Mar
24
2025
Maximum Deposit and Balance Limits for Checking Accounts

Maximum Deposit and Balance Limits for Checking Accounts

By | Budgeting & Goals, Financial Independence, money | Comments Off on Maximum Deposit and Balance Limits for Checking Accounts

Having a bank account can simplify money management, but it’s important to know that there may be limits on how much money you can put in and move through your accounts. Limits like these can impact the timing and efficiency of your transactions.

Banking details matter to almost all of us. According to the Federal Reserve , 95% of U.S. households have at least one account with a bank or credit union. If you are wondering how much you should keep in checking and savings and whether bank accounts have limits, do read on. We’ll help you answer these important questions so you know where to keep your money and what to expect when you do your banking.

What are Maximum Deposit Limits?

Generally speaking, banks and credit unions don’t impose maximum deposit limits on checking and savings. This means that there usually is not a maximum deposit amount for your checking account that you need to know. The same applies for savings accounts. So if you were to win the lottery (wouldn’t it be nice?), you could go ahead and deposit that mega check into your checking or savings account without any issues.

There may, however, be maximum deposit limits for other types of deposit accounts. For example, if you’re opening a certificate of deposit (CD) account, the bank may cap those deposits at a certain amount. Depending on the bank, the maximum deposit may be as high as $1 million.

Now, do checking accounts have maximum limits on what you can deposit in a single transaction? Yes, they can, depending on the bank.

Maximum Account Balance Limits

Just as banks usually don’t impose a maximum deposit limit, they also don’t set limits on account balances. There is, however, a limit on how much of your money is protected by the Federal Deposit Insurance Corporation (FDIC).

The FDIC insures bank accounts in the very rare event of a bank failure. The FDIC coverage limit is $250,000 per depositor, per account ownership type, per financial institution. Having two checking accounts with the same bank or multiple savings or CD accounts at the same bank doesn’t affect your coverage limit if the total balance is under $250,000.

If you have multiple accounts at the same bank and the balances exceed $250,000, then it’s possible that part of your deposits might not be covered. The FDIC offers an online estimator tool that you can use to calculate how much of your deposits are covered at an insured bank.

One important note: Some banks participate in programs that extend the FDIC insurance to cover millions. If you want to keep large sums of money on deposit, you may want to consider these programs1.

What Is the Right Amount of Money to Keep In a Checking Account?

How much money can you have in a bank account? The short answer is as much as you want. But a better question might be, “How much money should you have in checking?”

There are different rules of thumb you might follow. Much depends on your personal situation and comfort level, but let’s consider two popular ways to look at this matter. You may choose the “emergency account” route and keep two to three months’ worth of expenses in checking. You could add another 20% to that amount as a just-in-case cushion to cover any small unexpected expenses that might come up so you don’t have to tap into your emergency savings.

If your bank imposes a minimum balance requirement, you could use that as a guide instead when deciding how much to keep in checking. So if your bank has a $1,000 minimum daily balance in order to avoid a monthly service fee, you might aim to keep at least that much in checking.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $3M of additional
FDIC insurance.


What to Consider When Withdrawing Money

Maintaining a minimum balance in your checking and savings has some benefits. Specifically, it can help you to avoid fees or situations where you might run the risk of being short on funds. Here are three things to weigh when making withdrawals from bank accounts which can have implications in terms of maintaining your balance and avoiding excess charges.

Overdrafts

Overdraft occurs when you withdraw more money than you have available in your bank account, resulting in a negative balance. This is problematic because not only do you not have money to spend or pay bills, but also because your bank can also charge you a fee. According to the latest research from the Consumer Financial Protection Bureau , banks collected $15.47 billion in 2019 alone. Ouch! Keeping a minimum balance in checking and monitoring your balance regularly can help lower the risk of overdrafting your account.

Pre-Authorizations

Some transactions may require a pre-authorization hold before money is deducted from your account. For example, if you use your debit card to get $50 in gas, there may be an initial hold for that amount against your available funds. This lowers the dollar amount you have available for other spending. Having some extra funds in your accounts means all of your money isn’t tied up by these kinds of holds. Better yet, you might consider setting up a credit card account just for things like gas, hotel, and other travel purchases which often require pre-authorization.

Minimum Balance Requirements

As mentioned, banks and credit unions can impose minimum balance requirements for deposit accounts. This is separate from any initial minimum deposit requirement you might need to make to open the account. If your balance dips below the minimum deposit requirement, that could trigger a fee. How would you enter that “too low” zone? It might happen if you make a larger than usual withdrawal or debit card purchase, or decide to write a check that pays off your credit card bill one month.

Of course, you could avoid this by choosing a checking and savings option that doesn’t charge a monthly fee or set minimum balance requirements. This is an option if you’re banking with SoFi.

What to Consider When Depositing Money

The purpose of checking and savings is to hold your money until you need it. You therefore may not think twice about plunking some funds into your bank and parking it there. But when making deposits, it’s important to consider:

•   How much interest you’re earning with your bank vs. what you might earn elsewhere

•   How accessible your money is once you deposit it

•   What kind of fees you might pay to withdraw funds

Let’s review these points in a little more depth.

