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If you have a low income and sometimes struggle to make ends meet, you are hardly alone. As of now, 64% of Americans live paycheck to paycheck, meaning almost two out of every three people are feeling somewhat strapped.
Factors that can make saving money challenging include inflation (the cost of living has been rising steeply) and heavy debt loads, with the average person carrying $6,000+ on their credit card balance.

These two forces can quickly eat away income, making it feel impossible to save. Thankfully, there’s a way forward—with a little strategizing.

Here, learn 14 smart tips for how to save money on a low income. They can help boost your financial wellness.

Smart Ways to Save Money with Low Income

1. Finding a Budget Method That Suits You

A budget is a way for you to track your income, help you make good financial decisions, and plan towards goals.
It paints a picture of how much money you have coming in and going out and how you are allocating funds, which you can use to identify areas for improvement. A budget also will help you see what resources you have available to cover your living expenses. With it, you can see how to make money stretch further.

There are a wide range of budget methods to choose from. A traditional approach is building a line item budget, which involves tracking your expenses in a spreadsheet. You can build a spreadsheet from scratch, or use a template.

Google Sheets has a free template that’s great for beginners, and you can also create a budget in Excel.

Apps are an automated form of budgeting—they track all the expenses for you. If you prefer keeping track by hand, you can find budget-ready notebooks.

Whatever style or programs you use, it’s essential to find one that works for you, helps you save, and can assist in your progress towards a financial goal. Decide what technique works best for you.

2. Watching Money Spent on Food and Drink

If you’re thinking about how to save money with a low income, one wise move can be dining in. That may mean opting for pasta at home instead of the cute Italian place nearby.

Making meals at home is typically cheaper than eating out. And the gap has widened: In 2021, meals at home increased 2% in price. The cost of eating out, however, increased 9% that same year!

Cooking at home is cheap as long as your grocery bill is sensible. Look for budget-friendly recipes that are simple and use all the ingredients in your pantry. Search online for affordable recipes, including recipes under $10. You’ll likely find many options.

Choose more affordable proteins like eggs, beans, chicken, fish, and quinoa over beef and lamb. Red meats typically cost more than other proteins. The U.S. Bureau of Labor Statistics shows that ground beef, a less expensive cut, ranged from $4.10 to $5.90 per pound in May 2021. Any cut of chicken, on the other hand, ranged from $1.50 to $3.40 per pound.

Finally, you might want to trade wine for beer…or go on a dry spell. Alcohol is a costlier commodity than other beverages. Consider looking for alternatives like antioxidant-packed teas, juice, or reliable tap water. You might decide to save alcoholic drinks for special occasions like celebrations for a while to cut costs.

3. Getting Rid of Debt One Step at a Time

Studies show that debt can cause stress and negatively impact mental and even physical health. Paying off debt can be a major motivation to save money. It’s one less bill to pay at the end of the month, and the freedom is empowering.

How to approach debt reduction? Always be sure to pay at least the minimum amount due. Then consider these two techniques that can help you be financially stable with a low income:

•   In the snowball method, you use extra funds to pay off the smallest debt first, giving you a sense of accomplishment for wiping out a balance. Then you move on to the next smallest debt.

•   In the avalanche method, you use extra funds to pay off high-interest accounts first, regardless of the balance. That can be a wise move since this is the kind of debt that often keeps people owing money for a long period of time. Credit card debt, which currently has interest rates of 15% to 19%, is a common example of high-interest debt.

You also can combine your debts into one account with a debt consolidation loan. These personal loans typically have a significantly lower APR (annual percentage rate) which can save you considerable money in the long run.

4. Finding Ways to Get Rid of Non-essentials

Look at your budget, and separate your list of basic living expenses from non-essentials.

Essential expenses will include housing, food and drink, transportation, utility bills, and more. An example of transportation costs might be car payments, car insurance, gas, monthly train passes, and so forth.

Non-essentials usually include wants vs. needs (items like clothing you like but don’t require, and entertainment). If you’re a sneakerhead or handbag collector, it may be time to pause shopping. But if you need fresh clothes and shoes for work, set a target amount you can afford to spend that month. Make your dollars stretch with sales racks at stores or second-hand steals.

Love video games and eating out? Look at alternatives. Consider investing in cheaper board games and hosting game nights. Or, make friends with video console owners!

