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Creating a beautifully landscaped home can improve your day-to-day life and also increase the resale value of your home, making it well worth the investment. The question is, how much will it cost?

Landscaping costs range widely depending on the size, design, and scope of the project, and whether you plan to do it yourself or hire a professional. On average, however, a landscaping project can run between $1,248 and $6,280, according to the home improvement site Angi.

Whether you’re thinking about sprucing up your front yard, back yard, or both, here’s a look at what’s involved, how much it can cost, plus tips for how to budget for and finance a landscaping project.

What Are Some Benefits of Landscaping?

If you’re like many homeowners, you may prioritize interior upgrades over outdoor improvements. But improving your landscaping can actually be the gift that keeps on giving — it can beautify your space, increase your home value, and even decrease your heating and cooling expenses.

According to a recent report from the National Association of REALTORS®, an overall landscape upgrade (and even smaller projects like keeping up with yard maintenance), can pay for itself when you sell your home.

Investing in landscaping can also make your home more efficient. Planting leafy trees strategically around your property, for example, can keep your home cooler during the summer and warmer during the winter, reducing your energy bills.

Landscaping can also have environmental benefits beyond your property. The trees, bushes and flowers that make up your landscaping are natural air purifiers — they remove air pollutants from the atmosphere and store carbon dioxide, improving air quality, according to the U.S. Environmental Protection Agency (EPA). Landscaping can also improve local water quality by absorbing and filtering rainwater.

What Are Some Current Landscaping Trends?

Some of the top landscaping trends for 2025 include:

•  Climate-conscious landscaping Many homeowners are seeking out sustainable landscaping revamps, such as replacing lawns with alternative species (like clover) or re-wilding their yards with native species that require far less maintenance, water, and fertilizer.

•  Colorful gardens After years of soft greens, pastels, and neutrals, landscape designers are favoring brighter, more joyful designs. Plants that provide color and as support local pollinators (like birds, butterflies, and bees) are particularly popular. Examples include native sunflowers, coneflowers, garden phlox, and asters.

•  Outdoor living Landscape design is continuing to incorporate outdoor living spaces, such as seating areas, outdoor kitchens, and cozy fire pits.

Recommended: The Top Home Improvements to Increase Your Home’s Value

How to Budget for Landscaping

A good first step for coming up with your landscaping budget is to actually ignore numbers and give yourself permission to dream — what does your ideal landscaping look like? What does it feel like?

Next, walk around your property and create a list of both needs and wants. In your “needs” column, list repairs that must be done for safety’s sake, ranging from drainage challenges, broken fences, toxic plants that need to be removed, tree removal, and so forth.

Also imagine what the property could look like with the stunning new landscaping you’re envisioning. Perhaps some of the ideas listed above have inspired you in an unexpected direction. Have fun and add these ideas to your “wants” column.

Now, prioritize your list and be clear about which items are optional (perhaps a special trellis for climbing roses) and which are not (trip hazards where you plan to add outdoor seating).

Next, determine your budget, focusing on how much you can realistically spend on landscaping, keeping in mind how quality landscaping can add significant value to your home. Then, it might make sense to talk to several professional landscapers to get estimates.

Professionals will also be able to let you know if your plans are realistic for your property. Even if you intend to do some of the work yourself, these professionals will likely share information you have not yet considered. (Hiring them in the off-season might save you money, too.)

Once you determine the scope and cost of your project, it’s a good idea to add a cushion of 10% to 20% for the unexpected. When you have a final number to work with, you’ll need to determine if you can fund the project out of savings, or if you’ll need to finance any part of your landscaping plan (more on that below).

Recommended: Personal Loan Calculator

How Much Does Landscaping Cost?

The average landscaping project in the U.S. costs $3,648, but ranges between $1,248 and $6,280. Of course, you can spend a lot less than the average if you’re just sprucing up your front garden beds. You can also spend considerably more if your plan is to build a backyard oasis with a pool and outdoor kitchen.

How much your landscaping revamp will ultimately cost will depend on your yard size, the type of landscaping you want to do, and the landscaper’s labor costs.

Generally speaking, backyard landscaping projects cost more than front yard projects. The cost of the average front-yard spruce-up runs between $1,500 to $5,000, whereas a full backyard renovation can range between $15,000 to $50,000.

If you plan to use a designer for your project, it can run $50 to $150 per hour for a professional landscape designer to come up with an artistic direction for your space, choose the plants, and manage the project. The average cost to hire a landscape designer is $4,600. If you’re planning to do a major structural renovation, you may want to hire a landscape architect, which can run $70 to $150 per hour.

Recommended: Home Renovation Cost Calculator

What Is Landscaping Cost Per Square Foot?

Landscaping costs are influenced by a variety of factors, including geography, type of project, and the materials used. Figuring out the dimensions of the project area, however, can help you come up with ballpark cost estimates.

According to Angi, the cost of landscaping runs between $4.50 and $12 per square foot for basic services and intermediate projects, such as aerating, flower planting, and installing garden beds. However, if you’re planning a major tear-out and remodel, you can expect to spend as much as $40 per square foot.

How Much Does New Landscaping Installation Cost?

Starting from scratch can be challenging, but having a blank slate also opens up possibilities for curating your outdoor spaces.

To fully landscape a new home, you’ll want to budget around 10% of your property value. So if you purchased the home for $350,000, you can anticipate spending around $35,000 to both hardscape (add hard surfaces like brick, concrete, and stone) and softscape (add living things) across your front and backyards.

What Will It Cost to Maintain Landscaping?

In addition to the initial outlay, you’ll also need to set aside an annual budget to help with upkeep. The amount of maintenance you’ll need will depend on landscape design, local climate, and how much of a DIY approach you’re comfortable with.

Lawn-mowing can run anywhere from $40 to $150 per service, while getting your trees trimmed averages $1,800 per job. For all-around yard maintenance, like weeding and mulching, you might find a landscaper who charges an hourly rate (often $50 to $100 per hour) or charges a flat rate per job.

