Getting a Master of Business Administration is an investment. Tuition costs vary widely depending on the school, but the average cost of an MBA is $61,800 for a program in the U.S.
If you’ve committed to pursuing an MBA, the reality is that a higher income is probably still a few years away. However, you’re responsible for the cost of schooling now. It can be daunting, but there are options for making business school more affordable. Here are a few tips to evaluate as you craft a plan to pay for your MBA program.
Saving Up in Advance
If you’re already employed, and especially if you earn a high salary, it may make sense for you to stay in your gig for a few more years and put money away toward your degree. The more you save now, the less you may have to take out in loans later. If you’re interested in accelerating your savings, consider cutting your expenses to prepare for the lifestyle change of becoming a student again.
Taking Advantage of Free Money
There are a plethora of scholarships, grants, and fellowships available for business students. If you manage to land one, they can help reduce your costs slightly or significantly, depending on the size of the award.
When hunting for scholarships, consider starting with the schools you’re thinking of attending. Many institutions offer their own need- or merit-based scholarships and fellowships, some of which may even fund the entire cost of MBA tuition. Many, but not all, of these are geared toward specific groups of students.
Awards may be based on academic excellence, entrepreneurship, and for those committed to careers in real estate or finance. Contact your school’s admissions or financial aid departments to learn about the opportunities you qualify for.
Getting Sponsored by a Company
Some employers offer to pay for all or part of an MBA degree. In exchange, they may require that you work there for a certain time period beforehand and commit to maintaining your employment for some time after you graduate.
Some companies may offer relatively modest grants, while others might offer to cover the bulk of tuition costs. Some companies that offer tuition reimbursement for employees pursuing MBAs include Deloitte, Bank of America, Apple, Intel, Procter & Gamble, and Chevron.
If you can land a job at a company that offers this benefit, it can be a major help in paying for school and reducing your debt burden. Just be sure that you’re willing to meet the commitments, which in most cases means staying with your employer for a while.
Taking Out Student Loans
If you can’t make up the full cost of tuition and living expenses through savings, scholarships, or sponsorships, borrowing student loans is another option. You might first consider borrowing from the federal government, as federal loans offer certain borrower protections and flexible student loan repayment options.
Federal Student Loans
To apply for federal student loans, first fill out the Free Application for Federal Student Aid (FAFSA®). The school you attend will determine the maximum you’re able to take out in loans each year, but you don’t have to take out the full amount. You might choose to only borrow as much as you need, since you’ll have to pay this money back later—with interest, of course.
Graduate students are generally eligible for Direct Unsubsidized Loans (up to $20,500 each year) or Direct PLUS Loans. Neither of these loans is awarded based on financial need.
Both of them accrue interest while the student is enrolled in school. Unless you pay the interest while you’re in school, it will get capitalized (or added to the principal of the loan), which can increase the amount you owe over the life of the loan.
Direct Unsubsidized Loans will have a six-month grace period after graduation in which you won’t have to make principal payments (remember, interest still accrues). Direct PLUS Loans, however, do not have a grace period, so principal payments are due as soon as you earn your degree.
Private Student Loans
If you aren’t able to borrow as much as you need in federal loans, you can also apply for MBA student loans with private lenders, including banks and online financial institutions.
Private student loans will have their own interest rates, terms, and possible benefits. Make sure to research the different lenders out there and see which is the best fit for your financial situation.
Paying Student Loans Back
Taking out a big loan can be daunting, but there are options for making repayment affordable, especially with federal loans. The government offers four income-based repayment plans that tie your monthly payment to your discretionary income.
If you make all the minimum payments for 20 or 25 years, depending on the plan, the balance will be forgiven. (However, the amount forgiven may be considered taxable income.) If you run into economic hardship, you can apply for a deferment or forbearance, which may allow eligible applicants to reduce or stop payments temporarily.
If you put your degree to use at a government agency or nonprofit organization, you may also qualify for Public Service Loan Forgiveness. If you meet the (extremely stringent) criteria, this program will forgive your loan balance after you make 120 qualifying monthly payments (10 years) under an income-driven repayment plan.
Refinancing Student Loans
If you’re still paying off student debt from college or another graduate degree as you enter your MBA program, you could consider looking into student loan refinancing.
