership structure, the risk of default in a clearinghouse is spread across a group of market participants. And one weak member could be bad news for everyone, especially if a clearinghouse has to ask for additional money to refill the mutual default fund. Such a move could trigger a cascade of selling across markets as members try to meet the call.
Other critics have said the margin requirements and default funds at clearinghouses are too shallow, raising the risk that clearinghouses burn through their buffers and need to be bailed out by a government entity or go bankrupt, a series of events that could meanwhile throw financial markets into disarray.
Clearinghouses in Stock Trading
Stock investors may have learned the difference between a trade versus settlement date. Trades in the stock market aren’t immediate. Known as “T+2,” settlement happens two days after the trade happens, so the money and shares actually change hands two days later.
In the U.S., the Depository Trust & Clearing Corporation (DTCC) handles the majority of clearing and settling in equity trades. Owned by a financial consortium, the DTCC clears trillions in stock trades each day.
Clearinghouses in Derivatives Trading
Clearinghouses play a much more central and pivotal role in the derivatives market, since derivatives products are typically leveraged, so money is borrowed in order to make bigger bets. With leverage, the risk among counterparties in trading becomes magnified, increasing the need for an intermediary between buyers and sellers.
Prior to Dodd-Frank, the vast majority of derivatives were traded over the counter. The Act required that the world of derivatives needed to be made safer and required that most contracts be centrally cleared. With U.S. stock options trades, the Options Clearing Corp. is the biggest clearinghouse, while CME Clearing and ICE Clear U.S. are the two largest in other derivatives markets.
The Takeaway
Clearinghouses are financial intermediaries that handle the mechanics behind trades, helping to back and finalize transactions by members. But since the 2008 financial crisis, the ultimate goal of clearinghouses has been to be a stabilizing force in the marketplace. They sit in between buyers and sellers since it’s hard for one party to know exactly the risk profile and creditworthiness of the other.
For beginner investors, it can be helpful to understand this “plumbing” that allows trades to take place and helps ensure financial markets stay stable.
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FAQ
What does a clearinghouse do?
Clearinghouses handle the clearing and settlement for trades on the markets. Clearing is the handling of trades after they’re agreed upon, while settlement is the actual transfer of ownership, or delivering an asset to its buyer and the funds to its seller.
What role do clearinghouses play in the markets?
Since the financial crisis in 2008 and 2009, clearinghouses largely play a stabilizing role, while also clearing trades.
What protections help stabilize the markets as it relates to clearinghouses?
Margin requirements and default funds provide layers of protection against financial instability.
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The term “unicorn” was coined by venture capitalist Aileen Lee in 2013, to describe startup companies that reached a $1 billion post-money valuation.
The catchphrase — from the title of her article, “Welcome to the Unicorn Club: Learning From Billion-Dollar Startups” — was immediately and widely adopted, as it conveyed both the rarity and the somewhat mythical status of companies that hit the $1 billion benchmark.
Back in 2013, Lee counted 39 unicorns in the U.S. It was still considered exceptional for a private company to grow to that size without having an initial public offering or IPO.
Today, there are about 1200 to 1400 so-called unicorns globally, depending on the criteria used to identify these companies. But owing to a confluence of factors, including tighter capital markets, the number of unicorns has declined steadily in the last decade.
Key Points
• A unicorn is a startup that reached a post-money valuation of at least $1 billion.
• The term was coined by venture capitalist Aileen Lee in 2013. At the time it was an apt way to describe startups that attained a mythical level of success without an IPO.
• While unicorns are associated with Silicon Valley, unicorns can be found worldwide.
• Countries with the highest number of unicorns include the U.S., China, India, U.K., and France.
• Globally, the number of unicorns peaked in 2021, and has declined since then.
Top 10 Most Valuable Unicorns
As of January 2025, there are some 1,258 unicorns worldwide, with a cumulative business valuation of roughly $4.4 trillion, according to research by CB Insights, a business analytics platform.
Unicorns can be exciting for investors because they can represent rapid — even seemingly magical — growth. But are unicorns actually good investments? It’s important for investors to remember that, by definition, these companies haven’t yet come under the scrutiny of public markets.
Below is a chart of the unicorn companies with the highest valuations globally, according to CB Insights, as of January 2025.
Company
Valuation
Date Added
Country
Industry
SpaceX
$350 billion
12/1/2012
U.S.
Space
Bytedance
$300 billion
4/7/2017
China
Media & Entertainment
OpenAI
$300 billion
7/22/2019
U.S.
Enterprise Tech
Stripe
$70 billion
1/23/2014
U.S.
Fintech
SHEIN
$66 billion
7/3/2018
Singapore
Consumer Retail
Databricks
$62 billion
2/5/2019
U.S.
Enterprise Tech
Anthropic
$61.5 billion
2/3/2023
U.S.
Enterprise Tech
xAI
$50 billion
5/6/2024
U.S.
Enterprise Tech
Revolut
$45 billion
4/26/2018
U.K.
Financial Services
Canva
$32 billion
1/8/2018
Australia
Enterprise Tech
Source: CB Insights, as of January 31, 2025.