Keep in mind that mowing, trimming back shrubs, weeding, and mulching are also jobs you can likely do yourself, which will cut down on your landscape maintenance costs.

What Are Some Options to Finance a Landscaping Project?

If you want to invest in your home through landscaping but the price point is above what you have in savings, you may want to look into financing. Here are two common types of loans for landscaping.

Financing a Landscaping Project With a Home Equity Loan

A home equity loan gives you access to cash by tapping into the equity you have in your home. Your home equity is the difference between your home’s current market value and what you owe on your mortgage. Depending on the lender and your credit profile, you may be able to borrow up to 80% of your home’s current equity.

You can use a home equity loan for various purposes, including home upgrades like new landscaping. Because your home serves as collateral for the loan, you may qualify for a lower interest rate than on some other financial products, like personal loans and credit cards. If you have trouble repaying the loan, however, your lender could foreclose on your home. You’ll also pay closing costs with a home equity loan.

Financing a Landscaping Project With a Personal Loan

You can also use a personal loan to fund any type of home improvement project, including upgrading the outside of your home.

Personal loans for home improvement generally have fixed interest rates and a fixed repayment timeline. You’ll receive all the funds upfront, generally soon after you’re approved, and your monthly payments will be fixed for the duration of your loan.

Personal loans are typically unsecured loans, making them less risky than home equity loans, and don’t come with closing costs. They also tend to be faster to fund than home equity loans, which means you can get your landscape project going sooner. However, because personal loans are unsecured (which poses more risk to the lender), rates are typically higher than rates for home equity loans.

The Takeaway

Landscaping projects can add curb appeal and value to your home, with the current average cost of a landscaping project nationwide is $3,648. Of course you could spend a lot less if you are looking at a small project, like swapping out plants in your front garden, or significantly more for a full overhaul.

If you don’t have enough cash in the bank to cover your landscaping project, you may want to consider getting a loan, such as a home equity loan or a personal loan.

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.

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

FAQ

What is a good budget for landscaping?

Many experts advise allocating 10% of your property value toward landscaping costs if you are ready to fully landscape a home. Otherwise, between $1,200 and $6,000 is a typical landscaping cost.

How much is the typical landscaping project now?

The typical landscaping project is currently $3,648.

Is paying for landscaping worth it?

Typically, paying for landscaping is worthwhile as it can improve property value and reduce the need for major work in the future.

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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.

*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.

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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If you get paperless mortgage statements or have autopay set up on your home loan, or even if you get statements in the mail, it can be easy to miss important information.

By paying close attention to exactly what’s included in your mortgage statements, you’ll avoid unpleasant surprises.

What Is a Mortgage Statement?

You probably became well versed on mortgage basics during the homebuying process. And you likely did the hard work of using a home mortgage calculator, qualifying for a mortgage, and getting that loan.

But what is a mortgage statement? It’s a document that comes from your home mortgage loan servicer. It’s typically is sent every month and includes how much you owe, the due date, the interest rate, and any fees and charges.

In the past, the information that was included and the format of a mortgage statement varied widely among lenders. Thanks to the Dodd-Frank Act, enacted in 2010, mortgage servicers must now include specific loan information and follow a uniform model for mortgage statements.

Statements also include information on any late payments, how much you’ll need to pay to bring your account back to where it should be, and any late fees you’re dinged with. You can also find customer service information on your mortgage statement.

Mortgage Statement Example

A mortgage statement has elements similar to those on a credit card or personal loan statement. As a picture is worth a thousand words, here’s a mortgage statement example, courtesy of the Consumer Financial Protection Bureau:

How to Read a Mortgage Statement

Deciphering what’s on a mortgage statement can help you understand how much you owe in a given month, how much you’re paying toward interest and principal, and how much you’ve paid for the year to date.

Let’s dig into the different parts of a home loan statement.

Amount Due

This can usually be found at the top of your mortgage statement and is how much you owe for that month. Besides the amount, you’ll find the due date and, usually, the late fee you’ll get hit with should you be too slow with your payment.

Explanation of Amount Due

This section breaks down why you owe what you owe. You’ll find the principal amount, the interest amount, escrow for taxes and insurance, and any fees charged. All of these will be tallied for a total of what you’ll owe that month.

Past Payment Breakdown

Below the section that explains the amount due, you’ll find a breakdown of your past payment: the date the payment was made, the amount, and a short description that may include late fees or penalties and transaction history.

Contact Information

This is typically located on the top left corner of the mortgage statement and contains your mortgage loan servicer’s address, email, and phone number, should you need to speak to a customer service representative. Note that like student loan servicers, a mortgage loan servicer might be different from your lender.

Your mortgage loan servicer processes payments, answers questions, and keeps tabs on your loan payments, and how much has been paid on principal and interest.

You probably know what escrow is. If you have an escrow account, your mortgage loan servicer is also tasked with managing the account.

Account Information

Your account information includes your account number, name, and address.

Delinquency Information

If you’re late on a mortgage payment, within 45 days you’ll receive a notice of delinquency, which might be included on your mortgage statement or be a separate document. You’ll find the date you fell delinquent, your account history, and the balance due to bring you back into good standing.

There should additionally be other information, such as costs and risks should you remain delinquent. There also might be options to avoid foreclosure. One possible tactic is mortgage forbearance, when a lender agrees to stop or reduce payment requests for a short time.

Escrow Account Activity

Many mortgages include an escrow account, from which the mortgage servicer pays the homeowner’s property taxes and/or homeowners insurance. If you have an escrow account, you should see how much of your current payment will go to it listed in the explanation of the amount due. You may also see how much you have paid into it during the past year in the past payment breakdown.

Your lender is also responsible for conducting an escrow analysis each year to assess what your costs will be for the next year. It must let you know the results, what your payments will be in the coming year, and whether your account currently has a surplus or a deficit.

