First Paycheck? Here’s 6 Money Moves to Make It Count

If you just started your first job after graduation, you may be dreaming of all the ways you could spend your first paycheck. But before you go on a shopping spree, it’s a good idea to think carefully about how to make the most of this influx of cash.

While it’s fine to splurge a little and reward yourself for your hard work, it’s also wise to put some of your first paycheck towards savings, retirement, and debt repayment (if you have debt). These tips for how to use your first paycheck — and all the others after that — can help set you up for future success.

Key Points

•   Establish a checking and savings account to manage finances and build security.

•   Create a budget using the 50/30/20 rule to track and allocate expenses.

•   Start an emergency fund by setting aside a portion of each paycheck.

•   Make a plan to pay off high-interest debt to save on interest.

•   Begin investing in a retirement account to benefit from compound growth.

6 Smart Money Moves to Make After Your First Paycheck

Developing smart money habits early in your career can pave the way for long-term financial stability and independence. These six steps can put you in the right direction.

1. Set Up a Checking and Savings Account

Opening a checking and savings account is an essential first move in managing your finances. If you already have accounts, take a moment to evaluate whether they still meet your needs. With a checking account, you ideally want to find one with no monthly fees and minimal other fees, plus access to a wide network of free ATMs. When it comes to savings accounts, it’s a good idea to compare annual percentage yields (APYs) to find one that pays well over the average interest rate for savings accounts (0.41% APY as of December 16, 2024).

In addition to the major national banks, also consider online banks and credit unions, which often offer better interest rates and lower fees than traditional brick-and-mortar institutions.

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2. Create a Budget

Before you decide what to buy with your first paycheck, it’s a good idea to rough out a basic budget. This can be as simple as listing your fixed monthly expenses (e.g., rent, transportation, groceries, utilities, and debt payments), adding them up, and subtracting the total from your monthly take-home pay. The number you end up with is what you have for nonessential (aka, “fun”) spending and getting ahead on any debt.

One general budgeting rule of thumb is the 50/30/20 formula. This approach divides your after-tax income into three categories: 50% for necessary expenses (“needs”), 30% for discretionary spending (“wants”), and 20% for savings and debt repayment beyond the minimum (“goals”).

Depending on your income and expenses, you may need to adjust these percentages. That’s okay. The idea is to put some parameters on your spending and make sure part of every paycheck goes towards your goals.

3. Start an Emergency Fund

An essential first step when earning a regular salary is to start an emergency fund. Financial experts generally recommend having at least three to six months’ worth of living expenses tucked away in a savings account for emergencies. You might even want to open a separate high-yield savings account earmarked for emergencies so you don’t inadvertently spend this money on something else.

While saving for a rainy day might seem like a boring way to use your first paycheck, skipping this step could end up being a costly mistake. Without a back-up fund, any bump in the road — like a major car repair, trip to the ER, or loss of income — could force you to run up credit card debt that could take months, even years, to get out from under.

You don’t have to build your emergency fund overnight. Setting aside even $25 to $50 per paycheck builds a foundation. Consider setting up a recurring transfer from checking to savings for a set amount on the same day each month. Once your emergency savings is funded, you put that money towards other savings goals.

Recommended: Emergency Fund Calculator

4. Pay Off Debt

If you have high-interest debt, like credit card balances, it’s a good idea to use some of your paycheck to make extra payments beyond the minimum due. This can help you save a significant amount of money on interest over time. Moving forward, you might also use extra income — like a tax refund or work bonus — to make lump-sum payments towards high-interest debt.

If you have student loans, now is a good time to start paying them back. You generally have a six-month grace period after graduation before you’re required to start repayment. But the sooner you get started, the faster you can pay them off, and the less interest you’ll end up owing.

5. Start Investing

Retirement may feel like it’s eons away, but a great use of your fist paycheck is putting a small amount into your 401(lk). Even setting aside 5% or 10% percent of that first paycheck into a retirement savings account could reduce the amount of years you need to work and improve your quality of life after retirement. This is thanks to the magic of compound returns — when the returns you earn on your investments also earn returns. The earlier you start investing, the more you benefit from compound growth.

Many companies will also match your contributions up to a set amount. If yours offers this benefit, try to contribute up to the full match, since this is essentially free money. If your employer doesn’t offer 401(k) contributions, you can also look into opening an Individual Retirement Account (IRA) on your own.

6. Treat Yourself Responsibly

Making a plan for what to do with your first paycheck doesn’t mean you can’t have any fun with your first substantial payday. In fact, if you’re using the 50/30/20 (or a similar) budgeting formula, you’ll know exactly how much of your first paycheck you can fritter away without jeopardizing your financial health. And you’ll be able to splurge without feeling guilty, since it’s factored into the plan. So enjoy yourself — you earned it!

The Takeaway

Your first paycheck is a major milestone and a stepping stone toward financial independence. Smart moves — like creating a budget, starting an emergency fund, investing, and paying off debt — can help you make the most of your first paycheck. And don’t forget to leave some room in your paycheck to treat yourself too. Making wise money choices now will help you achieve stability and wealth in the future.

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

How much of my first paycheck should I save?

A general guideline is to save at least 20% of your paycheck. This includes emergency savings, saving for short-term goals, and retirement contributions. If you have debt, however, you’ll want to prioritize repaying high-interest obligations, while still setting aside some savings.

Whatever percentage of your paycheck you decide to save, it’s a good idea to automate savings to ensure consistency and make it easier to build financial security over time.

How do I cash my first paycheck?

Most banks will cash a paycheck as long as you have an account with them. If you don’t have a bank account yet, you may be able to cash the check at the issuing bank, which is printed on the check. You’ll likely need a show photo ID, and may have to pay a fee.

Ideally, you want to open a checking account and set up direct deposit with your employer, so you won’t have to bother cashing your paycheck. Depositing your check, rather than cashing it immediately, also allows for better money management and financial security.

