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Savings accounts can be a good place to stow extra cash and build wealth, but unlike checking accounts, you usually can’t spend straight from a savings account. What’s more, you may find that there are limitations on the number of withdrawals or transfers you can make from out of your savings account.

If you want to avoid getting entangled with savings account rules and restrictions or triggering fees, here’s advice on spending money from a savings account.

How Does a Savings Account Differ From a Checking Account?

You might think the main difference between a checking account and a savings account is how you view them — namely, one is for spending now, and one is for using later. But the bank also views these two accounts very differently. Here’s a closer look at how savings accounts work vs. checking accounts.

•  Savings accounts typically earn interest while checking accounts generally earn zero or very little interest.

•  Savings accounts may come with cash transfer and withdrawal limits. A federal rule called Regulation D used to limit certain types of transactions from a savings account to no more than six per month. While this rule was lifted during the pandemic, some banks still enforce the six-per-month cap on savings account transactions.

•  Savings accounts don’t usually come with debit cards that can be used to make purchases with money from that savings account. Only a few banks offer this service.

Can You Write a Check From a Savings Account?

Typically, you can’t write checks from a savings account. Of course, it’s always possible to transfer money from a savings account to a checking account and then write a check from there.

If you want to save money and have the ability to write a check with the money you save, you may want to consider opening up a money market account.

Money market accounts are a type of savings account that often pay a higher interest rate than traditional savings accounts and generally include check-writing and debit card privileges.

However these accounts often come with minimum monthly balances, and falling below the minimum can trigger fees. Like other savings accounts, money market accounts may limit transactions to six per month (which includes writing checks and debit card payments).

How to Spend (and Save) With a Savings Account

To take advantage of the interest you’re earning on your savings and avoid triggering penalty fees or the closure of your account, you may want to keep these savings account spending tips in mind.

Keeping Track of Your Withdrawals

It can be a good idea to find out what your bank’s policy is regarding monthly transactions from savings. Many institutions are sticking with the standard limit of six “convenient transactions” per month, while some are allowing more, such as nine transactions per month.

Convenient transactions include money transfers you make online, by phone, or through bill pay. Transactions, including ATM withdrawals and those that you make in person at the bank, do not typically count towards the monthly cap.

Paying Bills From Your Checking Account

Scheduling automatic bill payments from your savings account may put you over the savings withdrawal limit. It can be a better idea to have automatic bill payments or recurring transfers come out of your checking account.

Withdrawing Money Only for Large Expenses

If you withdraw money from your savings account for everyday spending, it can reduce the amount of interest you earn and make it harder to reach your savings goals.

It can be wiser to only touch your savings when it’s necessary to cover an emergency expense or a large purchase (ideally, one you’ve been saving up for).

Building Your Savings

A savings account can help you work towards your financial goals, such as creating an emergency fund, making a downpayment on a home, or going on a great vacation. In some cases, you may even want to have different savings accounts for different goals. High-yield savings accounts can be especially useful for this purpose, especially if you establish them at online banks, which often have no or low fees.

To help achieve those goals faster, you may want to set up an automatic transfer from your checking account into your savings account on the same day each month (perhaps after your paycheck gets deposited). It’s perfectly fine to start slowly. Even small monthly deposits will add up over time.

Maximizing the Interest You Earn

The higher the interest rate, the faster your savings will grow. That’s why it can be worthwhile to do some research into which institutions and which types of savings accounts are paying the highest rates.

Some options you may want to look into include: A high-interest savings account, money market account, certificate of deposit (CD), checking and savings account, or an online savings account.

Recommended: Savings Account Interest Calculator

The Takeaway

Savings accounts generally aren’t designed for making frequent transactions. Instead, their main purpose is to provide a safe place to store money and grow wealth via the interest earned. To make the most out of your savings account, you may want to look for a high-yield savings account which offers higher interest than standard accounts.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

Can you spend directly from your savings account?

You usually can’t spend directly from a savings account. Savings accounts are a secure place to keep money and earn interest, while checking accounts are designed for spending.

Can I use my savings account to pay for things?

Usually, you use your checking account to pay for things. That’s why checking accounts typically come with a debit card and checks. In order to pay for things with funds in your savings account, you may have to transfer the money into your checking account first.

Is there a limit on transactions from my savings account?

Some banks may limit how many transactions you can complete each month from a savings account. There used to be a six transaction limit but, during the pandemic, this guideline was lifted, but some financial institutions still enforce it. Check with your bank to learn if your account has a cap on monthly transactions.

About the author

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.

SOBNK-Q325-079

If you are thinking about getting a car, you may be deciding between buying or leasing. And if leasing seems like the right option for your finances and lifestyle, then you probably want to know what is needed to seal that deal.

Leasing a car typically requires both some cash and a solid credit score. If you have a high credit score, you may snag the best possible (meaning lowest) interest rate. If your credit history is not solid, then you may face higher rates or have difficulty getting approved.

