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Refinancing a personal loan can be a worthwhile process in some situations. It holds the potential to lower your monthly payments and/or the interest paid over the life of the loan.

Personal loans can be used for many purposes, which is part of their appeal. Consolidating credit card debt is a common use of personal loans. And it makes sense, given that personal loans typically have lower interest rates than credit cards (which currently average 24.35%).

Even if you’ve already taken out a personal loan, it can be wise to look at your refinance options for getting terms that better suit your needs.

Why Refinance a Personal Loan?

While there may be a variety of reasons to refinance a personal loan, it mainly comes down to two.

1.    To lower the overall interest rate and total interest paid.

2.    To lower the monthly payment.

These two might seem like the same thing, but they’re not.

When you refinance any type of loan, you are essentially replacing your old loan with a new loan that has a different rate and/or repayment term. If the new loan has a lower annual percentage rate (APR), you can save money on interest. If the APR is the same but the repayment term is longer, you can lower your monthly payments, making them easier to manage, but won’t save any money. (In fact, a longer repayment term generally means paying more in interest over the life of the loan.)

Another reason why you might consider refinancing a personal loan is to consolidate your debts (so you just have one payment) or to add or remove a cosigner.

Possible Advantages of Refinancing a Personal Loan

Here’s a look at some of the benefits of refinancing a personal loan.

Pay Less in Interest

If you are able to qualify for a personal loan with a lower APR, it may be possible to save a significant amount of money over time, provided you don’t extend your loan term. You can also save on interest by shortening your existing loan term, since this allows you to pay off the loan sooner.

Lower Your Monthly Payment

Refinancing to a lower APR and/or extending the length of the loan can lower your monthly payment. A lower monthly bill could help you get back on track, especially if you’ve been struggling to make your monthly payments.

Consolidate Multiple Debts

If you have a personal loan as well as other debts (such as credit card debt), you can use a new debt consolidation loan to combine those debts into one loan and a single monthly payment. If your new loan has a lower APR than the average of your combined debts, you may also be able to save money.

Recommended: Personal Loan Calculator

Possible Disadvantages of Refinancing a Personal Loan

Refinancing a personal loan might not be the right move for everybody. Here are some disadvantages to consider.

You May Pay More in Interest

If you refinance a personal loan using a loan that has a longer repayment term, you could end up paying much more in interest over the life of the loan.

You May Have to Pay an Origination Fee

Many personal loan lenders charge origination fees to cover the cost of processing and closing the loan. This is a one-time fee charged at the time the loan closes and, in some cases, can be as high as 6% of the loan. Since the fee is deducted before the loan is disbursed to you, it reduces the amount of money you actually get.

You Might Get Hit With a Prepayment Penalty

Some lenders charge a fee if you pay off the loan before the agreed-upon term, which is known as a prepayment penalty. If your original lender charges you a prepayment penalty, it could cut into your potential refinancing savings.

Refinancing a Personal Loan

If you are thinking about refinancing a personal loan, here are some steps you’ll want to take.

Check Your Credit Report and Score

To benefit from personal loan refinancing, you typically need to have stronger credit than you had when you got your original personal loan. With a more favorable credit profile, you might qualify for a lower APR on the new personal loan.

You can access your credit report for free from each of the three major credit bureaus — Equifax®, TransUnion®, and Experian® — through Annualcreditreport.com. It’s a good idea to scan your reports for any errors and, if you find one, report it to the appropriate bureau.

You can typically access your credit score for free through your credit card company (it may be listed on your monthly statement or found by logging into your online account).

Shop Around for Loans

Every bank has different parameters for determining who they’ll offer loans to and at what rate, so it’s always worth it to shop around. This could mean looking at traditional banks, credit unions, and online-only lenders.

Many lenders will give you a free quote through a prequalification process. This typically takes only a few minutes and does not result in a hard inquiry, which means it won’t impact your credit score. Prequalifying for a personal loan refinance can help compare rates and terms from different lenders and find the best deal.

Applying for a Loan

Once you’ve decided on a lender who can help you refinance to a new loan, it’s time to formally apply for a personal loan. You’ll likely need to submit several documents, including pay stubs, recent tax returns, and a loan payoff statement from your original lender (which will show how much is still owed).

Paying Off the Old Loan

Once you have your new loan funds, you can pay off your original loan. You’ll want to contact your original lender to find out what the process is and follow their instructions. It’s also a good idea to ask your original lender for documentation showing the loan has been paid off.

