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Putting in a pool can turn your backyard into an oasis for parties, playtime for kids, and weekend relaxation. Unfortunately, installing an in-ground swimming pool costs over $55,000 on average, which can leave many homeowners wondering how to cover the cost of installing a swimming pool.

What are your options if you don’t have enough cash? Can you get swimming pool financing? Fortunately, yes. You actually have several options for financing a pool, including a cash-out refinance, a home equity loan or credit line, and a personal loan. Read on for a closer look at different types of pool financing and their pros and cons.

How to Finance a Swimming Pool

If you don’t have enough money saved to pay upfront for a pool — or even if you do — you might be wondering what types of loans or other options are appropriate for this type of backyard remodel.

There are several pool financing choices available to homeowners — including credit cards, pool company financing, cash-out refinancing, home equity loans, home equity lines of credit, and home improvement loans.

Before you take the plunge into financing a pool, it’s a good idea to consider the pros and cons of each type, including the overall costs of borrowing and whether you might qualify for a particular type of loan. What follows is a guide to four of the most popular pool financing options.

Using a Cash-Out Refinance to Pay for a Pool

If you have significant equity built up in your home, you may want to consider a cash-out refinance. Equity refers to the amount of your home’s value that you’ve actually paid off. Put another way, it’s the difference between your mortgage balance and your home’s current value.

With a cash-out refinance, you replace your existing mortgage with a new mortgage for a larger amount. You receive the overage as cash back, which you can then use to cover virtually any expense, including the installation of a swimming pool.

Pros of a Cash-Out Refinance

A cash-out refinance comes with a number of potential benefits:

•   Access to large loans You may be able to borrow up to 80% of your home’s equity, which could be enough to cover the cost of putting in a pool — and maybe even some extras, like a new barbecue or lounge chairs.

•   A lower rate Borrowers with good or improved credit, or those who bought their home when interest rates were higher, may be able to refinance to a lower interest rate.

•   Potential tax deductions A mortgage interest tax deduction may be available on a cash-out refinance if the money is used for capital improvements on your property. (Consult with a tax professional for more details on how this applies to your situation.)

Cons of a Cash-Out Refinance

There are also some downsides to going the cash refi route, including:

•   Involved application process Borrowers must go through the mortgage application process all over again to get a new loan, which usually means submitting updated information, getting an appraisal, and waiting for approval.

•   Closing costs You may have to pay closing costs, generally from 2% to 6% of the total loan amount. (That’s the old loan plus the lump sum that’s being added.)

•   Foreclosure risk Your mortgage is a secured loan, which means if you can’t make your payments, you could risk foreclosure.

Using a Home Equity Line of Credit to Finance a Pool

Another way you can use your home’s equity to finance a pool is to take out a home equity line of credit (HELOC).

A HELOC is a revolving line of credit that uses your home as collateral. It works much like a credit card in that:

•   The lender gives you a credit limit to draw from, and you only repay what you borrow, plus interest.

•   As you pay back the money you owe, those funds become available to you again for a predetermined “draw” period (usually five to 10 years).

Pros of a HELOC

Here’s why a HELOC can be a popular way to pay for home improvements like adding a pool:

•   Flexibility Instead of borrowing money in one lump sum, a HELOC allows you to tap into the line only as needed. Plus, you only pay interest based on the amount you actually borrow, not the entire amount for which you were approved, as you would with a regular loan.

•   Low rates The interest rates are generally lower than credit cards and unsecured personal loans.

•   Potential tax deductions The interest on HELOC payments might be tax deductible if the funds were were to buy, build, or substantially improve your home, and you itemize your deductions.

Cons of a HELOC

HELOC also have a few potential drawbacks, which include:

•   Variable interest rates HELOCs generally come with a variable interest rate, which means when interest rates increase, the monthly payments could go up. Although there may be a cap on how much the rate can increase, some borrowers might find it difficult to plan around those fluctuating payments.