5. Changing to a Cheaper Entertainment Subscription Model

Can’t live without Netflix? What about Netflix, HBO, Disney, and Hulu? Combined, those streaming services can quickly total $35 per month before taxes. In one year, that’ll set you back $420.

While it’s important to unwind, sometimes cutting entertainment is worth the savings. Consider free entertainment on your TV or computer. There are plenty of apps that offer free on-demand and live streaming services. You can also get classic TV antennas that pick up free national channels.

Finally, try the library. Most carry more than just books—movies too. You just need a library card.

6. Cutting Back on Larger Expenses

Looking for other ways to save money on a low income? You can also find cheaper options for large bills in your budget to save money when you have a lower income.

Your biggest expense will probably be housing, so start there. Several factors affect rent or mortgages, like location and amenities. Consider living in a cheaper neighborhood temporarily. Also, a home with fewer amenities like a patio or pool are typically cheaper.

Consider getting roommates to split housing costs or even going rent-free. If you have family nearby—it might be worth asking to live with them for a low fee or even rent-free, provided you have a plan to get on your feet or can contribute to the household (say, by cooking or cleaning).

Transportation is another large cost. If your job is a safe and reasonable distance to bike to, try it out. Bikes are low-cost maintenance—with the benefit of staying fit and going green.

7. Saving What You Can

Try to cut habits that add up. A $5 fancy coffee once a week costs $260 a year. On a smaller income, that can eat away your earnings. If you can save $5 or $10 a week—that’s a good start. It’s better than saving zero dollars. But, developing a financial plan is a key step to saving anything you can.

You won’t know how much money you have until you have a budget in place. Once you have a picture of your money, look at where you can cut costs. It may be in categories like groceries, shopping, or entertainment, which are flexible costs.

8. Separating Money for Yourself From Other Expenses

Though you pay utility companies, the landlord, and your debt, remember to pay yourself. One technique: Save whatever change you have leftover from bills. Put it in a jar, and deposit it into a savings account regularly.

Living within your means or spending less of what you earn on living expenses can help you keep more of your earnings. If you have a significant amount of money leftover at the end of each month, create new savings goals like a home purchase fund or a retirement fund.

9. Turning On Alerts for Bill Payments

Get reminders for your bills. This will help you avoid late fees, which can eat up your funds.

When you open an online bank account, you can sign up for alerts on upcoming bills. Some banks offer a feature on mobile and browser programs that allows you to create alerts for your bills. You can add any type of upcoming bill you have, like your internet or electricity bill due dates, and get reminders via text, email, or phone notifications that a bill is due soon.

10. Spending Less on Your Car

A car can be expensive. Some tips to make it more affordable:

•   Buy a car—don’t lease. You get more value paying off a car compared to leasing a car. A lease also comes with more restrictions and costly penalties. It’s also more expensive in the long run than buying pre-owned.

•   Buy used. Used cars are cheaper. And, because they’re used, the insurance tends to be cheaper as well. Buying a pre-owned car means it won’t lose value as quickly as a new car. Some estimates say that a new car loses 40% of its value in the first year.

•   Aim to get a car that gets great gas mileage. An SUV or truck can easily cost $75 for a full tank. If you’re paying for a gas guzzler, it might be worth downsizing to a car that gets better gas mileage.

11. Finding Ways to Cut Entertainment Costs

Reading, listening to music, and tuning into your favorite program has its health benefits. From reducing stress and pain to improving memory—it’s important to have a little fun.

Instead of booking concert tickets for your favorite band, consider listening to their tunes on free apps (YouTube, for instance). Also check listings and see which local bands are playing; that could be a good way to discover some new favorites.

If you enjoy a good show, check out free TV streaming apps like Tubi or Pluto TV. Both have a great selection of movies and shows on demand or live.

12. Eliminating Your Bad Habits

When asking yourself, “How can I improve my financial situation?” look at your good and bad spending habits.
Do you buy groceries at the gourmet deli instead of a cheaper supermarket? Do you tend to eat out because you didn’t pack a lunch? Do you leave the AC running in your apartment while you’re out all day?

These are all costly habits you can change. Find a cheaper grocery store. You’ll find your dollar can stretch a lot further with cheaper prices. Try meal prepping on weekends so you can pack lunches for work each week. Lastly, run electricity only when you need it—and compare bills. You’ll likely see a difference.

13. Committing to a Month of No Spending

A no-spend challenge can be a fun way to save.