Here, we take a closer look at car lease requirements, including the minimum credit score you’ll need, plus whether leasing a car can hurt or help your credit moving forward.

What Are Car Lease Requirements?

A car lease is essentially a long-term rental agreement where you pay to use a vehicle for a specific period, rather than buying it outright. When you apply for the lease, the financing company will want to make sure that you are a responsible borrower. One way they can assess that is by looking at your credit score.

So do you need good credit to lease a car? The answer is, typically yes. Having good credit may make it easier to lease a car because a leasing company may not see you as financially risky as someone who has poor credit. Not all leasing companies will necessarily approve a car lease for someone who has a low credit score.

You might also need to prove that you have a job with a certain income when you’re leasing a car. Minimum income requirements vary by lender, but you typically need to provide pay stubs or tax returns to prove your employment and salary.

💡 Quick Tip: Make money easy. Enjoy the convenience of managing bills, deposits, and transfers from one online bank account with SoFi.

What Credit Score Do You Need to Lease a Car?

Credit scores typically go from 300 to 850, with five credit score ranges:

•  Poor credit score: 300-579

•  Fair credit score: 580-669

•  Good credit score: 670-739

•  Very good credit score: 740-799

•  Exceptional credit score: 800-850.

There is no one specific credit score you need to lease a car, since the minimum credit score requirement varies by dealership. According to Experian® data, however, customers leasing new vehicles in 2024 had an average credit score of 755, which is just above “good” credit, edging into “very good” credit.

While it’s possible to lease a car with a lower credit score, you might end up having to pay a higher-than-average interest rate or put down a big down payment to get approved.

Recommended: How to Manage Your Money Better

Leasing With a Credit Score Above 680

The credit score to lease a car and get favorable rates is one that’s considered at least “good,” meaning between 670 and 739, or higher. Having good credit typically makes it more justifiable for lenders to approve you for the lease because it’s less of a risk to them.

Just as with any type of financing, applicants who have good or better credit may be offered lower interest rates on auto leases. Having an above-average credit score could give you more negotiating power over the rates and terms of the car lease.

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

Leasing With a Credit Score Lower Than 680

Having a lower credit score means you’ll likely have difficulty finding a company willing to lease to you or you’ll pay more to lease a car. Leasing companies may see you as a risk, based on your credit history. You might find that having a trustworthy cosigner on the lease could help you get a lower interest rate or better terms than if you’re applying on your own.

If your credit score is lower than 680, you might want to work on building your credit profile before leasing a car so you can get a better deal. A good place to start is by checking your credit reports from the three major credit bureaus, which you can do for free at AnnualCreditReport.com.

It’s important to check your reports for accuracy — if there are any errors, contact the credit bureau that issued the report.

Recommended: How to Save Up for a Car

Building Your Credit Before Leasing

There are several ways to build your credit profile before leasing a car. Two of the most important to consider:

•  Pay down debt. This will lower your credit utilization ratio or rate, meaning the percentage of your credit limit you are using. “One way to positively impact or maintain your credit score is keeping your credit utilization low,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “Keeping it below 30% is a good starting point, but the lower the better.”

•  Pay on time. Be meticulous about paying your bills on time or even early. Just one or two late payments can have a negative impact on your credit profile.

•  Limit new credit applications. Each application for new credit results in a hard inquiry on your credit report, which can slightly lower your score.

Can Leasing a Car Build Credit?

Any time you apply for credit, you have the opportunity to build your credit. A car lease is credit, just as a car loan would be credit.

How you manage your lease payments affects your credit reports just as a loan would. Making regular, on-time monthly payments can impact your credit in a positive way. Late or missing payments, on the other hand, can have a negative influence on your credit.

In addition, a diverse credit mix, which can include a car lease, may have a positive impact on your credit profile, especially if you have limited credit history.

Can Leasing a Car Affect Your Credit Score?

As mentioned, paying a car lease on time can be a positive thing. However, missing payments or being late with payments could negatively impact your credit, making it harder to secure loans and leases with good terms in the future.

You may also see a small drop in your credit score when the lease begins because your credit report will show a new account is open. You may see a similar small drop when the lease is terminated because the account is closed. Both of these credit events — opening and closing a credit account — can have a temporary negative effect on your credit.

If you’re shopping around at different leasing companies over the course of a few weeks and apply for leases at those places, there will be inquiries into your credit history by the leasing companies. However, those multiple inquiries may show up as just one query on your credit report and minimally impact your credit.

5 Things That Impact Your Credit

Here are factors that can influence your credit profile:

1. Your Payment History

The single biggest factor in your credit score is your payment history, which can boil down to making payments on time, month after month. That can help build your credit. Paying late or not at all can negatively impact your credit.

