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Banking can be a complex thing, but understanding what’s known as the simple deposit multiplier doesn’t have to be. The simple deposit multiplier is the multiple by which a bank can lend out funds based on the reserve requirements. It ensures the bank maintains the minimum amount of money on hand to keep bank operations up and running. It also gives the bank the opportunity to boost the economy.

But that’s not all you need to know to understand this concept. Learn the details and practical insights you need here, including:

•   What is a deposit multiplier?

•   How does a deposit multiplier work?

•   What are real life examples of a deposit multiplier?

•   What’s a deposit multiplier vs. money multiplier?

What Is a Deposit Multiplier?

Also called the deposit expansion multiplier or simple deposit multiplier, a deposit multiplier is the maximum amount of money banks can create based on reserved units. To put it another way, it’s the multiple that banks use to know how much they can lend out vs. money kept on hand according to the existing reserve requirement. The deposit multiplier is typically a percentage of the amount deposited at a bank.

Why does the deposit multiplier concept matter? It plays a key role in the fractional reserve banking system, or FRB. This system involves the stipulation that banks must keep a certain amount of money on hand in reserves to conduct their day-to-day business. More specifically, the U.S. central bank, the Federal Reserve, mandates that banks hold a certain amount of money, known as required reserves, to make sure there is enough month for withdrawals from depositors. Any excess money that remains after the bank fulfills its daily operations can be loaned to borrowers (say, for mortgages). The amount that can be used for loans is determined by the deposit multiplier.

By accepting deposits and then making loans, banks have the ability to increase and decrease the money supply. When a financial institution lends out money in excess of its required reserves to businesses and consumers, it can amplify the money supply. That’s why the deposit multiplier metric matters; it’s a key way that the Federal Reserve and central banks can control the money supply as part of an overall monetary policy.

Recommended: How Long Does It Take For a Direct Deposit to Go Through?

How Does a Deposit Multiplier Work?

Here’s how a deposit multiplier works: When the account holder puts money in any of the different kinds of deposit accounts offered, the bank holds a percentage of it. This percentage is called the reserve requirement, which is set by the Federal Reserve. It helps ensure that the bank keeps an adequate amount of cash reserves available to meet the needs of withdrawal requests.

Keeping money accessible on demand can be critical. This protects against people trying to withdraw cash in keeping with fund availability rules and finding that their money is unavailable, which could be a deeply problematic and distressing experience.

A deposit multiplier is the multiple that allows banks to lend out money that’s deposited in the bank. This is the maximum amount of money the bank can lend out according to the value of its reserves. It is typically expressed as a percentage. You’ll learn more about that in a moment.

Recommended: How to Set Up Direct Deposit

Real Life Examples of a Deposit Multiplier

To understand a deposit multiplier, it’s wise to understand a few basic banking concepts. For banks, deposits are liabilities, because it is money owned by the account holder, and loans are assets for banks, because that money belongs to the financial institution and must be repaid. Banks also have reserves, which are deposits in the bank or in the Federal Reserve. Reserves are cash available to the bank. There is also an amount the bank must keep on hand, known as required reserves. Excess reserves is the term used to describe when the bank has more reserves than is required; these funds can in turn be lent out.

Now, if someone makes a $1,000 deposit, the bank’s liabilities and reserves would increase by $1,000. If the required reserve ratio is 10%, that means must keep $100 on hold and available, but the other 90%, or $900, may be lent. This allows the bank to expand the economy and profit.

To see how the simple deposit multiplier works, let’s consider an example in which a deposit of $10,000 was made and the required reserve ratio is 5%, meaning $500 has to stay on hand.

The deposit multiplier formula is: 1 / reserve ratio.

So with a required reserve ratio of 20%, the deposit multiplier is five. So for every dollar in the bank’s reserves, the financial institution can boost the money supply by up to $5. If the reserve ratio was 5%, the deposit multiplier would be 20, and the bank could build the money supply by $20 for each dollar held in reserve. As you see, the lower the reserve ratio is, the higher the deposit multiplier is and the more it can lend out.

Recommended: Benefits of Using Mobile Deposit

How Do You Find the Simple Deposit Multiplier?

The simple deposit multiplier is a ratio between bank reserves and bank deposits. It’s important for maintaining the money supply of the economy and the banking system.

As noted above, this figure is calculated by dividing 1 by the required reserve ratio. For example, if the required reserve ratio is 10%, this means the deposit multiplier is 10. For banks, this means that for every $10 deposited, a total of $1 must be kept in reserves, and the bank can increase the money supply by $10 for each dollar it’s holding.

Deposit Multiplier and the Economy

The Federal Reserve, which is the U.S. central bank, uses the deposit multiplier as one of its monetary tools to control the supply of money in the economy. Usually the money that is deposited in a bank is unlikely to stay in the bank. The money that a consumer deposits in a bank is lent out to another consumer in the form of a loan. The deposit multiplier measures this change in checkable deposits as bank reserves change.

Banks are creating money by expanding the amount of reserves into a larger amount of deposits. If the bank decides to keep a small amount of deposits as reserves that means more money is sent to other banks and more deposits are created at these other banks. If a bank decides to keep a larger sum of deposits as reserves, that means less money or new deposits are made in other banks or circulated among consumers.

When money is loaned out to a consumer, at some point that loan will be repaid and deposited back into the banking system. If there is a required reserve ratio of 10%, then 10% of that new deposit will remain in the bank and the rest can be loaned out into the economy. This cycle fuels economic growth, not to mention profit for the bank.