•   HELOCs are easy to use — and overuse Some of the same things that can make a HELOC appealing (easy access to cash, lower interest rates, and tax-deductible interest) could lead to overspending if borrowers aren’t disciplined.

•   Foreclosure risk A HELOC is secured by an asset (your house). If you stop making the payments on the HELOC, you could lose your home.

Recommended: The Different Types Of Home Equity Loans

Using a Home Equity Loan for Pool Financing

A home equity loan is yet another way to tap into the money you’ve already put into your home. But unlike a HELOC, borrowers receive a lump sum of money.

Pros of a Home Equity Loan

Home equity loans have several benefits that make them worth considering for financing a swimming pool:

•   Predictable payments Unlike HELOCs, which typically come with a variable interest rate, home equity loans usually have a fixed interest rate. The borrower can expect a reliable repayment schedule for the duration of the loan.

•   Low rates Because it’s a secured loan, lenders usually consider a home equity loan lower risk and, therefore, offer lower rates. Secured loans also tend to be easier to qualify for than unsecured loans.

•   Potential tax deductions And, once again, there is a potential tax break. If the loan is used for capital improvements to the home, and you itemize your deductions, the interest may be deductible.

Cons of a Home Equity Loan

There are also some downsides to a home equity loan:

•   Rates may be higher than HELOCs Because a home equity loan’s interest rate won’t fluctuate with the market, the rate for a home equity loan is typically higher.

•   Closing costs As with most loans involving real estate, you’ll likely have to pay closing costs. These costs can range from 2% to 5% of the loan amount.

•   Foreclosure risk You may put your home at risk for foreclosure if you can’t make your loan payments.

Using a Personal Loan

You don’t necessarily have to tap into your home’s equity to finance a swimming pool. Many banks, credit unions, and online lenders offer unsecured personal loans that can be used for home improvements, including the installation of a swimming pool.

If you haven’t owned your home for long, or if your home hasn’t gone up much in value while you’ve owned it, a personal loan may be worth considering.

Pros of a Personal Loan for Pool Financing

Here’s a look at some of the advantages of using a personal loan for a home renovation like a pool:

•   Simple application process Applying for an unsecured personal loan is typically quicker and simpler than applying for a secured loan. With a personal loan, you don’t have to wait for a home appraisal or wade through the other paperwork necessary for a loan that’s tied to your home’s equity.

•   Fast access to funds Personal loan application processing and funding speeds vary, but many lenders offer same- or next-day funding.

•   Lower risk Because your home isn’t being used as collateral, the lender can’t foreclose if you don’t make payments. (That doesn’t mean the lender won’t look for other ways to collect, however.)

Cons of a Personal Loan for Pool Financing

Personal loans also come with some disadvantages. Here are some to keep in mind:

•   Higher interest rates Personal loans are unsecured, which means they generally come with a higher interest rate than secured loans that use your property as collateral. (However, borrowers who have good credit and don’t appear to be a risk to lenders still may be able to obtain loan terms that work for their needs.)

•   Origination fees Many (though not all) personal loan lenders charge an origination fee of between 1% and 6%, adding costs you might not have anticipated.

•   Less borrowing power Personal loan amounts range from $1,000 to $100,000 but how much you can borrow will depend on the lender and your qualifications as a borrower. With a home equity loan or credit line, you may be able to access more — up to 80% of your home’s value, minus your outstanding mortgage.

Should You Finance a Pool?

Installing a pool is an expensive home improvement, so you may need to borrow some money to pay for all or part of the project. Even if you have enough cash saved to pay upfront for a pool, you may still want to consider financing some or most of the project if you want to keep cash accessible for emergencies and other needs.

Financing with a low-interest loan (provided you can afford the payments) can make paying for a pool manageable. But before you borrow a large sum, you may want to consider how long you plan to live in your current home, how much pool maintenance might cost each month, if you’ll actually use the pool enough to make it a worthwhile purchase, and if the value added to your home is worth the investment.

The Takeaway

Due to the high initial investment required for installing a new pool, many homeowners opt to borrow money for the project and pay it off over time. Fortunately, you have a few different options for pool financing.

