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Holiday loans are personal loans marketed toward those looking for extra money to pay for holiday expenses. In other words, they’re personal loans with some tinsel thrown on them. They are marketed to help people afford such seasonal spending as gifts, airfare to visit relatives, or the cost of renting a ski chalet for a big celebration.

Like other personal loans, holiday loans are usually offered at a fixed interest rate, and payments are made in regular monthly installments. However, even though they often come with lower interest rates than credit cards, taking out a holiday loan might not be the best financial move. Learn more here.

Understanding Holiday Loans

Holiday loans are basically defined as personal loans, with some seasonal flair. They may also be marketed as Christmas loans, depending on the financial institution that’s offering them.

The bank may list a variety of ways to use the money you get in a holiday loan, such as gift buying or holiday travel, but once the funds hit your account — just like with any other personal loan — you can use them for just about anything. There’s no need to verify that you put the funds toward, say, a new bike for your sweetie or a luxe hotel stay for the entire family.

Like other personal loans, holiday loans are usually unsecured. This means you don’t use a tangible asset like your home or a car as collateral, which means they may have higher interest rates on average than some other kinds of loans. They may also have more stringent qualification requirements, since an unsecured loan is a riskier prospect for the lender.

Features of Holiday Loans

The specific features of each holiday loan, including the amount available to borrow, will vary depending on the lender.

•   Typical loan amount: Some banks may cap their holiday loans at relatively low amounts, like $2,000, while others might offer tens of thousands of dollars to borrowers, as long as they can meet the eligibility requirements.

•   Interest rate: Most holiday loans come with a fixed interest rate. Because holiday loans are unsecured, interest rates tend to be higher than they are for secured loans like mortgages and car payments. For the 2023 holiday season, holiday loan rates ranged from approximately 7.99% to 13.99% annual percentage rate, or APR. However, these numbers will fluctuate with the economy and other factors, such as your credit score.

•   Loan term: A typical loan term (or repayment period) is a year or longer. Some holiday loans may come with terms as long as five years, which is a long time to be paying off a Christmas gift, tickets to the Nutcracker ballet, or a holiday party, no matter how awesome it was.

•   Fees: Be sure to read the fine print, because some holiday loans may also include additional fees like origination fees or early repayment penalties. If you take out a large high-interest loan, you may want to repay it more quickly than the term calls for to save money on overall interest.

•   Application process: Many Christmas holiday loans and other variations can be applied for online. You’ll likely need to upload certain documentation to prove your identity and your earnings. However, if you prefer an in-person process vs. a holiday loan online application, you may find a bank or credit union in your area offers this option.

💡 Quick Tip: Not sure what certain loan terms mean? Check out the Personal Loans Glossary for a simple guide to the basics.

Pros and Cons of Holiday Loans

Like any financial decision, there are both benefits and drawbacks to consider when it comes to holiday loans.

Pros:

•   Quick money upfront for holiday expenses (perhaps helping you achieve the “best holiday ever”)

•   No need to put down collateral

•   Longer payoff terms can keep monthly payments relatively low

•   Easy online application process

Cons:

•   High interest rates can mean you’ll likely pay a lot more for that gift or party than you would have in cash

•   Interest rates may be higher than other sources of funding

•   Origination fees and early repayment penalties could increase costs even more

•   Payoff terms of several years can keep you in debt long after that holiday season is remembered

Who Should Consider a Holiday Loan?

In many cases, financial advisors recommend against going into debt to pay for a seasonal celebration. Interest charges mean you’ll pay more for everything you purchase than you would if you bought items with cash. Even the best holiday trip or Hanukkah present may not be worth paying hundreds or even thousands of extra dollars in interest.

However, sometimes there are compelling reasons to take out that holiday loan. Maybe your family is about to move cross-country and you want to have a special celebration with relatives. Or you and your partner want to use the holiday as the occasion to get a much-needed new car.

Whatever the case, you are likely to have the best outcome with a holiday loan if you are confident you can repay the loan in full, preferably ahead of its full term. That can help you dodge some of the interest charges. Just be sure to check the fine print so you won’t be subject to any early repayment penalties.

Recommended: Affordable Ways to Celebrate the Holidays

Alternatives to Holiday Loans

If you want to enjoy an unforgettable season, there are alternatives to holiday loans worth considering.

Saving Up in Advance

Yes, you’ve probably thought of this one — but as mentioned, going into debt almost always means paying interest, and interest means each purchase costs far more than it otherwise would. Planning ahead and perhaps making automatic transfers into a savings account over the months prior to the holiday season can be a smart move.