This involves applying for a new loan with a private lender and, if you qualify, using it to pay off your existing loans. Particularly if you have a solid credit and employment history, you might be able to snag a lower interest rate or reduced monthly payment.
While there are many advantages of refinancing student loans, there are also disadvantages, as well. If you refinance federal student loans, you lose access to federal forgiveness programs and income-based repayment plans. Make sure you do not plan on taking advantage of these programs before deciding to refinance your student loans.
The Takeaway
MBA programs can offer a valuable opportunity to advance your career and increase your income, but they can also come with a hefty price tag. Options to pay for your MBA degree can include using savings, getting a scholarship, grant, or fellowship, or borrowing student loans. Everyone’s plan for financing their education may be different and can include a combination of multiple resources.
Making existing loans manageable while you’re in school can go a long way to making your MBA affordable. Down the line, you can consider refinancing the loans you take out to get you through your MBA program. You can get quotes online in just a few minutes to help figure out whether refinancing can get you a better deal.
If you do decide to refinance your student loans, consider SoFi. SoFi offers an easy online application, flexible terms, and competitive rates.
See if you prequalify for student loan refinancing with SoFi.
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
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Everyone loves a good deal, especially when it comes with a little cash back in their pockets.
According to a Lending Tree survey, 87% of U.S. adults have at least one rewards credit card. Another poll found that the majority of rewards cardholders prefer cash-back cards over any other option.
If you’re thinking about adding a credit card to your wallet, here are a few things you might want to know about cash-back rewards, including how cash-back rewards work, and whether this type of rewards card makes sense for you.
What Are “Cash-Back Rewards”?
Cash-back credit cards are offered by many credit card companies to qualified consumers. Consumers can use these credit cards to make purchases, and a certain percentage of that purchase is returned to the customer as a cash incentive. In other words, cash back rewards can be an easy way to make the most of everyday expenses.
Typically, cash-back rewards range between 1% and 2%; however, a few cards offer more.
Some rewards cards offer a set number of points per purchase that can be redeemed later for cash or for goods like airline tickets, discounts at coffee shops, or gift cards.
How Does Cash Back Work?
Cash-back rewards are easy to use. All that consumers have to do is spend as they normally do, and in return, the credit card company calculates the percentage to return to the cardholder based on what they spent on eligible purchases.
For example: A card pays a flat rate of 2% cash back on all purchases. If the cardholder spends $1,000 in a statement period, the card issuer will then give the cardholder $20 in cash-back rewards.
The card issuer pays out the percentage at the end of a given term, which could mean paying it out at the end of a statement period or billing cycle, or even once you hit a predetermined amount, like $20.
Cash-back cards might come in handy for everything from large purchases to everyday needs. Think of it this way — rather than purchasing things with cash, which doesn’t provide any added benefits, a cash-back card could return money right into a consumer’s pocket.
However, in order for that money to really pay off, the cardholder will likely want to pay off the credit card balance every month in full so they’re not accruing interest and fees, and negating that cash-back reward.
One thing to remember is that cash-back cards are different from other rewards cards. There are rewards cards that offer specific travel rewards, cards that partner with gas stations to earn free gallons, and many more.
Four Ways to Redeem Cash-Back Rewards
Depending on the cash back card, there may be a number of different ways you can redeem cash back rewards. Here are some commonly offered options.
1. Credit card balance reduction: This allows you to have your cash rewards applied to your balance and use them to pay off a portion of your monthly bill.
2. Gift cards: Some card issuers allow you to redeem your cash back rewards in the form of gift cards to your favorite retailers or restaurants. To sweeten this deal, some issuers partner with other companies, such as online retailers or airlines, to provide bonus payouts when cash back rewards are redeemed with a gift card.
3. Charitable giving: Several card providers allow users to use their cash back for good, sending their rewards directly to the charity of their choice. All that users need to do is select the charity and the card does the rest.
4. Paper check or direct deposit: You can often redeem your cash-back as just that — cash. In this case, you ask your card issuer to transfer the money directly to your bank account or send a paper check.
The Different Types of Cash-Back Cards
While cash-back cards all work in a similar way, there are some differences between these cards to keep in mind.