If you have significant home equity and are looking for fixed monthly payments, you might consider using a home equity loan to finance your pool. If you have significant home equity but want flexibility in your payments, you might prefer a HELOC.

If, on the other hand, you have good credit but not a lot of equity in your home — or you’d prefer not to put your home on the line — it may be worth looking at a personal loan for pool financing.

Ready to dive into your pool project? Consider a SoFi Personal Loan. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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If you’re wondering how your financial health is tracking, you may want to figure out your net worth and your liquid net worth. These two numbers reflect what your assets (what you have) vs. what you owe, helping you see how your personal wealth is evolving.

While totaling up your net worth offers a more big-picture view of your total assets with your total liabilities subtracted, liquid net worth is a slice of that. It focuses on solely the amount you own in liquid assets minus your total liabilities.

This reflects how much cash you truly have access to or could quickly raise if for some reason you needed to.

Here’s a guide to determining your liquid net worth and ways to improve it.

What Is Liquid Net Worth?

First, know that net worth is the amount of assets you have minus your liabilities, or what you owe. When it comes to income vs. net worth, you see that your worth is more than just what you earn; it’s also what you keep and how you invest and grow your money.

For instance, if you have a high income but spend it all because your cost of living is very high, your net worth could be very low despite your healthy salary.

Now, what is liquid net worth’s meaning? That’s the same calculation as net worth, but only looking at assets that could easily be tapped. So, you would exclude the value of, say, the home you are living in or your retirement accounts which you can’t touch until decades from now.

Liquid net worth reflects assets you could draw upon right now if you had to, without putting your home on the market or pulling money out of an IRA. Net worth vs. liquid net worth, on the other hand, represents all your assets, whether easily tapped or not.

What Counts for Liquid Net Worth Calculations?

Here are some assets that can count when calculating liquid net worth:

•   Cash

•   Money in a checking account

•   Money in a savings, CD, or money market account

•   Mutual funds, stocks, and bonds

•   Possibly jewelry and watches that could be quickly sold, if need be.

Typically, you do not include real estate or retirement savings when calculating liquid net worth as these can’t be cashed in on the spot if that was your goal.

Net Worth vs Liquid Net Worth

As briefly mentioned above, your total net worth includes all of your assets (what you own) and liabilities (what you owe). When you determine your net worth, you add up all your assets, including non-liquid assets, such as your house, car, and retirement accounts, and then subtract all of your liabilities. The resulting number is your total net worth.

•   Your liquid net worth is the amount of money you have in cash or cash equivalents (assets that can be easily converted into cash) after you’ve deducted all of your liabilities.

It’s very similar to net worth, except that it doesn’t account for non-liquid assets such as real estate or retirement accounts.

•   Your total net worth gives you a picture of your overall financial strength and balance sheet, while liquid net worth shows how much money you have available that is quickly accessible in case of emergency or other financial hardship.

•   Both measures of net worth can give you a useful snapshot of your financial wellness, since they consider both assets and debts. Looking at your assets without considering your debts can give you a false picture of your financial situation.

•   Knowing and tracking these numbers can also tell you if you are moving in the right or wrong financial direction. If your net worth or liquid net worth is in negative territory or the numbers are declining over time, it can be a sign you need to make some changes and/or may want to put off making a major purchase such as a home or a car.

Why Liquid Net Worth Matters

Your liquid net worth is a measure of your ability to weather a financial storm. Imagine you need money for something important — a major home or car repair, a trip to the ER, or getting laid off and deciding to start a new business.

You need it now… or, at least, within the next few weeks or months. Where are you going to get the money?

You might not want to look at cashing in things like your home, your car, your retirement savings, your baseball card collection, or Grandma’s wedding ring unless it’s absolutely necessary.

Those kinds of assets can be difficult to convert to cash in a hurry — and there could be consequences if you did decide to go that route.

Instead, it may be easier to tap your more liquid assets, such as cash from a checking, savings, or money market account, or cash equivalents, like stocks and bonds, mutual funds, or money market funds.