A no spend-challenge means that you avoid discretionary spending altogether, except for necessities like rent and groceries. That means not spending money on movie theater tickets, clothes, or even chocolate.

Write down a list of your non-essential expenses, like buying a cup of coffee each morning or eating out with friends on the weekend. Try alternatives like making coffee at home or taking a walk in a park instead of brunch with your friends. Let them know you’re doing the challenge—they might even join.

14. Getting Help if You Need It

If you find yourself still living paycheck to paycheck, there’s help.

If you have substantial debt, consider getting free debt and credit counseling from the nonprofit National Foundation for Credit Counseling (NFCC). The sessions take place over the phone or online. Call or fill out an online form to get started.

Also, cities, states, and the federal government provide help in the form of subsidized housing, discounted healthcare and free groceries. Simply call the 211 network 24/7 to share your situation and get connected to the right people.

You can also use the government’s benefit finder that can match you with the right programs.

15. Automating Your Savings

Once you have a budget in place, it’s easier to know how much to save a month.

To simplify saving (as mentioned briefly above), try automating transfers, a feature many banks offer that moves money from your checking account to your savings account on a certain date. For example, if you’re paid every Friday, you can set up an automatic transfer of the desired amount to your savings or investment accounts.

If you put away just $50 each week, you’ll have $2600 at the end of the year.

Why Saving Money With a Low Income Is Possible

No matter what your income, it’s tempting to live like a rock star or just try to keep up with your higher-earning friends. Or you might feel like your smaller earnings are not worth saving, and you’ll wait till you make more. But it’s possible to save more than you think even on a lower income.

If you make savings a priority and adjust your lifestyle to your income, it can pay off and help you increase your financial wellbeing. Simple changes like learning to budget, shopping at cheaper grocery stores, trading in your car for a greener one, or buying second hand can all help you take control. These moves can also help you pay down any debt you may have, build your rainy-day savings, and achieve longer-term financial goals.

The Takeaway

Whether you earn a lot or a little, living within your means always pays off.

Budgeting is the first step to getting your finances organized. It’ll help you see how much money you have to cover your monthly expenses and how much you have leftover for savings. You’ll also see a clearer picture of your spending habits.

Once you have a sense of your spending habits, find ways to spend smarter. That means finding cheaper options for necessities and cutting non-essential spending.

Finally, set attainable savings goals and put your cash away in a high-yield account. SoFi can help you here: When you open an online bank account with direct deposit, you’ll earn a competitive APY, pay zero account fees, and have tools to track your expenses, set up bill payments, and automate savings.

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

Why is saving money so hard?

Saving can often be hard because of our mindset. We don’t focus on creating and sticking to a budget and instead spend feely, in the moment. If you are following a budget but find it hard to free up cash to save, you might take on a side hustle to help bring in more income.

What happens if you don’t save money?

Not having savings puts you in a precarious position. Having money in savings is a safety net for unexpected expenses like a medical bill or job loss. Without one, you may find yourself unable to pay for bills, which could cause you to take on high-interest debt and/or pull you closer towards poverty. It’s wise to have at least three to six months’ of living expenses stored away in case of emergency.

How do I get the motivation to save when I do not make much?

With social media in today’s culture, it might seem like everyone has what they want (except you). So it’s important to put on blinders, and focus on your journey. Delete apps that encourage you to overspend, and ask trusted friends or mentors to navigate this territory together. Save whatever amount you can: Don’t get discouraged by comparing yourself to others’ savings plans.

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Photo credit: iStock/Rocco-Herrmann

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

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

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

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

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

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

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

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

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A credit card balance transfer can be a beautiful thing. By transferring existing high-interest debt to a credit card with no or low interest, you can save money and make it easier to pay off your debt. It can also have an impact on your credit score.

How, exactly, does balance transfer affect your credit score? A balance transfer can affect your credit score either positively or negatively — though the upsides are likely to outweigh any adverse effects in the long-term if you manage the balance transfer responsibly.

Recommended: How to Avoid Interest On a Credit Card

How Does a Balance Transfer Work?

A balance transfer is the process of consolidating existing high-interest debt to a different credit card. In other words, you’re effectively paying a credit card with another. Usually, you transfer the balance to a new credit card, but some cards allow you to do a balance transfer to an existing card.