Some are flat-rate cards, which means that cardholders receive the same exact cash back percentage on every eligible purchase, be it groceries or plane tickets. This option is easy as users never have to think about the way they use their cards.
Another option is a bonus category cash back card. These cards offer higher cash back percentages on certain purchase categories. For example, you might get more cash back on gas and groceries (say 2% or 3%) than you do on other items (say 1%). If you opt for this type of card, it can be a good idea to make sure the higher variable percentage is for items you purchase often.
Some cards rotate these bonus purchase categories every quarter, and you need to activate your rotating bonus categories in order to earn rewards. Others allow you to choose your bonus category.
Any of these cards may offer additional features, such as:
• Special promotions One way to earn even more cash back may be via a special promotion run through the credit card. For example, a credit card may typically offer 1% cash-back. However, for one billing cycle, it could partner with a large retailer for 5% cash back for all eligible purchases.
• Signup bonuses Cash back rewards cards might also come with signup bonuses to attract new customers. This might be a certain lump sum of cash back (say $100) if you spend a certain amount in the first three months. Or, you might be able to earn double or triple cash back for a set period of time.
Potential Drawbacks of Cash-Back Rewards
Cash-back credit cards can come with a few potential downsides that users may also want to be aware of. As with signing up for any new credit card, it’s a wise idea to read the fine print.
For instance, you may want to be sure to read through the contract carefully to understand exactly how the rewards work, what to expect along the way, and also suss out any hidden credit card fees such as late payment fees, balance transfer fees, foreign transaction fees, and more.
It can also be a good idea to find out if the card has a high annual fee, which may negate any earned rewards, and what the APR (annual percentage rate) is, in case you get into a bind and need to carry over a balance month to month. However, it’s key to keep in mind that carrying a balance nearly always outweighs any rewards.
It’s also important to note that many credit cards (cash-back or otherwise) can retain the right to change their bonus structure at any time. That means it could change the percentage of cash users receive in return for purchases for a lower (or higher) amount. So, users might want to be happy with the card and its rates and policies, not just the cash-back rewards, as that could change at any moment.
When looking at the fine print, consumers might also want to identify if the card comes with a cap on possible rewards. Many cards limit just how much money a user is allowed to claim, so make sure to know that number and be comfortable with the limit.
And, again, like all cards, it’s key to pay off a cash-back rewards card in a timely fashion. This way, users won’t be paying interest on purchases with a card that was meant to bring them a little money in return.
Cash-back is a credit card rewards benefit that refunds the cardholder a small percentage of some or all purchases made with the card. Every time you make an eligible purchase with your cash-back credit card, your card issuer will pay you back a percentage of that transaction. Your cash-back reward won’t necessarily pay out immediately. Like your statement balance, your rewards will accrue each month and show up on your monthly statement.
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.
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.
There are many reasons why you might want to sock away some cash and perhaps earn interest while you’re at it. Perhaps you’re saving up for a down payment on a house or gathering funds for an epic cross-country road trip. Or maybe you are trying to build up a healthy emergency fund or save for grad school. Or you might just need a safe place with good rewards to store your paycheck as you pay bills.
Whatever the scenario may be, a deposit account can be the answer. There are several different kinds of these accounts that can help your money stay secure but accessible and perhaps earn an annual percentage yield (APY) to help it grow.
Here, you’ll learn about the different account options that are available, including the pros and cons of each.
Basic Checking and Savings Accounts
There are several different kinds of basic checking and savings accounts. You may find standard accounts, premium accounts, and other variations offered by financial institutions. Here are the pros and cons of these deposit accounts.
Checking Account Pros and Cons
First, the pros:
• A checking account usually has very low monthly account fees or no monthly account fees.
• A checking account typically allows access in multiple ways. You can write checks and get an ATM card or debit card. You might get access to online and mobile banking apps so that you can mobile deposit money and pay your bills.
• These accounts provide a hub for your financial life: You have a home for your paycheck to be direct-deposited, you’ll have records of your transactions, and more ways to anchor and track your money.
• You’ll usually enjoy FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration) insurance of $250,000 per account holder, per account ownership category, per insured institution. Some institutions offer enhanced coverage, too.