How do I set up direct deposit?

Setting up direct deposit is usually handled by your employer’s HR or payroll department. You may be able to complete the process through an online portal, or you might have to fill out a direct deposit authorization form. Either way, you’ll need to provide your bank’s name, address, and routing number; your account number: the type of account: and (in some cases) a voided check. Keep in mind that it can take a few weeks for direct deposit to go into effect.


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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/.

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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Student Guide to Financial Literacy and Why It’s Important

Teaching financial literacy to kids from an early age can yield lifelong benefits. Understanding how money works, how to manage it effectively, and how to make informed financial decisions can significantly impact a young person’s future.

While a growing number of high schools require students to take a course in economics or personal finance to graduate, many young people leave high school, and even college, without a solid understanding of personal finance. This can leave them vulnerable to debt, poor financial decisions, and missed opportunities for building wealth.

Below, we’ll explore the importance of financial literacy for students, key topics they should understand, and resources available to help both students and parents build financial knowledge.

Key Points

•   Financial literacy empowers students to make informed money management decisions.

•   Budgeting helps balance income and expenses, ensuring financial stability.

•   Building credit through responsible use of credit cards and understanding credit scores is essential.

•   Managing debt effectively and differentiating between good and bad debt can help prevent financial stress.

•   Basic investing concepts and understanding taxes prepare students for long-term financial success.

Why Financial Literacy Is Important for Students

Financial literacy refers to the knowledge and skills needed to make informed decisions about managing money. For students, financial literacy is particularly important because they are at a pivotal stage in life where financial habits and decisions can have long-term effects. According to a recent survey by the National Financial Educators Council, lack of money knowledge cost the average American adult $1,015 in 2024.

Many students also face financial responsibilities early in life, such as managing a budget for college expenses, opening their first bank account, applying for student loans, or using credit cards. Without financial literacy, they may struggle with debt, overspending, poor credit scores, and missed opportunities to build wealth.

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.

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Key Topics Students Should Understand

One challenge of navigating financial education for students is deciding what’s most important for them to learn. Breaking personal finance down into smaller subtopics can make teaching financial literacy easier.

Basic Finance Concepts

At the core of financial literacy are fundamental finance concepts that students will want to understand early on. These include:

•   Income: Understanding different sources of income (e.g., wages, investments, side hustles).

•  Expenses: Differentiating between necessary expenses (rent, utilities, groceries, transportation) and nonessential, or discretionary, expenses (dining out, entertainment, clothing not needed for work).

•  Savings: Learning the importance of saving for emergencies, future goals, and retirement.

Teaching students these basics helps them see the big picture of how money flows in and out of their lives.

Budgeting

A budget is a plan for spending money each month. On one side, you have your income and any other earnings, and on the other, you have the money that you spend and save/invest for the future. These two sides should balance.

Key steps in budgeting for beginners include:

•   Listing all sources of income (e.g., job, allowance, scholarships)

•   Listing all expenses (e.g., rent, groceries, transportation)

•   Separating needs from wants

•   Adjusting spending based on available income and savings goals

•   Using budgeting apps to monitor and adjust spending habits

Teaching students how to budget prepares them to manage their money effectively and avoid financial stress.

Bank Accounts and Terms

Banking is another important concept to tackle when discussing financial education for students. Understanding how bank accounts work is essential for managing money. It’s key for students to understand these concepts and terms:

•   Checking account: A checking account is designed for everyday money management. It gives you a place to deposit your paychecks and any other earnings, and comes with checks and a debit card, making it easy to access your money.

•   Savings account: A savings account is used for storing money you don’t need right away and earning interest. Some banks limit withdrawals from savings accounts to six per month.

•   Interest rate: Interest is the return you earn for putting your savings in a bank, typically expressed as a percentage of the principal (original) amount. Interest is also the cost of borrowing money.

•   Overdraft fee: This is a charge for withdrawing more money than is available in an account.

Encouraging students to open and manage their own bank accounts helps them learn accountability and develop positive financial habits.

Recommended: How to Open a Bank Account

Credit Scores

A credit score is a numerical representation of how likely you are to repay a loan on time, based on your credit history. It’s important for students to understand:

•   How credit scores are calculated: Credit scoring models look at your payment history, how much of your available credit you are using, recent credit applications, and length of your credit history, among other factors.

•   Importance of a good credit score: A higher score makes it easier to get approved for credit cards, housing, and loans. It also gives you access to better rates and terms on credit cards and loans.

•   How to build credit: You can start building credit by becoming an authorized user on a parent’s credit card, getting your own credit card and using it responsibly, and avoiding too many new credit inquiries.

Learning about credit scores early helps students avoid damaging their financial future.

Debt Management

Debt is often unavoidable, but managing it effectively is crucial. Important concepts include:

•   Good debt vs. bad debt: Education loans and mortgages are often considered “good” debts because they can increase earning potential and help build wealth, while credit card debt with high interest is typically considered “bad” debt.

•   Minimum payments: Paying only the minimum on credit cards increases overall debt due to interest charges.

•   Debt snowball vs. avalanche method: These are strategies to pay off debt — snowball focuses on small debts first, avalanche tackles high-interest debts first.

Helping students use debt wisely, avoid racking up “bad” debt, and developing smart debt repayment plans can prevent financial stress and improve their financial future.

Basic Investing Concepts

Investing is a powerful way to build wealth over time. Students will want to understand:

•   Types of investments: You can invest in stocks (ownership shares of a company), bonds (a loan to a government, agency, or company), mutual funds (where you pool your money with other investors to buy stocks, bonds, and other investments), and real estate.

•   Compound returns: This refers to the returns you earn both on your initial investment and on the returns you’ve already accumulated. Compounding allows your money to grow at an increasingly faster rate.

•   Risk and return: Investing comes with risk. Generally the higher the potential return, the higher the risk of loss.