Recommended: How to Deposit Cash in an ATM

Deposit Multiplier vs Money Multiplier

While these two terms sound quite similar and are closely connected, they are not quite interchangeable. Consider the differences between a deposit multiplier vs. money multiplier.

•   The deposit multiplier is the maximum amount of money banks can create by lending funds. Some deposited money must remain on hand according to the required reserve ratio, but the rest can be used to grow the economy as indicated by this figure. The deposit multiplier is calculated as one divided by the reserve ratio.

•   The money multiplier is the increase in the bank’s money supply. It measures the change in money supply created through bank lending and is usually lower than the deposit multiplier since banks don’t lend all of their reserves.

The Takeaway

The deposit multiplier is a tool used by financial institutions. It expresses the maximum amount of money a bank can create based on its cash held in reserves. The figure is calculated as one divided by the required reserve ratio; the lower the reserve ratio is, the higher the deposit multiplier is and the more a bank can lend out. The deposit multiplier can help to optimize an economy’s money supply, which is why this metric is used by central banks all over the world.

If you are a personal banking client, you probably aren’t too focused on the deposit multiplier. You likely want convenience, high interest rates, and low fees. If so, come check out how good banking with SoFi can be. Open Checking and Savings with direct deposit, and you’ll earn a terrific APY, pay no account fees, and have access to the Allpoint network of 55,000+ fee-free ATMs. Plus, since we’re an online bank, we’re here for you 24/7.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

How do you use a deposit multiplier?

The deposit multiplier is used to determine the amount of money that can be created with the funds in a bank’s money supply.

How are deposit levels calculated?

In banking, the loan-to-deposit ratio (LDR) is calculated by dividing the bank’s total amount of loans but the sum of deposits over a specific time period. Loans are considered assets, by the way, since the money is the bank’s, while deposits are deemed liabilities, since they belong to the account holder.

What is the formula for a simple deposit multiplier?

To find the deposit multiplier, you divide one by the required reserve ratio. So if the reserve ratio is 5%, the deposit multiplier is 20. If the reserve ratio is 10%, the deposit multiplier is 10.

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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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Canceling a credit card might seem like a good idea if you’re trying to get debt under control or you want to consolidate your cards. But closing a credit account may do more harm than good and damage your credit standing. Before you take action, here’s what you need to know — and other strategies you may want to consider instead.

Understanding the Impact of Credit Utilization Ratio

In order to understand why canceling a credit card can hurt your credit score, you need to know about something called the credit utilization ratio. This is the ratio of your total credit to your total debt.

Another way to think of it is how much of your available credit you’re using. For instance, if you have two credit cards with a total line of credit of $20,000 and you use $5,000 of that, you have a credit card utilization ratio of 25%. In addition to credit cards, your credit utilization ratio can include things like loans, such as a mortgage, car loan, and personal loan.

Your credit utilization ratio directly affects your credit score. In fact, it accounts for 30% of your FICO score. Your credit utilization ratio is the second most important factor in your credit score (payment history is number one). Ideally, lenders like to see a person’s credit utilization ratio below 30%.

When you cancel a credit card, you reduce your available credit, which can cause your credit utilization ratio to jump up, especially if you owe money on other credit cards. This can negatively impact your credit score.

Reasons to Cancel a Credit Card

There are several factors that may be motivating you to want to cancel a credit card, including:

•   Too much debt. Perhaps having the card on hand is causing you to overspend and take on even more debt. If canceling the card will help you manage your finances better and get your debt under control, it can be a good option.

•   A high annual fee. If the card’s fee is high and you aren’t taking advantage of any of the perks like travel rewards to offset it, you may want to find a card that’s a better fit.

•   Too many cards. If multiple credit cards are causing you to stress out and miss payments, fewer cards might help lighten the load.

How to Cancel a Credit Card

If, after considering the pros and cons, you’ve decided to go ahead and cancel the credit card, here’s how to do it:

1.    Pay off the remaining balance on the card, or transfer the balance to another credit card.

2.    Contact the credit card company, preferably by phone. Some credit card companies allow customers to cancel online, but most will require a call. Keep in mind the company wants to hold onto customers, which could mean that they will try to entice you with offers or deals. You have the right to cancel at any time.

3.    Consider sending written confirmation to make things official. Send a letter to the credit card company informing them that you have canceled the same credit card account. Post it via certified mail to ensure the company receives the letter with confirmed receipt.

4.    Look at credit reports for changes to your credit score. The canceled account should be reflected in your credit score within several weeks. AnnualCreditReport.com offers a free copy of your credit report once a year.

5.    Cut up the card. Shredding or destroying the card helps prevent fraud.

Can Closing a Credit Card Impact Your Credit History?

Closing a credit card can affect the length of your credit history. That’s important because credit history is one of the factors used to help determine your credit score. In general, creditors want to know that you’ve had credit accounts over a period of time, so the longer the relationship, the better.

Recommended: 10 Credit Card Rules You Should Know

How to Downgrade Your Credit Card

If you’re considering canceling your credit card because of high fees or a high interest rate, you might want to downgrade the card instead. By downgrading you can swap your current credit card for one with a lower fee or lower interest rate.

Downgrading can provide some of the benefits of canceling the card without the negative impact of closing the account.

If downgrading sounds like a good option for you, these strategies can help:

•   Research the credit card issuer. Do they have cards with a low or no annual fee? It may be worth switching to credit card issuers with one of those.

•   Call the credit card company and ask for a downgrade. They may offer to waive the annual fees on your existing card. Or they may downgrade you to a low-interest card with no annual fee.