Characteristics of Unicorn Companies
The increase in the number of unicorns over time has meant that these companies come from a range of industries, sectors, and regions.
Unicorns by Industry
According to Crunchbase, as of June 2025, the top seven sectors with the largest number of unicorns are as follows:
• Software (894)
• Financial services (404)
• Information technology (383)
• Science and engineering (387)
• Data and analytics (379)
• Internet services (299)
• AI (283)
Unicorns by Geography
While the Bay Area’s Silicon Valley is still synonymous with startups, unicorns have gone global.
Top 5 Countries With the Most Unicorns
Country
Number of Unicorns
United States
702
China
302
India
119
U.K.
104
France
34
Source: Wikipedia, as of April 13, 2025
Age and Success Rate of Unicorns
Lately, U.S. unicorns have tended to be older when they enter the stock market. When Aileen Lee coined the term in 2013, the median age of a tech IPO company was nine years, data from University of Florida shows. Going back further in time, during the height of the dot-com bubble in 1999, the median age was four years.
Fast forward to 2023, and the median age jumped to 12.5 years.
In addition, while unicorn status may sound impressive, it doesn’t always translate to long-term success. According to a 2023 analysis by Bain Capital, less than 1% of the 2,500 unicorns they tracked worldwide generated $1 billion or more in revenues or cash — “a truer measure of sustainable success,” the report noted.
When it comes to who’s founding these unicorns, there has been some increase in diversity. Back in 2012 or 2013, when Aileen Lee did her initial IPO research, no unicorns had female founding CEOs. However, by 2024, 124 startups founded or co-founded by a woman became unicorns.
Why Are Unicorns Declining?
Owing to the range of criteria used to define and analyze unicorn companies, it can be difficult to pinpoint and track specific trends. One thing is clear, however: The rapid growth in the number of unicorn companies peaked several years ago and has declined steadily since then.
According to PitchBook, some 629 startups reached unicorn status in 2021. By 2024, though, only about 100 companies hit that mark worldwide, with 58 in the U.S.
What is contributing to the decline?
• Access to private capital. As mentioned above, companies are waiting longer before they go public, often because startups can continue to get investments from venture-capital firms (VCs) and private-equity funds in their later stages. Some prefer that option over the risky, complex process of having an IPO.
• Less capital for new ventures. One of the knock-on effects of private funds being tied up for longer is that new ventures are struggling to find capital they need.
• Late-state funding is less available. In addition, VCs are less inclined to provide funding at later stages.
Meanwhile, tech investing remains a bright spot for investors hungry for growth opportunities. Companies focused on artificial intelligence (AI) technologies were 44% of unicorns in 2024, according to CBInsights, a 7x increase over the previous decade.
How Do Unicorns Get Valued?
Many startups — even ones of unicorn size — are not profitable. Investors put in money under the assumption that profits will eventually come, and that’s why businesses may rely on longer-term forecasting. Similar to how it works when it comes to growth vs. value stocks, valuation metrics like price-to-sales ratios may be used in order to measure the company’s worth.
Investors may also come up with valuations by comparing unlisted firms with similar businesses that are publicly traded. Hence, a rising stock market may also lead to higher valuations for privately held companies, although overvaluation is an ongoing concern with many startups.
How to Invest in Unicorns
Accredited investors — those with $200,000 in annual income or $1 million in assets — can get exposure to unicorns by putting money into venture-capital funds: capital pools that invest in private companies. In recent years, they’ve attracted not just venture-capitalists, but also hedge funds, asset-management firms like mutual funds as well as sovereign wealth funds.
It’s important for would-be investors to bear in mind that it can take years for even a successful startup or unicorn to make a successful exit, either via an IPO, SPAC, direct listing, or an acquisition. On average, it takes eight years for a unicorn to exit, according to data by VisualCapitalist.
Can Average Investors Invest in Unicorns?
Unicorns don’t generally accept modest investments from individual or retail investors.
Jay Clayton, former chairman of the Securities and Exchange Commission, argued that smaller investors should get access to private-market investments. The fact that companies are staying private for longer has also made it true that individual investors are missing out more on businesses in their early stages.
But skeptics note that private markets don’t have the same disclosure requirements that public markets require, a situation that could leave retail investors in the dark about a company’s financials and increase the risk of fraud. Mutual funds can put up to 15% of assets in illiquid assets, but often they don’t allocate that much to private companies since these investments are tougher to sell.
Deep-pocketed retail investors can get in early with some startups via angel investing — when individuals provide funding to very young businesses. But these fledgling businesses tend to have valuations far below $1 billion.
💡 Quick Tip: Newbie investors may be tempted to buy into the market based on recent news headlines or other types of hype. That’s rarely a good idea. Making good choices shouldn’t stem from strong emotions, but a solid investment strategy.
Risks of Investing in Unicorns
Not all unicorns successfully transition into stock market stars. Some see their valuations dip in late private funding rounds. Some have even scrapped IPO plans at the last minute. Others disappoint after their debut in the public markets, finding that first-day pop in trading elusive or underperforming in the weeks after the IPO.