•   Diversification: Spreading investments across different types helps reduce overall risk.

Teaching students about investing early helps them take advantage of time and compound growth.

Taxes

Understanding how taxes work helps students avoid surprises and plan ahead. Key concepts include:

•   Income tax: This is the percentage of your income you pay to the government.

•   Deductions and credits: Deductions reduce your total amount of taxable income, while credits reduce the total tax due (which is more valuable than a deduction).

•   Filing requirements: Students need to learn how to file a tax return and what forms to use.

Understanding taxes helps students avoid penalties and maximize their refunds.

Mortgages

While mortgages may seem far off for students, understanding them early helps prepare for future homeownership. It’s important for students to know about:

•   Down payments: This is the upfront payment required when buying a home and is typically a percentage of a home’s purchase price. The more you put down on a home, the less you need to borrow — and the more money you save on interest over the life of the loan.

•   Interest rates: When you have a mortgage, you pay interest on the amount of the loan that you haven’t yet repaid to your lender. Your interest rate affects the overall cost of a mortgage.

•   Fixed vs. adjustable rates: Fixed rates remain constant over the life of the loan; adjustable rates can fluctuate based on market conditions.

Basic knowledge of mortgages helps students make better decisions about housing in the future.

Recommended: Savings Goal Calculator

Loans and Credit Cards

Student loans, car loans, mortgages, credit cards — they’re all ways that students can borrow money but they don’t all work the same way. So it’s a good idea for students to understand concepts like:

•   Revolving vs. installment debt Revolving debt, like credit cards, allows you to borrow and repay repeatedly within a credit limit. Installment debt, like a car loan or mortgage, is repaid in fixed payments over a set period (or term).

•   Credit limit: A credit limit is the maximum amount of money you can borrow or spend on a credit card or line of credit at any given time, set by the lender.

•   Payment terms: Payment terms include the minimum amount due each month on a credit card or loan and the date it needs to be paid by. Paying on time avoids late fees and damage to credit.

Teaching responsible borrowing habits prevents students from falling into debt traps.

How Parents Can Get Involved

Teaching financial literacy isn’t limited to school; students can also learn about money at home with their parents’ help.

Some of the best ways to teach students about finance are through hands-on activities. For example, parents could:

•   Help their child open a student bank account.

•   Pay kids an allowance and walk them through how to create a monthly budget.

•   Encourage students to set financial goals and save money toward them.

•   Offer to match savings by giving a child a percentage of what they save to encourage consistent saving.

•   Expose students to situations that require financial decision-making, like planning a family vacation or completing a weekly grocery shopping trip.

Parents can also teach by example if they practice healthy money habits. That includes things like making or reviewing the family budget, paying bills on time, resisting impulse purchases when shopping, and saving money regularly.

Tools to Help Teach Financial Literacy

Online tools, including games or interactive websites, can help with teaching financial literacy for kids. Using these tools helps students learn through real-life examples and interactive experiences. Here are a few resources to check out.

•   Consumer Financial Protection Bureau (CFPB): The CFPB offers plenty of financial education resources for kids, parents and teachers, including links to interactive games, articles, and detailed lesson plans covering core finance topics.

•   Banzai: This free financial education platform teaches real-world finance lessons and practical skills and can be used by teachers as well as students of all ages.

•   Hands On Banking: This site offers access to free financial literacy content in both English and Spanish, with courses for elementary, middle, and high school students. There are also separate sections for educators, as well as parents.

•   CashCourse: A crash course in financial literacy for students, access is free for students, educators, and anyone else who’s interested in expanding their money knowledge.

•   FinAid: This is a hub for information about paying for college, with information on student loans, grants, scholarships, and work-study programs, along with calculators that can help students estimate the cost of earning a degree.

•   FINRA Investor Education Foundation: This site is packed with resources to help students learn about everything from building emergency savings and buying a car to investing in the market.

•   Bank and credit union programs: Many banks and other financial institutions offer free, comprehensive, and often beginner-friendly financial literacy programs.

The Takeaway

Financial literacy is a critical skill that empowers young people to make informed decisions about their money. When students understand financial basics (like budgeting, saving, investing, debt management, and taxes), they’re generally better prepared to navigate adulthood, avoid common financial mistakes, and create a stable financial future.
If students aren’t learning financial literacy in school, parents can step in to help teach essential lessons about money at home. Parents can also lead by example. Showing your kids how you achieve your goals through budgeting, saving, and investing can give them the knowledge and confidence to do the same.

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.


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

Third Party Trademarks: Certified Financial Planner Board of Standards 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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Guide to Shared Branch Credit Unions

Guide to Shared Branch Credit Unions

Shared branch credit unions allow members to access banking products and services at other credit union branches that belong to a wider network. Joining a shared branch credit union can make managing your financial accounts more convenient if you live, work, or study in an area where your home credit union doesn’t have branches.

The types of transactions that can be carried out via shared branching are typically the same as those allowed by the home branch. There are, however, a few things you may not be able to do, so here’s a closer look.

What Is Shared Branching?

Shared branching is the practice of allowing members of one credit union to carry out financial activities at branches of other credit unions that are all located within the same branch network.

Here’s one example: The Co-Op Shared Branch managed by Co-Op Solutions, for example, offers access to more than 5,600 shared branches in the U.S. and over 30,000 surcharge-free ATMs. This can be very convenient in terms of being able to bank at a variety of locations.

As long as your home credit union, meaning the credit union where you maintain your accounts, is part of a shared branching network, then you can access your accounts at other credit unions within the network. You don’t need to be a member of multiple credit unions to benefit from this sharing system.

Shared branching is a significant departure from traditional banking. If you have checking and savings accounts at Chase Bank, for example, you likely wouldn’t be able to walk into a Bank of America and conduct business.

💡 Quick Tip: Make money easy. Enjoy the convenience of managing bills, deposits, and transfers from one online bank account with SoFi.