Making Payments on the New Loan

Be sure to confirm your first payment due date and minimum payment amount with your new lender and make your first payment on time. You may want to enroll in autopay to ensure you never miss a payment. Some lenders even offer a discount on your rate if you sign up for autopay.

The Takeaway

You can refinance a personal loan, and doing so may allow you to get a more favorable rate and/or more affordable payments. However, you’ll want to factor in any fees (such as origination fee on the new loan and/or a prepayment penalty on the old loan) to make sure the refinance will save you money. Also keep in mind that extending the term of your loan can increase the cost of the loan over time.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Can you refinance a personal loan?

Yes, it is possible to refinance a personal loan. Refinancing involves taking out a new loan to pay off the existing personal loan, ideally with more favorable rates and terms. However, whether you can refinance your personal loan will depend on factors such as your creditworthiness, the terms of the original loan, and the policies of the new lender.

Does refinancing a loan hurt your credit?

Refinancing a loan can have both positive and negative impacts on your credit. Initially, the process of refinancing may result in a hard inquiry on your credit report, which can cause a small, temporary decrease in your credit score. However, if you use the refinanced loan to pay off the existing loan and make timely payments on that loan, it can positively impact your credit over time.

Can I refinance a personal loan with another bank?

Yes, it is possible to refinance a personal loan with another bank. Many banks, credit unions, and online lenders offer loan refinancing options. This allows you to transfer your personal loan balance to a new loan with a new lender. However, eligibility criteria, terms, and interest rates will vary by lender. It’s a good idea to shop around, compare offers, and consider factors such as interest rates, fees, and repayment terms before deciding to refinance with another bank.

What are the pros and cons of refinancing a personal loan?

The pros of refinancing a personal loan include the potential to secure a lower interest rate, reduce monthly payments, consolidate multiple debts into a single loan, and switch to a more favorable lender. Potential downsides can include paying an origination fee for the new loan, owing a prepayment fee from your original lender, and extending your loan term, which can increase the total cost of the loan

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q325-023

If you’re in a bind to make a credit card payment, you may wonder if you can use another card to make your minimum payment. Typically, that’s not possible, or at least you can’t make the payment directly.

There may be workarounds that allow you to pull it off indirectly, such as cash advances and balance transfers.

Here, learn the details on these options, as well as some alternatives to help out when you are short on cash and have a credit card payment due.

Avoiding the Issue in the First Place

The best way to avoid a situation in which you are considering using one credit card to pay another is by paying your entire credit card statement balance every month.

Making credit card payments in full and on time will allow you to avoid paying interest.

Paying the statement balance in full each billing cycle also reduces the chance of accumulating debt that is hard to pay off.

At the very least it is important to make minimum payments to avoid negative effects on your credit score.

Of course, many people face situations in which it becomes hard to pay bills on time. Finding a budget system that works for you is one way to manage; there are many different budgeting methods out there, and it’s like one or more will suit you.

You might also consider doing some of your spending with a debit card or cash to avoid carrying so much credit card debt.

Paying a Credit Card With Another Credit Card

Most credit card rules don’t allow you to directly pay one card with another. It’s considered too expensive to process these kinds of transactions. But that said, there may be some workarounds that could allow you to use one card to pay another.

Taking a Cash Advance

You can’t pay one credit card with another directly, but you might be able to pay a credit card with a cash advance from another credit card.

Say you have two credit cards: Card A and Card B. You can’t afford to make your minimum payment on Card A, so you’re looking to Card B for a little help. You have the option to take a cash advance from Card B.

You could use Card B to withdraw cash at an ATM. Then you’d deposit that money into your checking account and make an online payment from your bank account or with a debit card.

Pros of a Cash Advance

The pros of using a cash advance to pay another credit card aren’t numerous. Basically, you are just accessing cash when it’s urgently needed.

•   Taking out a cash advance may be the right option if your situation meets three criteria: You’re trying to pay a small amount on Card A, you already have a second credit card (Card B) to use for this transaction, and Card B has a lower interest rate than Card A.

•   Most credit card companies limit how much cash you can withdraw with your credit card per month. If your withdrawal limit from Card B is $5,000, though, and you want to make a payment of $500 on Card A, things shouldn’t get too sticky.

In this way, you can make a payment, whether the minimum or more, to the credit card that is due. By using this process, the answer to “Can I pay a credit card with a credit card?” can be yes.