2. The Amount Owed

This factor looks at the amount of debt you’re carrying relative to your available credit (credit utilization). High credit utilization (using a large portion of your available credit) can negatively affect your credit.

3. The Length of Your Credit History

Having a longer credit history and having managed lines of credit well for years can benefit your credit. It shows that you can successfully borrow and pay back money.

4. Your Credit Mix

Having more than one kind of credit account can show that you manage borrowed funds well. For instance, it could be helpful if you have handled both installment debt (student loans and car loans are examples of this) and revolving accounts (such as credit cards) well.

5. New Credit

If you apply for a number of new lines of credit and have what are known as hard credit pulls done as part of this, your credit could suffer. It can look as if you are applying for a lot of new debt and may soon be overextended rather than financially stable.

The Takeaway

It’s important you consider what credit score is needed to lease a car before you go car shopping. Checking your credit reports in advance will uncover any surprises in your credit history before you’re at the dealership.

If you notice any blemishes in your past, you may want to take steps to positively impact your credit profile, such as making on-time payments and paying down debt, before you lease a car. This may help you save money on your car lease and give you more negotiating power.

The less you have to spend on interest and fees, the farther your money can go while leasing. Successfully managing leases, loans, and credit in general is part of good financial habits. Having the right banking partner can also enhance how well you handle your cash.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

Can you lease a car with a 600 credit score?

While it’s not impossible to lease a car with a 600 credit score, it will likely take more time and energy to find an offer. You will also probably pay a higher interest rate than someone with good or better credit, meaning you will pay more over the long term.

Does leasing a car hurt your credit?

When you apply for a car lease and the leasing company pulls your credit file, you may see a small dip in your credit score in the short term. After that, whether the lease hurts your credit depends on how well you manage the account. If you make on-time payments, it could positively impact your credit profile, but if you pay late or miss payments, your credit could suffer.

Is it better to lease or finance a car?

Whether it’s better to lease or finance a car will depend on your particular financial situation and goals. When you finance a car, you can eventually own it outright. It’s similar to buying a home with a mortgage. Leasing, on the other hand, is similar to renting. You never own the car or have it as an asset, but then again, you might like “trading up” every few years.

Photo credit: iStock/dusanpetkovic

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 12/23/25. 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.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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/.
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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

SOBNK-Q325-067

If you have a bank account, cashing a check is a simple process; you just deposit it and can then use the funds once it’s cleared.

However, about 4.5% of American households don’t have a bank account, according to a recent study from the Federal Deposit Insurance Corporation. They must therefore rely on alternative methods to cash a check. These workarounds can take a bit of time and energy, but can help you access cash if you are in this situation.

Here, you’ll learn about how you can cash a check if you don’t have a bank account or can’t use it for some reason. You’ll find out the pros and cons of each technique, as well as some important information about using checks and checking accounts.

7 Places Where You Can Cash a Check

There are several ways to cash a check if you don’t have a bank account. Some of these alternatives may come with fees or extra legwork. And some may have restrictions on the dollar amount they will cash. Here’s a closer look at the different ways you can cash a personal or business check without a bank account.

1. Cash the Check at the Issuing Bank

Look at the check to see which bank issued it and if there is a brick-and-mortar branch near you. Sometimes that bank will allow a non-customer to cash a personal check without a bank account if the payee comes in person. The teller can usually determine whether funds are available. The same often holds true for business checks.

•  Those that do provide this service often charge a flat fee (say, $8) or percentage of the check amount.

•  Some large banks will cash a check under a certain amount, $5,000 for example, without a fee.

•  Worth noting: If a bank does collect a fee, it may try to persuade the non-customer to open an account to avoid paying that charge.

2. Cash at a Retailer

Where else can you cash a check without a bank account? Several retailers such as Walmart and some grocery-store chains offer check-cashing services through their customer-service departments, usually for a flat fee based on the size of the check. For instance, at Walmart, there is a $4 fee for checks of up to $1,000 and a $8 fee for those over $1,000.

The amount charged and restrictions on the types of checks cashed will vary, however. For this reason, it’s important to check with each retailer in your area that offers this service to find one that works for your situation.

3. Payday Lending Store

Stand-alone check-cashing and payday-lending stores will cash many types of checks of varying amounts. However, the problem with payday loan check cashing services is that they are often the most expensive, charging a percentage of the check amount as well as a flat fee. For many people, this is best thought of as a last-chance option.


💡 Quick Tip: Fees can be a real drag when you’re trying to save money. SoFi’s high-yield checking account has no account fees, including overdraft coverage up to $50.

4. Prepaid Debit Cards

Some banks and financial institutions allow unbanked consumers to deposit checks directly to a prepaid debit card. Some big banks allow you to use their ATM system to deposit checks onto the card for a monthly service fee.