Recommended: Refinance Your Mortgage and Save

Understanding the Details

Your mortgage statement includes many details, all to help you understand what you’re paying in interest, the fees involved, and what your principal and interest amounts are. It’s important to look at everything to make sure you understand what information is included. If you have trouble deciphering the information, call your mortgage servicer listed on the document.

If you have an adjustable-rate mortgage, the mortgage statement also might include information about when that interest rate might change.

Important Features to Know

Here are a few key elements related to your mortgage statement to be on the lookout for.

Delinquency Notice

As mentioned, you’ll receive a delinquency notice within 45 days should you fall behind on payments. Besides how much you owe to get back in good standing, the delinquency notice might also include your account history, recent transactions, and options to avoid foreclosure.

Escrow Balance

If you have an escrow account for your mortgage, the balance is how much money you currently have in your escrow account. This may be included in your annual escrow statement. (Your mortgage statement should show what you have paid for the year to date.) If you have difficulty finding your escrow balance, contact your mortgage servicer.

Interest Rate and Loan Term

Your loan’s current interest rate will appear on your mortgage statement. If you have an adjustable rate, you’ll also see the date that the rate will next adjust. Your loan term or the maturity date of the loan may be included on the statement as well. If they don’t and you want the information, contact your mortgage servicer.

Recommended: Mortgage Calculator with Taxes and Insurance

Using Your Mortgage Statement

Now that we’ve covered the elements of a mortgage statement, let’s go over how to use your mortgage statement and make the most of it.

Making Sure Everything Is in Order

Comb through your mortgage statement and check to see that everything is accurate and up to date. Inaccurate information can lead to overpaying, potentially falling behind on payments, and/or other headaches.

Keeping Annual Mortgage Statements

While you might not need to hold on to your monthly mortgage statements for too long, make sure you have access to your annual mortgage statements for a longer period of time. If you run into an IRS audit, you may be required to provide documentation for the past three years.

Making Your Payment

There are a handful of ways you can make payments on your mortgage.

Online. This is probably the most common and simplest way to submit a mortgage payment. It’s usually free, and once you set up an account online and link a bank account to draw payments from, you’re set. You can also set up autopay, which will ensure that you make on-time payments. In some cases, you might be able to get a discount for setting up auto-debit.

Coupon book. A mortgage servicer might send you a coupon book to use to make payments instead of sending mortgage statements. A coupon book has payment slips to include with payments. The slips offer limited information.

Check in the mail. As with any other bill, you can write a check and drop it in the mail. However, sending a payment by snail mail might mean that your payment doesn’t arrive on time. If you are going this route, send payments early and consider sending them via certified mail.

Spotting Errors or Irregularities

If you discover an error on your mortgage statement, it’s important to get it corrected as soon as possible, even if it’s just a misspelling of a street name. To do this, you can start by telephoning your mortgage servicer to report the problem. Some problems the company may be able to fix over the phone.

If the mortgage servicer can’t resolve the issue over the phone, it may ask you to send a letter. This will allow you to document what the problem is and offer any evidence you have to support your case. The provider is generally obligated to make the change or conduct an investigation. The provider also has to let you know what their ultimate decision is.

How Long to Keep Mortgage Statements

Just as you’d want to hold on to billing statements for other expenses, you’ll want to keep your mortgage statements in case you find inaccuracies down the line. Plus, the statements come in handy for tax purposes and for your personal accounting.

So how long should you keep your mortgage statements? Provided you can find your statements online by logging in to your account, you don’t need to hold on to paper statements for long. In fact, you can probably get rid of paper copies if you have access to them online. It might be a good idea to download the documents to your computer.

Other documents, such as your deed, deed of trust, promissory note, purchase contract, seller disclosures, and home inspection report, you should keep as long as you own the home.

Consider holding on to annual mortgage statements for several years in a safe place. It’s a good idea to store them on your computer and have hard copies on hand.

The Takeaway

It’s easy to gloss over mortgage statements, but not knowing what’s in them every month and not noticing any changes can result in costly mistakes. It’s also eye-opening to see how much of a payment goes to principal and how much to interest. Having that information at hand can also be helpful if you are considering a mortgage refinance.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is a mortgage interest statement?

A mortgage interest statement is a tax form (Form 1098) used to report potentially tax-deductible expenses, including mortgage interest payments. It’s not the same as a mortgage statement, which is a document you receive from your mortgage servicer, usually every month, that shows how much your next payment will be, the due date, and any fees and charges, as well as other information.

How do I get my mortgage statement?

You should receive a statement monthly, either in the mail or via an alert from your mortgage servicer saying the bill is due. If you don’t receive a statement and can’t access it online, contact your lender promptly.

What is a mortgage servicer?

A mortgage servicer is a company that manages home loans. It sends your statement and collects and processes your payment every month, as well as provides customer support. A mortgage servicer may be different from your lender, which is the institution that approved your application and loaned you the funds to buy your property.

What should I check on my mortgage statement each month?

It’s a good idea to review your mortgage statement to ensure that there are no errors or unpleasant surprises. In particular, you’ll want to make sure that your last payment was received on time and check for any potential new or changed fees or rate changes.

Are mortgage statements available online?

In many cases, you can access your mortgage statements on the website of your mortgage lender or servicer.

Can I use my mortgage statement for tax purposes?

If you want to claim a mortgage interest tax deduction on your federal taxes, you can’t use your monthly mortgage statement. Instead, you’ll need to use a 1098, which is the form your mortgage lender or servicer uses to declare how much mortgage interest you have paid in the last year.

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Photo credit: iStock/Tijana Simic

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

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.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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®

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Paying down debt can be an important financial priority, but should you use your savings in order to do so? While it can be tempting to throw your full efforts into paying off debt, maintaining a healthy savings account for emergencies and saving for retirement are also important financial goals.

Continue reading for more information on why it may not always make sense to use savings to pay off debt and ideas and strategies to help you expedite your debt repayment without sacrificing your savings account.