How Can I Use a Shared Branch?

To use a shared branch credit union, you first have to determine whether your home credit union belongs to a sharing network. Co-Op Solutions, for instance, simplifies this process. It offers a shared branch and ATM locator tool that you can use to find shared credit union branches near you.

Once you find a shared branch, you can visit in-person to manage your accounts. You’ll need to bring a form of photo identification to verify your identity. You may also need to provide your phone number and the last four digits of your Social Security number. And of course, you’ll need the name and account number for your home credit union.

Generally, you can use a shared branch credit union much the same as your home credit union. That means you can use the ATM to make withdrawals or check account balances. If you need to make a deposit or complete other transactions, you can do those through a teller either inside the branch or at the drive-thru.

What Can Members Do at a Shared Branch?

For the most part, shared branch credit unions allow you to carry out the same range of transactions as you would at your home branch. If you’re not sure what a particular shared branch credit union allows, you may be able to find a list of services on the credit union’s website.

Here are some of the most important transactions you can complete via shared branching.

Deposits and Withdrawals

Credit union members can deposit funds to their accounts and make withdrawals through a shared branch credit union. That’s convenient if you need to deposit cash or withdraw money from your accounts. You may also choose to make deposits in-person if you’re concerned about mobile deposit processing times. (And if you’re wondering about whether mobile deposits are safe, the answer is typically yes.)

Transfer Money Between Accounts

Shared branching also allows members to move money between accounts. For example, you may want to shift some of your savings to checking or to a money market account at your credit union.

Can you move money from one bank to another via shared branching? Yes, if you have accounts at more than one credit union. If you need to transfer money from your credit union to a financial institution that’s not part of a shared branch network, then you’ll need to link the external account to schedule an ACH transfer or wire transfer.

If you need to send funds overseas, keep in mind that not all credit unions participate in the SWIFT banking system, which is used to facilitate international wire transfers.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

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Make Loan Payments

Credit union members can make payments to auto loans, personal loans, mortgages, and other loans through shared branches. You’ll need the loan number to make your payment. Being able to pay through a shared branch credit union could help you to avoid missed due dates.

What Can Members Not Do at a Shared Branch?

While shared branch credit unions allow for flexibility, there are some things members cannot do. If you belong to a shared branch credit union network, here are some of the things that are typically prohibited.

Open a Bank Account

If you’re visiting a co-op shared branch credit union, you can’t open a new account with your home credit union. Instead, you’d need to go to one of your home credit union’s branches or visit the credit union’s website to open the accounts. Of course, you could ask how to open a business bank account or personal bank account options at the shared branch if you’re interested in being a member of that credit union.

Access Deposited Funds Immediately

Just like banks, credit unions process transactions according to a set schedule. When you deposit money at a shared branch credit union, you can’t expect to be able to withdraw it right away. The deposit hold time or processing time can vary by the credit union. You may be able to expedite processing if the credit union allows it, but you may pay a fee for that.

Withdraw an Unlimited Amount of Money

Shared branch credit unions can impose limits on the amount of money members can withdraw each day. For example, members of the Co-Op Solutions Shared Branch Network are typically limited to no more than $620 per day in withdrawals from their ATM network. That limit may be higher or lower than the limit imposed by your home credit union.

Open an Individual Retirement Account

Individual Retirement Accounts (IRAs) offer a tax-advantaged way to save money for retirement. Credit unions can offer IRAs to savers, though you typically cannot open one through a shared branch. Instead, you’ll need to go to your home credit union to open an IRA either in-person or online.

Benefits of Shared Branching

If you prefer credit unions to traditional banks, then belonging to a shared branch credit union can offer some advantages. Remember, you don’t have to do anything special to enjoy the benefits of shared branching, other than belonging to a credit union that’s part of a sharing network. You don’t have to open multiple bank accounts to have privileges at more locations.

Convenience

Shared branch credit unions make it convenient to access your money wherever you are, as long as there’s a shared branch location nearby. So whether you’re traveling for business, taking a family vacation, or planning a move, you don’t have to worry about leaving your credit union accounts behind.

Flexibility

Doing business at a shared branch credit union allows for flexibility since you can do most of the things you’d be able to do at your home branch. Again, the main things you wouldn’t be able to do include opening new checking or savings accounts, opening an IRA, or applying for a loan. You’d only be able to do those things if you also choose to become a member of the shared branch credit union.

Avoid Fees

Banks make revenue by charging fees for the services they provide. Being part of a shared credit union may help you avoid some fees. If you use a shared-branch credit-union ATM network while you’re traveling, you may be able to avoid out-of-network ATM surcharges. While shared branch credit unions may charge fees for certain services, others may be provided free of charge.

Drawbacks of Shared Branching

While shared branching does have some advantages, there are some potential downsides to consider. Here are some of the main cons of using shared branch credit unions.

Availability

Credit unions are not obligated to join a shared branch network. If your home credit union isn’t part of a sharing network, then you’ll be limited to using only that credit union’s branches. That could make managing your accounts more challenging if you regularly travel for business, school, or pleasure.

(However, many people today are used to banking without brick-and-mortar locations, which is a key difference between online banking versus traditional banking. This availability issue may not be a big concern to some who do their money management online or via an app.)

Withdrawal Limits

As mentioned, credit unions that are part of the Co-Op Solutions network can limit your withdrawals. If you need to withdraw a larger amount in cash than is permitted, you’d need to find a branch of your credit union to do so, assuming your credit union has a higher daily cash withdrawal limit.

Use Limitations

Shared branch credit unions can be used to do quite a few things, but they’re not all-encompassing. There are some transactions that you’ll only be able to do at your credit union’s branch or via the credit union’s website or mobile app.

The Takeaway

Deciding where to keep your money matters. Shared branch credit unions can make banking easier. With shared branches, you don’t have to be limited to a certain geographic area when managing bank accounts in person or via ATM. You can avoid fees by being part of a large network of connected credit unions. While there are some drawbacks, the benefits of convenience and cheaper banking costs can be very appealing to some consumers.