Balance transfer credit cards often offer a low, or even 0%, annual percentage rate (APR) for a promotional period. This temporarily lowers the credit card interest rate, potentially allowing you to save on interest and more quickly pay off your debt. The length of the introductory APR offer varies by card, usually lasting anywhere from six to 21 months, after which the standard purchase APR will apply.

There is usually a fee required to make a balance transfer. This fee is either a flat rate or a percentage of the balance you’re transferring, such as 3% to 5% of your balance.

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

When to Transfer the Balance on Your Credit Card

There are two key things to look for in order to identify an opportune time for a balance transfer. First, you’re approved for a balance transfer card that offers a 0% APR introductory period. Second, you’re in a place where you can focus on paying off the balance you transfer to your new card before the promotional period ends.

It’s important to work aggressively on eliminating your balance during this period. Otherwise, once the promotional APR kicks over to the usual APR, the interest rate could potentially be as high — if not higher — than the APR of your old card.

How a Balance Transfer May Hurt Your Credit Score

If you’re contemplating a balance transfer, you might be wondering: Does a balance transfer affect my credit score? While a balance transfer itself won’t directly impact your credit score, opening a new balance transfer card could have a ripple effect on your credit. A balance transfer to an existing credit card may not affect your credit score as much as opening a new account.

Let’s take a look at a couple of the ways a balance transfer could cause your credit score to drop:

•   Applying for new credit results in a hard inquiry. Whenever you apply for a credit card, the credit card issuer will do a hard pull of your credit, which usually lowers your score by a few points. Hard inquiries stay on your credit report for two years. That being said, when compared to what affects your credit score on the whole, hard inquiries don’t impact your credit as much as, say, your payment history or credit utilization.

•   Getting a new card will lower the average age of your credit. Another way that opening a new balance transfer credit could hurt your credit score is by lowering the average age of your credit. The length of your credit history makes up 15% of your score. A longer credit history is an indicator that you’ve taken steps toward establishing credit.

Recommended: When Are Credit Card Payments Due

How a Balance Transfer May Impact Your Credit Score

Now, let’s take a look at how a balance transfer can impact your credit score:

•   It can lower your credit utilization rate. As credit usage makes up a significant chunk of your credit score — 30%, to be exact — a balance transfer could give your credit score a lift. When you open a new credit card account, it will add to your total credit limit, which, in turn, can lower your credit utilization. As a credit card rule, the lower your credit utilization, the better it is for your credit score.

   Here’s an example: Say you have two credit cards, and they each have a $10,000 credit limit, for a total credit limit of $20,000. You’re carrying a $10,000 balance. In turn, your credit usage is 50%.

   Now, let’s say you open a new balance transfer credit card that has a credit limit of $10,000. Combined with your other two cards, you’ll now have a total credit limit of $30,000. With a $10,000 balance, your total credit usage is lowered to about 33%.

•   You may be able to pay down debt faster. As you’re paying less interest — or perhaps no interest at all — during your card’s promotional period, you can more easily whittle away at your outstanding debt quicker. That’s because more of your payments will go toward paying down your principal. Plus, lowering that outstanding balance also feeds into lowering your credit utilization ratio — another positive when it comes to building credit.

•   A balance transfer can make it easier to stay on top of payments. A balance transfer allows you to consolidate multiple balances into one monthly payment. This can make it easier to stay on top of making on-time payments, as you won’t have numerous due dates to juggle. In turn, this can have a positive impact on your payment history, which makes up 35% of your credit score.

Recommended: What is the Average Credit Card Limit

Steps to Take After a Balance Transfer

So you’ve decided to do a balance transfer. Congrats! Now, here are the steps to take to make the most of it.

Stop Using Your Other Credit Cards

If possible, put a halt on spending with your other credit cards. That way, you can focus solely on paying off the outstanding balance you’ve transferred.

Still, you’ll want to keep your other cards open. You might consider using a credit card to make a small purchase every so often to keep those accounts active.

Know When the Introductory Period Ends

Make sure you’re aware of when the introductory APR for your balance transfer card ends. Also take time to note what the balance transfer card’s standard APR is. When the promotional APR ends, that rate is what your new APR will be.

Devise a Payoff Plan

A balance transfer is really only worthwhile if you aim to pay off your outstanding debt — or as much of it as possible — during the promotional APR period.

Let’s say you have $6,000 in debt, and you’ve secured a 0% APR that will last for 12 months. Aim to pay off $500 every month, or $250 twice a month. That way, you’ll have your debt paid off before the higher APR kicks in.