The Case Against Using Savings to Pay Off Debt

While it can feel satisfying to watch your debt balance drop, using savings to achieve that can come with unintended consequences. It’s important to weigh the risks before depleting your savings for the sake of faster debt repayment.

Emergency Funds Provide Financial Security

One of the key arguments for not using savings to pay off debt is the importance of maintaining emergency savings. An emergency fund — typically three to six months’ worth of living expenses — provides a crucial financial cushion in the event of job loss, unexpected medical bills, or an urgent car or home repair. Without that buffer, you might be forced to run up high-interest credit card debt to get by, negating the benefits of having paid off previous debt.

💡 Quick Tip: With average interest rates lower than credit cards, a personal loan for credit card debt can substantially decrease your monthly bills.

Opportunity Cost of Using Savings

Using your savings to pay off debt means missing out on the opportunity to invest that money or let it earn interest in a high-yield savings account. This is especially relevant with low-interest debt, such as federal student loans, certain car loans, or mortgage balances. If you could earn more interest or investment returns than what you’re paying on your debt, paying off the debt early could potentially cost you money in the long run.

Every financial decision has an opportunity cost. It’s important to consider whether your money might be better utilized elsewhere.

When to Prioritize Paying Off Debt

In some situations, however, it could make sense to pay off debt rather than save money. Here are some scenarios where you may want to use your savings to pay off debt.

High-Interest Debt

Credit card debt is notorious for high interest rates. As of May 2025, the average credit card annual percentage rate (APR) was 22.25% Given the steep cost of these debts, it can be smart to prioritize paying off credit card debt over saving. The interest accruing can quickly outpace any gains from savings or investing, so tackling high-interest debt should usually be a top priority.

Source of Stress

Debt isn’t just a financial burden; it’s often an emotional one too. If your debt causes anxiety, sleep loss, or tension in your relationships, that emotional toll is worth considering. Prioritizing debt repayment to relieve stress and improve mental well-being can be just as valuable as financial gains.

Limiting Financial Flexibility

High debt payments can limit your cash flow and force you to delay important life goals, like owning a home, getting married, going back to school, or starting a family. For example, a high debt-to-income ratio can hinder your ability to qualify for favorable mortgage rates or even a mortgage at all. By paying off debt, you free up money in your budget that can later be redirected towards other goals.

When to Prioritize Saving

While paying down debt is important, there are also compelling reasons to focus on building your savings, especially if your debt isn’t urgent or costly.

Low-Interest Debt

If your debt comes with a relatively low interest rate, there may be less urgency to pay it off early. For example, if your mortgage has a 3.5% interest rate, and your retirement investments earn an average of 7%, you’re likely better off contributing to your retirement than accelerating debt payments.

In these cases, the debt is manageable and might even come with tax advantages. This gives you room to prioritize saving and investing instead.

Access to 401(k) Employer Match

If your employer offers a 401(k) match and you’re not contributing enough to get the full match, you’re essentially leaving free money on the table. A 100% match up to 6% of your salary, for example, is an immediate 100% return on investment. That’s far more than you’d save by paying off most debts faster.

In nearly every case, it makes sense to contribute enough to receive the full match before prioritizing additional debt payments.

No Emergency Savings

If you don’t have an emergency fund, it’s wise to build one before aggressively attacking your debt. Without savings, you’re vulnerable to any financial disruption, which could force you into more debt. Establishing a modest emergency fund — say $500 to $1,000 to start — can prevent future financial setbacks and give you some breathing room.

How to Start Paying Off Debt Without Dipping Into Your Savings

You don’t necessarily need to choose between savings and debt repayment — you can do both. Here’s how to get started on your debt without draining your savings account.

Make a Budget

Creating a budget is a crucial step towards effectively paying off debt — and the process is easier than it sounds. Simply gather the last several months of financial statements and use them to calculate your average monthly income and spending.

If you find that, on average, your spending is close to (or higher) than your earnings, you’ll want to find places to cut back. First look for monthly expenses you can cut completely, such as steaming services you rarely watch or membership to a gym you rarely use. Then consider ways to trim discretionary spending, such as eating out less, avoiding impulse purchases, and finding cheaper entertainment options. Any funds you free up can then be funneled towards debt repayment.

Establish a Debt Payoff Strategy

“Focus on paying off one debt at a time,” advises Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “If you spread your money out over many debt payments, your progress may not be as fast as you want. But by focusing on one goal at a time, you can see success sooner, and that can keep your motivation up.”

Two popular debt paydown strategies to consider:

•   Debt snowball: With this approach, you put extra money towards the debt with the smallest balance, while making minimum payments on all the other debts. When that debt is paid off, you move to the next-smalled debt, and so on until all debts are paid off. This method can deliver early wins and help keep you motivated to continue tackling your debt.

•   Debt avalanche: Here, you put extra money towards the debt with the highest interest rate, while paying the minimum on the rest. When that debt is paid off, you move on to the debt with the next-highest rate, and so on. This strategy helps minimize the amount of interest you pay, which can help you save money in the long term.

Consider Debt Consolidation

If you have multiple high-interest debts, you might consider using a personal loan to pay off your balances, a payoff strategy known as debt consolidation. Personal loans for debt consolidation typically have fixed interest rates, so your payments remain the same for the term of the loan. Rates also tend to be lower than credit cards. In addition, debt consolidating simplifies repayment by rolling multiple payments into one.

However, debt consolidation generally only makes sense if you can qualify for a rate that’s lower than what you’re currently paying on your debt balances. Before going this route, it’s helpful to use an online debt consolidation calculator to see exactly how much you can save by consolidating debt with a personal loan.

💡 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.

Look Into Balance Transfer

Another way to pay down credit card debt faster is by doing a balance transfer. This strategy involves moving debt from one or more credit cards to another, ideally with a lower or 0% introductory interest rate. This temporary reduction in the APR allows more of your monthly payments to go towards the principal, helping you pay down debt faster and potentially saving you money on interest charges.