Of course, there’s a lot to be said for online banking and its associated benefits.

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

Should I join a credit union or a bank branch?

It depends on your needs. Joining a credit union could make sense if you’re looking for lower interest rates on loans and fewer fees, provided you meet the credit union’s requirements to join. If you do choose to join a credit union for those benefits, you can still open an account at a traditional or online bank and enjoy the benefits those offer.

Is it good to be part of a credit union?

Credit union membership can offer certain perks that you may not always get at a bank. For example, credit unions may charge lower interest rates for loans while offering higher interest rates on deposit accounts. You may also be able to get access to discount programs and other special incentives for being a member.

Can I withdraw money from any bank branch?

You can withdraw money from any branch of your bank, either by seeing a teller or using the ATM to access your accounts. However, you wouldn’t be able to walk into a branch of Bank A to withdraw cash from accounts held at Bank B.


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/Marco VDM

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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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.


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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Guide to Sinking Funds

Understanding Sinking Funds

It may sound like a negative thing, but a sinking fund is money that’s saved toward a specific goal. Governments and businesses can use sinking funds to hold reserve cash to fund future expenses, but this kind of account also has a place in personal finance as you build wealth and achieve goals.

What sinking funds are is a way to earmark and stash money so you can, say, buy a new car or take an amazing vacation. Understanding how sinking funds work can help you decide if you need to include them in your budget.

What Is a Sinking Fund?

A sinking fund is money that’s earmarked to pay planned expenses that fall outside of your regular budget. In accounting, a sinking fund is used to save money to pay debt or replace an asset that is declining in value. The name, which can admittedly sound negative, may be derived from the idea of sinking, or paying off, a debt.

As mentioned, individuals, businesses, and even governments can use sinking funds to hold money in reserve for future expenses. For example, the U.S. Treasury Department maintains a sinking fund for unused appropriations.

For an individual, the meaning shifts somewhat. A sinking fund can help you be financially prepared to pay certain expenses that are on the horizon. In this way, it can help you avoid having to turn to high-interest credit cards or loans to cover expenses that don’t fit into your monthly budget. Being able to avoid debt is one of the main reasons why saving is important.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Examples of a Sinking Fund

A sinking fund can be used to save money for a variety of expenses. Some of the most common sinking funds categories include:

•   Vehicle maintenance and repairs

•   Pet care

•   Home maintenance and repairs

•   Birthdays, holidays, and other special occasions

•   Wedding expenses

•   Baby expenses

Those are just a few of the things you might need a sinking fund for. The number of sinking funds you choose to establish can depend on your financial goals. You might create one for, say, a down payment on a home or a trip to Bali. It’s up to you.

You can set up separate accounts for each goal and, if you like, automate savings into each. You might add $25 per pay period to one, $100 to another. By setting up recurring transfers to occur right after your paycheck hits your checking account, you can help your savings grow with minimal effort.

Recommended: Should I Pay off Debt Before Buying a House?

Benefits of a Sinking Fund

Setting up sinking funds can offer some advantages if you have planned or recurring expenses.

•   You can use them to create a structured plan for saving toward various expenses or financial goals.

•   Depending on where you keep your sinking funds, you may be able to earn a decent rate of interest on your deposits.

•   Sinking funds ensure that when a planned expense comes due, you have the money to pay it. You can avoid dipping into your emergency fund or using a credit card.

Drawbacks of a Sinking Fund

Sinking funds can help you to be consistent with saving, but there are some potential drawbacks.

•   You have to be organized and disciplined when setting up a fund or multiple funds.

•   If you’re also saving or investing in other accounts, you may have trouble keeping track of what is sinking fund money and what isn’t.

•   Saving in multiple sinking funds could leave you spread thin financially if you’re not careful about budgeting.

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How to Create a Sinking Fund

Getting started with sinking funds isn’t that difficult. Here are a few simple tips for using sinking funds to save toward planned expenses.

List Your Sinking Fund Categories

The first step in creating a sinking fund is deciding what categories to include. A good way to choose sinking fund categories is to review your spending for the last six months to a year. Look for expenses that may recur periodically, like biannual or annual insurance premiums or annual home maintenance.

From there, consider what savings goals you might be working toward that are one-time expenses. That may include a wedding, a down payment on a home, a vacation, new furniture, or something else you only expect to pay for once. You can then use your recurring expenses and planned expenses to create your sinking fund categories.

Determine Your Savings Target

Next, decide how much you need to save toward each expense or goal on your sinking fund list. Assign an overall dollar amount first, then determine how much you need to save monthly, based on when you plan to spend the money.

Say you want to save $1,000 for a trip you’d like to take in a year. You’d divide the total by 12, and your savings goal would be $83.33 per month.

Decide Where to Keep Sinking Funds

Once you know what you need to save each month, you can choose where to keep your sinking funds. Again, this may be a single savings account or money market account, or a savings account with multiple subaccounts.

Certificate of deposit (CD) accounts are usually not the best place to keep sinking funds. They require you to leave money in them untouched for a set maturity term to avoid a penalty. However, you may be able to find an add-on CD account that is a work-around to this. These accounts may allow you to increase the funds on deposit; check with a financial institution that offers this product for more details.

Set Up Automatic Transfers

If you’ve opened sinking fund accounts, you can take the final step and link them to your checking account. You can then schedule recurring automatic transfers from checking to your sinking fund account each month to grow your savings automatically.

You might want to set up your automatic deductions for payday. It can be helpful to have the money whisked out of your checking account and into savings before you see it and think about spending it.

Sinking Funds vs Emergency Funds

You may be tempted to dip into your emergency fund for some expenses, like, say, buying a new mobile phone. However, a sinking fund may be a better option. While a sinking fund and an emergency fund are both designed for saving, they serve very different purposes.