Investment Opportunities

Keeping all of your cash in checking and savings may seem like a good idea. After all, your money is relatively safe (thank you, FDIC), and you can dip into it as needed. But if you’re hoping to grow wealth, then investing some of your money in the stock market can deliver better returns over time. Allocating part of your paychecks to an investment account where you can buy stocks, exchange-traded funds (ETFs), cryptocurrency, or IPOs could pay off over the long term more so than simply earning interest with a bank account.

Liquidity

Liquidity is an investing term that describes how easy it is to turn an asset into cash. Bank accounts are highly liquid since you can get money from them fairly quickly. For example, if you need $500 to pay for an emergency vet bill, you could swipe your debit card, write a check, or hit the ATM.

When deciding how much money to deposit to checking and savings, consider an amount you’d feel comfortable having on hand if you needed it in an emergency. Then, if there’s an amount beyond that which you don’t think you’d need to access right away, you could invest that or put it into a high-yield CD account.

Transfer and Withdrawal Fees

There may be times when you need to transfer funds between bank accounts — perhaps on a regular basis. It’s worthwhile to consider the kind of fees this activity may trigger, so you don’t wind up taking too much of a financial hit. For example, if your bank sets a savings withdrawal limit, you may have to pay an excess withdrawal fee if you go over that limit. The Federal Reserve eliminated the “six withdrawal per month limit” for savings and money-market accounts, but banks can still charge a fee for excess withdrawals. Check the policies at your bank. This can guide you when deciding how much to deposit in savings. You’ll want to think about how soon you might need to take that money out again and what it might cost.

The Takeaway

Bank accounts can make life easier when you need to pay bills, make purchases with a debit card, or set aside money for savings goals. That said, you’ll want to be aware of limits on your accounts in terms of minimum balance requirements, deposit limits, and withdrawal limits. This can help you to avoid excessive fees. Because your checking should be a convenient financial tool, not something that is causing you concern or charging you an array of fees!

Bank Better with SoFi

If you’re looking for a checking and savings option that’s accessible and fee-friendly, consider online banking with SoFi today. Not only do eligible accounts earn a competitive APY, you’ll also bank free of account and overdraft fees. Plus SoFi recently announced that deposits may be insured up to $2 million through participation in the SoFi Insured Deposit Program.

Why not see how simple and stress-free banking can be?

3 Great Benefits of Direct Deposit

  1. It’s Faster

    2. 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.

  2. It’s Like Clockwork

    3. 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.

  3. It’s Secure

    4. 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.

FAQ

How much money can you put in a checking account?

Generally, there’s no checking account maximum amount you can have. There is, however, a limit on how much of your checking account balance is covered by the FDIC (typically $250,000 per depositor, per account ownership type, per financial institution), though some banks have programs with higher limits. Banks can also impose daily, weekly or monthly limits on mobile check deposits.

Should I keep all my money in my checking account?

Keeping all of your money in your checking account usually isn’t ideal, as you may be able to earn a higher rate of return by investing some of it. It can, however, be a good idea to keep two to three months’ worth of expenses in checking, plus a small cushion of 20% to 30% extra for any surprise expenses that might pop up.

What is the limit of depositing money in the bank?

Banks may not impose an aggregate limit on how much you can deposit to checking and savings. But there may be limits on how much you can deposit each day via mobile check deposit, with a teller or through the ATM. This limit can vary from bank to bank.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/Prostock-Studio

1SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per depositor per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by banks in the SoFi Insured Deposit Program. Deposits may be insured up to $3M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.


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

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Mar
24
2025
Can Bank Accounts Have Beneficiaries?

Can Bank Accounts Have Beneficiaries?

By | Budgeting & Goals, Family Finances, money | Comments Off on Can Bank Accounts Have Beneficiaries?

If you have a retirement account or a life insurance policy, you’re probably familiar with the process of naming a beneficiary, but did you know that bank accounts can have beneficiaries as well?

The point of designating beneficiaries is to specify who will inherit your assets when you die. When you open a new bank account, you may have the option to add one or more beneficiaries. You can name a beneficiary for a checking account, savings account, or money market account.

Naming beneficiaries to bank accounts is something you might consider as part of a broader estate plan. Learn more about this here, including:

•   What is a beneficiary?

•   Do bank accounts have beneficiaries?

•   What are the pros and cons of adding a beneficiary to a checking or savings account?

•   How do you add a beneficiary to a bank account?

•   What are POD accounts?

What Is a Beneficiary?

A beneficiary is someone who’s entitled to inherit assets from someone else. The types of assets that can allow you to name someone as beneficiary include:

•   Life insurance policies

•   401(k) plans and similar workplace retirement plans

•   Individual Retirement Accounts (IRAs)

•   Trusts

•   Bank accounts

Primary beneficiaries have first claim to assets. Contingent beneficiaries can be named to inherit assets should the primary beneficiary die or not be able to be located.

Beneficiaries can be a person, organization, or entity. For example, you might name your spouse as the beneficiary of a life insurance policy while naming your favorite charity as beneficiary of a trust you’ve created.