Just keep in mind that if you can’t pay off your balance during the promotional period, you’ll be back to paying high rates again. Also these cards often charge a transfer fee, typically 3% to 5% of the transferred amount, which adds to your costs.

The Takeaway

So should you pay off debt or save money? The answer is that it depends. If you have at least a starter emergency fund and high-interest debt, it may make sense to prioritize paying your balances down, either through an avalanche or snowball plan, debt consolidation, or a balance transfer.

However, if you have debt with a very low interest rate, access to an employer 401(k) match program, and/or no emergency savings, you may want to prioritize savings over debt repayment.

Ultimately, the smartest path forward often involves doing both: saving and paying down debt in tandem, based on your individual situation and future goals. This hybrid strategy can help put you on a path to long-term financial health.

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.

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

FAQ

Why is it risky to use savings to pay off debt?

Using savings to pay off debt can be risky because it leaves you without a financial cushion for emergencies. If unexpected expenses arise, like a medical bill or car repair, you may need to rely on high-interest credit again, putting you back in debt. Also if your savings are in a high-yield account or investment, withdrawing them could mean missing out on compound interest and future growth. It’s important to weigh the long-term impact before using savings to eliminate debt.

Which debt should I pay off first?

It’s generally best to start with high-interest debt, like credit cards, because they cost you the most over time. This strategy, known as the “avalanche method,” can reduce the total interest you’ll pay. Alternatively, you might choose to pay off the smallest balances first. Known as the “snowball method,” this approach provides quick wins, which can help boost motivation. The best game plan for you will depend on your personality and financial goals.

How much should I have saved?

A good rule of thumb is to have three to six months’ worth of living expenses saved in an emergency fund. This provides a safety net in case of job loss, medical emergencies, or unexpected costs. Your exact savings goal may vary based on your income stability, family size, and existing obligations. If you’re just starting out, aim for at least $1,000 to cover small emergencies, then build toward a more substantial reserve while balancing other financial goals like debt repayment.

Are personal loans a good alternative to using savings?

Personal loans can be a viable alternative to using savings to pay down debt, especially if you can secure a lower interest rate than your current debt carries. However, loans add to your overall debt load and come with fees and interest. Using savings avoids interest, but could leave you vulnerable if emergencies arise, so it’s important to weigh your options carefully.

How do I balance saving and paying off debt at the same time?

Balancing saving and debt repayment involves setting clear priorities and budgeting effectively. Start by building a small emergency fund (e.g., $500-$1,000) while making minimum payments on all debts. Then, focus on aggressively paying down high-interest debt while still contributing modestly to savings. Once high-interest debt is reduced, you can shift more income toward savings. The goal is to avoid future debt by preparing for emergencies and long-term financial goals.

Should I use my savings to pay off credit card debt?

Using savings to pay off credit card debt can make sense if the debt carries high interest and your savings exceed your emergency needs. Since credit cards often charge upwards of 20% interest, paying them off can save you money long term. However, you should keep a basic emergency fund — typically $1,000 or more — so you don’t fall back into debt when unexpected expenses arise. If your savings are limited, consider a blended approach — pay down some debt while maintaining a small safety net.

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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.

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

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

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

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If you’re looking for a tool you can use to borrow money when you need it, you may be wondering which is the best choice: a personal line of credit, a personal loan, or a home equity line of credit (HELOC).

In this guide we’ll compare these three types of loans. The two credit lines both function similarly to a credit card but typically have a lower interest rate and a higher credit limit, while a personal loan can provide you with a lump sum of cash that you pay back over a set term. We’ll also cover some of the pros and cons of using a HELOC vs. a personal line of credit vs. a personal loan.

What Is a Personal Loan?

A personal loan is a highly flexible way to borrow a lump sum of money for virtually any reason – from paying medical bills to financing a wedding. You may be able to borrow anywhere from $1,000 to potentially as much as $100,000, typically at a fixed rate, and pay it back in regular monthly installments over a preset period of two to seven or even 10 years. These loans are usually unsecured debt, which means you don’t have to use collateral to qualify. The rate and other terms are determined by the borrower’s credit score, income, debt level, and other factors.

You’ll owe interest from day one on the full amount that you borrow. But if you’re using the loan to make a large purchase, consolidate debt, or pay off one big bill, it may make sense to borrow a specific amount and budget around the predictable monthly payments.

Personal loan rates and fees can vary significantly by lender and borrower. You can use a loan comparison site to check multiple lenders’ rates and terms, or you can go to individual websites to find a match for your goals.

What Is a Personal Line of Credit?

A personal line of credit, sometimes shortened to PLOC, is a revolving credit account that allows you to borrow money as you need it, up to a preset limit.

Instead of borrowing a lump sum and making fixed monthly payments on that amount, as you would with a traditional installment loan, a personal line of credit allows you to draw funds as needed during a predetermined draw period. You’re required to make payments based only on your outstanding balance during the draw period.

In that way, a PLOC works like a credit card. Generally, you can pay as much as you want each month toward your balance, as long as you make at least the minimum payment due. The money you repay is added back to your credit limit, so it’s available for you to use again.

You can use a personal line of credit for just about anything you like as long you stay within your limit, which could range up to $50,000, and possibly more.

Like a personal loan, a PLOC is typically unsecured, so you don’t need collateral. The lender will base decisions about the amount you can borrow and the interest rate you’ll pay on your personal creditworthiness. The interest rates are generally variable.

Can a Personal Loan or a Personal Line of Credit Be Used to Buy a House?

If you could qualify for a high enough credit limit — or if the property you want to buy is being sold at an extremely low price — you might be able to purchase a house with a personal line of credit or a personal loan. But it may not be the best tool available.

A traditional mortgage, secured by the home that’s being purchased, may have lower overall costs than a personal loan or personal line of credit. There are several different types of mortgage loans to choose from.

If you’re looking at a personal loan vs. a personal line of credit or mortgage, it’s also important to realize that a personal loan is usually for a much shorter term than a mortgage, which is typically 30 years, or most PLOCs. And since personal loans, like PLOCs, are unsecured, they typically carry much higher interest rates than traditional mortgages.