With a sinking fund, you’re setting aside money regularly that you plan to spend at some point. (In the example of a new phone, maybe your current one is starting to have some glitchiness, and you know a new model will be released in six months with lots of bells and whistles.) Some sinking fund expenses may be one-time; others may be recurring.
An emergency fund, on the other hand, is designed to hold emergency cash in case you have an unexpected expense that you need to cover. Emergency funds are there for those “uh-oh” moments, when your hot water heater conks out or you get hit with a major dental bill.

Starting an emergency fund while also having sinking funds can be a good idea. When you have both, you have money set aside to pay foreseen and unforeseen expenses. And just like sinking funds, one of the benefits of having an emergency fund is that you’re less reliant on high-interest credit cards to pay for things.

Sinking Funds vs Savings Accounts

Sinking funds and savings accounts can refer to the same thing. For example, you might hold your sinking funds in a high-yield savings account at an online bank. But it’s also possible that you have other savings accounts that are not specifically used for sinking funds. Sinking funds usually have a specific goal, which can help you get motivated to save money.

Saving funds can be more general. If you have kids, you might set up savings accounts for them to teach them the value of money. Or you might have a savings account that you treat as a slush fund, where you keep money that you haven’t earmarked toward any specific goal.

If you have both sinking funds and savings accounts, it’s important to track what money goes where. That way, you can ensure that you’re saving enough in your sinking funds and not shortchanging any of your planned expenses.

Recommended: Smart Short-Term Financial Goals to Set for Yourself

Where Can You Keep a Sinking Fund?

When deciding where to keep a sinking fund, accessibility matters. You need to be able to add money to your sinking fund and withdraw it when needed. For that reason, you might open an online bank account to hold your sinking funds.
With an online savings account, you can earn interest on deposits and link your account to checking for easy transfers.

Some banks allow you to open a main savings account with multiple subaccounts. You might choose this option if you’d like to be able to add money to individual sinking funds for specific expenses. Subaccounts can allow you to see all of your sinking fund money in one place while keeping goals separate.

A money market account is another candidate for holding sinking funds. These accounts can earn interest like a savings account, but they may offer check-writing abilities or debit card access, which you typically don’t get with a savings account.

Just be sure to check if your bank limits the number of withdrawals you’re allowed to make from a money market account. For some people, this factor (if it exists) can be a deal breaker.

The Takeaway

A sinking fund can help you stay on track when saving for planned expenses. You can use sinking funds to save for a wide range of expenses, without having to dip into other savings, your emergency fund, or breaking out your plastic. It can be a helpful way to organize your finances and meet your money and lifestyle goals.

Where to keep money in a sinking fund? Someplace that bears interest but is easily accessible can work well.

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 a sinking fund in simple terms?

A sinking fund is a type of account that has a specific goal (such as a down payment on a house or debt repayment). Funds are typically added to it regularly.

How much should you have in a sinking fund?

If your sinking fund is an emergency fund, you should aim to have at least enough money to cover three to six months’ worth of standard living expenses. Otherwise, it’s up to you to set the purpose of a sinking fund (a Peloton bike or a trip to Yellowstone?) and how much you want to save.

What is considered a healthy sinking fund?

A healthy sinking fund has enough money to cover any planned expenses you might have on the horizon. The size of your sinking fund will depend on which expenses you’re planning for, how often you’re saving for those expenses, and how much you’re saving toward them each month.


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/whitebalance.oatt

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.
*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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Guide to Achieving a Better Life Experience (ABLE) Accounts

Guide to Achieving a Better Life Experience (ABLE) Accounts

An ABLE account — short for Achieving a Better Life Experience — is a tax-advantaged savings vehicle that’s designed for eligible people with disabilities. Designated beneficiaries can use an ABLE savings account to set aside money to pay for qualified disability-related expenses.

An ABLE savings account can offer substantial tax benefits for qualified individuals, as contributions grow tax deferred and qualified withdrawals are also tax free. Also referred to as a 529 A account (owing to its similarity to a 529 college savings plan), the ABLE account is designed to make saving and investing more advantageous for people with disabilities and their families.

What Is an ABLE Account?

An ABLE account is a tax-advantaged savings account for people with disabilities and their families. ABLE savings accounts allow people to pay for qualified disability expenses (QDEs) without impacting their ability to qualify for Medicaid or other government assistance programs.

The Achieving a Better Life Experience Act became law in December 2014. The intention behind the ABLE Act and the creation of ABLE accounts was to ease financial stress associated with paying for many of the QDEs associated with different disabilities. Qualified expenses include: housing, education, assistive technologies, specially equipped vehicles, and even food.

Under the ABLE Act, states have the authority to establish an ABLE disability account program. As of June 2022, all 50 states offer at least one ABLE savings account program, according to the ABLE National Resource Center. However, plans are currently inactive in Idaho, North Dakota, South Dakota, and Wisconsin.

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How Do ABLE Accounts Work?

An ABLE account is a type of tax-deferred savings account similar to a 529 college savings plan. These accounts work by allowing designated beneficiaries to contribute money, up to prescribed limits.

The money can come from various sources, including individual or corporate contributions, or a trust. The money in an ABLE savings account does not affect your eligibility for other government benefits.

Also like a 529 plan, the money grows on a tax-deferred basis and can be withdrawn tax free when it’s used to pay for qualified disability expenses. Broadly speaking, QDEs are any expenses a person with disability pays in order to maintain their health, independence, and quality of life.

However, withdrawals from an ABLE savings account for non-qualified expenses can result in those distributions being subject to tax. Using money in an ABLE disability account for non-qualified expenses could also affect eligibility for government assistance.

Benefits of an ABLE Account

Generally speaking, ABLE savings accounts are designed to make paying for certain expenses easier for people with disabilities. Here are some of the main advantages of opening an ABLE savings account.