Liquid net worth is often considered a true measure of how financially stable you are because it tells you what you can rely on to cover expenses. In addition, your liquid net worth acts as an overall emergency fund.

Calculating Your Liquid Net Worth

The difference in calculating net worth and liquid net worth is understanding which of your financial assets are liquid assets.

Liquid assets are cash and assets that could be converted to cash quickly. The following are considered liquid assets.

•   Cash: This includes the money that is in your wallet, as well as the cash you have in any savings, checking, and money market accounts.

•   Stocks: Any equity in a brokerage account, such as stocks, index funds, mutual funds, and ETFs, is considered a liquid asset. While you might have to pay taxes and other fees if you sell equities to convert to cash, you could liquidate these assets fairly quickly.

•   Bonds: Like equities, any bonds or bond funds are also liquid assets. Again, you may have to pay taxes on your profits when you sell, but the translation is relatively quick.

Non-liquid assets include anything that cannot be converted to cash quickly or for their full value, such as:

•   Retirement accounts, such as 401(k)s and IRAs.

•   A house or other real estate holding (which could take a while to sell and the actual sales price is not known).

•   Cars (while you may be able to liquidate a car relatively quickly, cars generally don’t hold their original value; they depreciate).

Liquid Net Worth Formula

For a liquid net worth calculation, here are the steps to follow:

•   List all of your liquid assets: The cash and cash equivalents you could easily and quickly get your hands on if you need money.

•   Next, list your current liabilities, including credit card debt, student loan balance, unsecured loans, medical debt, a car loan, and any other debt.

•   Subtract your liabilities from your liquid assets. The result is your liquid net worth.

4 Tips for Improving Liquid Net Worth

If your liquid net worth is too low to cover at least three to six months’ worth of living expenses or is in negative territory, you may want to take some steps to bolster this number. Here are some strategies that can help boost liquid net worth.

1. Building an Emergency Fund

If you don’t already have a solid contingency fund set aside in a liquid account, you may want to start building one. Having enough cash on hand to cover three to six months’ worth of expenses can be a great place to start building your liquid net worth.

An emergency fund can help keep you from getting behind on your bills and running up high interest credit card debt in the event of an unexpected expense, job loss, or reduction in work hours.

It’s fine to build towards this slowly. Automating your savings to deposit, say, $25 per paycheck into an emergency fund can be a good starting point if money is tight.

2. Reducing Expenses

For every dollar you save each month, you are potentially increasing your liquid net worth by that amount. One way to cut spending is to take a close look at your monthly expenses and to then try to find places where you may be able to cut back, such as saving on streaming services, lowering your food bills, or shopping around for a better deal on home and car insurance.

3. Lowering High-Interest Debt

Debts add to your liabilities and therefore lower your liquid net worth. Expensive debt also increases your monthly expenses in the form of interest. This gives you less money to put in the bank each month, making it harder to build your liquid net worth.

If you’re carrying credit card debt, you may want to start a debt reduction plan (such as the “debt snowball” or “debt avalanche” method) to get it paid down faster.

4. Increasing Investments

Investing money in the market for long-term savings goals, such as a child’s education, can increase your liquid net worth. While there is risk involved, you’ll have more time to ride out the ups and downs of the securities markets when saving for the longer term.

Recommended: Average Net Worth by Age

The Takeaway

Liquid net worth is the amount of money you have in cash or cash equivalents after you’ve deducted your liabilities from your liquid assets. It doesn’t account for non-liquid assets, such as real estate or retirement accounts.

Your liquid net worth can be a valuable measure of your financial health and stability because it shows how prepared you are to handle a change in plans, an unexpected expense, or a true emergency.

One easy way to boost your liquid net worth is to start building an emergency fund. If you’re looking for a good place to start saving, you may want to consider opening a high-interest bank account.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

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

FAQ

Does a 401(k) count as liquid net worth?

When calculating liquid net worth, you typically do not include retirement accounts nor real estate. Liquid net worth’s meaning involves assets you can quickly tap without paying a large penalty.