Make Shifts in your Spending

To ensure that you’re paying off the outstanding amount on your balance transfer card at a steady clip, look at ways you can scale back on your spending. Doing so will free up money that you could throw at your debt payoff efforts instead.

Along the same lines, see if you can increase your cash flow. Perhaps you can take on more hours at work or get a side hustle.

Is a Balance Transfer a Good Idea?

A balance transfer can be a solid move to make if you’re prepared to knock off the debt before the introductory APR period ends. Otherwise, you’re left with a mountain of debt — potentially with a higher interest rate than you currently have.

When deciding whether a balance transfer is right for you, you’ll also want to take into account any balance transfer fees you’ll pay. Do the math to ensure the amount you’ll save on interest will more than offset the cost of these fees.

Also note that, before you worry about balance transfer effects on your credit score, you’ll need to consider whether your credit is even strong enough for you to qualify. The most competitive balance transfer offers generally require at least good credit (meaning a FICO score of 670 or above), further underscoring the importance of good credit.

If you’re not sure of where you stand credit-wise, don’t worry about taking a peek: here’s how checking your credit score affects your rating (spoiler: it doesn’t).

Recommended: Can You Buy Crypto With a Credit Card

Balance Transfers and Credit Scores: The Takeaway

A balance transfer can both hurt and help your credit score. Your credit score could temporarily suffer after applying for a new balance transfer card. However, a balance transfer has the potential to help your credit score, as it can lower your credit utilization rate and make it easier for you to stay on top of your payments.

Find out if you qualify for a SoFi Credit Card today!

FAQ

Do balance transfers hurt your credit score?

Balance transfers can either hurt or help your credit score. Making a balance transfer can hurt your credit score if you apply for a new card to do so, which requires a hard pull of your credit. It can also ding your score because it may lower the average age of your credit lines.

Will I need a credit credit score for a balance transfer?

To qualify for a balance transfer card with a zero or low interest rate, you’ll need a strong credit score. A good credit score is generally considered in the range of 670+.

Will I lose points with a balance transfer?

You will not lose rewards points with a balance transfer. That’s because your old creditor will generally consider the balance transfer as payment.

What are the negatives of a balance transfer?

Getting a balance transfer credit card can bring down your credit score if it requires a hard inquiry on your credit report. Plus, it can lower your average credit age. Another downside of a balance transfer is that you’ll need to pay a balance transfer fee, which is either a flat rate or a percentage of the outstanding amount.

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Photo credit: iStock/Roman Novitskii

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 .

The SoFi Credit Card is issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

¹See Rewards Details at SoFi.com/card/rewards.

SoFi cardholders earn 2% unlimited cash back rewards when redeemed to save, invest, a statement credit, or pay down eligible SoFi debt.

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Credit card companies don’t alway make it easy, but there are ways to pay your credit card bill with your debit card. To use your debit card to pay a credit card bill, you must do so via bank transfer payment. In other words, you have to use either a credit card provider’s payment portal or a third-party payment portal that includes not only your debit card information, but also your banking information.

Keep in mind, however, that credit card companies usually prefer to receive payment funds from the customer’s bank account over a physical debit card. Many credit card providers simply don’t accept monthly bill payments with physical debit cards, but they will allow debit card payments if you play by their rules. That may change the way you may use a debit card to pay a credit card bill, but it doesn’t mean you can’t do it.

Can You Pay a Credit Card With a Debit Card?

You might be able to pay a credit card with a debit card. Whether you can do so really depends on the credit card provider’s policy on debit card payments — some credit card policies allow for them and others don’t.

Consequently, you may have to go out of your way to get the job done. When you go to pay your credit card bill, there likely won’t be an option to enter a card number as a method of payment, whether that card is a credit card or a debit card. In most cases, however, you can pay your credit card bill with the bank account that the debit card is attached to by making an electronic transfer.

Recommended: Tips for Using a Credit Card Responsibly

How to Make a Credit Card Bill Payment (Indirectly) With a Debit Card

Even if you can’t use a debit card to directly pay a credit card bill, you can indirectly use a debit card — or rather the funds attached to that debit card — to pay your outstanding credit card debt. Here’s how:

1.    Review your checking account, and get the bank routing number and checking account number. Do so privately and securely, so as not to attract financial fraudsters.