Beneficiaries vs Writing a Will

A will is a legal document that allows you to specify how you’d like your assets to be distributed among your heirs after you pass away. You can also use a will to leave funeral or burial instructions or name a legal guardian for your minor children.

Wills can name beneficiaries who are to receive assets from your estate. State law determines who can and cannot be excluded as a will beneficiary. For example, disinheriting a spouse is usually prohibited but you might be able to exclude your children from your will.

Assets that have a designated beneficiary generally supersede a will. So, if you’ve named your spouse as beneficiary to your 401(k), for example, you wouldn’t be able to leave that asset to someone else in your will.

Should You Add a Beneficiary to Your Bank Account?

Can checking accounts have beneficiaries? Yes. Do you need to add a beneficiary to your bank account? It depends.

Naming a beneficiary for a bank account allows that person to inherit those assets once you pass away without having to go through probate. Probate is a legal process in which a deceased person’s estate is divided up among their heirs. Assets can be divided according to the terms of a will. If there isn’t a will, then state inheritance laws can determine what happens to the deceased’s estate.

Probate can be time-consuming and costly. Adding a beneficiary to a bank account allows them to sidestep all of that. Your beneficiary can collect the money in the account without a lengthy wait. They may need to verify their identity and provide a death certificate, but it’s a much simpler process than probate.

You might choose to add a beneficiary if you want to make sure that they’re able to access those assets right away. Your beneficiary designations for a bank account won’t affect your designations for life insurance policies, retirement accounts, or other assets.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $3M of additional
FDIC insurance.


Steps for Adding a Beneficiary to Your Bank Account

Banks typically don’t require or perhaps even request that you add a beneficiary to an account. It’s a good idea to check with your bank first to find out if you can add a beneficiary to a checking account or savings account. If so, the bank should be able to tell you what you’ll need to do next to do so.

Typically, the process works something like this.

1. Decide which accounts will have a beneficiary

The first thing to consider is which accounts to name beneficiaries for. You might have a checking account, savings account, and money market account at the same bank, for instance. Since the accounts are separate, you’d have to decide which ones will have beneficiaries and whether the beneficiary for each one will be the same person.

You’ll need to tell the bank which bank account number or numbers you’re referencing when adding a beneficiary. It’s a good idea to double check the number to make sure you’re giving the right account information.

2. Choose your beneficiaries

Next, you’ll need to decide who will be the beneficiary for your bank accounts. If you’re married, that might be your spouse. If you’re unmarried or widowed, you might choose to name one of your children, another relative, or a close friend.

Keep in mind that you may not be able to name minor children as beneficiaries. If you’d like to ensure that your bank account goes to a minor child, you may need to first choose an adult to act as their custodian should something happen to you. You could then name the custodian as beneficiary on behalf of the children.

3. Update your beneficiary preferences

The actual process for naming a beneficiary to a checking or savings account will vary by bank. At some banks, it may be as simple as logging in to online banking, navigating to your account settings, and entering your beneficiary’s information. That may include their name, address, date of birth, and Social Security number.

Other banks may require you to submit a beneficiary designation form, either online or in person at a branch. Again, you’d need to provide the beneficiary’s identifying information to add them to your account.

Note that adding a beneficiary designation does not grant that person access to your account during your lifetime. They would only be able to access the money in the account upon your death.

Consider Creating a POD Account

A payable on death or POD account is a bank account that has a named beneficiary. That beneficiary is entitled to automatically receive the assets from the account when the original account owner passes away. They do not have access to the account during the primary account owner’s lifetime.

Creating a POD account allows your beneficiaries to bypass probate. You can name one or more beneficiaries for a payable on death account. In terms of how to create a POD account, you’d need to tell your bank that you either want to open a new account for that purpose or convert an existing account.

Keep in mind that if you need to change your beneficiaries later, the bank may require you to close the account and redeposit the money into a new POD account. A POD beneficiary designation will override instructions left in a will. When there are multiple beneficiaries to a payable on death account, assets in the account are split between them equally.

How Marriage Impacts POD Accounts

Marriage can add a wrinkle to your will or estate planning efforts if you’re creating a POD account. If you live in a community property state, your spouse would be entitled to half of the assets in the account, excluding ones you owned before the marriage or ones that you inherited.

Keep in mind that if you named your spouse as beneficiary to a bank account and you end up getting divorced, they would still be entitled to receive assets from the account. You’d need to contact your bank to update your POD beneficiary designations to make sure those assets where you want them to once you pass away.

Alternatives to Adding a Beneficiary to Your Bank Account

Adding one or more beneficiaries isn’t the only option for managing a checking account or savings account. You might also consider setting up a joint account with someone else or specifying how you want your bank accounts to be divided in your will. Setting up a joint bank account might be easier, though there are some pros and cons.

Opening a Joint Bank Account

Opening a joint bank account is something you might consider if you’d like the person you’d otherwise choose as a beneficiary to have access to the account while you’re alive. For example:

•   You might choose to set up a joint account with a spouse if you have a high level of financial trust between you.

•   If you’re unmarried, then you might choose to open a joint bank account with your adult child, a parent, or a sibling.