Cons of a Cash Advance

While a cash advance may get the money you need into your hands, consider the cons:

•   Your credit card company might not allow you to withdraw enough money per month to pay off your other credit card. Your cash advance limit isn’t necessarily the same as your monthly spending limit. Before you take a cash advance, you may want to contact the company that issued your second card to inquire. Or check a statement.

•   Also, interest usually starts accruing on the amount you withdraw from the moment you take the cash advance. The annual percentage rate (APR) for a cash advance will typically be higher than the purchasing APR on the card. As a result, it’s possible to go even further into debt.

•   What’s more, you’ll likely pay a fee to take a cash advance. The amount will depend on the credit card company, but you can usually expect to pay the greater of $10 or up to 6% of the amount you withdraw.

Completing a Balance Transfer

If you don’t have another credit card, or your cash advance allowance is too low, you might consider a balance transfer, which would allow you to transfer the balance on Card A to Card B.

Ideally, Card B would have a lower interest rate or none at all. You could potentially pay off the total balance more quickly because more of the money you used to pay in interest is going to pay off the principal, or you’re not accruing interest at all.

You may complete a balance transfer only by using a designated balance transfer credit card.

Pros of a Balance Transfer

The benefit of a balance transfer is getting a reprieve on paying the high interest rates that credit cards can charge.

•   Certain credit card companies offer balance transfer credit cards with no interest for the first six months or more. When you shop around for a new card, you’ll typically hear the grace period referred to as an “introductory balance transfer APR period” or “promotional period.”

•   During this period, you can work on paying off your debt without paying any interest. This can help you manage your finances and debt better.

Cons of a Balance Transfer

While balance transfers may be a godsend for paying off your balance in a set amount of time, what if you can’t nibble away at the total balance quickly? Keep these drawbacks in mind:

•   Once the introductory balance transfer APR period ends, the interest rate will shoot up, and the balance transfer card may not seem so magical anymore.

•   If you miss a payment, most companies will suspend the introductory APR period on your new card, or Card B, and you’ll have to pay what’s known as a default rate, which could end up being even higher than the rate on your previous Card A. Even if you consider yourself responsible enough to make all your payments on time, a financial emergency could throw you off track.

•   There are also generally fees associated with balance transfers, though they’re often lower than cash advance fees.

•   It’s worth mentioning that you usually can’t use balance transfers or cash advances to get credit card points or miles.

💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

What If I Can’t Pay My Minimum?

Now you have some answers to why you can’t pay a credit card with a credit card directly. And you know the ways to get around that situation and still use plastic.

If, for whatever reason, a cash advance or balance transfer isn’t available to you, you may still have trouble making your minimum payments. If this is the case, stay calm, and assess your situation. Here are some options for a credit card debt elimination plan.

•   You may want to gather your credit card statements and put your debts in order, either from largest to smallest or from highest interest rate to lowest. This step can help you understand how much debt you’re in and how to prioritize your bills.

•   You may decide to tackle the largest debts first or even your smallest to gain momentum. Or you may decide to save money on interest by focusing on credit cards with the highest interest rate first. You may see these tactics referred to by such names as the debt avalanche or snowball repayment methods.

•   You may consider talking to your creditors to see if they can help. A credit hardship program could give you more time to pay off your balance or adjust your terms.

What About a Personal Loan?

Taking out a personal loan is an option for paying off a large credit card bill. A personal loan may come with a lower interest rate than a credit card, and may be more manageable in the long run.

Pros of a Personal Loan

Here are some of the pluses of using a personal loan to pay off credit card debt:

•   If you have a good credit score, your rate for a personal loan could potentially be lower than your credit card rate. If that is the case, you could take out a kind of personal loan called a credit card consolidation loan, and then make payments on the loan at the lower interest rate. You’d likely end up paying less in interest over time and might be able to pay back the loan more quickly than you’d be able to pay off the credit card.

•   Most credit cards come with variable interest rates, meaning the rate can change over time with shifts in the economy. An unsecured personal loan usually has a fixed rate. (Unsecured means the loan isn’t secured by collateral, like your home or car.) This can help you budget better, since you know what you owe every month.

•   Taking out a personal loan also could help your credit utilization ratio, the amount of available revolving credit you’re using. Credit utilization affects your credit score. You can build your credit score by lowering your credit utilization ratio. Your score can also be favorably affected when you consistently pay bills on time.

Cons of a Personal Loan

Taking out a personal loan to pay off a credit card isn’t for everyone. Here are some downsides to think over.

•   It might not help you take control of your finances. Maybe you have trouble controlling your spending, and that’s why you have credit card debt to begin with. Having a personal loan to fall back on could tempt you to spend even more with your credit card.