A variable rate, which is typical of personal lines of credit, might not be the best option for a large purchase that could take a long time to pay off. Your payments could go lower, but they also could go higher. If interest rates increase, your loan could become unaffordable. With a traditional mortgage, you would have the option of a fixed rate or a variable one.

Another consideration: If you use all or most of your PLOC to make a major purchase like a home, it could have a negative impact on your credit score and future borrowing ability. The amount of revolving credit you’re using vs. how much you have available — your credit utilization ratio — is an important factor that affects your credit score. The rule of thumb is typically to aim for less than 30%.

What Is a HELOC?

A HELOC is a revolving line of credit that is secured by the borrower’s home. It, too, usually has a variable interest rate.

Lenders typically will allow you to use a HELOC to borrow a large percentage of your home’s current value minus the amount you owe. That’s your home equity.

A lender also may review your credit score, credit history, employment history, and debt-to-income ratio (monthly debts / gross monthly income = DTI) when determining your borrowing limit and interest rate.

Recommended: Learn More About How HELOCs Work

Personal Line of Credit vs HELOC Compared

If you’re comparing a personal line of credit with a HELOC, you’ll find many similarities. But there are important differences to keep in mind as well.

Personal Loan vs HELOC Compared

If you’re looking at a HELOC vs. a personal loan, you’ll find many ways in which the two are different, but also some ways they’re alike.

Similarities

Here are some shared aspects of a personal loan vs. a home equity line of credit.

•   The money that you borrow can be used for virtually any purpose you choose.

•   Easy access to your money. A personal loan gives you the money in a lump sum and a HELOC allows you to draw funds at will (up to a set limit) during the draw period.

•   You must pay interest on your loan, and rates are typically lower than they would be for credit cards, for instance.

•   There are defined periods during which your loan and interest must be repaid in regular installments.

•   Lenders may charge a variety of fees, including late or prepayment fees on either. Be sure you know about potential fees before closing.

Differences

There are also many points of difference to take into account when you’re considering a HELOC vs. a personal loan.

•   HELOCs are secured by your house, which serves as collateral. Personal pans are typically unsecured. This means that your interest rate is likely to be higher with a personal loan.

•   HELOCs are revolving lines of credit and work like credit cards – you use what you need when you need it. A personal loan generally comes as a lump sum.

•   Personal loans typically have fixed interest rates, meaning that your monthly payments will always be the same for the length of the loan. HELOCs typically have adjustable rates, meaning that your payments can change with the market as well as with how much you withdraw.

•   Personal loans generally have terms of 10 years at most. HELOCs often have a 10-year draw period followed by a 20-year repayment period, for a total of 30 years.

•   Lender requirements vary, but you’ll generally need a FICO® score of at least 610 for a personal loan, while for a HELOC, it may be 680. Higher scores are likely to result in better interest rates and possibly higher loan limits.

•   Since your home is collateral for a HELOC, you may need to pay for an appraisal to establish how much your home is worth. Depending on your lender, you may also need to pay other closing costs.

Personal Loan vs. Home Equity Line of Credit
	Personal Loan	HELOC
Flexible borrowing and repayment	✓	✓
Convenient access to funds	✓	✓
Annual or monthly maintenance fee	Not typically	Varies by lender
Typically a variable interest rate		✓
Secured with collateral		✓
Approval based on creditworthiness	✓	✓
Favorable interest rates	✓*	✓*
*Rates for secured loans are usually lower than for unsecured loans. Rates for personal loans are generally lower than credit card rates.

Personal Line of Credit vs HELOC Compared

If you’re comparing a personal line of credit with a HELOC, you’ll find many similarities. But there are important differences to keep in mind as well.

Similarities

Here are some ways in which a personal line of credit and a HELOC are alike:

•   Both are revolving credit accounts. Money can be borrowed, repaid, and borrowed again, up to the credit limit.

•   Both have a draw period and a repayment period. The draw period is typically 10 years, with monthly minimum payments required. The repayment period may be up to 20 years after the draw period ends.

•   Access to funds is convenient. Withdrawals can be made by check or debit card, depending on how the lender sets up the loan.

•   Lenders may charge monthly fees, transaction fees, or late or prepayment fees on either. It’s important to understand potential fees before closing.

•   Both typically have variable interest rates, which can affect the overall cost of the line of credit over time. (Each occasionally comes with a fixed rate. The starting rate of a fixed-rate HELOC is usually higher. The draw period of a fixed-rate personal line of credit could be relatively short.)

•   For both, you’ll usually need a FICO® score of 680. Your credit score also affects the interest rate you’re offered and credit limit.

Differences

The biggest difference when you’re looking at a personal line of credit vs. a home equity line of credit is that a HELOC is secured. That can affect the borrower in a few ways, including:

•   In exchange for the risk that HELOC borrowers take (they could lose their home if they were to default on payments), they generally qualify for lower interest rates. HELOC borrowers also may qualify for a higher credit limit.

•   With a HELOC, the lender may require a home appraisal, which might slow down the approval process and be an added expense. HELOCs also typically come with other closing costs, but some lenders will reduce or waive them if you keep the loan open for a certain period — usually three years.

•   A borrower assumes the risk of losing their home if they default on a HELOC. A personal line of credit does not come with a risk of that significance.

Personal Line of Credit vs. Home Equity Line of Credit
	Personal LOC	HELOC
Flexible borrowing and repayment	✓	✓
Convenient access to funds	✓	✓
Annual or monthly maintenance fee	Varies by lender	Varies by lender
Typically a variable interest rate	✓	✓
Secured with collateral		✓
Approval based on creditworthiness	✓	✓
Favorable interest rates	✓*	✓*
*Rates for secured loans are usually lower than for unsecured loans. Rates for personal loans are generally lower than credit card rates.