• Savings accounts are interest-bearing, meaning your money can grow, especially through compound interest. However, not all savings accounts are created equal: Some standard accounts pay quite low interest. Look to online vs. traditional banks for higher rates (more on this below).
• These accounts are also typically insured by FDIC or NCUA.
As for the downsides:
• You probably can’t access your account via checks or a debit card. You will likely be limited to transfers and ATM withdrawals.
• In addition, while the Federal Reserve has lifted the six-transaction limitation on savings accounts due to the pandemic, many banks still impose some transfer and withdrawal limitations on savings accounts.
• You may encounter minimum balance requirements and fees if you go below that amount.
Get up to $300 when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 4.00% APY on savings balances.
Up to 2-day-early paycheck.
Up to $2M of additional FDIC insurance.
5 Other Deposit Account Options
Here are some other deposit account types you might consider beyond checking and savings:
1. High-Interest Savings Accounts
Some banks offer special, high-interest savings accounts that can offer much higher rates than traditional savings accounts. Some institutions don’t charge monthly fees for these accounts while others do but will waive them if you meet a balance minimum.
As with all savings accounts, you may be limited in terms of the number of withdrawals or transfers you can make each month.
One good place to look for this type of account is at an online bank. Because these institutions typically have lower operating expenses than brick-and-mortar banks, they can often offer rates that can be considerably higher than traditional banks, and may also be less likely to charge monthly fees.
A money market account is a type of deposit account that pays interest on deposits and allows withdrawals. Money market accounts are similar to standard savings and checking accounts, except that they typically pay higher interest rates, require higher initial deposits, and may also require minimum balances, which can run anywhere from $100 to $10,000.
Unlike standard savings accounts, some money market accounts also come with a debit card and checks, although institutions may require that they not be used more than six times per month.
You may want to keep in mind the difference between a money market account vs. a money market fund. A money market account is a federally insured banking instrument, whereas a money market fund is an investment account.
Typically, money market funds invest in cash and cash-equivalent securities. It is considered low risk but doesn’t have a guaranteed return.
3. Certificates of Deposits (CDs)
A certificate of deposit (CD) is a product offered by consumer financial institutions, including banks and credit unions, that provides a premium interest rate in exchange for leaving a lump-sum deposit untouched for a certain period of time.
The bank determines the terms of a CD, including the duration (or term) of the CD, how much higher the rate will be compared to the bank’s savings and money market products, and what penalties will be applied for early withdrawal.
CDs offer different term lengths that usually range from a few months to several years. Interest rates tend to be higher for longer terms. Some CDs have a minimum deposit amount that can be over $1,000 or more, though there are banks that offer CDs in any amount.
Sounds good? Well, it is if you know you won’t be touching that money for the entire term length. If you suddenly need the money, then you will likely have to pay a penalty to withdraw money early from your CD.
While you can get no-penalty CDs or early withdrawal CDs, it’s a good idea to make sure to read the fine print, as many of these accounts only have no penalties or withdrawal fees if you take money out during the first few weeks after you invest. In return for that withdrawal window, you often give up a significant amount in APY.
If ease of access is a concern, it might make sense to invest in CDs that feature fewer restrictions around withdrawals. Or, you could set up a CD ladder strategy where you buy CDs that have different maturity dates, ensuring access to funds as your CDs mature at staggered intervals.
4. High-Yield Checking Accounts
Though interest is normally associated with savings, and not checking, accounts, many financial institutions offer high-yield checking accounts.
These interest-bearing accounts, sometimes called rewards checking, work like regular checking accounts and come with checks and an ATM or debit card.
In return for getting a higher interest rate, these accounts often come with rules and restrictions. You may, for example, only earn the higher rate on money up to a certain limit. Any money over that amount would then earn a significantly lower rate.
You may also be required to make a certain number of debit card purchases per month and sign up for direct deposit in order to earn the higher (or rewards) rate and to avoid a monthly fee.
The benefit of an interest-bearing checking account is that you’ll always have access to your money and you may have fewer limitations on how you can use your account than you might with a savings account, all while still earning a bit of interest.
5. Cash Management Accounts
A cash management account is a cash account offered by a financial institution other than a bank or credit union, such as a brokerage firm. These accounts are designed for managing cash, making payments, and earning interest all in one place.