•   You might be asked to open a joint bank account with someone else if you’re assuming responsibility for managing their finances. For instance, an aging parent might want to set up a joint account so you can help them with managing bills.

Can you open a bank account for someone else? Yes, but only in limited situations. Generally, you can open a bank account for someone else if:

•   They’re a minor child.

•   They’ve granted you power of attorney.

Before opening a joint account, consider the relationship you have with the other person and how much control you’re comfortable allowing them to have. For instance, what if you’d like them to inherit the assets in your bank account but not be able to make withdrawals right now? You may be better off naming them as a beneficiary instead or setting up a POD account.

💡 Recommended: Joint Bank Accounts vs. Separate Bank Accounts in Marriage

The Takeaway

Do checking accounts have beneficiaries? Some of them do or can upon request. Whether you’d like to add a beneficiary to your account can depend on your financial and personal situation. In some cases, a POD or joint account might better suit your needs.

If you’re interested in opening a new bank account, SoFi could be a good option. SoFi’s online Checking and Savings account lets you spend and save in one convenient place. You’ll also earn a competitive annual percentage yield (APY) and pay no account fees, which can help your money grow faster. Plus, you can get paycheck access up to two days early with a qualifying direct deposit.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

What if there is no beneficiary on a bank account?

If there is no beneficiary on a bank account and the account holder dies, the assets in the account will be combined with other assets from the estate during probate. All assets, including bank accounts, would then be distributed according to the terms of a will or, if there is no will, state inheritance laws.

How many beneficiaries can you have on one bank account?

Banks can decide whether to limit the number of beneficiaries you can have on a bank account. When naming multiple beneficiaries, keep in mind that they’ll each be entitled to an equal share of those assets. If you’d rather divide the account up differently, you may want to leave it to your heirs in your will instead.

How does a beneficiary receive their money?

A bank account beneficiary will typically need to verify their identity and the death of the account owner before receiving any money from the account. The bank may cut them an official check for the account balance or transfer the money to their bank account electronically.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/Alessandro Biascioli

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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.

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.

SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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Mar
24
2025
Do You Have Sound Money Values?

Do You Have Sound Money Values?

By | Budgeting & Goals, Financial Independence, money | Comments Off on Do You Have Sound Money Values?

Money values are a set of beliefs about money and how it’s meant to be used. Do you see money as something that is meant to be spent and enjoyed in the moment? Or is watching your pennies so you can retire early your ultimate financial goal?

Whether someone’s financial values are positive or negative can influence the decisions they make with money. For example, research suggests that children who learn positive money lessons early on are more likely to be better with money and have stronger relationships as adults.

But where do money values come from? And are they set in stone or can they change over time? Understanding the impact of money values is an important step in improving your financial health. Read on to learn more about how money values are formed, and how you can better align your values and finances.

Key Points

•   Money values are core beliefs about how money should be used and often drive financial decisions and habits.

•   Money values are typically formed in childhood but can be changed over time.

•   Positive money values lead to disciplined financial habits like budgeting and goal setting, while negative values can be detrimental to financial health.

•   Aligning your financial habits with your money values involves identifying your beliefs, setting goals, and making spending decisions that reflect these values.

•   Communicating money values with your partner can prevent conflicts and help you find compromises when managing finances together.

What Are Money Values?

When talking about values in finance or in general, you’re talking about beliefs. Specifically, values are beliefs that motivate people to action in some way and drive behavior. If you apply that concept to finance, you could define money values as a set of beliefs that drive financial decision-making.

Financial values can be formed in childhood through your first-hand experiences with money. For example, if you grew up in a household that emphasized saving and avoiding debt, then you might be more inclined to value the importance of stashing cash in a savings account and delayed gratification as an adult. On the other hand, if you grew up in a home with a parent who was a compulsive shopper, then your money values might tell you that buying things constantly is normal behavior.

Financial values can vary widely from one person to the next, and it’s possible that you may have developed money values without being consciously aware of them. But those values can affect the decisions you make when it comes to saving, spending, and handling debt.

How Do Money Values Work?

Money values work by shaping your decision-making with money. They act as a guide to tell you what’s acceptable behavior for managing money and what isn’t. So again, someone with positive money values might believe that carrying excessive amounts of debt or making unnecessary purchases are bad financial habits to avoid.

If you have poor money values as an adult because of your childhood experiences with money, then you might not see anything wrong with being in debt. Or you might simply think that having lots of debt is a fact of life, and there’s nothing you can do to change it. For that reason, having negative money values can be dangerous to your financial health, today and tomorrow.

The good news is that it’s possible to change your money values over time. It can take an effort to learn new values and behaviors and adopt a new money mindset. However, the effort can be worth it if you’re not happy with your financial situation and you’d like to change it for the better.

Why Are Money Values Important?

There are certain fundamentals for personal finance that can help you to get ahead financially. These include things like budgeting, avoiding high interest debt, and saving consistently. Your money values matter because they can determine how committed you are to practicing good financial habits.