•   Also, a lower interest rate isn’t guaranteed. If you discover that your loan rate could be higher than your card’s rate after inquiring with a lender, taking out a loan may not be the best choice.

•   No matter how low your personal loan interest rate is, it will still be higher than the rate during an introductory APR period for a balance transfer.

The Takeaway

You may be able to pay a credit card with a credit card, albeit indirectly, with a balance transfer or cash advance. While those moves can work in a pinch, each has potential drawbacks.

Taking out a fixed-rate personal loan with a clearly defined payment schedule may be the better long-term option.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Can you pay a credit card with another credit card?

You generally cannot pay a credit card with another credit card. That said, you might indirectly pay a credit card by getting, say, a cash advance from another card to use as cash.

How can I pay a credit card with another credit card?

You cannot directly pay a credit card with another card. You could, however, indirectly do so via a cash advance or a balance transfer offer.

Can I pay rent with a credit card?

It depends. Typically, you cannot pay rent with a credit card because the landlord would then usually pay fees to accept that form of payment, raising their costs. However, there are specialized credit cards for this purpose as well as third-party platforms that may make it possible to pay rent with a credit card.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q325-028

A checking account generally serves as the hub of your daily financial life. It provides a secure and convenient place for your income to enter and for your daily and monthly expenses to leave. While some checking accounts serve only basic functions, some go a step further. Called “rewards checking,” these accounts may offer perks like interest on your balance, cash back on purchases you make with your debit card, or both.

While these accounts can be appealing, they come with some caveats. You might face limits on how much you can earn and be required to meet certain criteria (such as maintaining a high balance or enrolling in direct deposit) to qualify for your rewards.

To help decide if a rewards checking account is right for you, here’s a closer look at what they are, how they work, and their pros and cons.

What Is a Rewards Checking Account?

A rewards checking account is a type of checking account that offers incentives or perks to account holders in exchange for meeting certain requirements. These perks can include higher interest rates, cash back on purchases, or other benefits like ATM fee refunds.

To qualify for the rewards, users typically need to meet certain conditions, such as making a set number of debt card transactions per month or having at least one direct deposit or automatic payment per month. If you don’t meet the requirements, you might earn a lower interest rate or earn no rewards for that period.

How Does a Rewards Checking Account Work?

Some checking accounts with rewards have criteria for earning perks each month. For instance, a bank may require you to:

•   Use your debit card for a minimum number of transactions each month.

•   Maintain an average minimum account balance.

•   Receive a set number of direct deposits equal to a specified value.

•   Enroll in services like e-statements or online bill pay.

If the reward is a higher annual percentage yield (APY), you will likely earn that in the form of monthly interest on your bank’s payment schedule, deposited directly into the account. If the checking reward is cash back, the bank may offer multiple ways to redeem the cash within the mobile app. Similar to cash-back credit cards, you can often convert points into airline miles or other perks — or just receive cash in your account.

Perks of a Rewards Checking Account

The perks of a rewards checking account will vary by bank but might include:

Cash Back

Cash back is usually expressed as a percentage of the transactions made with a debit card; this might also be structured as points or even airline miles.

Interest

While basic checking accounts generally don’t pay much or any interest, a rewards account may be an interest-bearing checking account. If so, it will typically offer an APY that is higher than the zero or the very low rate usually offered by traditional checking accounts.

Signup Bonus

A rewards checking account may pay a one-time bonus for signing up for a new checking account and meeting specific criteria.

ATM Fee Reimbursement

A rewards account may offer refunds for expenses incurred for using out-of-network ATMs.

Other Perks

Among the other rewards you may see offered are ways to earn airline miles, shopping discounts, cell phone insurance, and identity theft protection, among other options.

Some rewards checking accounts may offer a combination of these perks.

Who Should Use a Rewards Checking Account?

A rewards checking account can be a good option if you regularly use your debit card for purchases and keep a substantial amount of money in your checking account. If you do not have a rewards credit card, a rewards checking account can serve as an alternative way to earn money for spending money.

As mentioned, some banks have special requirements for members to earn rewards. Read terms and conditions carefully. If you cannot meet account requirements for the reward, the account might not be right for you, especially if there are monthly maintenance fees.

How to Qualify for a Rewards Checking Account

Qualifying for a rewards checking account may vary depending on the bank, but, as mentioned, there tend to be common core requirements for earning rewards, such as:

•   A minimum number of debit card transactions in a month

•   An average daily minimum account balance

•   A minimum number (or value) of monthly direct deposits

If an account comes with a signup bonus, the bank likely has a set of requirements you’ll need to meet to snag that cash. This may include enrolling in direct deposit to get you started.