Cash management accounts often allow you to get checks, an ATM card, and online or mobile banking access in order to pay your bills. They also typically pay interest that is higher than standard savings accounts.
Cash management accounts also generally don’t have as many fees or restrictions as traditional savings accounts, but it’s important to read the fine print.
Before opening a cash management account, you may want to ask about monthly account fees and minimum balance requirements.
Some brokerage firms require a sizable opening deposit and/or charge monthly fees if your account falls below a certain minimum. Others will have no monthly fees and no minimums.
Time vs Demand Deposit Accounts
When you consider different kinds of deposit accounts, you may hear the terms time vs. demand accounts. Here’s how they differ:
• A time deposit, such as a CD, requires you to keep your money with a financial institution for a particular period of time.
• With a time deposit, if you withdraw funds before the end of the term, you may face penalties.
• With a demand deposit account (such as a checking account), you may access your cash whenever you like.
• While you won’t pay a penalty for withdrawing money, you may earn a lower interest rate than with a time deposit account.
Here’s the difference between these two kinds of accounts in chart form:
Type of Account
Access
Fees
Interest
Time Deposit
At the end of a predetermined time period
Penalties for early withdrawal
May be higher than demand accounts
Demand deposit
At the account owner’s discretion
Typically no penalties for withdrawals
May be lower than time deposit accounts
Opening a Bank Account With SoFi
If you’re looking for a safe, convenient place to keep your money and also earn some interest while you’re at it, there are a number of great options to pick from.
When you open a Checking and Savings account with SoFi, you’ll spend and save in one convenient place, while earning a competitive APY and paying no account fees. Plus you’ll have fee-free access to 55,000+ ATMs worldwide within the Allpoint Network.
SoFi Checking and Savings: The better way to bank.
FAQ
What are the different types of deposit accounts?
There are several different kinds of deposit accounts, including checking, savings, certificate of deposit (CD), cash management, and money market accounts.
What is the most common type of deposit account?
Among the most common types of deposit accounts are a standard checking account or other kind of checking account.
Is a CD considered a deposit account?
A CD is considered a deposit account, but a time deposit vs. a demand deposit. That means that you are supposed to let the money stay in the CD until it reaches the maturity date or else you will likely be charged a fee. A demand deposit account, on the other hand, can be accessed when you please.
3 Great Benefits of Direct Deposit
It’s Faster
As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.
It’s Like Clockwork
Whether your check comes the first Wednesday of the month or every other Friday, if you sign up for direct deposit, you know when the money will hit your account. This is especially helpful for scheduling the payment of regular bills. No more guessing when you’ll have sufficient funds.
It’s Secure
While checks can get lost in the mail — or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.00% 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 12/3/24. 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.
Shopping can be necessary (how else are you going to get what you need?), and a lot of the time, it can be fun. But it also leads to impulse purchases, which can mean overspending and winding up with high-interest credit card debt.
That’s where the 30 day rule can help. It’s a technique that can help you slow down shopping and save money. It gives you a way to pump the brakes on a purchase and wait before buying.
This, in turn, can help you determine if you really need or want an item vs. getting caught up in the moment. If you’re able to take time and decide not to make a purchase, it can help your overall financial outlook (that credit card bill, for instance, may be more manageable).
Here, you’ll learn more about the 30 day rule and how it can help you save money.
What Is the 30 Day Rule?
The 30 day rule is a simple strategy that has the power to help you control your spending and make solid financial choices. Here’s how it works:
• If you feel the urge to make a significant purchase of something that’s non-essential, whether it’s in a store or online, the rule says: Stop. Leave the store, or click away from the site.
• Write down what you wanted to buy, along with where it can be found, and its price. Date the document and then mark on your calendar when 30 days will have passed.
• Some people find this additional step helpful: Rather than just write down the amount of the discretionary purchase, you could put that amount of money into your savings account. Seeing your pumped-up savings account balance can potentially help you decide not to purchase something that’s an impulse buy.
• During the 30 days, you can think about whether you really need the item or, if it’s a “want” rather than a “need,” whether you want to spend discretionary funds on it.