In other cases, using an app, you can use your smartphone to take pictures of your checks and deposit them into any type of account, including a prepaid card. This is often free, but you may have to wait up to 10 days before the funds from the check are available. In some cases, you can pay a relatively large fee, usually about 2% to 5% of the check value, for quicker access to the funds.

5. Employer-Sponsored Payroll Debit Card

Some large employers have programs that allow you to deposit your paycheck directly onto a reusable debit card. Be sure to look at the various types of fees associated with these cards. You may wind up paying overdraft, ATM, transfer, and inactivity fees in addition to general service fees.

6. Sign Your Check Over to Someone Else

Another option would be to sign a check over to a trusted friend or relative. This person could then deposit the check in their account and withdraw the funds, once available, and give them to you.

This is a simple process. Some verification is involved, and then you usually just need to write “Pay to the order of” and the name of the person on the back of the check and then sign it. However, it’s vital that this person can be relied upon to give you the cash once they deposit the check in their checking account and it clears.

7. Check Cashing Outlet

If you need to cash a check without a bank account, you could also visit a check cashing outlet. This can be expensive, though: Fees can be around 10% of the check’s value.

Here, consider the pros and cons of each in chart form:

What to Consider Before Cashing a Check

To help determine which check-cashing option is best for you, keep the following in mind.

Check Amount

In general, larger checks are harder and more expensive to cash without a bank account than smaller sums. Walmart, for instance, will usually only cash checks up to $5,000 or $7,500.

Check-cashing stores may have similar limits, or higher fees for larger checks. For large checks, depositing into a prepaid debit card may be the best option.

Fees

As we’ve seen above, almost every non-bank checking service entails fees when cashing your check. They can vary widely, with check-cashing and payday-lending stores usually being the most expensive.

It can pay to look for the least expensive alternative in your area, especially if you are able to access the bank that issued the check.

Identification Requirements

To show that the check rightfully belongs to you, you’ll need to show at least one form of government-issued identification, such as a license or passport. With large checks, you may be required to show two forms of ID.

Recommended: How to Write a Check to Yourself

Personal Checks

Personal checks can be more difficult to cash without a bank account than government-issued or payroll checks. Many check-cashing stores won’t accept any personal checks, and retailers may have lower limits on how much they’ll cash, usually a couple hundred dollars.

Here’s one workaround: Ask the person writing you the personal check to send a money order or cashier’s check instead.

Can You Cash a Check Without ID?

To cash a check without ID, you have a few options:

•  Check with the issuing bank and see if they will allow you to cash it without identification or with an alternative method of identification.

•  Sign the check over to someone else, have them cash it, and give you the funds.

•  If you have an account but no ID, deposit the check, wait for it to process, and then withdraw the funds.

•  Use ATM check cashing, if possible.

Recommended: How to Make Money From Home

How to Cash a Large Check Without a Bank Account

The methods for cashing a large check without a bank account are similar to methods for cashing any other check. You will likely want to be a bit more cautious and double-check the process in advance:

•  Sign the check over to a trusted friend or relative

•  Visit a check-cashing outlet.

Opening a Bank Account

Cashing a check without a bank account can often be costly and inconvenient. After exploring the options above, you may find that your best option for the long term involves opening a bank account. A bank account makes saving and spending easy, safe and flexible. Some points to consider when opening an account:

•  What do you need to open a checking account? You’ll usually need to make sure you qualify for an account, have an ID, and be willing to share basic personal information such as your birthdate, address, phone, social security number, etc. You’ll also need an initial deposit, which can often be as little as $25.

•  Keep in mind, most banks have a minimum age to open a bank account; they won’t allow those under 18 to have an account without a parent or guardian as the joint owner.

•  If you have a history of banking issues, such as unpaid overdraft fees, you may not qualify for a traditional checking account. Instead, you may want to consider what’s known as a second-chance account, offered by many lenders. These accounts often charge a monthly fee and come with more restrictions than a traditional checking account. That said, many allow solid customers the opportunity to convert to a regular checking account in six months to a year.

The Takeaway

It is possible to cash a check without a bank account. Options include signing the check over to a trusted friend to cash it and give you the funds, seeing if the issuing bank will cash it, using the check to buy prepaid debit cards, and other tactics.

That said, opening a bank account can be a simple process and can provide not just check cashing but the foundation for your daily financial life.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

Can I cash a $5000 check without a bank account?

You will likely be able to cash a $5000 check at a retailer, such as Walmart, or at a check cashing outlet. Inquire about fees, though, before proceeding to be sure you are prepared.

How can I cash a large check immediately?

To cash a large check immediately, try your bank if you have one or the bank that issued the check. You might also be able to cash it by signing it over to a friend or relative who can give you the cash once it clears, buying prepaid debit cards with it, or going to a check cashing outlet.

What bank will cash a check without an account?

It’s often best to go to the bank that issued the check and see if they will cash it. They will be able to verify that the funds are available and may be willing to give you the money.