Here are some things that positive money values can do for you:

•   Help you to be more disciplined with your money, rather than allowing money to control you

•   Make it easier to keep track of money because you’re committed to sticking to a monthly budget and avoiding unnecessary spending

•   Give you clarity when setting up financial goals so that you know exactly what it is you want to achieve with your money

•   Underscore your purpose for pursuing those goals so that you stay motivated and on track

•   Make decisions confidently with your money, whether it’s where to invest or what to say to a friend who asks for money

Financial values can act as a guidepoint or compass for you so that you don’t feel like you’re operating in the dark with money. Understanding your personal values toward money can also help with navigating relationships with people who might have different financial values. The clarity you have about how you want to manage your money can help you stay the course to meet your goals.

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Tips for Determining Your Money Values

If you’re not sure what your money values are or you’re questioning what they ought to be, figuring it out doesn’t have to be difficult. There are some simple exercises you can do to drill down to your financial values and what money means to you.

Creating a List of Where Money Impacts Your Life

When setting up a financial plan that revolves around money values, it’s helpful to first understand how money affects your life. Making a list of areas where money impacts you the most can give you perspective on what money values you have and how they drive your decision-making.

For example, consider how money affects you on these levels:

•   Friendships

•   Romantic relationships

•   Family relationships

•   Work and career decisions

•   Hobbies and recreation

•   Health

•   Long-term planning (whether that means home ownership or retirement)

Also, think about how money affects you mentally and emotionally. If money is a constant source of stress, for example, that could be a sign that your money values might be getting in the way of good financial habits.

Creating Goals for What You Want to Accomplish

Setting goals can motivate you to make changes to your financial outlook, whether big or small. It can also help you to determine what your money values are and how your goals align with those values.

Making two lists — one for short-term goals and one for long-term goals — can give you an idea of what you’d like to do with your money. For example, financial short- term goals might include:

•   Saving an emergency fund

•   Setting aside money for a vacation

•   Saving up for new furniture

Financial long-term goals on the other hand might be things like saving for retirement or putting a large down payment on a home. You can never have too many money goals, but it’s important to be realistic about what you can achieve at any given time.

Visualizing Where You Will Be in 5-10 Years

Many people use a five-year plan to map out their goals and financial progress. If you’ve never tried this before, consider where you’d like to be five or 10 years from now.

The idea is to create as vivid a picture as possible. For example:

•   Where will you live?

•   Will you rent your home or own it?

•   What kind of work will you be doing? Will you be working a 9-to-5 job, be in grad school, or running your own business?

•   How much money will you have in savings?

•   How much debt will you have?

•   Where will you be in terms of progress towards your long-term money goals?

Visualizing your future self is an important exercise because it gives you something to aim for. You can start working toward it now by adapting your money values to reflect where you want to go.

Prioritizing Your Goals

If you have multiple financial goals, you might not be able to knock them all out at once. So you’ll have to decide which ones are most important to focus on first.

For example, many people question whether it makes sense to save or pay down debt. Saving first can give you a small cushion so that you don’t have to turn to a credit card if an emergency comes along. On the other hand, putting off debt repayment can mean paying more in interest over time. Which side of the debate you land on can clue you in as to what your money values are.

You can go through each of your goals and ask yourself how urgent that goal is for you. That can help you to better organize your list so you know what to focus on first.

💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Living Out Core Values

Once you’ve identified what your money values are, you can work on living them out in your daily life. In other words, that means making sure that your behaviors with money match up with your beliefs about money.

So, let’s say early retirement is one of your long-term financial goals; specifically, you’d like to retire 15 years from now. Ask yourself what you need to do on a daily basis to reach that goal. It might mean finding ways to make more money or prioritizing debt payoff. Or it could be as simple as saying no to a night out with friends in order to save some cash.

When you consider how even seemingly small decisions might affect you financially, you’re living out your core money values. The more consistently you can do that, the easier it becomes to create the kind of financial life you want.

Tips for Aligning Your Values With Your Finances

Getting into some simple routines with your finances can make it easier to align them with your money values. Here are some of the best ways to make sure your financial values are reflected in how you manage your money:

•   Make a monthly budget and and then stick to it

•   Review your spending regularly

•   Use credit cards responsibly by keeping balances low and paying in full whenever possible

•   Start a regular savings plan

•   Contribute to a retirement account if you’re not doing that already

•   Choose investments that match up with your values

•   Consider ways that you can reduce expenses and save money

•   Surround yourself with people who have similar money values.

Communicating about money with your spouse or partner is another important step. If their financial values are different from yours, then talking things over can help you to avoid conflict. You may not be able to persuade them to accept your values or vice versa. However, you might be able to reach a compromise on how to manage your money that you’re both comfortable with.

The Takeaway

Having sound money values can pay off if you’re able to feel financially healthy and enjoy the kind of lifestyle you want without racking up debt. Or perhaps positive money values will help you buy a house sooner or retire earlier.

Part of managing your money successfully involves choosing the right place to keep your money. When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Can you be financially stable without money values?

It’s possible to be financially stable even if you aren’t aware that you have any money values. You can still make good decisions with money without realizing that values are driving those decisions. But having clear financial values to follow can help make stability easier to achieve.

What are bad money values?

Bad money values are values that lead to poor decisions with money. For example, someone who carries a large amount of credit card debt or relies on expensive payday loans to cover the bills may never have learned how to properly budget. Poor money values don’t have to be set in stone, however; it’s possible to turn them into positive financial values.