• After 30 days have passed, if you still wish to purchase the item, then you can potentially do so, knowing that it’s no longer an impulse buy. Rather, it’s likely to be a well thought-out and planned financial choice. It can also help your budget to compare prices with different vendors after you’ve made your decision to buy.
Pros and Cons of the 30 Day Savings Rule
Now that you understand the principle behind the 30 days savings rule, consider the upside:
• It helps you avoid impulse buys.
• It gives you time to assess a major purchase, comparison-shop, and budget.
However, the 30 day savings rule can also have downsides:
• It can lead to feelings of frustration or deprivation not to be able to buy in the moment.
• If you wait 30 days and then decide to buy, the item you want could be more expensive or sold out.
Needs vs Wants
The 30 day rule can be an excellent way to manage the causes of overspending and help you differentiate needs from wants.
Examples of Needs
Needs are your basic living expenses; the items that are vital for daily life. For example, if you’re out of toilet paper, that clearly goes into the needs category, and doesn’t fit the rule. You could shop for a better price, sure, but it’s a pretty necessary purchase.
If your car is almost out of gas and you’ve got to drive to work in the morning, the same concept applies. Yes, if you need to eat dinner and the cupboards are bare and the fridge is empty, you’ll need food (but not necessarily steak and lobster).
Examples of Wants
On the other hand, wants are things that are not part of daily survival. Groceries to cook dinner are an example of needs, but a pricey sushi dinner or even that vanilla latte to go in the morning are clearly wants.
When it comes to shopping, you may find yourself giving into wants when you pick up some new shoes just because they’re on sale or decide to upgrade your phone even though your current one works fine.
There’s a middle ground, of course, where it may be tougher to decide if something is a need or want, and whether the rule applies. For example, you may have a big work conference coming up, and there’s a really sweet suit on sale.
On the one hand, you may have an outfit that will work just fine, but on the other, this one may be more appropriate, giving you the confidence to shine at the conference. In that case, it may make sense to think about the purchase for a day or two, rather than for a full 30.
Get up to $300 when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 4.00% APY on savings balances.
Up to 2-day-early paycheck.
Up to $2M of additional FDIC insurance.
The Role of FOMO Spending
FOMO (which stands for Fear of Missing Out) spending is the kind in which you feel that if you don’t buy a particular item, you might miss out on something important. This could happen if you see social media posts where friends (and perhaps even people you don’t know!) are buying something you don’t have.
This anxiety can significantly influence how people spend their money, serving as motivation to spend funds that they can’t really afford. Some points to consider:
• The reality is that not everyone’s financial situation is the same. Your friends may earn a higher income, have a different debt situation, and manage lesser expenses than you do.
• If you find yourself feeling peer pressure to spend in ways that aren’t healthy for your budget, it may make sense to come up with alternative, less expensive activities to do together.
For instance, instead of going out to an expensive new restaurant with a friend, you could cook together. And just because everyone else may seem to be spending their summer vacation at a far-flung destination doesn’t mean you can’t have a great getaway at a nearby cabin on a lake or travel somewhere exotic during the off-season.
• If you’re more tempted to buy when you use your credit or debit card, it may be wise to bring a set amount of cash instead when going to spending-trigger locations. If you love to shop, shop, “window-shop” online to your heart’s content, and then maybe consider visiting a brick-and-mortar store when it’s time to make a purchase. This can help ensure that the item lives up to your expectations.
Each of these strategies is a way of practicing delayed gratification — and there are plenty of benefits to engaging in this healthy behavior (besides from possibly fattening your wallet).
Delayed gratification, according to studies, is often a trait found in successful people. When someone can delay satisfaction until the appropriate time, they are more likely to thrive financially, as well as in their relationships, careers, and health than those who haven’t yet mastered the skill.
It isn’t always easy to wait when doing something might make you feel good right now, but waiting can lead to bigger rewards in the future. As this becomes a practice, it can help to boost your overall self-control and achieve long-term goals.
One of the more well-known studies on delayed gratification involves, of all things, marshmallows. This study was conducted at Stanford University in the 1960s, and went like this:
• Participating children were taken into a room where they each found one marshmallow on their plates.
• The children could choose to eat their marshmallow now, or wait 15 minutes and then get a second one.