•   Ask about a partial refund. Some credit card companies will provide a partial refund on the annual fee, depending on when you downgrade. Ask the customer service representative if they can prorate the annual fee or provide any refund.

How to Keep Your Credit Utilization Rate Low

Whether you downgrade a credit card or not, it’s important to improve your credit utilization rate since it counts for 30% of your FICO score. Here’s how to keep yours low.

•   Make more than one credit card payment a month. Making more than two automatic bill payments or one payment per billing cycle can benefit your credit score. That’s because credit card companies report balances towards the end of the billing cycle. Making several payments can reduce your credit utilization ratio when your balance is reported.

•   Keep credit accounts open, if possible. Keeping a card open, even if you rarely use it, increases your credit limit and helps lower your credit utilization rate.

•   Ask for an increase in credit limit. If you have a record of ontime payments, your credit card company may be willing to increase the credit limit for your account. And the more available credit you have, the better your ratio. Call customer service to make the request.

The Takeaway

Canceling a credit card can negatively impact your credit score, so make sure to consider all your options carefully. You can keep the credit account open, which can help with your credit history, and rarely use the card. Or you can downgrade to a card with a lower interest rate and no annual fee. In the end, the decision is yours, but it’s good to know you have choices.

You can track your credit score with SoFi’s money tracker app. It helps you stay up to date with any changes that affect your score, allows you to connect all your bank accounts, and lets you monitor your spending habits and savings all in one place.

With SoFi, you’ll always know where your credit score, and your finances, stand.

FAQ

How do I close a credit card without affecting my credit score?

Closing a credit card is likely to have a negative impact on your credit score. Downgrading to a card with a lower interest rate and no annual fee may be a better option.

Is it better to cancel unused credit cards or keep them?

If the credit card has a low interest rate and no annual fee, it can be better for your credit score and your credit history to keep the card.

Does canceling a credit card hurt your credit?

Canceling a credit card can hurt your credit score. However, practicing other good credit habits, like paying your bills on time, can help you gradually get back in good standing.

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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 .

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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Learning money management skills early can set a person up for financial success throughout life. That’s why high school and the start of college are ideal times for students to gain some knowledge and skill so they can manage their money, whether that means saving their earnings from a summer job or understanding the ins and outs of college loans.

Skills like budgeting and building a solid credit score may seem daunting to high school students at first — but quickly become exciting and engaging as they gain independence and see the results pay off.

Here, you’ll learn about the ways to start on a path of smart money management and good financial habits, from using credit wisely to building an emergency fund.

Budgeting Checklist for Incoming College Freshmen

1. Setting up Your Own Bank Account

Financial planning for high school students begins with a simple money move: opening an online bank account. This is also a key step towards independence; it marks the shift from asking mom and dad for funds to being a more self-sufficient young adult.

Typically, you can open your own bank account once you turn 18. If you are younger, you will likely still need your parent’s help to open either a joint account or high-school student account.

But if you are 18 or older, you can easily open a bank account online or in person at a bricks-and-mortar bank branch. You might look for a college student bank account, which may have lower fees. Typically, the documents needed to start an account will include:

•   Government-issued photo ID, like a driver’s license or passport.

•   Proof of your mailing address.

•   Your Social Security number.

You may or may not even need to make an opening deposit. Before you sign on,though, do read or inquire about the account terms. You’ll want to know what kind of requirements (like a minimum monthly balance) and fees (such as monthly and overdraft fees) are expected so you can make sure to get the best, most affordable deal possible.

Aim to open both a checking account for spending and a savings account for rainy day or emergency funds.

2. Preparing for College Ahead

If you are a high school student, you are probably aware of how big an issue student debt can be in America. Currently, approximately 43 million borrowers owe around $1.6 trillion in student debt. Being saddled with significant debt may make achieving your financial goals harder. Familiarizing yourself with how much your education will cost is a good step as you prepare for college. This knowledge can help you chart a path that avoids too much debt.

As you compare the tuition of colleges you might attend, look at the funds available vs. how much you might have to borrow. The U.S. Office of Financial Readiness has a useful Savings Goal Calculator to show you how long it’ll take to save towards your goal and what your monthly contribution would be, along with other tools.

3. Getting a Credit Card to Build Credit

As you are probably well aware, credit cards are a convenient way to pay for purchases online and in-person. They also help build your credit score, which is a three-digit number that reflects how well you handle debt. It’s based on such things as how good a job you do of paying bills on time and how well you use credit (that is, not charging up a storm on your plastic if you can’t easily repay it). Your credit score is calculated by the big three credit reporting agencies (Equifax, Experian, and TransUnion). If you have a good rather than fair credit score, it means you’ll likely qualify for lower rates if you take out a car loan or mortgage later in life.

If you’re a high school student, you can learn how to use a credit card wisely to build credit by being added onto a parent’s credit card. Their wise use of their card and good credit rating can create a solid launching pad for your credit score. Parents can set low borrowing limits and write up agreements with their kids to ensure their responsibility for paying off their card.

4. Growing an Emergency Fund

As a high school student, you likely have free housing and free food. That won’t always be the case, so while your expenses are low or even non-existent, it’s a great time to start saving for a rainy day (aka creating an emergency fund).

You only need three things to start saving: some money, an account, and a goal. In terms of goals, getting in a groove of saving some “just in case” cash can be a very smart move. An emergency fund can really provide peace of mind when those unexpected life events occur, like a big medical bill arrives or your laptop dies. Even if you just put $20 a month away, it’s a good start.