When considering a rewards checking account, it’s wise to read the fine print before opening to ensure you fully understand the requirements.

Pros of Rewards Checking Accounts

Here are some of the benefits of opening a rewards checking account:

•   Earning potential: Whether through a higher-than-average APY or through cash back on debit card purchases, the main draw of a rewards checking account is often earning money (or more money) for doing the banking you would do anyway.

•   No annual fee: Unlike some rewards credit cards, rewards checking accounts generally do not charge an annual fee.

•   ATM fee reimbursements: Many rewards checking accounts will refund all or some of the fee you may be charged when using an out-of-network ATM. This can be valuable if you frequently travel outside your bank’s network.

Recommended: How to Manage Your Money Better

Cons of Rewards Checking Accounts

Rewards checking accounts also come with some potential downsides. Here are some to keep in mind:

•   Limits on rewards: Some bank programs cap the rewards at a set amount each month, meaning there could be a limit to the amount of cash back you can earn.

•   Better rewards elsewhere: Rewards credit cards may offer more cash back than a rewards checking account.

•   Minimum balance requirements: Some banks have minimum initial deposit requirements and/or ongoing balance requirements to earn the reward. If you cannot meet the requirement or do not wish to keep that much money in a checking account, the account might not be the right fit.

•   Fees: While some rewards checking accounts have no fees, others do charge monthly maintenance fees that can make the rewards less attractive or possibly even negate them.

Cashback Checking Accounts vs Credit Cards

You may be wondering whether a cashback checking account or credit card is the better fit for you. See how they stack up here:

Is a Rewards Checking Account Worth It?

A rewards checking account with cash back can be a good fit if the conditions to earn the perks are no problem for you. You might consider going with this type of checking account if:

•   You’re already in the habit of swiping your debit card for everyday purchases (or this prospect doesn’t faze you). If so, it might be easy for you to manage a checking account like this and make your money work harder for you.

•   You tend to keep a large sum of funds in your checking account. If that’s the case, you might enjoy the earning potential provided by a high-interest checking account even if it has a higher-than-usual balance requirement.

•   You’re willing to have your paycheck directly deposited into the account. Some rewards checking accounts require that you have a recurring direct deposit, such as your paycheck, to qualify for the rewards.

The Takeaway

A rewards checking account could be a good deal if you want to earn interest (or more interest) on cash you have sitting in your checking account and/or there are perks that you could reap for behaviors you already engage in (like swiping your debit card or receiving direct deposit), or don’t mind adopting. It can also be a good alternative to a rewards credit card, since there are typically no annual fees.

Before you dive in, however, you’ll want to weigh the rewards against any costs or requirements. If the account charges fees, for example, it could eat into your rewards. And if you don’t consistently meet the requirements to earn rewards, you may not get any.

As with all decisions concerning your financial life, it pays to shop around to make sure you’re finding the best fit for your lifestyle and goals.

FAQ

What are rewards in banking?

Rewards in banking refer to incentives and perks that account holders receive. They might be a signup bonus for a new account, a higher-than-average interest rate, or cash back on debit card purchases. Customers may need to meet certain requirements, such as maintaining a certain balance or spending a certain amount on their debit cards each month, to receive the rewards.

Why do banks offer points or rewards?

Banks offer points or rewards to entice consumers to choose their accounts or cards over competitors. Once you become a customer, rewards ensure you continue to engage with the bank’s product, either by depositing more funds into your account or using your debit or credit card for more daily purchases.

Are bank rewards interest?

Bank rewards are generally not considered interest. Interest is the money you earn from keeping your funds in a savings or other interest-bearing account. By contrast, rewards are promotional incentives given for specific actions like spending or meeting account requirements. That said, in some cases, a reward will come in the form of a higher-than-average interest rate.

Can you earn points on a checking account?

Yes, some banks offer rewards checking accounts that let you earn points for everyday activities like using your debit card. These points can often be redeemed for cash back, travel, gift cards, or merchandise. Not all checking accounts offer this feature, however, so it’s important to compare options and read the terms to make sure the rewards align with your spending habits.

Are bank rewards worth it?

Whether or not bank rewards are worth it depends on your financial situation and preferences. Do you meet the criteria for a rewards checking account (such as swiping your debit card often enough or receiving a certain dollar amount of direct deposits)? Can you handle any requirements such as monthly minimum balance or account fees, if assessed? If so, earning interest or receiving other perks could be a smart, money-wise move.