Do wealthy people have good financial values?

Just because someone is wealthy doesn’t automatically mean they have good financial values. A billionaire who runs a Ponzi scheme, for example, might have money values that tell them that it’s okay to defraud others for their own benefit. While having good money values can help you build wealth, you don’t need to be rich to make good financial decisions.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


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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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

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

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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24
2025
Differences Between Time Deposits and Demand Deposits

Differences Between Time Deposits and Demand Deposits

By | Budgeting & Goals, Financial Independence, money | Comments Off on Differences Between Time Deposits and Demand Deposits

A demand deposit account is a type of bank account that allows you to withdraw money “on demand,” without having to provide advance notice beforehand. Time deposit accounts only allow you to withdraw funds once the account reaches maturity.

Banks and credit unions typically offer both kinds of accounts: demand deposit (checking and savings accounts, for instance) and time deposit (such as certificates of deposit, or CDs). These two types of accounts are designed to meet different financial goals. Understanding the difference between demand deposits vs. time deposits can help you decide where to put your money.

What Are Time Deposits?

Time deposit accounts are savings accounts that require you to keep your money in the account for a set time frame. They can also be called term deposit accounts or term deposits since the bank can specify the term that the money must stay in place.

If you’d like to withdraw money before the term ends, the bank may allow that. However, they will likely charge you a penalty fee. They may also require you to give them a certain amount of advance, either in writing, in-person, or over the phone. Once you open a time deposit account, you typically can’t add any additional funds at a later date.

How a Time Deposit Works

A time deposit works by effectively locking in your money for a set time period or term. During this term, your money can earn interest at a rate specified by the bank.

A certificate of deposit account is the most common type of a time deposit or term deposit account. Banks often offer CDs with varying maturity terms, which can range anywhere from one month to five years or more.

While your money is in the CD, it earns interest. Once the CD matures, you can do one of two things:

•   Roll the principal and interest earned into a new CD with different terms

•   Withdraw the principal and interest earned

If you take money out of the CD before it matures, the bank will likely impose an early withdrawal penalty. This penalty usually involves forfeiting some of the interest earned. The size of the penalty can vary depending on how early you withdraw the money and the length of the CD.

What Are Demand Deposits?

With a demand deposit account, you are allowed to put money into the account or take money out of the account when you want and without giving any advance notice. Demand deposit accounts include checking accounts, savings accounts, and money market accounts.

The money in a demand deposit account is generally considered to be liquid, or ready cash, and you can withdraw any amount (including the entire balance) at any time without paying a penalty. However, some banks may charge a fee if you exceed a certain number of withdrawals from a savings account within one month.

How a Demand Deposit Works

Demand deposit accounts work by allowing you convenient, flexible access to your money. The most common example of a demand deposit account is a checking account. With a checking account, you can deposit money, then access it by:

•   Using a debit card to make purchases online or in stores

•   Withdrawing cash at ATMs or through a teller

•   Scheduling online bill payments

•   Linking it to mobile payment apps

A trade off for this easy access to your money is that demand deposit accounts typically don’t pay high rates of interest, and checking accounts generally don’t pay any interest at all. While you can sometimes find an interest-bearing checking account, checking account interest rates tend to be on the lower side.

There are other types of interest-bearing accounts that fall under the demand deposit umbrella. They include: traditional savings accounts, high-yield savings accounts, money market accounts, and kids’ savings accounts.

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Federal Insurance for Demand and Time Deposits

The Federal Deposit Insurance Corporation (FDIC) provides insurance coverage for member banks, which is passed on to account holders. The FDIC insures both demand and time deposit accounts, including:

•   Checking accounts

•   Savings accounts

•   Money market accounts

•   CD accounts

The standard FDIC coverage limit is $250,000 per depositor, per account ownership category, per insured financial institution. The National Credit Union Administration (NCUA) offers similar coverage for time and demand deposit accounts held at member credit unions.

Recommended: How Do Calculate Interest on a Savings Account?

Demand Deposit Pros

When comparing demand deposit vs. time deposit accounts, it helps to understand the pros and cons of each type of account.

Here are some of main benefits of demand deposit accounts:

•   They give you access to your money without being required to give the bank advance notice.

•   They offer multiple ways to manage and access money, including online and mobile banking, automated clearing house (ACH) transfers, direct deposit, ATM banking, and branch banking.

•   There is the potential to earn interest on balances and, in some cases, rewards on purchases.

Demand Deposit Cons

While demand deposit accounts can make managing money and growing savings convenient, there are some potential downsides to keep in mind. These include:

•   There may be monthly fees or other fees.

•   Since interest rates can vary, you may need to shop around to find the best rate.

•   Banks may limit the number of withdrawals you’re allowed each month.

Time Deposit Pros

Time deposit accounts can be a great place to keep your savings — if you understand how they work. Here are some of the advantages of opening a time deposit account:

•   They offer a guaranteed rate of interest, so there’s very little risk of losing money.

•   They typically offer a higher interest rate than you can get on a demand deposit account.

•   There are generally no fees if you leave the money in the account until maturity.