The children who chose to wait, the researchers discovered, had higher standardized test scores. They also were found to have fewer behavioral issues and health problems.
You might use this study to think about your own ability to wait for greater rewards. Focusing on finances, you might consider times when a quick impulse purchase didn’t turn out to be the best move, as well as times when saving for something better was ultimately more rewarding. These moves can help you cut back on spending.
The above strategies all have one thing in common. They involve tracking your spending and saving so that you can make choices that fit your budget, lifestyle, goals, and dreams.
As part of that process, it may make sense to identify where you’re overspending. The reality is that it’s gotten super easy to spend — and, therefore, overspend — in today’s frictionless financial world.
You may find that you’re spending literally hundreds of dollars a month in ways you didn’t realize, whether that’s by picking up a quick coffee at the drive-thru window, a subscription you rarely use, or something else entirely.
When you know where your money is going, down to the last penny, it can help you adjust your budget in a way that prioritizes your financial needs and money goals. That could involve paying down debt, saving up for a vacation next summer, or banking some cash for the down payment on a house in the future.
4 Other Tips and Strategies to Save Money
Here are some additional savings strategies to consider:
Pay Yourself First
Want to pay yourself first? You can do this by having money automatically deducted from your paycheck and transferred into your savings account. By automating your savings, you can make sure that you don’t spend money that can be helping to fund your future dreams.
Try Out Different Budget Methods
It can take a little trial and error to find a budget that works for you and your unique situation. Some people like the 50/30/20 rule, others use the envelope system, and there are many other options. Do a little online searching and experimenting to find one that works for you.
Use an App
Technology can help you track your spending and save more. Your financial institution may have tools that make this a snap. Or you might decide to take advantage of a roundup app that puts a little money into savings with every purchase you make. Again, an online search can reveal alternatives, or see what your bank offers.
Start a Side Hustle
Another way to save more is to earn more. Starting a low-cost side hustle can be one way to do just that. Whether that means walking dogs, selling your nature photos, or providing social media services for local businesses, there could be a simple and satisfying way to tap your talents and bring in more cash.
Opening a Savings Account with SoFi
With a SoFi Checking and Savings Account, you can spend and save in one convenient place while earning a competitive annual percentage yield (APY) and paying no account fees. You can track your weekly spending within the dashboard in the SoFi app. Tracking your spending can help you stay on target with your financial goals. If you’ve got multiple goals, then you can use our Vaults feature to save towards each of them.
Check out SoFi Checking and Savings to track your spending and saving.
FAQ
What is the 30 day rule for saving money?
With the 30 day rule, you wait 30 days before making a major purchase to be sure you really want or need it. This technique of waiting can help you delay gratification, feel more in control of your finances, and potentially avoid overspending on impulse buys.
Does the 30 days rule work?
The 30 day rule can work if you stick with it. By waiting 30 days before making a major purchase, you have time to consider whether you really need it, shop around for the best price, or decide that it was an impulse buy and you don’t really want it anymore.
What is the golden rule of saving money?
The golden rule of saving money is to save money before you spend. Some people refer to this as “paying yourself first.” By prioritizing saving, you can potentially minimize debt and reach your financial goals.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.00% 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 12/3/24. 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.
There are times in life when you might wonder if you should merge bank accounts. One obvious trigger is marriage: You and your spouse may decide to combine all or some of your accounts into joint reserves. Or perhaps you simply have a number of bank accounts, and they are becoming unwieldy. Perhaps you opened one in college, then another when you moved to start your first job, and then yet another to get a special promotional bonus.
Whatever your goals, if you’re craving financial simplicity or otherwise need a fresh approach to your accounts, here’s what you need to know about:
• How to combine bank accounts
• The pros and cons of combining bank accounts
• When to combine bank accounts.
How to Combine Bank Accounts in 4 Steps
If you decide that merging bank accounts is the right step for you, here’s how to make it happen:
1. Decide Where to Keep Your New Account
The first step — whether you are downsizing for yourself or joining two individuals’ finances together — might be to decide where you want to open your new account.
If you or your spouse have multiple accounts across different financial institutions, you could evaluate which institution offers the best benefits and lowest fees. You might stick with the one existing account you like best or start a joint account somewhere new.