2.    Go to your credit card account to set up automatic payment. A handy feature of how credit cards work, this will allow money to be withdrawn from your bank account ahead of the monthly payment due date. On that date, the credit card company will withdraw the specified cash amount from your bank account.

3.    Make sure you have enough cash in your bank account to cover the withdrawal. If you don’t, your credit card company will reject the payment. It’s up to you to reach out and make good on your monthly credit card payment that’s due. Any delay in doing so could result in a missed or late payment, which could have financial consequences.

Recommended: When Are Credit Card Payments Due

Paying a Credit Card Bill With a Debit Card Online

If you’re using a debit card to pay a credit card bill online, you’ll need to make that payment through the credit card’s payment portal. The good news is that credit card companies may accommodate online debit card payments.

Once you’ve signed into your credit card account, you’ll be given several options to pay your bill. The most common methods include ACH bank payment, a third-party payment platform, over the phone, or with your debit card.

Simply click on the debit card payment option and fill in your card details (this should only be a one-time occurrence as your debit card information should be securely held by your credit card provider in its payment portal.)

Once your debit card information is accurately entered, review the payment and hit “send.” Your payment should be confirmed immediately by the card carrier, and the money will leave your debit card account within 24 hours or so.

Paying a Credit Card Bill With a Debit Card Offline

Credit card companies likely allow you to use your debit card to make a credit card payment by phone, in person, and sometimes through the sponsoring bank’s ATM.

Make sure you have your debit card on you before paying at any bank or over the phone. If even one digit is wrong, the payment won’t go through, and you’ll have to revert to another form of payment to cover your credit card debt.

Are There Any Downsides to Paying Your Credit Card Bill With a Debit Card?

The fact is, while credit card companies will accept debit card bill payments, it’s not their preferred form of payment. It’s easier for credit card carriers to process bank ACH payments or third-party payments through platforms like PayPal, which handle the process for the card company. As such, you’ll have to jump through hoops or go an indirect route, similarly to if you were to try to pay credit card statement with another credit card.

Further, debit card payments may be prone to various outcomes that credit card companies don’t like. This includes scenarios such as the cardholder not having enough money in their account to cover the credit card payment or the fact that debit cards are common targets of financial fraudsters. In fact, a key difference between a credit card and debit card is their levels of payment protection.

The Takeaway

Just because you can use a debit card, even in limited fashion, to pay your credit card bill doesn’t mean you should. To keep payments flowing smoothly and to protect your debit card (and your bank account), it’s likely a better move to pay your credit card bills via bank ACH transactions, or through secure third-party payment processors. That way, your payment still originates from your bank checking account — only without the potential payment and security headaches that may come with using a debit card to pay a credit card bill.

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

FAQ

Can I pay a credit card online with a debit card?

Technically, yes, you can pay your credit card bill with your debit card. However, it may take some extra steps to do so.

Can I pay my credit card at an ATM with a debit card?

Yes, you can use a debit card at an ATM to pay a credit card bill — but only an ATM from the bank that offers the credit card.

Are there extra charges for paying a credit card with a debit card?

You generally won’t face any extra charges for paying a credit card with a debit card. You may simply have to jump through some extra hoops to do so.

Can I pay my credit card bill with someone else’s debit card?

While this is technically doable, it’s not advisable. Using another party’s debit card to pay a credit card bill can get complicated, especially if you’re not certain the other person’s bank account has sufficient funds to cover your balance.

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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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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

Wondering how to handle your student loans? Knowledge and a solid plan are powerful — especially when it comes to your loans. The first step in managing student debt is to know how much you owe and keep tabs on the terms.

Then, take a look at loan forgiveness options. With an understanding of how much you owe, you can make progress toward repaying your debts.

5 Things to Help Manage Student Debt

These five high level tips can help you figure out how to handle your student loans. If you’re looking for more in-depth information, SoFi offers a full library of student loan resources with tips and strategies to help you deal with your student loans.

1. Know What You Owe

The first step in tackling your student loan debt is knowing exactly how much you owe, and the terms associated with each loan. It can be scary to meet your loan debt head-on, but you can’t take steps to get out of debt until you know exactly how much you owe.

This can help inform how much you’ll pay each month and how long it will take to pay off your debt. SoFi’s student loan payoff calculator will give you an idea of your loan payoff date.