Time Deposit Cons

Opening a time deposit account could make sense if you want a place to park your money for several months to years and earn a higher rate of interest. But it’s important to keep these cons in mind:

•   You may pay an early withdrawal penalty if you need to take any or all of the money out prior to maturity.

•   There is often a minimum deposit required.

•   Most time deposit accounts do not allow you to make additional deposits once the account is open.

How to Choose Between a Demand and Time Deposit Account

Demand deposit vs. time deposit: which one should you pick? The answer will depend on your financial needs and goals.

You might choose a demand deposit account if you:

•   Want convenient access to your money via a debit or ATM card, online banking, mobile banking, or at a branch

•   Want to be able to earn some interest on your savings while still having easy access to the money

•   Don’t mind the possibility of paying checking or savings account fees

A time deposit account, on the other hand, may be more appropriate if you:

•   Want to earn a higher interest rate than you can get on a standard checking or savings account at a bank

•   Have a sum of money you don’t need to touch for the immediate future

One good solution is to have a mix of demand deposit accounts and time deposits. This might include a checking account (for paying bills and everyday spending), a savings account (to hold your emergency fund), and one or more CD accounts to fund your longer-term goals. Just be sure to pay attention to minimum balance requirements and fees for each account you open.

When choosing between different types of savings accounts and CDs, you’ll also want to consider the interest rate and the annual percentage yield (APY).

The difference between the interest rate vs. APY is that the APY tells you the total amount of interest you earn on the account over one year. While it’s based on the interest rate, the APY also takes into account the compounding interest (when interest accrues on previously accrued interest) to give you the most accurate idea of what you’ll earn in a year.

APY, however, is not to be confused with annual percentage yield, or APR, which refers to what you can owe in interest charges on a loan.

Recommended: What Is a CD Ladder?

The Takeaway

There are two key differences between demand deposit and time deposit accounts: how easily you can access the money in the account and how much interest the account earns.

Demand deposit accounts (which include checking accounts, savings accounts and money market accounts) allow you to withdraw money from the account at any time, whereas time deposit accounts (such as CDs) require you to deposit your money for a specific length of time. While demand deposit accounts offer more flexibility, they typically offer lower interest rates than time deposit accounts.

One option to consider for your day-to-day banking: See what SoFi offers.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

What is the difference between demand deposit and time deposit?

The key difference between demand deposit vs. time deposit is access. With demand deposit accounts, you generally access your money at any time without paying a penalty or giving the bank any advance notice. With time deposit accounts, you generally can’t withdraw money until the account reaches maturity.

Which type of deposits with the banks are called demand deposits?

Demand deposit accounts include checking accounts, savings accounts, and money market accounts. Checking accounts can allow you to use a debit card, pay bills online, and manage money through online and mobile banking. Savings accounts are used to hold money you don’t plan to spend right away and may offer interest. Money market accounts combine features of both checking and savings accounts.

Why are demand deposits considered money?

Demand deposit accounts hold money that you can withdraw whenever you want. You can use this account to get cash, pay bills, make purchases, or complete other financial transactions. The money in these accounts is a liquid (or easily accessible) asset.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/FG Trade

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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


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

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2025
CD Loans, Explained

CD Loans, Explained

By | Budgeting & Goals, Financial Independence, personal_loan | Comments Off on CD Loans, Explained

A certificate of deposit (CD) can be a useful tool for saving money for an upcoming goal. The downside is that you need to wait until the CD matures in order to access your money. If you withdraw some or all of your funds early, you typically get hit with a hefty penalty fee.

If you’re in a pinch and need cash quickly, however, you may be able to get a CD loan. Also known as a CD-secured loan, this is a type of personal loan that uses the value of a CD account as collateral. CD loans are offered by some banks and credit unions. Typically, the lender needs to be the same institution that holds your CD.

Here’s a closer look at how CD loans work and how they stack up against unsecured personal loans.

What Is a CD Loan?

A CD loan is a type of personal loan that is secured by the money you have in a CD. Since the collateral lowers the risk for the lender, these loans can be easier to qualify for and have lower interest rates than unsecured loans. However, if you don’t repay the loan, the bank can take the money out of your CD to cover their losses.

Of course, to get a CD loan, you need to have a CD, which is a type of savings account that pays a fixed interest rate over a set amount of time, or term. You must leave the money untouched for the CD term, which can range from three months to five years. If you withdraw your funds before the end of the CD’s term, you usually have to pay an early withdrawal penalty. CDs generally pay a higher annual percentage yield (APY) than regular savings accounts. And the longer the CD’s term, usually the higher the APY. Similar to other types of savings accounts, CDs come with FDIC protection, up to the applicable limits.

How Do CD-Secured Loans Work?

If you take out a CD loan, the lender will charge interest. So you’ll be earning interest on the CD but paying interest on the CD-secured loan. In some cases, a bank or credit union will set the minimum annual percentage rate (APR) on their CD loans at 2% over the CD rate. So if your CD pays 3%, your CD loan rate would start at 5%. Your actual rate would depend on your credit and the term of the loan, among other factors.