How do you know whether a unicorn is destined to be the next market darling or flame-out? There is no way to know for sure, but there are a number of risks when it comes to unicorn investing. Here are some:
• Lack of Profitability: Many unicorns offer deeply discounted services in order to supercharge growth. While venture capitals are used to subsidizing startups, public market investors may be tougher on these models.
• Market Competition: No matter how great an idea is and how much funding they bring in, there are always competitors. If another company has superior marketing, more users and higher sales, even a unicorn could stumble.
• Consumer/Business Need: Just because a founder has a cool idea and they can build it, doesn’t mean anybody will spend money on it. The true test of product relevance lies in actual market performance.
• Management Team: Who are the company’s founders, and what is the culture they are creating at their startup? Many startups fail, and a founder’s management style and lack of experience can be cited as major reasons why.
• Regulatory Changes: Some unicorns represent new business models or disrupt existing industries. Such changes may come with regulatory oversight that makes operating difficult.
Alternative to Unicorns in Startup Terminology
The surge in private-market tech investing has led to a new vernacular that’s specific to startup valuations. Here’s a table that covers some popular lingo.
List of Unicorn Terminology
Startup Term
Definition
Pony
Company worth less than $100 million
Racehorse
Company that became unicorns very quickly
Unitortoise
Company that took a long time to become a unicorn
Narwhal
Canadian company with a valuation of at least $1 billion
Minotaur
Company that has raised $1 billion or more in funding
Undercorn
Company that reached a $1 billion valuation then fell below it
Decacorn
Company with a valuation of at least $10 billion
Hectocorn
Company with a valuation of at least $100 billion
Dragon
Company that returns an entire fund, meaning the single investment paid off as much as a diversified portfolio
The Takeaway
While they started out as rarities, unicorns have since multiplied. For investors, unicorn companies may appear to be a good way to diversify and get access to a high-growth business. But it’s important to remember that many unicorns are unprofitable businesses that secure $1 billion valuations by making very long-term projections.
It’s important to look closely at a new company’s management team, history, as well as financials before investing in it. Whether you’re a new or seasoned investor, researching which stocks to buy and when to buy them can be time-consuming and challenging.
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FAQ
What is the biggest unicorn company?
A handful of unicorns have reached a valuation of $100 billion or more while still private, including SpaceX, ByteDance, and OpenAI.
What is the difference between a unicorn and a startup?
A unicorn is a startup, or private company that is VC funded, that reaches a $1 billion valuation before going public. Not all startups become unicorns.
Are unicorns risky?
Yes, like many startups that have yet to prove themselves in the public marketplace, unicorns come with a risk of failure. Their pre-market valuation may seem impressive, but isn’t a guarantee of success in terms of generating revenue or cash, or besting the competition.
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Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
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If your application for a federal Parent PLUS Loan was denied, you and your child still have options to help pay for their college. Below, we’ll explain some reasons why a Parent PLUS loan application might be denied, what you can do if yours is rejected, and alternatives to consider.
Key Points
• Parent PLUS Loans may be denied if borrowers have an adverse credit history, overdue payments, or recent bankruptcy.
• Parents can appeal a Parent PLUS loan denial with the Department of Education by proving extenuating circumstances caused the credit issues.
• An endorser without adverse credit can help secure a denied Parent PLUS Loan — the endorser assumes responsibility for repaying the loan if the parent cannot.
• Additional financial aid options to explore include more federal aid, scholarships, and private loans.
• Considering less expensive school options such as local or community colleges can also help manage college costs.
What Is the Parent PLUS Loan Program?
Parent PLUS Loans are federally funded Direct PLUS Loans taken out by parents to help their child pay for college. To apply, students or their parents must first fill out the Free Application for Federal Student Aid, or FAFSA®. Then a parent applies for a Parent PLUS Loan on the Federal Student Aid site. Most schools require this to be done online, though some have a different application process. Unlike other types of federal student loans, Parent PLUS loans require a credit check.
Why a Parent PLUS Loan Might Be Denied
If your Parent PLUS Loan was rejected, it may be because you don’t meet the credit requirements. PLUS borrowers can’t have an adverse credit history, such as being at least 90 days overdue in making a debt payment or in bankruptcy in the last five years.
Your application may also be denied if you or your child don’t meet other PLUS loan requirements. For instance, your child must be enrolled at least half-time at an eligible school, and you must meet the general eligibility criteria for federal student aid.
What Parents Can Do
In the event that your application for a Parent PLUS Loan is rejected, you may want to consider these options.
Appeal the Decision
If you had extenuating circumstances that led to an adverse credit event, you can ask the U.S. Department of Education (ED) to reconsider your application. You’ll need to provide documentation that proves that extenuating circumstances led to the adverse credit. The ED will decide whether to approve the appeal. Check the Federal Student Aid website for a list of potentially acceptable appeals and the supporting documentation needed.
If your appeal is approved, you’ll be required to complete PLUS Credit Counseling before your loan is disbursed. Counseling takes between 20 and 30 minutes and can be done online.