Photo credit: iStock/Feodora Chiosea

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

SOBNK-Q325-068

You’ve likely made some impulse purchases in your life and later regretted spending your hard-earned cash that way. One way to avoid making impulsive or bad buying decisions is to hit pause just before you make a purchase to ask yourself a series of simple questions.

This extra step forces you to step back and honestly consider how the potential purchase fits into your life. You might ultimately decide you don’t want the item after all. And, if you do decide to buy it, you can feel confident that you’re doing it for the right reasons.

9 Questions To Ask Yourself Before Buying Something

Knowing some key questions to ask yourself before you buy something can help ensure that you spend according to your values and cut down on purchases you’ll regret later. After all, the last thing you want is to spend money on things that don’t really enhance your life — and may add to your debt (especially if you’re already paying off some debt).

Here are some key pre-purchase questions to consider.

1. Is This a Want or a Need?

A great first question to ask is whether your prospective purchase fulfills a need or is just something you want, or a discretionary expense. If it’s an item you need — and you can afford it — then you might just go ahead and buy it. If, on the other hand, it only fills a want, it’s a good idea to continue vetting the purchase with the questions that follow.

2. What Do You Gain From Buying This?

Consider what you hope to gain from making the purchase. Is it the admiration or approval from other people? Does someone you know or follow on social media have it? Is this something that will genuinely improve your quality of life?

Research suggests that people feel more satisfied when they spend money on things or experiences that mean something to them and reflect their values.

Recommended: What Is FOMO Spending?

3. Is This Something That Will Actually Sell Out?

Though retailers will often make you think you need to act quickly (due to low stock), there’s a good chance that the items that you’re thinking of buying will still be available at a later date. If you’re feeling pressured to buy due to a limited-time sale, keep in mind that sales pop up all the time. Waiting for the next one could save you even more money, as you may decide you don’t really want it that much. This can help you avoid making an impulse buy.

4. Can You Get It Used or for a Better Price

If you’re thinking of pulling the trigger on a full-price item you don’t need right away, consider whether you may be able to find a better deal. For example, you might:

Buy Used

If you’re looking at a piece of equipment (like sports, exercise, or baby gear) or furniture, keep in mind that you may be able to find it in great condition on a second-hand marketplace online or even a yard sale.

Find Discounts

While buying used is not everyone’s cup of tea, buying on sale should be. These days, there are websites and apps that can help you do quick price comparisons to find the best deals. Some apps will even alert you when the price for a wanted item drops.

5. Do You Own Something Similar?

If you were to look at what you already own, you might be surprised to find how often you purchase nearly the same items over and over again. Buying similar items is totally understandable. We all know what makes us comfortable and what we tend to wear or like, so we gravitate to similar-looking clothes, shoes, home decor, and so on.

If you already have several coffee mugs, jean jackets, baskets, whatever that are similar to your prospective purchase, you may want to pass.

Recommended: How to Stop Spending Money

6. Why Do You Want to Buy This Now?

Sometimes there is a clearcut reason to make a purchase, even an impulse purchase. You might be at a store and remember you need hand soap or a certain tool to make a repair. But if there isn’t a clear reason for making this purchase right now, you may want to pass.

7. How Often Will You Use It, Really?

If you will only use or wear the item you’re thinking about buying once, or even a handful of times, you may want to rethink the purchase. It’s possible you can get by with something you have, can rent the item, or can borrow it from a friend or neighbor. This can end up saving you buyer’s remorse as well as money that you could stash in a high-yield savings account.

8. If the Item Was Full Price, Would You Still Buy It?

A sale price can make an item look particularly appealing. You might even think you’d be a fool to pass it by. But it’s important to put the price tag to the side for a moment and consider whether or not you really want and love the item. Would you even be considering it if it were full price? If the answer is no, it’s likely you can forgo it.

9. Would It Be Better To Put the Money Elsewhere?

If you can ask yourself this question, then you’ve arrived. You’re thinking of the big picture and wondering whether there may be other things that are more important than what’s in front of you. This involves delaying gratification and knowing how to spend money wisely.

You might decide that rather than buying that new pair of shoes, the money could better be put in, say, an online bank account where it can earn interest with lower or no fees.

The Psychology Behind Reflecting Before Purchasing

One common reason why people shop for new (and often similar) things is because they don’t fully appreciate the things they already possess. But there is a way you can turn this psychology around.