Photo credit: iStock/AndreyPopov

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 12/23/25. 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.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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/.
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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q325-044

A credit card can be a useful financial tool and offer a number of perks, from the opportunity to build your credit to the chance to rake in lucrative rewards. However, using a credit card responsibly is key to enjoying those benefits. Otherwise, a credit card could harm your financial well-being rather than help it.

Using a credit card responsibly involves sticking to basic rules like making on-time payments and avoiding practices such as spending more with your card than you can afford to pay off. By learning some tips for how to use a credit card responsibly, you can make the most out of this financial tool.

How Do Credit Cards Work?

A credit card is a payment card that offers access to a revolving line of credit. You can tap into this credit line for a variety of purposes, including making purchases, completing balance transfers, and taking out a cash advance. Cardholders can borrow up to their credit limit, which is largely determined based on their creditworthiness and represents the maximum amount they can borrow.

It’s necessary to make at least a minimum payment by the due date each month in order to avoid a late fee. However, to avoid paying interest entirely, cardholders must pay off their balance in full each month; interest accrues on any balance that rolls over from month to month.

Many credit card companies charge compounding interest, which means that not only will you owe interest on any outstanding balance, you’ll also end up paying interest on the interest. That’s because this interest is calculated continually, then added to your balance, and it may be compounded daily. You may be shocked to see how much credit card interest you’ll pay if you only make the minimum payment each month.

Understanding Your Statement

A crucial component of knowing how credit cards work is understanding your monthly credit card statement. Your statement contains a number of important pieces of information about your credit card account, including:

•   Your account information

•   Your account summary, including your payment due date

•   All purchases made with the card

•   Your total credit card balance

•   The minimum payment due

•   When the credit card payment is due

•   Your available credit

•   Interest charges

•   Rewards summary

Many of these details are key to know in order to ensure you’re using a credit card wisely. For instance, knowing your payment due date will ensure you make your payment on time, avoiding any late fees and a ding to your credit score.

Checking on your available credit can help you ensure you’re not using too much of your credit, which can drive up your credit utilization rate and subsequently drag down your score.

10 Tips For Using a Credit Card Responsibly

To make the most of your credit card, here are several credit card rules to keep in mind — as well as some guidance on what credit card behavior to avoid.

1. Avoid Making Too Many Impulse Purchases

To use a credit card responsibly, you want to avoid overspending with it. How many purchases are “too many” depends upon how much your impulse buys cost and how easily they fit into your budget. Say you know you can pay off your credit card balance and otherwise meet your monthly expenses and savings and other financial goals. That’s an entirely different situation from one in which your impulse purchases are too costly to promptly pay off and/or prevent you from meeting other financial responsibilities or goals.

If you enjoy making spontaneous buys, you may consider including this as a line item in your monthly budget and then sticking to it. This could add enjoyment to your life without causing financial problems down the road.

2. Use the Right Credit Card

There are a variety of different types of credit cards, and depending on how you plan to use your credit card, one option may make more sense than another. Some credit cards are there to help you build your credit, while others pay out generous rewards.

Selecting which card is right for you requires a look at your financial habits and current situation. For example, if you know that you often end up needing to carry a balance, then it may make sense to find a card that prioritizes low interest rates. Or say you’re a frequent vacationer — in that case, you might benefit from a travel rewards card.

3. Take Advantage of Benefits Offered

Interested in another way to use your credit card responsibly? Signing up for eligible rewards programs like SoFi Plus can help cardholders make the most of their card.

Also know that each type of credit card may have slightly different reward programs. See what the full range perks offered by your card are — and if you’re not sure, check the card’s website or ask the credit card company for specifics. For example, you might need help understanding what unlimited cash back really means in terms of how you might benefit.

Once you know what perks are available, you can use them strategically. You may discover that the card(s) you have don’t provide the best benefits for you. For example, maybe your card offers one of its highest rewards rates for gas purchases, but you don’t do much driving. In that case, you might be better served by a rewards card that offers a flat rewards rate or that prioritizes a category in which you’re a frequent spender.

Finally, if you’re earning rewards points, it’s also important to consider the best way to use them. Sometimes it’s possible to get a bigger bang for your buck if, say, you use your rewards points at an approved store rather than opting for cash back.

4. Sign Up for Automatic Payments

To avoid missing payments or making them late, consider signing up for automatic payments or autopay. By enrolling in autopay, you’ll regularly have money transferred from a linked account each month in order to cover the amount due (or at least the minimum payment required).

Another option is to sign up for automatic reminders about payment due dates (by text, for example, or by email). You can do this through the credit card company or via a calendar app.

What’s most important is coming up with a plan that works best for you to ensure you make your payments on time. Otherwise, you could face late fees and adverse effects to your credit score.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

5. Regularly Check Your Statements

Mistakes do happen on credit card statements and, unfortunately, fraudulent activities could impact your account. Check your statement every month to ensure that you made all the charges that appear, and that any payments you’ve made are accurately reflected.