Find an Endorser
You may want to consider having someone else endorse the Parent PLUS loan. An endorser is essentially a cosigner without an adverse credit history. In the event that you are unable to repay the loan, the endorser would be responsible.
An endorser must complete an addendum online. They should be prepared to provide personal information such as their mailing address and phone number and their employer’s information, plus two references.
Your Child May Qualify for More Aid
If your Parent PLUS loan is rejected, there’s a chance your child may qualify for more federal student aid. They can contact their school’s financial aid office to see what can be done given that their parental contribution is now reduced.
It’s important to talk to your child about student loans so they understand how the loans work and how much they will cost upon graduation. It may be helpful to speak in terms of the expected monthly payment, so your student can compare that to their expected annual salary.
Scholarships
It’s likely not too late for your child to apply for scholarships. In fact, students should be searching for scholarships each and every year they’re in school.
While some types of scholarships may be limited to incoming freshmen, this is not always the case. In addition to looking at scholarships offered by your child’s school and the state, other local organizations may offer scholarships.
If your student is still in high school, their guidance counselor may be able to provide advice on ways to search for scholarships, including finding opportunities in your area.
Consider Other School Options
Depending on where you live, you may want to reconsider where your child goes to school. Switching to a state school or local community college could save thousands in tuition, room and board, and travel costs. Some community colleges even have transfer programs for getting students into four-year schools. Consider meeting with a counselor at the community college to see what the transfer process is like.
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Private Student Loans After a Parent PLUS Loan
Private student loans are another way to close the funding gap. Commercial banks, credit unions, online lenders, and other lending institutions offer these loans with varying terms and rates.
Private student loans and private parent student loans are not backed by the federal government and therefore not subject to its qualification rules. They may also lack the borrower protections available to federal loans, such as deferment. Private student loans are often considered once all federal aid options have been explored.
Rates on private student loans are generally determined by your credit score and personal financial situation. Borrowers who did not qualify for a Parent PLUS loan may also have trouble qualifying for a private loan at a competitive rate. Still, it’s worth shopping around. In addition to comparing rates between lenders, you’ll want to factor in the costs associated with taking out a loan, such as origination fees, prepayment penalties, and more.
Also, keep in mind that you can always choose to refinance student loans in the future if and when you may be able to qualify for a lower interest rate or more favorable loan terms. When you refinance, you replace your current loans with a new loan from a private lender. If you do get a lower interest rate, you could save money over the life of the loan.
You can refinance both private and federal student loans. However, refinancing federal loans makes them ineligible for such federal programs and protections as income-driven repayment and federal deferment. If you think you might need those benefits, think twice about refinancing federal loans.
The Takeaway
Parent PLUS Loans are federal loans available to parents of students. There are credit-related requirements in order to qualify for a PLUS loan, so in some cases, it is possible to be denied for a Parent PLUS Loan. If your application is rejected, you still have options, including appealing the decision, adding an endorser to the loan, exploring scholarships, or looking into alternate schools.
If you’ve exhausted all your options, private parent student loans are another alternative to consider. And if you can’t get a competitive rate, you can explore refinancing in the future.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
How often can I take out a Parent PLUS Loan?
You can apply each year you’d like to receive a Parent PLUS loan. To do so, you must fill out a Direct PLUS Loan Application.
When do Parent PLUS Loans need to be paid back?
Repayment begins 60 days after the final loan disbursement for that academic year. If you’re approved for deferments each year, you may not need to begin repaying the loan until six months after your child graduates.
If I’m approved for a Parent PLUS Loan, where will the funds go?
Funds from Parent PLUS Loans are sent directly to your child’s school. If there’s money left over, the school will send the remaining amount to you or, if you authorize it, to the student.
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Living beyond your means can easily happen. Typically, it’s a case of your spending outstripping your earnings. This in turn means it’s hard to pay off debt and save for your financial goals.
Sound familiar? If you find yourself running out of money before the next payday, you could be leaving above your means.
Here, learn more about this issue and the warning signs. Then you can begin to take action and take control of your money.
Key Points
Living beyond your means generally involves spending more than you earn, often using credit.
Signs that you’re living above your means include not growing your savings, spending more than a third of your income on housing, and carrying credit card balances.
To start living below your means, track your spending for a month to identify overspending areas.
Use the 50/30/20 rule to establish an effective budget.
Build an emergency fund to manage unexpected expenses without debt.
What Does “Living Beyond Your Means” Mean?
Simply put, ”living above your means” means that you are spending more money than you are earning. People are able to do this by relying on credit cards, loans, and prior savings to cover their expenses. However, the process is not sustainable, and eventually overspending is likely to catch up to you.
Living beyond your means can also mean that you’re spending most or all of what comes into your checking account each month and, as a result, don’t have anything left over for saving or investing, such as building an emergency fund, saving for a short-term goal like buying a car or a home, or putting money away for retirement.
Here are ten red flags that you’re living a lifestyle you simply can’t afford — and tips for how to get back on track.
1. You Live Paycheck to Paycheck
One of the most obvious and common signs of living beyond your means is when there’s little to no money left after you pay your bills. If your paycheck disappears within days of receiving it, and you’re counting down the days until the next one, that’s a major warning sign.