Before you make a purchase, consider whether or not you already own something that can fulfill the same purpose. If you do, next think about whether there is a reason you need something similar. If you can’t, you can probably easily pass on the purchase. The process of reflection not only avoids an unneeded expense but allows you to refocus on the item you already have and appreciate it more.

How Budgeting Can Curb Compulsive Spending

Creating a budget involves looking at where your money is currently going and making sure that your spending aligns with your priorities. There are many different kinds of budgets but one simple framework is the 50/30/20 rule.

The idea is to divide your monthly take-home income into three categories, spending 50% on needs, 30% on wants, and 20% on savings (and debt payments beyond the minimum). This set-up helps curb compulsive spending because you only have so much “fun” money to spend each month. It also allows you to spend money without feeling guilty, since it’s baked into the budget.

Recommended: Savings Calculator

The Takeaway

If you are considering making a discretionary purchase, you can ask yourself a few questions that can help you avoid buying something that you later regret. For instance, asking if you already have something similar or whether you’d buy it even if it wasn’t on sale can help you determine your motivations. By reconsidering the purchase, you might wind up saving money that could be better spent paying down debt or going into your bank account.

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

How do you determine if you should buy something?

A good first step is to determine whether a prospective purchase fulfills a need or is simply something you want. If it fills a need, you can go ahead buy it, as long as you can afford it. If it’s a want, you might next consider why you want to buy it. Also think about whether you may already have something similar, and whether the money might be better spent on something else.

Should a budget include flexibility for impulse purchases?

Yes. A budget will typically allot a certain amount of money just for “fun” each month. This frees you up to make the occasional impulse purchase without feeling guilty or worrying that it will hurt your long-term financial health. In fact, building in flexibility to your spending plan can help you stick with it.

What questions should you ask yourself before buying something?

Some key questions to ask yourself before you make a purchase include:

•  Do I need it?

•  What do I gain from buying this?

•  Do I own something similar?

•  If the item was full price would I still buy it?

•  How often will I use it, really?

•  Could I get it used or for a better price elsewhere?

•  Is there a better way I could use this money?

How do you stop impulse buying psychology?

One effective strategy is to establish a waiting time before you make any discretionary purchases. If you see something you want to buy, put the purchase on pause for a week (or more). Tell yourself that if, at the end of the waiting period, you still want the item and can afford it, then you can go ahead and buy it. You may find, however, that by delaying gratification (and the purchase), you lose interest in the item and opt not to buy it after all.

Photo credit: iStock/Talaj

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.

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-Q325-089

Most people hit financial challenges at some point. Perhaps it’s a bout of overspending, the feeling that you can’t get out from under your credit card debt, or the fact that you can’t balance your budget.

Facing these kinds of situations doesn’t mean that financial security can’t be yours, nor that your money goals are unattainable. Rather, it means that you may need to focus on your finances, reprioritize, and adopt some new habits to get on track.

Here, you’ll learn about five of the most common money challenges, as well as some smart solutions that can help you take control of your finances.

1. Monthly Spending Exceeds Income

Many people struggle with the fact that their monthly outflow (or spending) outpaces their monthly inflow (or take-home income). The imbalance can cause you to rely on credit cards, and make it nearly impossible to save for the future, or even for a rainy day.

To help get your cash flow into balance, you may want to set up a basic budget. While a budget may sound restrictive, it can actually simplify your finances and make it easier to make everyday spending decisions.

A good way to start is to go through the last few months of financial statements and receipts, then tally up your average monthly income (after taxes) and average monthly spending. You may also want to break down expenses by categories, and then group categories into necessary and unnecessary spending.

It can also be helpful to actually ​track your spending for a month, taking note of every latte and lunch out (or by using an app that tracks expenses). Although you may think you know where your money is going, when people tally up all their purchases for a month, they are often surprised to notice that their spending doesn’t always match up with what they thought their priorities were.

Once you see where your money is really going each month, you can then look at your budget critically and search for areas where you can cut back. For example, you might decide you’ll eat out less often, pack your lunch a few days a week, save on a streaming service you rarely watch (buh-bye), or find a cheaper cell phone provider.

You may also want to think about ways you may be able to grow your income, such as negotiating a higher salary, looking for a new (higher-paying) job, or taking on a low-cost side hustle.

2. Not Having a Financial Cushion

Life can be unpredictable, and unforeseen events, like a loss of income, car breakdown, or visit to the ER, can quickly put you into a hole if you don’t have any emergency savings at your disposal.