You might also put away some cash you earn if you are working or money you receive as a gift. If you start an emergency fund now, you’ll have a headstart on financial security when you’re in college.

5. Creating a Monthly Budget

Now, when you’re young, is a great time to learn how to create a budget and stick to it. It boils down to understanding how much money you have each month and how that will be allocated towards your needs and wants. Of course, budgeting for high school students may be a little different than budgeting for adults; you likely aren’t paying your own rent and utilities, nor are you probably working full-time. But still, it can be a valuable exercise to help you understand cash management today and tomorrow.

There are many engaging tools available to help you build your budget, from great-looking notebooks to easy-to-use apps. They can help guide you through understanding your fixed expenses (say, your monthly cellphone bill) and your variable expenses (groceries and dining out). You’ll want to make sure the money you have every month covers your fixed and variable expenses and allows you to save a little, too. If you are interested in learning more about budgeting for beginners, you might look into options like the envelope system or the 50/30/20 rule.

Recommended: How to Build a 50/30/20 Budget

6. Not Relying on Credit Cards

Another good budgeting strategy for high school students is to be careful when using a credit card. Shopping with a credit card can feel as if you are getting things for free. That is, until the bill, with the high interest rate added on, arrives.

Carrying a balance on your card will cost you. Interest rates add up over time — and you’ll spend more on an item than you would have with cash. You also risk building a habit of living beyond your means.

To keep out of credit card debt, try to only use your credit card to pay for essentials like your phone or car insurance bill every month. Your bill will be much more manageable than if you use plastic to hit the mall. And when your bill is manageable and you can pay it off monthly, your credit score will likely increase.

7. Not Getting Overzealous With Spending

Building on the idea above, part of entering adulthood means knowing how to sidestep financial pitfalls. Overspending is a major one, and it can be so fun in the moment. Shopping is easier than ever with your phone and computer, but those non-essential expenses add up. Here are a few tricks to stop that bad habit before it starts:

•   Create a shopping list for your next outing. Let’s say you’re dorm room shopping. Set a budget, and use cash or a debit card so you spend only what you have.

•   Avoid sales at stores…it’s better to spend no money than money on something you don’t need—no matter how good the deal is.

•   Sleep on it. If you see something you like…don’t get it right away. Think about whether or not you really and truly need it. If you feel as if you have to have it but can’t afford it, get in the habit of saving for it and then buying it outright instead of charging it and then dealing with credit card debt.

8. Paying Attention to Bills and Charges

Even though you are in high school, right now is a great moment to start being a savvy consumer. Get in the habit of tracking your bills, making sure they are accurate, and paying them on time. You might review bills at the end of each week or month, say. Review bills carefully as scams, hacks, and fraudulent charges do happen.

You might also set up bill pay reminders and track expenses on phone apps. Finance apps from banks and software companies have alert systems that can notify you of new charges and due dates. These can pop up as phone banners, text messages, or emails.

While you’re at it, why not check your account balances regularly? For many people, a couple of times a week is good. This will help you stay in touch with how your money is doing and will also allow you to catch any fraudulent activity early.

9. Keeping Your Credit Card Clean of Any Bad Reports

Learn how to build a positive credit score by paying your credit card bill on time. Paying bills on time is the biggest contributor (35%) to your credit score, so work towards nailing that.

Also know that your credit utilization ratio matters. Here’s what that ratio does: It reflects how much of your available credit you are using. So if you have a credit card with a $1,000 credit limit, if you charge $700, you are at 70% of your limit. Which, according to financial experts, may be too high and can lower your credit score. The best rule of thumb for balances on your card is 10% or less of the borrowing limit and no more than 30%. This shows a less risky use of credit.

10. Thinking About Insurance Early

High school students usually don’t need policies like life insurance or disability insurance, which are part of true “adulting.” But it helps to get familiar with how insurance works.

Car insurance is a great product to learn with. If you are getting a car, ask your parents to help you shop for auto insurance or look online. There are tools that let you compare policy features and rates. If you are covered by your parents’ policy, ask them to walk you through its features and costs. These experiences will help you learn how to protect your hard-earned assets and be a smarter consumer.

Why Getting Started Young Is Important

Building financial health early sets you up with the life skills needed for bigger decisions, like purchasing a home or retiring early. Recent research found that young people who have taken some financial literacy courses make better financial decisions, like avoiding costly debt. Immersing yourself in or at least getting some basic knowledge about finance will serve you well for years to come.

Here are some other advantages of building your financial know-how and learning how to budget:

Shows Maturity to Parents

Learning basic financial skills will help you transition from dependence on your parents to independence. It will also show your parents that you are ready for more freedom and self-reliance, which can be a good thing, especially if they are the helicopter types.

Helps Parents With Expenses

By learning to budget and manage your money, you can help your family reach their goals. If you stash cash aside now, you might have enough funds to pay for books or daily needs like toiletries and food when you are in college. You might even be able to contribute a chunk of change towards tuition. Whatever the case, starting to save for college in high school will help you gain good financial habits.

Prepares You Better for College

Setting up a financial plan when you are a high school student is great preparation for college. Students who have a good knowledge of budgeting will likely not run out of spending money while on campus. They may also have an understanding of college loans that makes them less likely to default when it’s time to repay them. Establishing moneywise routines early can set you up for decades of financial health.

The Takeaway

High school is a great time to begin to learn financial concepts and skills like budgeting and nurturing a good credit score. While you are living at home and not paying rent, you can begin to establish good habits with bank accounts, credit, and bill paying that will reward you throughout your life.