Living paycheck to paycheck means you have no cushion for emergencies and would not be able to cover your living expenses if you were to lose your income. This puts you in a precarious situation, where any financial bump in the road could throw your entire financial life into disarray.
2. Your Credit Score Has Dropped
A declining credit score is often a silent but powerful indicator that you’re overspending. This drop can result from late payments, high credit utilization (the amount of credit you’re using compared to your total limit), or accumulating too much debt.
If you’re relying heavily on credit cards to cover basic living expenses — like groceries, gas, or other monthly bills — it likely means your spending has outpaced your income. Over time, this kind of borrowing not only hurts your score but also racks up interest charges that dig you deeper into the hole.
3. You’ve Stopped Your Retirement Contributions
If money is feeling a little tight, you may feel that now is not the time to worry about retirement. While this may seem like a short-term fix, it can significantly damage your long-term financial health.
Halting retirement contributions — even temporarily — means missing out on compound returns (when the returns you earn start earning returns of their own), employer matches, and overall portfolio growth. If you’re regularly suspending or avoiding savings altogether, it may indicate your current expenses are too high to support your financial goals.
Increase your savings with a limited-time APY boost.*
*Earn up to 4.30% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.60% APY as of 11/12/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 1/31/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.
4. A Big Portion of Your Income Goes to Housing
Housing is typically the largest monthly expense, but if your rent or monthly mortgage payment is above 30% of your monthly pre-tax income, you may be financially overextended.[1] This can make it hard to have enough money leftover to cover other expenses, save, invest, and build wealth over time.
Staying below 30% can be difficult if you live in a region of the country where the cost of housing is high. Nevertheless, spending a lot more than a third of your income on housing can leave you “house poor,” and put your other financial obligations at risk.
5. Your Savings Account Isn’t Growing
If your savings balance has stayed flat — or worse declined — over the past few months, it’s a sign that your lifestyle is too costly. A lack of progress in savings makes it hard to handle unexpected events or set aside funds for the future.
Making regular deposits into a savings account, such as a high-yield savings account — in addition to your 401(k) or IRA — allows you to work towards your short- and medium-term financial goals, such as putting a downpayment on a home or a car or going on vacation.
6. You’ve Been Charged an Overdraft Fee More than Once This Year
An overdraft fee is charged when there’s not enough money in your account to cover a check or debit card payment. Overdrawing from your account often means the bank will lend you money to cover the overage. You’re then responsible for paying back that amount, as well as an overdraft fee, which can potentially be more than the overdrawn amount. (That said, there are some banks that offer no-fee overdraft protection.)
Mistakes happen, and a one-off overdraft isn’t necessarily an indicator of overspending. But repeat offenses can be a sign that you are living too close to the edge and don’t have a clear picture of how much money is going in and coming out of your account each month.
7. You’ve Never Set a Budget
A lack of budgeting can be a fundamental sign of living beyond your means. If you’ve never taken the time to outline your income, expenses, and saving goals, you may well be spending money in ways that aren’t sustainable.
Without a budget, it’s easy to underestimate your monthly expenses or overestimate what you can afford. You might think you’re managing fine but in reality you could be accruing debt, missing saving opportunities, or overspending in certain categories.
Many people think making and following a budget will be too complicated. But having a budget can actually simplify your spending decisions by letting you know exactly what you can and can’t afford. Having a budget also helps to ensure you have enough money to cover essentials, fun, and also sock some away in savings.
8. You’re Leasing a Car You Can’t Afford to Buy
Leasing a vehicle you would not be able to purchase outright or finance can be a major financial red flag. Leasing lets you rent a high-end lifestyle, but many people end up with leases they really can’t afford.
You might be covering your monthly auto payments, but if you can’t do that while meeting your other expenses and also putting money into savings, then your car is likely too expensive. Leasing also means you’re never building equity in a vehicle and may face additional costs for mileage or wear-and-tear penalties.
9. You’re Only Making Minimum Payments on Credit Cards
It’s fine to use your credit card to pay for everyday expenses and the occasional big purchase. But if you can’t pay off most of the balance each month, it’s a red flag that you’re living beyond your means.
While minimum payments keep your account in good standing and avoid late fees, most of the payment goes toward interest, which means they don’t address the underlying debt. Minimum payments are also designed to be small, so it takes much longer to pay off your balance, sometimes even years. This can trap you in a cycle of debt where you’re constantly paying off interest rather than reducing the principal, making it highly challenging to ever become debt-free.
10. You Don’t Have an Emergency Fund
Not having a stash of cash you can turn to in a pinch can be a sign that you’re living above your means. You may be gambling on the fact that nothing will go wrong. But life is unpredictable, and you could well get hit with an unexpected expense (like a major car repair or medical bill) at some point, or potentially lose your job.
Without savings to fall back on, you may be forced to rely on high-interest credit cards or loans, which can lead to debt that’s hard to repay. This financial strain can cause stress, damage your credit, and disrupt long-term goals like saving for retirement or buying a home. An emergency fund provides a buffer that protects your financial stability.