How much you can borrow with a CD-secured loan depends on the lender. Often, you are able to borrow up to 100% of the value of your CD principal. The term of the loan can generally be as long as the term of the CD.

While you can typically access money in a CD if absolutely necessary and pay a penalty, that may no longer be the case if you get a CD loan. Typically, the funds being used as collateral are sealed even in the event of an emergency.

Who Might CD Loans Be Right For?

The idea of paying interest on a loan backed by an interest-bearing CD may seem counterintuitive. However, there can be some logical reasons for taking out a CD-secured loan. One is that you may be able to build your credit by taking out a CD loan and then making a series of on-time payments on the loan. More common ways to do that include getting a secured credit card or becoming an authorized user on another person’s credit card. But if those options aren’t available, and you have a CD, you might use a CD loan for that purpose.

Another reason you might opt for a CD loan is that you need access to your funds for an emergency before it matures. However, you’ll want to first check what your CD’s early withdrawal penalty is. It might be cheaper and easier to simply break open a CD early and pay the penalty. However, if the penalty would be more than what you’d pay in a CD loan’s fees and interest, you might consider a CD loan.

Before taking out a CD loan, it makes sense to weigh the pros and cons.

CD Loan Pros

•   Lower interest rates CD-secured loans often have lower interest rates compared to credit cards and unsecured personal loans, making them an attractive option for borrowers seeking lower borrowing costs.

•   Building credit CD loans offer an opportunity to establish or improve your credit history if you currently have limited or no credit.

•   Retaining CD benefits Despite using the CD as collateral, you can still earn interest on the deposited amount.

•   Fast access to funds If you apply for a CD loan with the bank or credit union that holds your CD, you can often get approved quickly and receive funds within a day or two.

•   Good for those with bad credit Borrowers with poor credit often qualify for CD-secured loans.

CD Loan Cons

While CD loans have their benefits, there are also some drawbacks to keep in mind.

•   Frozen funds The funds in the CD are tied up as collateral, limiting access to the money until the loan is repaid.

•   Potential loss of CD If you default on the loan, the lender can seize the CD, resulting in the loss of the deposited funds.

•   Limited loan amount CD loans are typically limited to a percentage of the CD’s value, which might not meet your full borrowing needs.

•   Fees Your bank may charge fees, such as an origination fee, for issuing you a CD loan.

•   Hard to find CD loans aren’t as common as other types of personal loan, so your bank or credit union may not offer them.

CD Loan vs Personal Loan

While CD-secured loans and unsecured personal loans have some similarities, they also have some significant differences.

With both types of loans, you get a lump sum of money up front and can then use those funds for virtually any type of expense. Both also typically offer fixed interest rates and a set repayment term so payments are easy to predict and budget for.

Unlike a personal loan, however, a CD-secured loan can be hard to find. Also with a CD loan, you need to put your savings on the line to secure the loan. With an unsecured personal loan, you don’t need to provide any funds or personal assets as collateral, making them accessible to borrowers without a CD or other assets.

CD loans also tend to have lower interest rates than unsecured personal loans due to the collateral, while personal loans tend to offer more flexibility in loan amount and repayment terms.

Recommended: Typical Personal Loan Requirements Needed for Approval

The Takeaway

CD loans can be a viable option for someone who has a certificate of deposit and needs access to funds while keeping their deposited amount intact. The lower interest rates and potential credit-building opportunities make CD loans attractive for some borrowers.

However, these loans aren’t widely available and the cost of the loan could potentially exceed the CD’s early withdrawal fee. Also, you could lose the money in your CD if you have difficulty making payments. It’s crucial to weigh the pros and cons, consider your personal financial goals and needs, and compare loan options before deciding on the best borrowing solution.

If you’re interested in exploring personal loans, SoFi could help. SoFi’s unsecured personal loans offer competitive, fixed rates and a variety of terms. Checking your rate won’t affect your credit score, and it takes just one minute.

See if a personal loan from SoFi is right for you.

FAQ

Where can I get a CD loan?

CD loans are typically offered by banks and credit unions. It’s best to start by contacting your current financial institution to inquire about their CD loan options. They can provide you with specific details about their loan terms, interest rates, and application process. Typically, you need to take out a CD loan from the same institution that holds your CD.

What are CD loan interest rates?

CD loan interest rates vary depending on the lender, current market conditions, and your qualifications as a borrower. Rates tend to be lower than those of unsecured personal loans, since the loan is backed by the funds in the CD.

Some banks and credit unions will set the minimum annual percentage rate (APR) on their CD loans at 2% over the CD rate. So if your CD pays 3%, your CD loan rate would start at 5%. Your actual rate would depend on your credit and the term of the loan, among other factors.

Do you get money back from a CD loan?

When you take out a CD loan, you do receive money from the lender. However, it’s important to note that the funds received are borrowed money that you are obligated to repay, typically with interest. The funds from the loan are separate from the funds you have deposited in a certificate of deposit. The CD itself remains intact and continues to earn interest, but it is held as collateral until the loan is repaid. Once the loan is fully repaid, you regain full access to your CD and any interest it has earned during the loan term.

About the author

Rebecca Lake

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.


Photo credit: iStock/PeopleImages

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

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

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