If something is missing, review the statement dates to see if the transaction may have happened right after the statement cut-off date, for instance. If something seems off, contact your credit card company for clarification. In the case of any potentially fraudulent activity, it’s important to report credit card fraud to your credit card company immediately.

6. Pay More Than the Minimum

You’ve just read about how credit card interest works, so you’ll remember that only making the minimum payment doesn’t get you out of paying interest. To avoid credit card interest charges, you’ll need to pay off your monthly statement balance in full.

Understandably, this isn’t always possible, but even then, it still helps to pay as much above the minimum as you can afford to. This will at least cut down on the outstanding balance that accrues interest.

7. Don’t Close Out Old Cards

While it might seem logical to close out an older credit card you’re no longer using, you’ll want to think twice before you cancel a credit card. That’s because doing so can negatively impact your credit.

For starters, canceling a credit card will lower your credit utilization rate, which compares your total outstanding balance to your overall available credit limit. Closing out a card will cause you to lose that card’s credit limit, thus lowering the amount of credit you have available.

Closing an old card could also have an impact if the card in question is one of your older accounts. Another factor that contributes to your credit score is the age of your credit. By closing out an old account, you’ll lose that boost in age.

That being said, there are scenarios where it might make sense to close a card, such as if it charges a high annual fee. Just be mindful of the potential effects it will have on your credit before moving forward.

8. Maintain a Low Credit Utilization Rate

Another key tip for responsible credit card usage is to avoid maxing out your cards. Instead, aim to keep a lower credit utilization rate — ideally below 30%. The lower you can keep this utilization rate, the better your credit score is likely to be. Some financial experts advise keeping your utilization below 10% of your limit.


💡 Quick Tip: Aim to keep your credit utilization — the percentage of your total available credit that you’re using at any given time — below 30% (or lower). This could help you to maintain a strong credit score.

9. Avoid Unnecessary Fees

Another part of using a credit card responsibly is being aware of all of the fees you could face, and then taking steps to steer clear of those costs. Your credit card terms and conditions will spell out all of the fees associated with your card, as well as the credit card’s APR (or annual percentage rate) and the rules of its rewards program.

Many credit card fees are pretty easy to avoid. For instance, if you’ll incur a fee to send money with a credit card, simply avoid doing that and look for an alternative route. Similarly, you can avoid late payment fees by making on-time payments, and over-the-limit fees by not maxing out your credit card.

10. Avoid Applying for Too Many Cards

As you get into the swing of things with using your credit card, you may feel tempted to keep acquiring new cards, whether to keep on earning rewards or to capitalize on enticing welcome bonuses. But proceed with caution when it comes to applying for credit cards.

Applying for credit cards too frequently can raise a red flag for lenders, as it may suggest that you’re overextending yourself and desperate for funding. Plus, each time you submit an application for a credit card, this will trigger a hard inquiry, which can ding your credit score temporarily. Consider waiting at least six months between credit card applications.

The Takeaway

When used responsibly, credit cards can be helpful for a whole slew of things, from making online purchases to helping to build your credit. The key phrase to keep in mind is “when used responsibly.” To stay on top of your credit cards, tips like signing up for automatic payments, watching your utilization ratio, making the most of the rewards programming, and using the right type of credit card for your needs are all important.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What are tips for effective credit card use?

Some ways to use credit effectively include paying your bill in full each month, never missing a payment due date, keeping your credit utilization low, and maximizing available rewards and perks.

What is the 2 3 4 rule for credit cards?

What is known as the 2 3 4 rule for credit cards refers to how a person should apply for new cards. This guideline says that the limits are typically for no more than two cards in 30 days, three cards in 90 days, and 4 cards in 120 days. If you go over those numbers, the credit bureaus may think that you are seeking too much credit.

What is the #1 rule of credit cards?

The top rule for credit cards and responsible usage is to always pay your balance in full and on time. This will allow you to avoid high-interest credit card debt.

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

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

Third Party 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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Determining how long your retirement savings will last can be a complicated, highly personal calculation. It’s based on how much you’ve saved, how you’ve chosen to invest your money, your Social Security benefit, whether you have other income streams — and more.

And even when you have all the information at your fingertips, it can be hard to make an accurate calculation, because life is fraught with unexpected events that can impact how much money we need and how long we’re going to live.

Taking those caveats into account, though, it’s still important to make an educated estimate of how much money you’re likely to accumulate by the time you retire, as well as how much you’re likely to spend.

What Factors Affect My Retirement Savings?

Here are some of the many variables that can come into play when deciding how long your retirement savings might last.

Retirement Plan Type

Whether it’s a defined-benefit plan like a pension, or a defined contribution plan like an employer-sponsored 401(k), 403(b), or 457, the kind of account you contribute to will likely have an impact on how much and what method you use to save for retirement.