How to Live Below Your Means and Get Back on Track
Overspending can feel like a slippery slope — once you’re living above your means, it can be tough to stop the cycle. But financial recovery is entirely possible. The key is to learn how to live below your means and establish habits that promote long-term stability. Here’s how to get started:
1. Create a Realistic Budget
A solid budget is the foundation of any financial turnaround. Start by tracking all your income sources and listing every expense, from rent to streaming services. Categorize your spending into needs, wants, and goals/savings, then determine if you want to rejigger how much you are spending in each area.
One popular budgeting framework is the 50/30/20 rule. This divides your after-tax income into three categories: 50% for needs, 30% for wants, and 20% for savings and debt repayment beyond the minimum. This set-up ensures that your essential expenses are covered while also allowing for some “fun” spending and future financial security.
To find room in your budget for saving and paying more than the minimum on debts, you may need to cut back on nonessential spending. For example, you might free up funds by cooking more and eating out less, getting rid of streaming services you rarely watch, and/or quitting the gym and working out at home.
To cut back on impulse purchases, you might institute the 30-day rule: When you feel the urge to buy something you want but don’t need, commit to waiting 30 days before making the purchase. If after the waiting period, you decide you truly want the item and it aligns with your financial goals, go ahead and buy it. There’s a strong chance, however, that the urge to buy it will have passed.
3. Build an Emergency Fund
Living paycheck to paycheck leaves little room for error. An emergency fund is your financial safety net — it prevents one unexpected bill from becoming a crisis.
Financial advisors often recommend setting aside at least three to six months’ worth of living expenses for emergencies. But you don’t have to come up with that entire sum overnight. Begin with whatever amount you can afford, even if it’s just $10 a week. Consider setting up an automatic transfer to a separate savings account earmarked for emergencies so you’re not tempted to spend it. Or, if your bank offers it, you might dedicate a savings vault within your account for emergency savings.
This buffer provides peace of mind and helps you avoid falling into debt when life throws curveballs.
The Takeaway
Living above your means doesn’t always look like luxury vacations or designer clothes. Often, it’s more subtle: relying on credit cards, skipping savings, or struggling to cover basic expenses. The good news is that these warning signs are not life sentences — they’re signals that you can change course.
Learning how to live within your means involves awareness, building a budget, and making one smart money decision at a time. With consistent effort, you can shift from financial survival to financial security — and ultimately, financial freedom.
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 3.60% APY on SoFi Checking and Savings.
FAQ
What are the long-term impacts of living beyond your means?
Living beyond your means can lead to chronic debt, poor credit, and financial instability. Over time, high-interest credit card balances and loans can become unmanageable, making it difficult to build savings or qualify for major purchases like a home. This behavior often leads to stress, strained relationships, and limited future financial opportunities. Without change, it can also delay or prevent retirement, forcing individuals to work longer or rely on others for support later in life.
What are the first steps to take if I’m overspending?
The first step is to track your spending for a full month to understand where your money is going. Then, categorize your expenses and identify areas where you can cut back, such as dining out, subscriptions, or impulse purchases. Creating a realistic budget is crucial — allocate funds for needs, savings, and limited wants. Set financial goals and consider using a budgeting app or cash envelopes to stay disciplined. If overspending is tied to emotional triggers, you might benefit from speaking with a financial counselor.
How can I start saving if I have no extra money?
Start by reviewing your expenses and identifying small, nonessential costs to reduce or eliminate — like daily coffee runs or streaming services. Even setting aside just $5 to $10 a week adds up over time. You might also want to automate your savings (so money is transferred to a savings account before you can spend it) and boost your income through side gigs or selling unused items. The key is to start small and build momentum through consistency and gradual lifestyle adjustments.
What percentage of my income should go toward housing?
Financial experts generally recommend spending no more than 30% of your gross monthly income on housing. This includes rent or mortgage payments, property taxes, insurance, and utilities. Staying within this limit helps ensure you have enough left over for other essential expenses like food, transportation, savings, and debt payments. In high-cost areas, it may be harder to stay under 30%, but exceeding it by too much can strain your finances and reduce your ability to build long-term wealth.
What helpful resources exist if I’m struggling financially?
There are many free and low-cost resources available. Nonprofit credit counseling agencies, like the National Foundation for Credit Counseling (NFCC), offer budgeting help and debt management plans. Local community organizations often provide food assistance, utility aid, and housing support. Government programs like SNAP, Medicaid, and unemployment benefits can also offer relief during tough times. In addition, financial literacy websites, public libraries, and budgeting apps offer tools and guidance to help you regain control of your finances.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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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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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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No one wants to see their hard-earned cash sitting in the bank and earning a minuscule amount of interest. Instead, most people want their money to work hard and grow at a healthy rate over time.
Achieving that may be as simple as switching banks or even just swapping account types. Or trying a couple of other smart financial moves that can help you build your wealth.
Read on to learn smart strategies that may help you earn more interest than you are currently.
Key Points
High-yield savings accounts and rewards checking accounts may both offer higher interest rates than their traditional counterparts, though may come with restrictions.
Money market accounts often provide higher interest rates than standard savings accounts but may have minimum balance requirements and limited check-writing privileges.