One important step is setting up a bank account that helps your money grow. When you open an online bank account with SoFi that includes direct deposit, you’ll be rewarded with a competitive APY and no account fees, so your money grows faster. Plus you’ll have access to 55,000+ Allpoint Network ATMs worldwide at no cost.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

How can a teenager create a budget?

Students have a wealth of resources like free budget templates on the Internet, budgeting apps, or old-school budget planners. You might look into some of the different methods, like the envelope system and the 50/30/20 rule, and see which one suits your style best.

How much money should a high schooler have saved?

That depends on the individual and their goals. The general rule of thumb for savings is three to six months of living expenses in your emergency account. For high school students, who typically aren’t paying for daily living expenses, they might begin saving $20 or more a month to build up a nest egg for when they are on their own.

How should a beginner budget?

A beginner should partner up with someone to guide them. Ask a parent or a trusted older relative to help you set up a budget. Another avenue is to use online tools, from financial literacy courses and videos to apps that help you track spending and savings.

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Photo credit: iStock/SDI Productions

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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.

SOBK0622018

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It’s certainly a frustrating experience to be denied a checking account, but you can find out why you were rejected and take steps to get approved. The truth is, your bank account application could be denied for many reasons. Maybe you had some issues in the past (say, closing an account with a negative balance) or perhaps there’s just a plain old mistake in your record.

Whatever the case, you probably want to repair the situation ASAP. Having a checking account is a hub for many people’s financial life. It’s where your pay is likely deposited and how you pay your bills.

So let’s take a look at:

•  Why your bank application was denied

•  What your ChexSystems record might have on file

•  How a second-chance checking account could help

•  Steps to take before reapplying for a checking account

Reasons Why You May Be Denied a Checking Account

Are you wondering, “Why was I denied a checking account?” There are a few reasons that could be the determining factor in this situation. Many people wonder if they can be denied a checking account because of their credit score. Typically, banks don’t pull your credit report when you apply for an account. Your credit score is a measure of your creditworthiness; how well you do in terms of borrowing and repaying money, from whether you pay your utility bills on time to whether you have credit charge offs on your cards.

What they do look at is a similar record but for how well you have handled your banking life. Consumer agencies provide banks with information about your prior checking account activity. ChexSystems is one of the most well-known of these banking reporting agencies. It collects information from banks on your checking account activity and assigns you a score depending on how well you manage your bank accounts. The banks use this score to decide whether to qualify you for a checking account. If you have a poor score (we’ll share more details on that in a minute), you may be denied.

But your ChexSystems report is not the only reason a bank may deny you a checking account. There might be a simple error in your personal information. For example, your name might be spelled wrong or your Social Security number could be incorrect. The bank will try to electronically verify these data with a third party, and any errors will cause the application to be rejected.

You will also have to provide proof of identity, such as a copy of your driver’s license or passport, and if there are discrepancies between the documents and the information typed into an application, the application may be rejected.

Let’s now take a closer look at what might be responsible for your being rejected for a checking account.

Recommended: How Often Should You Monitor Your Checking Account?

Negative Information on ChexSystems

Negative items on your ChexSystems report may get you denied for a checking account. They can cause banks to consider you a high risk for financial services. Negative information that could cause your application to be rejected include one or more of the following:

•  Forced account closures

•  Bounced checks or overdrafts

•  Suspected fraud or identity theft

•  Unpaid fees or negative bank balances from a current or closed accounts

•  Too many account applications submitted over a short period

These negative marks on your record can last up to five years.

Errors on Your ChexSystems Report

Just as you may have credit report errors, so too can your ChexSystems report have mistakes. This could trigger your bank account application to be rejected, even if your past checking account management was good. You can obtain a copy of your ChexSystems report once a year or whenever your application for a bank account is denied. (Keep in mind, though, that applying for a bank account too many times will be a black mark against you. If you get rejected, it’s probably a good idea to investigate your banking report vs just putting in more applications.)

If you are denied a bank account, check whether simple errors on your ChexSystems report could be the reason.

Bad Credit

Your credit score can affect a bank’s decision regarding a checking account. ChexSystems collects data related to both debit and credit accounts, and a low credit score may play a role. If unpaid debts and fees are reported to a collection agency, and that information finds its way to the credit reporting bureaus, your credit score will be negatively affected.

Recommended: What Is Considered a Bad Credit Score? 

Bankruptcy

If you have filed for bankruptcy, the bank will find out when it checks your background. Depending on the bank’s stipulations, they may decide that you are too much of credit risk to offer you a bank account. Your borrowing capacity will be significantly limited by bankruptcy, as will the number of financial institutions willing to provide you with financial services, such as a checking account.

Identity Can’t Be Verified

An application for a bank account may be rejected simply because there are mistakes and/or the information entered does not match the documents you submitted. For example, if you have recently moved, the verification source may not recognize your new address, or you might have answered security questions incorrectly when prompted by the verification system.

Here are other reasons your identity might not be verified:

•  Your submission had an error or typo.

•  Your credit profile may contain erroneous information.

•  Your credit report could be frozen if there is suspicion of fraud or identity theft.

•  Your documents may have expired.

•  Your documents may be unreadable.

•  You may have submitted a phone number that is not associated with your address.

Recommended: How To Read A Credit Report

Alternative: Second-Chance Checking Account

So let’s say your bank account application was denied. How do you get that checking account that you need? Here’s one route: Some banking institutions offer a second-chance account for those denied a traditional checking account. A second-chance account provides limited services, but it can help improve your financial life if managed responsibly.