If you are doing the latter, you could compare traditional vs. online banks or which institutions are offering a perk that appeals to you.
2. Start Shifting Accounts
Here’s the next step in how to combine bank accounts: If you’ve decided you want to combine accounts, you could start moving your direct deposits, automatic credit card payments, and other similar transactions over from your old accounts to the new one. You might also want to make sure any subscriptions or other deductions are switched over as well.
3. Check That Your Account Is Up and Running
After about a month, you might want to double-check and make sure that everything has transferred properly. You don’t want to end up paying a late fee or have a check bounce because you weren’t monitoring your accounts.
Once you see the correct payments and deposits coming in and out of the new combined account, then you could take the last step in how to merge bank accounts, which is to start closing your old accounts.
This might involve a trip to a branch in person, and if there is anything left in your old account, the bank will issue you a check or cash payment for the remainder.
If you’re wondering whether to merge bank accounts, it can be helpful to consider the pros and cons of combining accounts. Here, the upsides:
• A shared account gives each person in the relationship access to money when they need it. Joint accounts usually offer each person a debit card, a checkbook, and the ability to make deposits and withdraw money.
This also includes online access to account information, which might help when it comes to paying bills together or other when making shared financial decisions.
• Even those who are not looking to combine finances with someone else could benefit from merging their own money into fewer accounts. How many bank accounts should you have? For most single adults, just one checking and one savings account at the same bank should cover your financial needs.
This could help cut down on confusion and simplify your spending, so that you’re not trying to balance your budget across multiple accounts. Minimizing the number of accounts you hold could mean fewer fees, since many banks charge monthly fees or require a minimum balance.
• Another advantage to a joint bank account is that you are less likely to run into financial surprises with your partner. With money going into (and out of) one account that you both have access to, it might be easier to keep tabs on your monthly budget and spending.
Get up to $300 when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 4.00% APY on savings balances.
Up to 2-day-early paycheck.
Up to $2M of additional FDIC insurance.
Drawbacks of Merging Your Accounts
Now, consider the downsides of merging accounts:
• Some couples may prefer to keep their financial independence. In fact, rather than combining all your finances, you might decide to create a new joint account but also keep some accounts separate. Or you might decide to keep your finances totally independent of each other, and instead come up with a budget to figure out which expenses each person will pay.
• Combined accounts may not suit your big-picture financial needs and money goals. Before you decide that a combined bank account is your goal, you might want to have a big-picture conversation about what each partner brings to the table.
For instance, what if one partner is entering the marriage with student loan debt, past loans, or other financial burdens? Will the new shared account be used for those payments? Or is it up to the individual to pay off their own debts?
• A joint account could also become a problem in some states if the relationship ends, because without any other agreement in place, that shared money might get split up evenly in a divorce. Or, even worse, one spouse might clear out the account, leaving the other without money.
If you’re concerned about only having a joint account, you could open a joint account specifically for shared bill management with each person depositing a specific amount every month.
You could even have three separate checking accounts — yours, mine, and ours — maybe if one person is a spender and one is a saver. That way, both people manage their checking accounts on their own.
Opening a Bank Account With SoFi
Whether you decide to combine bank accounts, keep them separate, or something in between, it’s important to choose an account that meets your needs. SoFi offers a checking and savings account with a competitive annual percentage yield (APY) and no account fees, which can help your money grow faster.
Plus, with a SoFi Checking and Savings Account, you can save, spend, and earn all in one place. Plus, joint accounts are available with SoFi.
Bank smarter and simpler with SoFi.
FAQ
Can you merge two bank accounts together?
Yes, you can combine bank accounts. You might be able to transfer an account into another existing one or open a new account to accomplish this.
When should you combine bank accounts?
You can combine bank accounts when you marry, if that suits your and your spouse’s financial needs and style. You might also merge accounts if you find you have multiple accounts and want a simplified financial life.
How do you link two bank accounts from different banks?
You can link accounts between two different banks without merging them. Typically, you can do this on your financial institution’s website or app. You’ll look for the option that says “link external accounts,” and you’ll need the bank routing and account numbers handy.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
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 4.00% 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 12/3/24. 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.