Tax-Deferred Growth and Tax-Free Withdrawals

One of the main draws of ABLE accounts is their tax-advantaged status. The money that goes into an ABLE account can be invested and allowed to grow on a tax-deferred basis. As long as distributions are used to pay for QDEs, withdrawals are always 100% tax-free.

ABLE accounts have an edge over savings accounts, since designated beneficiaries can invest their money in the market. That means they have an opportunity to grow their savings through the power of compound interest.

Flexibility

The ABLE account allows for flexibility, since the money can be used to pay for a wide range of disability-related costs. With a traditional 529 plan, savers are limited to using funds to pay for education-related expenses. The ABLE savings account allows designated beneficiaries (i.e. the disabled individual or family member) to use the money for the categories noted above — housing, transportation, technology, food, etc. — as well as employment training, health and wellness costs, legal and administrative fees, and more.

Friends, family members, and others can contribute to ABLE accounts on behalf of the designated beneficiary, up to the annual limit. For 2024, the annual contribution limit, including rollovers from 529 plans, is $18,000.

And beneficiaries don’t have to worry about those contributions affecting their ability to qualify for Medicaid, Supplemental Security Income (SSI), or other forms of government aid, assuming they’re within certain limits. To learn more about who can make qualified contributions, check the ABLE website, or consult the ABLE program in your state.

One further note: In addition, a U.S.-resident ABLE account owner who doesn’t participate in an employer-sponsored retirement plan can contribute up to an additional $14,580 from their earnings into their ABLE account. The amount that can be added to the account is higher for residents of Alaska at $18,210 and Hawaii at $16,770. (More details on this below.)

Financial Autonomy

ABLE accounts afford designated beneficiaries with a measure of financial independence, since they can set up an ABLE account themselves and make contributions on their own behalf. Individuals can also manage the account, and decide how to invest their savings and when to take qualified distributions for eligible expenses.

An ABLE account can give a person with disabilities more control than something like a special needs trust, a type of trust fund. In a special needs trust, the trust grantor sets aside assets for a disabled beneficiary but that beneficiary doesn’t have a say in how the money can be used.

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Drawbacks of an ABLE Account

While ABLE accounts have some positives, they’re not necessarily right for everyone who has a disability. Here are some of the potential drawbacks to consider when deciding whether to open an ABLE account.

Non-Deductible Contributions

Contributions to an ABLE savings account do not offer a tax break in the form of a deduction. (This is also true of some state 529 plans.) So even if you fully fund an ABLE account up to the annual limit each year, you can’t use those contributions as tax deductions.

Age Restrictions

An ABLE account can only be established for someone who has a blindness or disability that began before age 26. So someone who becomes disabled at age 27 or later would not be able to open an ABLE disability account.

The age requirement puts this type of special needs savings account out of reach for some individuals, though they could still be named the beneficiary of a special needs trust.

Worth knowing: There’s legislation afoot to raise the age of eligibility to “before 46” versus “before 26” in 2026.

Means Testing

Money held in an ABLE account is subject to means testing for the purposes of qualifying for Supplemental Security Income and Medicaid. The first $100,000 in ABLE account assets is disregarded for SSI but going over that limit can result in a suspension of your benefit payments.

The $100,000 account balance threshold doesn’t affect Medicaid eligibility. But if a designated beneficiary passes away with money remaining in their ABLE account, the state can lay claim to those assets in order to recoup any Medicaid benefits that were received.

Opening an ABLE Account

People with disabilities can open an ABLE account in any state, as long as that state’s plan is open for enrollment. The ABLE National Resource Center maintains a map with details for each state’s program, including whether out-of-state residents are accepted.

Once you find an eligible program, you can open an ABLE account online. There’s some basic information you’ll need to provide, including:

•   Your name

•   Date of birth

•   Social Security number

•   Bank account number

Parents can open an ABLE account on behalf of a minor child with disabilities. You also have to meet the definition of a designated beneficiary. In New York, for example, you must be able to show that one of the following is true:

•   You’ve been classified as blind as defined in the Social Security Act

•   You’re entitled to SSI or Social Security Disability Insurance (SSDI) due to a disability

•   You have a disability that’s included on the Social Security Administration’s List of Compassionate Allowances Conditions

•   You have a written diagnosis from a licensed physician documenting a physical or mental impairment which severely limits function, and is expected to last at least one year, or can cause death

Similar to opening a bank account, there may also be a low minimum deposit requirement to open an ABLE account.

Requirements of an ABLE Account

There are certain requirements that must be met in order to open an ABLE account. Generally, you’re eligible for one of these accounts if you:

•   Become eligible for Supplemental Security Income based on disability or blindness that began before age 26; or

•   Are entitled to disability insurance benefits, childhood disability benefits, or disabled widow’s or widower’s benefits based on a disability or blindness that began before age 26; or

•   Certify that you have a medical impairment resulting in blindness or disability that began before age 26.

Again, age and disability status are the most important requirements for ABLE savings accounts. You can open an ABLE account in your home state or in another state, if that state’s program allows non-residents to enroll. It’s important to note, however, that you can only have one ABLE account in your name.

How Much Can You Contribute to an ABLE Account?

The annual contribution limit is pegged to the gift tax exclusion limit each year, which is $18,000 for 2024. Eligible designated beneficiaries can, however, contribute additional money if they’re employed and have earned income for the year.

The IRS limits those contributions to an amount up to the lesser of:

•   The designated beneficiary’s compensation for the year, OR

•   The poverty line amount for a one-person household as established by the Community Services Block Grant Act

For 2024, the allowable amount for persons with disabilities in the continental United States is up to $14,580. The limit for residents of Alaska $18,210 and Hawaii at $16,770.

Funds from a 529 college savings account can be rolled into an ABLE account. Any rollovers count toward the annual contribution limit. So if $6,000 have been contributed to the plan for the year already, in theory you could rollover up to $12,000 into an ABLE account from a 529 savings account for 2024.