Recommended: Credit Cards vs. Personal Loans

Pros and Cons of HELOCs

A HELOC and personal line of credit share many of the same pros and cons. An advantage of borrowing with a HELOC, however, is that because it’s secured, the interest rate may be more favorable than that of a personal line of credit or a personal loan.

A HELOC may offer a tax benefit if you itemize, spend the funds on buying, building or significantly improving your home, and can take the mortgage interest deduction. But there are potential downsides, too.

Pros and Cons of Personal Loans

A personal loan can be a good choice when you need a lump sum of money – say, for a major purchase or bathroom remodel – especially if it’s not an extremely large amount. You’re likely to get a better interest rate than you would on a credit card, and a shorter repayment term than you’d have for a PLOC or HELOC. But there’s a lot to consider.

Pros and Cons of Personal Lines of Credit

Because you draw just the amount of money you need at any one time, a personal line of credit can be a good way to pay for home renovations, ongoing medical or dental treatments, or other expenses that might be spread out over time.

You pay interest only on the funds you’ve drawn, not the entire line of credit that’s available, which can keep monthly costs down. As you make payments, the line of credit is replenished, so you can borrow repeatedly during the draw period. And you don’t have to come up with collateral.

But there are other factors to be wary of. Here’s a summary.

Alternatives to Lines of Credit

As you consider the pros and cons of a HELOC vs. a personal LOC or personal loan, you may also wish to evaluate some alternative borrowing strategies, including:

Personal Loan

As you’re thinking about a personal loan vs. a personal line of credit, the big difference is that, with a personal loan, a borrower receives a lump sum and makes fixed monthly payments, with interest, until the loan is repaid.

Most personal loans are unsecured, and most come with a fixed interest rate. The rate and other terms are determined by the borrower’s credit score, income, debt level, and other factors.

You’ll owe interest from day one on the full amount that you borrow. But if you’re using the loan to make a large purchase, consolidate debt, or pay off one big bill, it may make sense to borrow a specific amount and budget around the predictable monthly payments.

Personal loan rates and fees can vary significantly by lender and borrower. You can use a loan comparison site to check multiple lenders’ rates and terms, or you can go to individual websites to find a match for your goals.

Auto Loan

If you’re thinking about buying a car with a personal loan, you may want to consider an auto loan, an installment loan that’s secured by the car being purchased. Qualification may be easier than for an unsecured personal loan or personal line of credit.

Most auto loans have a fixed interest rate that’s based on the applicant’s creditworthiness, the loan amount, and the type of vehicle that’s being purchased.

Down the road, if you think you can get a better interest rate, you can look into car refinancing.

Beware no credit check loans. Car title loans have very short repayment periods and sky-high interest rates.

Mortgage

A mortgage is an installment loan that is secured by the real estate you’re purchasing or refinancing. You’ll likely need a down payment, and borrowers typically pay closing costs of 2% to 5% of the loan amount.

A mortgage may have a fixed or adjustable interest rate. An adjustable-rate mortgage typically starts with a lower interest rate than its fixed-rate counterpart. The most common repayment period, or mortgage term, is 30 years.

Your ability to qualify for the mortgage you want may depend on your creditworthiness, the down payment, and the value of the home.

Credit Cards

A credit card is a revolving line of credit that may be used for day-to-day purchases like groceries, gas, or online shopping. You likely have more than one already. Gen X and baby boomers have an average of about four credit cards per person, Experian® has found, and even Gen Z, the youngest generation, averages two cards per person.

Convenience can be one of the best and worst things about using credit cards. You can use them almost anywhere to pay for almost anything. But it can be easy to accrue debt you can’t repay.

Because most credit cards are unsecured, interest rates can be higher than for other types of borrowing. Making late payments or using a high percentage of your credit limit can hurt your credit score. And making just the minimum payment can cost you in interest and credit score.

If you manage your cards wisely, however, credit card rewards can add up. And you may be able to qualify for a low- or no-interest introductory offer.

Credit card issuers typically base a consumer’s interest rate and credit limit on their credit score, income, and other financial factors.

Student Loans

Federal student loans typically offer lower interest rates and more borrower protections than private student loans or other lending options.

But if your federal financial aid package doesn’t cover all of your education costs, it could be worth comparing what private lenders offer.

Home Equity Loans

If you’re a homeowner with equity in your house and you’re not comfortable with the adjustable payments of a HELOC, you might want to consider a home equity loan. These lump sum loans typically have fixed interest rates, meaning that you’ll know in advance what your payments will be every month and can plan accordingly. And since they’re secured with your home, interest rates are typically lower than they’d be for unsecured loans. Just remember that, as with a HELOC, your home is at risk if you can’t make your payments.

The Takeaway

A HELOC, a personal loan, or a personal line of credit can be useful for a borrower in need of funds. Each kind of loan has different advantages and drawbacks, so it’s important to consider each carefully in light of your financial situation so you can assess what would work best for your needs.

SoFi now partners with Spring EQ to offer flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively lower rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit from SoFi, brokered through Spring EQ.

FAQ

What is better, a home equity line of credit or a personal line of credit?

If you qualify for both, a HELOC will almost always come with a lower interest rate. However, it does put your home at risk if you can’t make your payments.

Can I use a HELOC for personal use?

Yes. HELOC withdrawals can be used for almost anything, but the line of credit is best suited for ongoing expenses like home renovations, medical bills, or college expenses. Some people secure a HELOC as a safety net during uncertain times.

How many years do you have to pay off a HELOC?

Most HELOCs have a “draw period” of 10 years, followed by a repayment period, which may be up to 20 years.

What happens if you don’t use your home equity line of credit?

Having a HELOC you don’t use could help your credit score by improving your credit utilization ratio.

How high of a credit score is needed for a line of credit?

Personal lines of credit are usually reserved for borrowers with a credit score of 680 or higher. A credit score of at least 680 is typically needed for HELOC approval, but requirements can vary among lenders. Some may be more lenient if an applicant has a good debt-to-income ratio or accepts a lower loan limit.