Ideally, an emergency fund will have enough cash to cover at least three- to six months’ worth of living expenses, but even a reserve of $1,000 can save you from having to rely on credit cards or take out a personal loan to handle an unexpected expense.

To start building a buffer, you may want to consider dedicating part of your monthly budget to emergency savings. It can be a good idea to keep this fund in an account that earns more interest than a standard savings account, but still allows you easy access to your money, such as a high-yield savings account (typically offered by online banks), money market account, online savings account, or a checking and savings account.

Even contributions of $50 a month can add up quickly, creating a cushion that can come in handy when a rainy day hits.

3. Carrying a Credit Card Balance Every Month

Credit cards can be both a useful financial tool and an incredibly slippery slope. High-interest rates make the price of the charged items significantly more expensive. And, depending on credit makes it more likely that you’ll spend more than you earn.

As you re-evaluate your budget and work to reduce expenses, you may also want to find a way to pay more than the minimum on your credit card balances. If you have multiple cards, you might try the avalanche method of paying off debt. This involves paying the minimum on all your balances, but putting extra towards the balance with the highest interest rate. Once that’s paid off, you put your extra money towards the debt with the next highest balance, and so on.

Another approach is the snowball method. Here, you pay the minimum on all your debts, but put extra money towards the smallest balance. Once, that’s paid off, you put your extra money towards the next-highest balance, and so on.

Alternatively, you may want to consider consolidating your credit card debt by paying off all your balances with a personal loan. You would then only have one balance to keep up with, ideally with a lower interest rate.

4. Being Weighed Down by Student Loan Debt

Having a large amount of student debt can demand payments that limit your ability to buy a home or increase your savings. While it can be tempting to put off payment and keep more money in your checking account, that only results in paying more interest over time.

Instead, you may want to consider paying more each month in order to get out from under student debt faster. Whether it’s paying $20 or $100 more each month, every bit over the minimum payment helps to make a dent in your debt.

You may also want to put any lump sum of cash you receive, such as a tax refund or bonus, towards your student loan debt. When you make extra payments, however, it’s a good idea to make sure that you select the option for the funds to be applied toward your loan principal (otherwise it may go towards interest).

Another option you may want to consider is refinancing your student loans. This means trading in your current loan(s) for one brand new loan through a private lender. The goal with refinancing is to get a lower interest rate while also having the ability to change your loan term (such as cutting the timeline in half). This can be a good option if you have good credit and are currently paying a high interest rate on your student loans. Just be aware that refinancing federal student loans can mean you are not eligible for forgiveness, so think carefully about your decision. In addition, extending your loan term can mean that while your monthly payments are lower, you pay more interest over the life of the loan.

Recommended: 6 Strategies to Pay Off Student Loans Quickly

5. Not Saving Enough for Retirement

Retirement saving can be critical if you want to have financial freedom in your future. And even if retirement seems like a long way off, it can be much easier to amass a comfortable nest egg when you start saving and investing early.

Thanks to the magic of compounding interest (when the interest you earn also earns interest), even putting a little bit of money into a retirement fund each month can help you build wealth over time.

If you aren’t maximizing contributions to a 401k, you may want to consider putting as much tax-deferred money as possible into these accounts. If your employer offers matching funds, it can be a good idea to take full advantage of this perk (which is essentially free money).

If you don’t have access to a 401k or you are able to put any additional money aside to secure your retirement, you may want to consider opening an IRA (keeping in mind that there are annual limits to retirement contributions).

Taking advantage of these savings vehicles can lower your tax burden this year and earn interest for your golden years.

The Takeaway

Many of us have to deal with financial challenges at one time or another during our lives, such as living paycheck to paycheck or accumulating too much debt. Resolving these issues can involve tracking your expenses for a month and setting up a monthly budget. Or you may need to set up a manageable debt repayment plan to regain control of your finances. One simple step that may help you optimize your finances is to find the right banking partner.

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

What are the main financial challenges?

Common financial challenges include poor budgeting, not having an emergency fund, overspending, racking up credit card debt, living paycheck to paycheck, and not saving for long-term money goals.

What is financial stress?

Financial stress can be defined as difficulty meeting one’s financial commitments and the anxiety that triggers. Money worries are often based on feeling as if one doesn’t have enough money and/or having too much debt.

What are significant financial difficulties?

Significant financial difficulties can be defined as being unable to make necessary payments using one’s disposable income or possibly any other source.

Photo credit: iStock/iamnoonmai

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.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOBNK-Q325-083