How Can You Use ABLE Money?

As discussed earlier, money in an ABLE savings account can be used to pay for qualified disability expenses. That means expenses that are paid by or for the designated beneficiary and are related to their disability.

Examples of things you can use ABLE money for include such living expenses and other costs as:

•   Education

•   Housing expenses

•   Food

•   Transportation

•   Employment and career training and support

•   Assistance technology and related services

•   Health care

•   Prevention and wellness

•   Financial management and administrative services

•   Legal expenses

•   Funeral and burial expenses

•   Day-to-day living expenses

The IRS can perform audits to ensure that ABLE account funds are only being used for qualified disability expenses. So designated beneficiaries may want to keep a detailed record of withdrawal and how those funds are used, including copies of receipts.

ABLE Accounts vs Special Needs Trusts

A special needs trust (SNT) is another option for setting aside money for disability expenses. In a special needs trust, the beneficiary does not own any of the trust assets but the money in the trust can be used on their behalf. A trustee manages trust assets according to the direction of the trust grantor.

Here’s how ABLE accounts and special needs trusts compare at a glance. You may benefit from consulting a tax professional to understand when and how income from an SNT may be taxed.

ABLE Account

Special Needs Trust

Tax Treatment Growth is tax-deferred and qualified withdrawals are tax-free; there is no tax deduction for contributions. Income generated by the trust (i.e. withdrawals) is generally taxable to the beneficiary during their lifetime.
Control Designated beneficiaries can control how assets in their account are managed. The trustee manages the trust on behalf of the beneficiary, according to the wishes of the grantor.
Contribution Limits Contribution limits correspond to annual gift tax exclusion limits. No limit on contributions, though the gift tax may apply to contributions over the exclusion limit.
Medicaid/SSI Impact Up to the first $100,000 in assets is not counted for SSI purposes; balances are not counted for Medicaid eligibility. Assets are not counted toward Medicaid or SSI eligibility.
Use of Funds Funds can be withdrawn tax-free to pay for qualified disability expenses. Funds can be withdrawn for any purpose, though they’re typically used for disability expenses. The beneficiary may owe taxes.
Age Requirement Disability must have occured before age 26. Beneficiaries must be under age 65 when the trust is created.

Alternatives to ABLE Accounts

If you don’t qualify for an ABLE account or you’re looking for ways to save on behalf of a disabled child or dependent, there are other accounts you might consider. Here are some options to weigh when looking for alternatives to ABLE accounts.

Special Needs Trust

As mentioned, an SNT can also be used to pay for disability-related expenses. Establishing a trust can be a little more involved than opening an ABLE account, since you’ll need to create the trust on paper, name a trustee, and fund it with assets. But doing so could make sense if you care for a disabled child or dependent and you want to ensure that they’ll be taken care of should something happen to you.

529 College Savings Account

A 529 college savings account is designed to help parents and other individuals save money for education while enjoying some tax benefits. Contributions can be made on behalf of a beneficiary with disabilities. That money can grow tax-deferred, then be withdrawn tax-free to pay for qualified education expenses.

You might open a 529 college savings account for yourself or your child to help them pay for school without incurring student debt.

Bank Accounts

Opening one or more bank accounts is another way to set aside money to pay for disability expenses. Bank accounts won’t yield any tax breaks but they can allow for convenience and accessibility.

•   Opening deposits: Brick-and-mortar banks might require an opening deposit of anywhere from $5 to $100 while online banks might allow you to open a checking or savings account with as little as $1 or even $0, with funds to be deposited in the future.

•   You’ll need government-issued ID, like a driver’s license, to open an account.

•   So how long does it take to open a bank account? Not long, if you’re doing it online. Typically, when you have your basic forms of ID ready, the time it takes to open an online account is minimal.

•   When can you create a bank account online? The simple answer is when you’re old enough to do so. Keep in mind that the legal age to open a bank account in your name is typically 18 so if you’re underage, you may need your parents to open the account for you.

•   Online banks and traditional banks can offer a variety of account options. Student checking and savings accounts, for example, are designed for younger teens. Older teens who are headed off to university might be interested in opening a bank account for college students.

Banks can also offer certificate of deposit (CD) accounts and money market accounts.

If you’re wondering whether you can open a bank account with no ID, the answer is no. You’ll need some form of personal identification, such as a government-issued ID, in order to open a bank account online or at a brick-and-mortar bank.

The Takeaway

An ABLE account can make it easier for someone with disabilities to meet their needs while maintaining control over their finances. With an ABLE account, the money that’s contributed grows tax-free and can be withdrawn tax free to pay for qualified expenses relating to the care of a disabled person. Another benefit: Those qualified expenses aren’t limited to health care. The range of expenses include housing, food, transportation, employment — as well as health and wellness and preventive care.

In addition, you may want to consider other options, such as online bank accounts, for growing your savings.

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 considered an ABLE account?

An ABLE account is a tax-advantaged account that’s administered through a state program for the purposes of helping persons with disabilities to save and invest money. An ABLE account’s tax status sets it apart from bank accounts, college savings accounts, or Individual Retirement Accounts (IRAs). You can sign up with your state program.

Should you have both an ABLE account and a special needs trust?

It’s possible to have both if that’s desired. An ABLE account can be managed by its designated beneficiary, allowing them control over their finances. Special needs trusts are managed by a trustee on behalf of the beneficiary, meaning they cannot direct how the money is spent. Having both an ABLE account and a special needs trust can help to ensure that someone with disabilities is taken care of financially while allowing them a measure of independence.

Is a Roth IRA an ABLE account?

No. A Roth IRA is a tax-advantaged account that’s used for retirement savings. Roth IRAs are funded with after-tax dollars and qualified distributions are tax-free. They’re not limited to persons with disabilities while an ABLE account is designed to be used specifically for qualified disability expenses.


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

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.
*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.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

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


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