These accounts often come with high fees, but you can upgrade a second-chance account to a regular checking account within a year or two if you pay the fees and maintain a positive balance. These accounts can help you on your path to building a solid banking history.

Steps to Take Before Reapplying for a Checking Account

If you’ve been denied a checking account, you may well want to apply elsewhere immediately. But a word of warning: Doing so could cause your application to be rejected if you request a new account too often. To maximize your chances of success, take the following steps before you reapply.

1. Find Out Why Your Application Was Denied and Ask the Bank to Reconsider

By law, the bank should tell you why your application was denied. Regardless of the bank’s information from a reporting agency, the bank makes its own decisions when approving account applications. You may be able to overturn the bank’s decision depending on the circumstances. It’s probably worthwhile to make that request.

2. Check Your Banking Report

You can obtain a copy of your ChexSystems report once a year and whenever you are denied a bank account if the report is the cause of your rejection. Visit the ChexSystems’ website or call 800-428-9623.

3. Look for Errors and Fraudulent Activity

Once you have your ChexSystems report, look for fraudulent activity or mistakes in information such as your name, address, phone number, or Social Security number. For any errors contact the agency, and be ready to provide supporting information to ensure the issue gets corrected.

4. Clean Up Your Report

Look at the negative actions on your report and fix them; you can file a dispute for anything erroneous by going to the ChexSystems website. Pay off any debts and unsettled fees. Ask to have the negative activity removed. Otherwise, they can stay on your report for up to five years.

The Takeaway

Having your application for a bank account denied is an upsetting experience that can definitely limit your financial life. The root of the problem could be that ChexSystems or another consumer reporting agency has given the bank information indicating that you are a high-risk customer. But your application could also have been rejected because mistakes were made or your identity couldn’t be verified. By taking steps to remove errors and repair damage, you’ll be on the road to get the accounts you need to keep your money safe and keep your financial life humming along.

When you’re ready to apply for bank accounts again, check out what SoFi has to offer. When you open our linked Checking and Savings account with direct deposit, you’ll get an array of benefits that make banking a breeze and help your money grow. You’ll earn a competitive APY and pay zero account fees. Plus, you’ll have access to your paycheck two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.60% APY on SoFi Checking and Savings.

FAQ

Can you get a bank account if you’ve committed fraud?

If you have committed fraud, you will likely have a history with ChexSystems, and you are likely to find your bank account application declined. However, you can get a second chance checking account. If you maintain a positive balance and pay the monthly fees, you can probably upgrade to a regular checking account within a year or two.

How do I get my bank account after being blacklisted?

ChexSystems will blacklist you if you show a pattern of questionable behavior like failing to pay fees or committing fraud. You can try to remedy the record by paying off debts, but otherwise, your record could be with you for up to five years. You can seek out a second chance loan and hope that you can upgrade to a regular checking account within two years if you manage your account responsibly.

How long do fraud investigations last?

There’s no formal limit on the length of an investigation. Typically, they take about 45 days. But remember, if you are found guilty, that negative information can stay on your ChexSystems report for up to five years.

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Photo credit: iStock/skynesher

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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 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.

SOBK0322015

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With the cost of higher education out of reach for many, more young people are flocking to high-paying trade jobs that don’t require a bachelor’s degree. Many of these jobs not only pay well, they are typically in high demand through unpredictable job markets or economic conditions.

What Is a Trade Job?

A trade job is a profession that doesn’t require a college degree, but rather a specialized skill or skill set obtained through a trade school or on-the-job experience and training. Popular trade jobs include construction managers, technicians, dental hygienists, mechanics, commercial pilots, and real estate brokers.

Pros of a Skilled Trade Job

A skilled trade job can be an attractive career path for a couple of reasons:

Educational Requirements

Unlike careers that require a college degree, which can cost hundreds of thousands of dollars and take four years to complete, trade jobs can often be obtained with less than two years of specialized education and at a fraction of the cost. Some trade jobs do not require any supplemental education at all, allowing trade workers to earn a living without being saddled by any student loan debt.

Recommended: Is the Average College Tuition Rising?

Job Security

Many trade jobs are in high demand due to the specialized knowledge and skilled physical labor needed to perform them. They are also potentially at lower risk of outsourcing or automation because they require a physically present human.

Cons of a Skilled Trade Job

On the other hand, there are negative connotations with some trade jobs, including:

Physically Demanding

Trade jobs that involve a lot of labor, like HVAC technicians, construction workers, and mechanics can take a physical toll over the course of a long career.

Potentially Dangerous

Certain trade jobs have high injury and mortality rates, particularly ones that involve the operation of heavy machinery or working in hazardous environments.

25 Trade Jobs That Make the Most Money

Despite conventional wisdom that a bachelor’s or master’s degree is required to earn a good salary, trade jobs can pay very well. In fact, some of the highest-paying jobs in certain states are skilled trades.

Here are 25 of the highest-paying trade jobs in 2022, according to data from the U.S. Bureau of Labor Statistics:

1. Transportation, Storage, and Distribution Manager

•   2021 Median Annual Salary: $98,230

•   Requirements: High school diploma or equivalent; 5+ years of work experience

•   Job Description: Supervising and coordinating the transportation, storage, testing, and shipping of materials or products in accordance with government regulations.