Certificates of deposit (CDs) can offer competitive interest rates in exchange for leaving your money in the account for a set term.
Credit unions may provide higher interest rates and lower fees if applicants are eligible.
A bond issuer, such as a government or corporation, may provide regular interest payments over the life of the bond in exchange for lending them money.
What Is Interest?
Interest is the percentage paid when money is borrowed or loaned out. Here are a couple of examples.
When you deposit your money into an account at a financial institution, the bank may pay you interest. This is your reward for keeping your cash there, where they can lend some of it out or otherwise use it as part of their operations.
When you borrow money (like a mortgage or car loan) or open a line of credit (say, for a credit card), you pay interest to your lender. You are paying for the privilege of using their money.
When you deposit money into a bank account, you are, in effect, loaning them the money. They pay you interest in return.
The financial institution can use that money in any number of ways, including lending it out to others. Say you deposit $10,000 in a savings account that earns a 3.00% interest rate. The bank could then use some of your money and that of other depositors to make a $100,000 mortgage loan at 7.00% to a borrower.
The difference between the 7.00% they are charging the person with the home loan and the 3.00% they are paying you and other savings account holders is one of the ways banks make money. And it’s also a good example of how and why you earn interest on your deposit.
How Does Interest Work?
Interest can work in a couple of different ways.
With simple interest, interest is earned only on the principal, or the amount of money you deposited.
With compound interest, interest is generated on the principal and the interest as it accrues. This makes your money grow more quickly. Interest can be compounded at different intervals, such as quarterly, monthly, or daily.
Here’s an example of what a $10,000 savings account would look like at the end of a year if you earned 3.00% simple interest:
$10,000 principal + $300 interest = $10,300 at the end of the year.
However, if that interest was compounded daily, by the end of the year, you would have:
$10,000 principal + $304.53 interest = $10,304.53 at the end of the year.
While it doesn’t sound like much, over time, the difference is amplified. If you’re wondering how to make money with interest, consider what those numbers would look like after 10 years:
It can be wise to check with financial institutions and see how often interest is compounded. The more frequent the compounding, the more your money will grow.
Now that you understand what interest is, consider these seven ways you might help your money grow faster thanks to the power of interest.
1. High-Interest Savings Accounts
Want to earn more interest on savings? Some banks offer high-interest or high-yield savings accounts that can pay higher rates than traditional savings accounts, while still providing fairly easy access to your money.
How big a difference can this make? When comparing annual percentage yield (APY), regular savings accounts are paying an average of 0.42% APY as of December 16, 2024 while high-yield accounts are offering about 3.00% APY.[1] When looking for a good interest rate for a savings account, most people would rather snag the latter.
Some high-interest accounts may limit you to six withdrawals or transfers per month, which was previously required by the Federal Reserve. While this Regulation D rule has been suspended since the coronavirus pandemic, some banks will still charge fees or have other penalties for more than six withdrawals, so be sure to check.
You can often find high-interest savings accounts at online-only banks. Because these institutions tend to have lower operating costs than brick-and-mortar banks, they often offer higher rates than traditional banks. They may also be less likely to charge monthly fees.
A high-yield savings account can be a great place to build an emergency fund or save for a vacation or home repair while providing safety and liquidity.
Increase your savings with a limited-time APY boost.*
*Earn up to 4.30% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.60% APY as of 11/12/25) for up to 6 months. Open a new SoFi Checking & Savings account and enroll in SoFi Plus by 1/31/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.
2. Rewards Checking Accounts
Checking accounts are traditionally used for storing money that you use frequently, and they typically don’t pay much, if any, interest. However, some banks offer rewards checking accounts. These may pay higher interest rates than traditional checking and savings accounts. For instance, while some standard checking accounts may pay little or no interest, rewards accounts may offer an APY of around 0.50%, or 1.00%, or more.
However, there may be some restrictions. For instance, the balance that earns the elevated rate may be limited. In addition, you may have to meet certain direct deposit or debit card transaction requirements each month to earn the higher rate.
Like other checking accounts, rewards checking accounts are highly liquid and typically come with check-writing privileges, ATM access, and debit cards. Plus, deposits can be withdrawn at any time.
If you’re considering a rewards checking account, however, you may want to first make sure you can meet any requirements.
3. Credit Unions
Another of the best ways to earn interest on your money is to consider joining a credit union.
Unlike banks, credit unions are owned by the people (or members) who hold accounts at the credit union. Because of this, these financial institutions work for the benefit of account holders instead of shareholders.
In some cases, that can translate into lower fees, better account perks, and higher interest rates. To join a credit union, you typically need to live or work in a certain geographic area or work for a certain employer.
If you have a credit union near you, you may want to check the rates it offers and see if you can get a good deal.
4. Money Market Accounts
A money market account is a type of deposit account that usually combines the features of both checking and savings accounts. This kind of account often requires a higher minimum balance to open than a standard savings account and typically earns a higher interest rate.
Some money market accounts also come with a debit card or checks (which you generally won’t find with savings accounts), but financial institutions may require that they not be used more than six times per month. Some will charge a fee if you go over that number.