Pension Plan

With a pension plan, retirement income is usually based on an employee’s tenure with the company, how much was earned, and their age at the time of retirement. Pensions can be a reliable retirement savings option when available because they reward employees with a steady income, typically once per month.

One potential downside, however, is that pension plans can be terminated if a company is acquired, goes out of business, or decides to update or suspend its employee benefits offerings. Indeed, pension plans are far less common compared with defined-contribution plans like 401(k)s and 403(b)s and the like.^[1]

401(k) Plan

With a 401(k) plan, participants can contribute either a percentage of or a predetermined amount from each paycheck. The money is deposited pre-tax, and the account holder generally owes taxes when they withdraw the money in retirement.

In some cases, the funds employees contribute are matched by their employer up to a certain amount (e.g. the employer might contribute 50 cents for every dollar up to 6%).

Unlike a pension plan, the amount of retirement funds the participant saves in a 401(k) is based on how much they personally contributed, whether they received an employer match, the rate of return on their investments, and how long they’ve had the plan.

IRA or Roth IRA

An Individual Retirement Account, or IRA, is a retirement savings account that’s not sponsored by an employer. Individuals with earned income can open an IRA. There are different types of IRAs, including traditional and Roth IRAs, which each have their own tax treatments.

For both traditional and Roth IRAs, you can contribute a certain amount a year; the amount frequently changes annually. For 2025, individuals can contribute up to $7,000, or $8,000 if they’re age 50 or older.

There are no income limits for a traditional IRA, so account holders can contribute up to the limit. Contributions are made with pre-tax dollars, and a certain amount can be deducted from your income taxes, depending on your income, tax-filing status, and whether you (or your spouse, if applicable) are covered by a workplace retirement plan. You pay taxes on your withdrawals from a traditional IRA in retirement.

On the other hand, a Roth IRA has limits on contributions based on filing status and income level. Contributions are made with after-tax dollars and withdrawals from the account are tax-free in retirement.

Recommended: How to Open Your First IRA

Less Common Plans

Other types of retirement plans like Employee Stock Ownership Plans (ESOP) and Profit Sharing Plans are less common and have their own unique benefits, drawbacks, and details. For example, with an ESOP you get shares of company stock purchased for you, with no investment on your behalf, and these plans are designed so that you receive fair market share for the stock when you leave the company. However, because an ESOP only holds shares of company stocks, there is no diversification. You’ll also owe income tax on the distributions.

Social Security

Social Security is a federally run program used to pay people ages 62 and older a continuing income. Social Security benefits are structured so that the longer you wait to claim your benefit check, the higher the amount will be. If you wait until your full retirement age — 67 for anyone born in 1960 or later, and between ages 66 and 67 for those born from 1943 to 1959 — to start collecting benefits, you’ll receive the full benefit amount. However, if you start collecting benefits at age 62, for instance, you’ll only receive about 70% of your full benefit.^[2]

Expected Rate of Return on Investments

If a person puts money into a defined-contribution plan or makes investments in stocks, bonds, real estate, or other assets, there are a number of return outcomes that could affect their retirement savings.

An investment’s performance is about more than just appreciation over time. Learning how to calculate the expected rate of return on the investment can help you get a clearer picture of what the payoff will look like when it’s time to retire.

Unexpected Expenses

One never really knows what retired life might bring. Lots of unexpected expenses could arise.

An extensive home repair or renovation or maybe even a costly relocation to another state or country might make an unforeseen dent in retirement funds.

A major medical incident or the factoring in of long-term care can be another unexpected expense, as are caregiver costs if you or a family member need help.

Some seniors are surprised to learn that health care can get costly in retirement and Medicare may not always be free. Many of the services they might need could require out-of-pocket payments that eat into savings.

As much as individuals might not want to imagine such scenarios, there could be the chance of a divorce during retirement, which could cause a redraft of the savings plan.

Creating a budget to estimate expenses is a great way to get ahead of any surprising financial setbacks that could sneak up down the line.

Inflation

Inflation can take a hefty toll on retirement savings. Even average rates of inflation might have a significant impact on how much retirement funds will actually be worth when they’re withdrawn. For example, $1,500 in January 2021 had the same buying power as $1,810.12 in October 2024.^[3]

Understanding how inflation can affect your retirement savings might ensure you have enough funds padded out to support you for the long haul.

Market Volatility and Investment Losses

Regardless of financial situation or age, checking in on retirement accounts and the climate on Wall Street could help clarify how market swings might affect your retirement savings.

Retirees with defined contribution plans might suffer financial losses if they withdraw invested funds during a volatile market. Not panicking and having enough emergency funds to cover 3 to 6 months of living expenses can help you weather the storm.

Talking to an investment advisor about rebalancing an investment account portfolio to reduce risk is another option for getting ahead of this unexpected savings speedbump.