•   Duties:

◦   Supervising workers involved in receiving or shipping

◦   Inspecting warehouse and equipment safety

◦   Analyzing logistics and collaborating with other departments

2. Elevator/Escalator Installers & Repairer

•   2021 Median Annual Salary: $97,860

•   Requirements: High school diploma or equivalent; apprenticeship; license (certain states)

•   Job Description: Assemble, install, maintain, and fix elevators, escalators, chairlifts and other moving walkways and equipment. In addition to understanding the mechanics and components of each system, they are typically involved in the physical repair or replacement of parts, as well as testing equipment to ensure it meets specifications.

•   Duties:

◦   Assembling elevators, escalators, and similar units

◦   Conducting preventative maintenance and inspections

◦   Maintaining service records

Recommended: Does Net Worth Include Home Equity

3. Nuclear Power Reactor Operator

•   2021 Median Annual Salary: $94,790

•   Requirements: High school diploma or equivalent; long-term on-the-job training; U.S. Nuclear Regulatory Commission license

•   Job Description: Responsible for controlling and maintaining the systems that generate and distribute power to businesses, homes, or factories. This can include electricity generated through gas, nuclear, hydroelectric, wind, or solar energy.

•   Duties:

◦   Monitoring voltage and electricity grids

◦   Adjusting control rods and electricity output

◦   Recording systems data

Recommended: Tips for Using a Credit Card Responsibly

4. Radiation Therapist

•   2021 Median Annual Salary: $82,790

•   Requirements: Associate degree (preferred) or certificate; state and national license

•   Job Description: Administer radiation therapy to patients with cancer and other illnesses.

•   Duties:

◦   Explain treatment plans to patients

◦   Calibrate and operate radiation machinery

◦   Monitor patient and keep records of treatment

5. Subway and Streetcar Operator

•   2021 Median Annual Salary: $81,180

•   Requirements: High school diploma or equivalent; moderate on-the-job training; local transit training program (varies by location)

•   Job Description: Operate subways and aboveground street cars, ensuring passengers safely move from one location to another.

•   Duties:

◦   Operate train controls

◦   Make announcements and provide verbal directions to passengers

◦   Ensure overall passenger safety

Recommended: What Credit Score is Needed to Buy a Car

6. Nuclear Medicine Technologist

•   2021 Median Annual Salary: $78,760

•   Requirements: Associate degree from an accredited nuclear medicine technology program; state license; long-term on-the-job training

•   Job Description: Prepare and administer radioactive drugs for imaging or treatment, typically within hospitals, medical labs, and care centers.

•   Duties:

◦   Explain medical procedures to patients

◦   Prep and administer drugs to patients

◦   Maintain and operate imaging equipment

7. Gas Plant Operator

•   2021 Median Annual Salary: $77,850

•   Requirements: High school diploma or equivalent; long-term on-the-job training

•   Job Description: Oversee the day-to-day operations of industrial power plants used by utilities, oil and gas, and manufacturing companies.

•   Duties:

◦   Maintaining equipment and machinery

◦   Ensuring compliance with safety and regulatory standards

◦   Supervising employees and contractors at the plant

Recommended: Should I Go to Community College?

8. Dental Hygienist

•   2021 Median Annual Salary: $77,810

•   Education Requirements: Associate degree; state license

•   Job Description: Examine patients for oral diseases and provide preventative care and education about oral hygiene.

•   Duties:

◦   Taking dental x-rays

◦   Assisting dentists in providing teeth cleaning and plaque removal

◦   Educating patients about oral hygiene techniques

9. Sonography Technician

•   2021 Median Annual Salary: $77,740

•   Requirements: Associate degree; state license

•   Job Description: Operate sonographs that produce images of the inside of a body in order to assess and diagnose medical conditions.

•   Duties:

◦   Prepping and administering sonograph exams

◦   Reviewing images and test results for quality

◦   Analyzing diagnostic information and providing summaries for physicians

10. Electrical Line Installer and Repairer

•   2021 Median Annual Salary: $74,530

•   Requirements: High school diploma or equivalent; long-term on-the-job training

•   Job Description: Install and repair electrical power systems and telecommunications systems.

•   Duties:

◦   Installing, inspecting, and testing power lines, and equipment

◦   Identifying defective devices, transformers, and switches

◦   Stringing power lines between buildings and structures

11. Construction Manager

•   2021 Median Annual Salary: $72,010

•   Requirements: High school diploma or equivalent; 5+ years of experience

•   Job Description: Supervise and coordinate the activities of construction workers.

•   Duties:

◦   Overseeing construction projects from start to finish

◦   Scheduling and supervising on-site contractors

◦   Preparing and monitoring budgets

12. Aircraft Technician

•   2021 Median Annual Salary: $65,550

•   Requirements: Certificate of completion from a Part 147 FAA-approved aviation maintenance technician school

•   Job Description: Repair and perform maintenance on aircraft and aircraft equipment.

•   Duties:

◦   Diagnosing mechanical and electrical issues

◦   Repairing aircraft components

◦   Testing aircraft parts with diagnostic equipment

13. Boilermaker

•   2021 Median Annual Salary: $64,290

•   Requirements: High school diploma or equivalent; apprenticeship

•   Job Description: Assemble, maintain, and repair boilers, vats, or other containers used to hold liquids and gas.

•   Duties:

◦   Reading blueprints to determine where to position boiler parts

◦   Assembling boiler tankers using welding machines

◦   Cleaning boiling vats and replacing broken valves and pipes

14. Wellhead Pumper

•   2021 Median Annual Salary: $63,740

•   Requirements: High school diploma or equivalent; moderate on-the-job training

•   Job Description: Operate power pumps and equipment used to extract oil or gas from an oil field well.