If you aren’t sure, find out if you have a combination of federal and private student loans. Confirm your loan servicer and identify the monthly due dates for loan payments. Federal student loans come with some benefits like a six-month grace period and protections like deferment options. SoFi’s student loan help center has additional resources detailing the differences between private and student loans and much more.

2. Find Out If You Qualify for Biden’s Loan Forgiveness Plan

In August 2022, President Biden announced his loan forgiveness plan. He also announced the final extension of the pause on student loan payments that has been in effect since the beginning of the COVID-19 pandemic. Federal student loan payments are set to resume in January 2023.

Under Biden’s forgiveness plan, federal student loan borrowers earning up to $125,000 (as individuals) or $250,000 for those filing jointly may qualify for up to $10,000 in forgiveness. Pell Grant recipients may qualify for up to $20,000 in forgiveness.

Amounts forgiven under this plan will not be considered taxable on the federal level. Some states have announced that they will charge income tax on forgiven amounts.

The application is expected to go live in October 2022. Borrowers can make sure that their contact information is accurate in their Student Aid account to receive updates. You can also opt in for text alerts here.

The application for loan forgiveness will be open until December 2023.

Private student loans do not qualify for federal loan forgiveness programs.

3. Choose a Payment Plan

Federal student loan borrowers can change their repayment plan at any time without incurring any fees. Here’s a brief overview on the different types of plans:

•   Standard Repayment Plan spreads payments evenly over 10 years. The extended plan.

•   Graduated Repayment Plan. On this plan payments start lower and then gradually increase over time. Repayment takes place over 10 years.

•   Extended Repayment Plan can have either fixed or graduated payments and repayment takes place over 10 years.

•   Income-Driven Repayment Plans. There are four types of income-driven repayment plans that tie a borrower’s income to their loan payments. Repayment takes place over 20 or 25 years. At the end of the repayment period, the remaining balance is forgiven (though this amount may be taxable).

This may also be a good time to evaluate whether or not you want to pursue a loan forgiveness plan like the Public Service Loan Forgiveness program. Individuals who work for a qualifying nonprofit may qualify to have their loans forgiven after making 120 on-time payments. Amounts forgiven under PSLF are generally not considered taxable income.

Consider Student Loan Refinancing

If you have private student loans, the repayment terms for them were likely set at the time you borrowed the loan. Student loan refinancing is one option that could allow you to adjust the terms on your loans. Keep in mind that extending your loan terms generally results in lower monthly payments, but may increase the amount of interest you owe over the life of the loan.

Unlike consolidation through the federal government, a borrower may secure a more competitive interest rate through refinancing which could potentially reduce the amount of money a borrower owes over the life of their loan. Learn more about consolidating vs. refinancing.

If refinancing is intriguing, you can take a look at this student loan refinancing calculator to see how your loan may change if you refinance. Note that refinancing federal loans will eliminate them from any federal benefits or programs, including forgiveness programs.

4. Automate Loan Payments

Setting up automatic payments with your loan servicer is one of the easiest ways to make sure you never miss a payment. Most loan servicers will let you set up automatic payments within your account online. If you’re having trouble, contact your loan servicer.

5. Make a Big Picture Budget

It’s easy to get tunnel vision when you are so focused on student loan repayment. So keep in mind that student loans are only part of your overall financial picture.

Take the time to budget and make room for other financial goals, like saving for retirement. In addition to budgeting monthly for food, entertainment and utilities, you might have a car loan and rent or a mortgage to pay. Personal finance tools like SoFi Relay can help you track your spending and income, so you can stay on top of your financial goals.

Recommended: Student Loan Refinancing Guide

Not all accounts are free by any means, but SoFi Checking and Savings® has no account fees. It’s a bank account online that offers cash-back rewards. Money can be tucked into vaults for goals or an emergency fund. Checks can be deposited from your phone, and more.

The Takeaway

How to manage student loans? The first priority is knowing exactly what you owe. Choose the repayment plan that works for you, and take advantage of Biden’s recently announced loan forgiveness program if you qualify.

You can always reevaluate your current pay-off strategy or loan terms. Some may find that refinancing — combining all loans into one new private loan, with a new, hopefully, lower, interest rate and/or new term — may make sense for their personal situation.

If refinancing student loans seems appealing, it’s easy to check your rate. When you sign up for any SoFi product and become a member, you gain access to a range of exclusive SoFi member benefits like career coaching.

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SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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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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