Does a HELOC increase your mortgage payments?

The HELOC is a separate loan from your mortgage. The two payments are not made together.

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Photo credit: iStock/KTStock

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

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.

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

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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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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 .

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Advanced placement, or AP, classes that are offered in high school can help a student prepare for college, be a more competitive applicant, and save money on tuition. Those are among the reasons that many students consider taking AP classes in high school.

Here’s a closer look at what AP classes are, what the benefits of taking them are, and how they can affect a student’s college experience.

What Are AP Classes?

AP stands for “advanced placement,” and AP classes prepare students for college by giving them college-level work during high school. Their dedication is awarded accordingly, as they can earn college credit and placement by taking corresponding AP exams.

One of the primary motivators for enrolling in AP classes is they prepare students to take and pass AP exams. Students who earn qualifying AP scores on these exams can receive credits from most colleges and universities in the United States.

Depending on their high school’s offerings, students can enroll in one or more of the 40-plus AP classes that cover a variety of subject matters such as arts, languages, sciences, mathematics, and literature.

In order to enroll in an AP class, there may be prerequisite classes that you must take first. It’s recommended that even if students meet the required qualifications in order to take an AP class, that they consider carefully if they are prepared to take a college level course.

The three main benefits of taking AP classes in high school relate to saving money, becoming a more competitive college applicant, and preparing for success in college.

Benefit #1: Saving Money on College Tuition

AP classes will take up a lot of your time in high school but can also save time and money down the line in college. When you receive a high score on an AP exam, the college you attend in the future may give you credit that cancels out the need to take a similar college class.

Some schools may offer advanced placement instead, which allows you to effectively test out of introductory level courses in the specific subject, but may not be counted toward credit.

Policies vary by school, but the more AP exams you pass, the more credits you may be able to earn. These credits could allow you to skip classes which could save you a semester of attending an introductory English literature or Spanish class. Add up enough of these credits, and you could potentially shave off an entire semester or more of your time spent at college.

Note that the policy on AP scores will vary from school to school, and not all schools offer credit for AP classes. Some schools may require a four or five on the AP exam in order to qualify for credit, while others may accept a three. It’s wise to look for details on this kind of policy when conducting your college search.

Generally, you can use AP credits to your financial advantage in two ways. You can either graduate early, which will save money on tuition, fees, and living expenses. Or, you can take lighter course loads across a four year period and can make time to take a part-time job or could add a second major or minor.

At the very least, you may be able to avoid paying for textbooks or lab fees in classes in which you have already mastered the subject matter.

Benefit #2: Making Your College Application More Competitive

When you apply for college, you typically work hard to put your best foot forward and to prove that you will thrive once you land on campus in the fall. College admissions departments carefully comb through transcripts, test scores, and personal essays to see if students will not only be a good fit at their school but to ensure the student has every chance of succeeding once they enroll.

This is one of the reasons AP classes can be beneficial to high school students. When a student thrives in an AP class, they are essentially thriving in a college class. Before an AP student arrives at college, they will clearly understand what will likely be expected of them, how rigorous the course work can be, and what steps they need to take to succeed academically.

Alongside proving preparation, AP students could receive a bit of a grade point average (GPA) boost if they earn good grades. Some high schools, but not all, will give more weight to AP grades than normal ones. For example, receiving a B in an AP class may provide as many points towards your GPA as if you earned an A in the non-AP version of the class.

Recommended: 5 Ways to Start Preparing for College

Benefit #3: Prepare for College Better

Taking an AP course is akin to taking an actual college course, which can help you get a taste for college. If structured properly, an AP course should give you a preview of what skills you need to succeed in a college class and what the workload might look like.

Learning to manage time properly, developing strong research and analytic skills, and covering material more quickly in an AP class can be helpful preparation for the rigors of college life.

Taking AP classes can also help you identify your interests and passions which may lead you to the right college. Having a preview of what it would be like to study French, Psychology, or Chemistry in college can help guide you during the application process towards schools that have strong programs in your chosen area of interest.

College Financing Options

When it comes to paying for college, there are a lot of different options available to students, including scholarships, grants, and federal financial aid.

But figuring out what you qualify for and how to apply can be overwhelming. A great first step is to complete the Free Application for Federal Student Aid (FAFSA). This will let you know what financial aid you are eligible for. For students and parents that need extra help covering the cost of attending college, student loans are a potential option. There are two types of student loans, federal and private.

Federal loans come with a fixed interest rate. With a subsidized federal loan, you don’t pay any interest while you are in school at least half-time. With an unsubsidized federal loan, interest begins to accrue right away (though you don’t have to start making payments until six months after you graduate).

Private student loans are available through banks, credit unions, and online lenders. Interest rates can be fixed or variable and will depend on the lender. Students that have excellent credit (or have cosigners who do) tend to get the lowest rates. Just keep in mind that private student loans may not offer the same protections, like income-based repayment plans, that come with federal student loans.

The Takeaway

Advanced placement or AP classes can benefit students in three key ways. It can give them a taste of college-level work and prepare them for what’s ahead. It can make them a more competitive applicant since it shows colleges that a student has undertaken advanced work. And it can potentially help a student save on tuition since they may be able to opt out of introductory and prerequisite courses. If a student still needs help with tuition costs, scholarships, grants, federal, and private student loans are possible sources.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What is the benefit of taking an AP class in high school?

The AP Program allows students to pursue college-level work while in high school and receive college credit, advanced academic standing, or both when they attend college. This can save money on tuition.

Do colleges care if you take AP classes in high school?

Yes, colleges often want to see evidence that applicants were able to excel in challenging classes in high school. For this reason, it can be advisable to take AP classes if they are offered and you are qualified to take them.

What are the disadvantages of taking AP classes in high school?

There can be disadvantages of taking AP classes in high school. These include an increased workload, the potential for lower grades since the courses are more challenging, and the cost of taking the AP exams (currently $99 each for students in the U.S., U.S. territories, and Canada).

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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.

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Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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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