•   Duties:

◦   Assembling pumps and attach hoses to wellheads

◦   Operating pumps and monitoring flow

◦   Transferring oil to storage tank or truck

15. Electronic Engineering Technologist

•   2021 Median Salary: $63,640

•   Requirements: Associate degree (preferred); certificate from accredited program

•   Job Description: Assist electrical engineers with the design and development of communications equipment, computers, medical devices, and other electric-powered equipment.

•   Duties:

◦   Designing and assembling electrical systems

◦   Observing onsite systems placement and performance

◦   Performing quality control and identify issues

16. Real Estate Agents

•   2021 Median Salary: $61,890

•   Requirements: High school diploma or equivalent; licensing exam

•   Job Description: Help clients buy, sell, or rent their properties.

•   Duties:

◦   Generating lists of properties for sale or rent and showing them to clients

◦   Advising clients on prices, mortgages, and market conditions

◦   Facilitating buyer/seller negotiations and final purchase or rental agreements

17. Respiratory Therapist

•   2021 Median Salary: $61,830

•   Requirements: Associate degree

•   Job Description: Provide care for patients having trouble breathing.

•   Duties:

◦   Examining patients and recording symptoms and conditions

◦   Consulting with physicians on treatment

◦   Performing diagnostic tests

18. Building Inspector

•   2021 Median Salary: $61,640

•   Requirements: High school diploma or equivalent

•   Job Description: Review building plans to ensure construction meets local and national regulations and ordinances.

•   Duties:

◦   Monitoring construction to ensure compliance

◦   Inspecting electrical and plumbing systems to ensure they are up to code

◦   Issuing violations for non-compliant work

19. Millwright

•   2021 Median Salary: $60,330

•   Requirements: High school diploma or equivalent

•   Job Description: Install, dismantle, repair, reassemble, and move machinery in factories, power plants, and construction sites.

•   Duties:

◦   Repair or replace malfunctioning equipment

◦   Clean, adjust, and calibrate new machinery

◦   Move machinery and equipment

20. Electrician

•   2021 Median Salary: $60,040

•   Requirements: High school diploma or equivalent; apprenticeship

•   Job Description: Install, maintain, and repair electrical power, communications, lighting, and control systems.

•   Duties:

◦   Identify and repair electrical problems

◦   Install wiring and equipment for electrical systems

◦   Ensure compliance with National Electrical Code

21. Plumber

•   2021 Median Salary: $59,880

•   Requirements: High school diploma or equivalent; apprenticeship

•   Job Description: Install and repair gas and water piping systems in homes, factories, and businesses.

•   Duties:

◦   Identify and repair plumbing problems

◦   Installing pipes and plumbing fixtures

◦   Clean drains, remove obstructions, and repair or replace broken pipes and fixtures

Recommended: Should I Sell My House Now or Wait

22. Mining Roof Bolter

•   2021 Median Salary: $59,770

•   Requirements: High school diploma or equivalent; moderate on-the-job training

•   Job Description: Operate machinery to install roof supporting bolts in underground mines.

•   Duties:

◦   Drill bolt holes into roofs

◦   Perform safety checks on bolting equipments

◦   Extract loose rock from bolting support

23. Broadcast, Sound, and Video Technician

•   2021 Median Salary: $49,050

•   Requirements: High school diploma or equivalent; moderate on-the-job training

•   Job Description: Operate and maintain electrical equipment used for television broadcast, radio programs, live concerts, and films.

•   Duties:

◦   Setting up and operating equipment

◦   Monitoring and adjusting audio and visual quality

◦   Repairing equipment and fixing recording issues

24. HVACR Technician

•   2021 Median Salary: $48,630

•   Requirements: High school diploma or equivalent; 6 months to 2 years at a trade school or community college that offers heating, air conditioning, and registration programs.

•   Job Description: Install and perform maintenance on heating, ventilation, cooling and registration systems for buildings and private residences.

•   Duties:

◦   Installing, testing, and repairing HVACR systems

◦   Replacing or repairing defective parts

◦   Conducting overall system maintenance and performance improvements

25. Masonry Worker

•   2021 Median Salary: $48,040

•   Requirements: High school diploma or equivalent; apprenticeship or on-the-job training

•   Job Description: Use brick, concrete, and natural and manmade stones to build structures, walls, or walkways.

•   Duties:

◦   Design blueprints and calculate materials needed

◦   Break or resize materials into required shape

◦   Align, construct and polish finished structures

Recommended: What is the Average Credit Card Limit

The Takeaway

Many trade jobs can offer competitive pay and job security, without a significant upfront educational cost. Moreover, they provide an opportunity to help make a difference by solving real world problems.

Choosing the right career path is an important step toward achieving your financial goals. It’s just as important to practice smart financial habits, like setting spending limits, staying on top of your credit score, and establishing long-term goals.

SoFi can help you track your money like a champion, with tools that make it easy to monitor your credit score, set up savings goals, and pay off debt sooner.

Get Started with SoFi

FAQ

What skilled trades are in demand?

According to the Bureau of Labor Statistics, medical sonographers, respiratory therapists, industrial machinery mechanics, security and fire alarm installers are expected to experience the greatest job growth over the next ten years.

What are some of the best trades to learn that pay well?

Transportation managers, elevator installers, nuclear power reactor operators, and radiation therapists all earn a median salary above $80,000.

What are high paying trade jobs that require no degree?

HVACR technicians, real estate agents, subway operators, and plumbers all pay above-average salaries and require no formal degree.

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Photo credit: iStock/dima_sidelnikov

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