How do you calculate liquid net worth?

To calculate your liquid net worth, add up your liquid assets (cash, money in the bank, stocks, bonds, and the like) and subtract your liabilities (credit card debt, student loans, car loan, etc.). When adding up your assets, do not include real estate or retirement accounts.

What is the average liquid net worth by age?

Figures for average liquid net worth are hard to come by. Rather, total net worth is what is typically tracked, which was recently found to be approximately $76,300 for those under age 35, $436,200 for those 35 to 44; $833,200 for those 45 to 54, and $1,175,900 for those 55 yo 64. It may be helpful to also consider the media values for these age brackets, which are significantly lower than the average.

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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 recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

As an alternative to direct deposit, 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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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.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

Paying a Credit Card With Another Credit Card

Curious to know, “Can I use a credit card to pay off 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.

Let’s 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 5% 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

Can you pay a credit card with a credit card? Indirectly, yes, 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. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

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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.

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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Figuring out how to double your money with investments often hinges on striking the right balance between risk and reward. Your personal risk tolerance and goals can influence how you invest and the returns your portfolio generates.

However, doubling your money is a reasonable goal, especially if you’re willing to wait for your money to grow. And that’s a big variable to keep in mind: Time. If you’re interested in doubling your money and growing wealth for the long-term, there are several investing strategies to consider.

Investing Strategies to Double Your Money

1. Get to Know the Rule of 72

The rule of 72 can be a helpful guideline for answering this question: How long to double your money?

If you’re not familiar with this investing rule, it’s not complicated. It uses a simple formula to estimate how long doubling your money might take, based on your annual rate of return. You divide 72 by your annual return to get the number of years you’ll need to wait for your investment to double.

So, for example, if you have an investment that generates a 5% annual return, it would take around 14.5 years to double it. On the other hand, an investment that’s generating a 12% annual return would double in about six years.

The rule of 72 doesn’t predict how an investment will perform. But it can give you an idea of how quickly (or slowly) you can double your money, based on the returns you’re getting each year. Just keep in mind that the rule’s accuracy tends to decrease as the rate of return increases, so it’s more of a guideline than a hard-and-fast rule.

💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.

2. Leverage Your Employer’s Retirement Plan

One way to attempt to double your money through investing may be through your workplace retirement plan. If your employer offers a matching contribution to the money you’re deferring from your paychecks, that’s essentially free money for you.

Employer matching contributions are low-hanging fruit, in that you don’t need to change your investment strategy to take advantage of them. All that’s required is contributing enough of your salary to your employer’s retirement plan to qualify for the match.

The matching formula that companies use varies, but some companies offer a dollar-for-dollar match, meaning that the money you put into a 401(k) would automatically double when you receive your match. Keep in mind that some companies use a vesting schedule, meaning that you have to work at the company for a certain period of time before you get to keep all the employer contributions.

Aside from potentially helping to double your money, investing your 401(k) or a similar qualified retirement plan can also yield tax benefits. Contributions made with pre-tax dollars are deducted from your taxable income, which could lower your annual tax bill.

3. Diversify Strategically

Diversification means spreading your money across different investments to create a portfolio that will meet your needs for both risk and return.

As a general rule of thumb, riskier investments like stocks have the potential to generate higher returns. More conservative investments, such as bonds, tend to generate lower returns but there’s less risk that you’ll lose money on the investment.

If you want to double your money, then it’s important to pay attention to diversification and what that means for your return on investment. For instance, if you’re investing heavily in stocks then you could see greater returns but you might experience deeper losses if the market takes a hit. Playing it too safe, on the other hand, could cause your portfolio to underperform.

Also, keep in mind that there are many types of investments besides stocks, mutual funds and bonds. Real estate, stock options, futures, precious metals and hedge funds are just some stock and bond alternatives you could use to build a portfolio. Understanding their risk/reward profiles can help you decide what to invest in if you’re focused on doubling your money.

💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

4. Consider Buying When Others Are Selling

The stock market is cyclical and you’re guaranteed to experience ups and downs during your investing career. How you approach the down periods can impact your ability to double your money when the market goes up again.

When the market drops, some investors start selling off stocks or other investments to avoid losses. But if you’re comfortable taking risks, the sell-off could present an opportunity to buy the dip.

If you can purchase stocks at a discount during periods of volatility when other investors are selling, you could double your money when those same stocks increase in value again. But again, making this strategy work for you comes down to knowing how much risk is acceptable to you.

5. Commit for the Long Term

There are different investment philosophies you can adopt. For example, traders regularly buy and sell investments to try and get quick wins from the market. A buy-and-hold strategy takes a different approach, but it could pay off if you’re trying to double your money.

Buy-and-hold investing involves buying an investment and holding onto it for the long-term. The idea is that during that holding period, the investment will grow in value so you can sell it at a sizable profit later.

This is a passive investment strategy that relies on patience and time to increase your portfolio’s value. The longer you have to invest, the more you can capitalize on the power of compounding gains, or gains you earn on your gains.

If you’re using a buy-and-hold strategy with a value investing strategy, you could potentially double your money or more if your investments meet your expectations. Value investing means investing in companies that you believe the market has undervalued.

This strategy takes a little work since you have to learn how to understand the difference between a stock’s market value and its intrinsic value. But if you can find one of these bargain hidden gems and hold onto it, you could reap major return rewards later when you’re ready to sell.

6. Step Up Your Investment Contributions

Another simple strategy to double your money is to invest more. Assuming your portfolio is performing the way you want and need it to to reach your goals, doubling your investment contributions could be a relatively easy way to boost your returns.

If you can’t afford to put big chunks of money into the market all at once, there are ways to increase your investments gradually. For instance, you could start building a portfolio with fractional shares and increase your contributions by a few dollars each month.

If you’re investing your 401(k) at work, you could ask your plan administrator about raising your contribution rate annually. For example, you might be able to automatically bump up salary deferrals by one or two percent each year. And if that coincides with a pay raise you may not even miss the extra money you’re contributing.

7. Focus on Tax Efficiency

Minimizing tax liability is another opportunity to stretch your investment dollars. There are different ways to do that inside your portfolio.

Investing in your retirement plan at work is an obvious one, so if you aren’t doing that yet you may want to consider getting started. Remember, the longer you have to invest, the more time your money has to grow.

If you don’t have a 401(k) or a similar plan at work, you could open a traditional or Roth Individual Retirement Account (IRA) instead. A traditional IRA allows for tax-deductible contributions, meaning you get an upfront tax break. Then, you pay ordinary income tax on that money when you withdraw it in retirement.

Roth IRAs aren’t tax-deductible, since you fund them with after-tax dollars. The upside of that, however, is that qualified withdrawals in retirement are 100% tax-free.

A taxable brokerage account is another way to invest, without being subject to annual contribution limits the way you would with a 401(k) or IRA. The difference is that you’ll pay capital gains tax on your investment growth.

Paying attention to asset location can help with maximizing tax efficiency across different investment accounts. For example, exchange-traded funds can sometimes be more tax-efficient than other types of mutual funds because they have lower turnover. That means the assets in the fund aren’t bought or sold as frequently, so there are fewer taxable events.

Keeping ETFs in a taxable account while putting less tax-efficient investments into a tax-advantaged account, such as a 401(k) or IRA, could help with doubling your money if it means reducing the taxes you pay on investment gains.

The Takeaway

Learning how to double your money can mean taking a slow route or a quicker one, but it all comes down to how much risk you’re comfortable with and how much time you have to invest. One of the keys to growing your investments is being consistent and that’s where automated investing can help.

There are numerous strategies and tactics that you can try to leverage to your advantage. But ultimately, whether you’re able to double your money will likely come down to how much you’re willing to risk, how much time you have on your side, and probably a little bit of luck.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

Photo credit: iStock/South_agency

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SoFi Invest®

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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