Ways to Calculate How Much You Might Need to Retire

Are you on track for retirement? That’s something that can be calculated in many ways, which vary in efficacy depending on who you ask.

Here are a few formulas and calculations you can use to consider how much to save for retirement:

The 4 Percent Rule

The 4 Percent Rule, first used by financial planner William Bengen in 1994, assesses how different withdrawal rates can affect a person’s portfolio to ensure they won’t outlive the funds. According to the rule, “assuming a minimum requirement of 30 years of portfolio longevity, a first-year withdrawal of 4 percent, followed by inflation-adjusted withdrawals in subsequent years, should be safe [for retirement].” Bengen has since adjusted the rule to 4.5% for the first year’s withdrawal.

The jury is out on whether 4% is a safe withdrawal rate in retirement, but some financial professionals have noted that the rule is rigid and some flexibility may be called for, though it is ultimately up to each investor and their specific situation.^[4]

The Multiply by 25 Rule

This one can get a little controversial, but the Multiply by 25 rule, which expanded upon Bengen’s 4% Rule with the 1998 Trinity Study, involves taking a “hoped for” annual retirement income and multiplying it by 25 to determine how much money would be needed to retire.

For example, if you’d like to bring in $75,000 annually without working, multiply that number by 25, and you’ll find you need $1,875,000 to retire. That figure might seem scary, but it doesn’t factor in alternate sources of income like Social Security, investments, etc.

However, it’s based on a 30-year retirement period. For those hoping to retire before the age of 65, this could mean insufficient funds in the later years of life.

The Replacement Ratio

The Replacement Ratio helps estimate what percentage of someone’s pre-retirement income they’ll need to keep up with their current lifestyle during retirement.

The typical target in many studies shows 70-85% as the suggested range, but variables like income level, marital status, homeownership, health, and other demographic differences all affect a person’s desired replacement ratio, as do the types of retirement accounts they hold.

Also, the Replacement Ratio is based on how much a person was making pre-retirement, so while an 85% ratio might make sense for a household bringing in $100,000 to $150,000 per year, a household with higher earnings — say $250,000 — might not actually need $212,000 each year during retirement. A way to supplement this calculation could be to estimate how much of your current spending will stay the same during retirement.

Social Security Benefits Calculator

By entering the date of birth and highest annual work income, the Consumer Financial Protection Bureau’s Social Security Calculator can determine how much money you might receive in estimated Social Security benefits during retirement.

Other Factors To Calculate

Expected Rate of Returns

Determining the rate of return on investments in retirement can help clarify how long your savings could last. An investment’s expected rate of returns can be calculated by taking the potential return outcomes, multiplying them by the likelihood that they’ll occur, and totaling the results.

Here’s an example: If an investment has a 50% chance of gaining 30% and a 50% chance of losing 20%, the expected rate of returns would be 50% ⨉ 30% + 50% ⨉ 20%, which is an estimated 25% return on the investment.

Home Improvement Costs

If a renovation is looking like it will be necessary down the line, you might calculate how much that home repair project could cost and factor it into your retirement planning.

Inflation

You might also consider using an inflation calculator to uncover what your buying power might really be worth when you retire. To do the calculation, you could assume an annual inflation rate of around 2% to 3%, which is what most central banks consider to be modest and balanced.

Making Retirement Savings Last Longer

If you’re still wondering how long your savings will last or seeking potential ways to make it last longer, a few of these strategies could help:

Lower Fixed Expenses

Unexpected expenses are likely to creep up regardless of how much you save, but by lowering fixed expenses like mortgage and rent payments (by downsizing to a less expensive house or rental) as well as food, insurance, and transportation costs, you might be able to slow the spending of your savings over time. Setting a budget is a solid way to see this in black and white.

Maximize Social Security

While opting into Social Security benefits immediately upon eligibility at 62 might sound appealing, it could significantly reduce the benefit over time, as noted above. With smaller cost of living adjustments later in life, a lengthy retirement (people are living longer than ever before) could mean less money when you need it the most.

Stay Healthy

Unexpected medical expenses might still occur, but by safeguarding health and well-being earlier in life, you may be able to avoid costly chronic conditions like high blood pressure, diabetes, or heart disease.

Keep Earning

Whether it’s staying in the full-time workforce for a couple more years or starting a ride-share side hustle during retirement, continuing to bring in money can help you stretch your savings out a little longer.

The Takeaway

Everyone wants a secure retirement. An important step in your retirement plan is calculating how long your savings will likely last. While there is no way to know for sure, this is such an important step in long-term planning that many different methods and strategies have evolved to help people feel more in control.

There are investment strategies, tax strategies, and income strategies that can help you create a forecast of how you’re doing now, and how your retirement savings may play out in the future. Because there are so many risks and variables — from the markets to an individual’s own health — just having a basic calculation will prove useful.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.