It can also be a good idea to ask about other fees, such as monthly account fees and penalties, before opening one of these accounts.
Certificates of deposit (CDs), which are a kind of time deposit, typically offer higher interest rates than traditional savings accounts in exchange for reduced withdrawal flexibility.
When you put money in a CD, you agree to leave the money in the account for a set period of time, known as the term. If you withdraw your deposit before the term expires, you’ll usually have to pay an early withdrawal penalty.
One benefit of CDs is that you typically lock in a set interest rate when you open the CD. Even if market rates drop, you’ll keep earning the same rate. On the other hand, if rates rise, you’ll be stuck earning the lower rate until the CD matures.
One way to work around this is to open several CDs that mature at different times, a technique known as CD laddering. Having a mix of short- and long-term CDs allows you to take advantage of higher interest rates, if they bump up, but still have the flexibility to take advantage of higher rates in the future.
A CD ladder also helps with the lack of liquidity that comes with CDs. Because of the staggered terms of the certificates, one is likely to be coming due (or available) if you need to use the cash.
6. Bank Bonuses
Many banks offer special bonuses from time to time; these can be a way to boost the earnings on your money. You may want to keep your eyes open for high-yield savings accounts that offer a sign-up bonus or an interest rate bonus. These incentives can boost your earnings, though you may have to maintain a high minimum balance in the account to earn the higher rate.
You may want to keep your eyes open for high-yield savings accounts that offer a sign-up bonus.
Some banks also offer cash bonuses to customers who open new checking accounts. While this may also come with some requirements, such as setting up direct deposit and/or keeping your account open for a certain number of months to earn the bonus, it can be another good way to increase the income you earn on your bank deposits.
7. Bonds or Bond Funds
Another way to gain interest on your money could be with bonds, which are loans that the government or companies issue. These pay investors interest on a regular basis until the bond hits its maturity date.
These investments, however, are not insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA) the way an account is at a bank or credit union. U.S. savings bonds are backed by the government, but bonds may carry risk.
Type of Account
Pros
Cons
High-Interest Savings
Higher interest
May have withdrawal limits
Rewards Checking
Higher interest, unlimited withdrawals, checks, and a debit card
May have requirements such as a certain number of debit card or ATM transactions
Credit Union
Higher interest
May need to live in a certain area or work in a certain profession to open an account
Money Market
Higher interest; checking account privileges such as a debit card and checks
May charge fees and/or limit number of transactions
Certificates of Deposit
Higher interest, guaranteed interest rate
Money must be kept on deposit for a specific time period or else penalties can be assessed
Bank Bonuses
Higher interest and/or cash to add to your account
Not offered by all banks; may have minimum deposit requirements or rate may decrease after introductory period
Bonds
Pay interest to grow your investment
May not be insured
Other Ways to Make Your Money Work For You
If you’re planning to park your cash for at least five years or so and you are willing to take some risk, you may want to consider investing your money in the market.
While an investment may have the potential to generate a higher return, all investments come with the risk that you could lose some or all of your money.
You may better weather this risk by investing for the long term, which essentially means only investing funds that you would not likely need to touch for maybe five years or longer, so that the market has time to recover from downturns.
There are a variety of ways to start investing. If your employer offers a 401(k), that can be one of the easiest ways to start investing. Another option for retirement is opening an individual retirement account (IRA).
You could also open a brokerage account to help you target your financial goals. This is a taxable account, typically opened with a brokerage firm, that allows you to buy and sell investments like stocks, bonds, and mutual funds.
If you’re ready to start investing, you may want to speak with a qualified financial advisor who can help you establish your savings goals and risk tolerance and help you develop a personalized investment strategy.
Creating a SoFi Savings Account Today
If you’re looking to make more interest on your money, you may be able to increase returns by opening a high-yield account at SoFi.
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 3.60% APY on SoFi Checking and Savings.
FAQ
What does it mean to “gain interest”?
Gaining interest is similar to earning interest. It means that your money (the principal) is growing over time thanks to the interest rate being paid. The exact amount it grows will be determined by the interest rate, how long it sits, and how frequently (if at all) the interest is compounded.
How can you make money with interest rates?
You can earn interest through various types of accounts. High-yield savings and high-yield checking accounts typically offer better rates than traditional ones. Money market accounts, which combine features of checking and savings accounts, may offer higher interest rates, but often come with certain restrictions. Certificates of deposit (CDs) provide a fixed interest rate for money locked in for a set time period. You may also consider investing in bonds, which provide periodic interest payments until the bond matures.
How much interest does $10,000 earn in a year?
How much interest $10,000 will earn in one year will depend on the interest rate and how often the interest is compounded, if at all. If the interest rate is 3.00%, without compounding, it would earn $300. With daily compounding, it would earn $304.53. If the interest rate were 7.00%, the account holder would have $700 in interest at the end of the year with simple interest, and $725.01 with daily compounding.
About the author
Julia Califano
Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.
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.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
1SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/sidpterms. See list of participating banks at SoFi.com/banking/fdic/participatingbanks.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
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