Using Credit Cards Strategically

If you have access to a credit card with a high enough limit, it might be an alternative to a holiday loan. Again, though, if you want to avoid paying interest, make sure you’re in a position to pay it off in full before the grace period ends.

You may also be able to apply for a new credit card that offers a 0% interest promotional period. Usually, these periods last about a year, which could give you more time to pay off the holiday debt without accruing interest. But again, make sure you can pay it off in full before time runs out. Otherwise, you may face interest rates even higher than you would with holiday loans.

Other Financing Options

As the holidays roll around, you might also consider some other ways to pay for seasonal expenses.

•   You could take out a standard personal loan (vs. one marketed as for the holidays). This will typically have a lower interest rate than credit cards. See how these compare to holiday loans before you commit.

•   You might see if a close friend or family member would be willing to loan you some money; just make sure to honor the terms of repayment so as not to rock your relationship.

•   Buy now, pay later offers allow you to purchase items on a form of layaway plan.

•   Another possible source of funding could be a P2P loan, which involves individuals lending and borrowing to one another without a bank’s involvement.

Recommended: How Much Will a Personal Loan Cost You?

The Takeaway

Holiday loans are personal loans marketed to people looking for extra money to spend on holiday expenses. While some are on the smaller side (up to $2,000), some lenders will approve tens of thousands of dollars to borrowers for holiday purchases and celebrations. Compare options carefully, though. You likely don’t want to spend any longer than necessary paying off holiday expenses. Shop around for the right terms to suit your financial situation.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Is it difficult to get a holiday loan?

Because holiday loans are unsecured loans, which can be a relatively high-risk venture for the lending bank, they may have more stringent application requirements than secured loans like mortgages and auto loans. However, some lenders may advertise holiday loans for bad credit. These can come with even higher interest rates and fees than other similar loans, though.

Are holiday loans common?

Holiday loans aren’t the most common type of personal loan; personal loans are more commonly taken out by people consolidating debt or renovating their houses. But holiday loans are certainly not unheard of, and many lenders advertise them specifically.

Do banks typically offer holiday loans?

While not every bank offers holiday loans, many banks, credit unions, and other financial institutions offer regular, unsecured personal loans. Funds from those loans can be used to pay for holiday expenses. (In fact, many holiday loans are essentially the same product as personal loans.) No matter what kind of loan you’re taking out, always be sure you understand the full fee structure, including the total amount of interest you stand to pay over the lifetime of the loan, up front.

Photo credit: iStock/Tempura

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q324-021

Between inflation and rising prices, being frugal with your spending is a good idea. But you can go a step further: By learning some valuable life skills and DIY-ing more activities, you can save money.

Mastering skills like cooking, cleaning, riding a bike, and doing your own taxes means you don’t have to pay professionals for expensive services. While it can be time-consuming, harnessing new skills can make you more independent, help you keep more of your money, and maybe even inspire a few new hobbies.

In this article, we’ll take a look at 20 basic money-saving skills that almost everyone can learn. They can be fun to dig into, build confidence, and free up funds to put towards your financial goals.

How Life Skills Are Essential to Your Financial Freedom

Life is built on financial transactions. We pay for food at the restaurant, spend money on a haircut, reach deep into our wallets at the gas station, and shell out for repairs when something in our home breaks.

While we can’t possibly learn enough life skills to replace all these transactions, it is possible to take up a few new savings skills, like cooking, painting, and sewing, so that you can hoard a little more money each month.

That little bit of money adds up — honing several life skills can be an important step toward your financial freedom. The money you save can go towards your emergency fund, paying down student loan debt faster, or gathering the down payment on a house.

20 Life Skills That Can Help You Save Money

So which life skills are worth learning? We’ve rounded up 20 of the top money-saving skills that, when mastered, can help you avoid spending your cash on basic goods and services. They’ll help put you on the path to becoming financially disciplined.

1. Cooking

Eating out now and then is perfectly fine — a well-deserved reward after a long week at the office or a celebratory dinner for a major milestone. But eating out for lunch or dinner every day can be unhealthy (those portion sizes!) and can get quite expensive. Learning the basics of cooking can keep you out of the pricey restaurants and in your own kitchen instead.

Cooking can require an investment in the proper cookware and staple ingredients, but overall it’s bound to be cheaper than getting food to go or at an eatery. Just think about the price difference between avocado toast whipped up in your kitchen and what you’d pay at a cute cafe. Search for recipes online, and follow tips to save money on food before you head out to the grocery.

2. Painting

Ready to pick up a paintbrush and unlock another savings skill? According to Angi (formerly known as Angi’s List), homeowners spend more than $3,100 on average to paint the exterior of their home, and renters and homeowners alike might pay painters even more to paint the interior. The current rate for painting the interior typically runs from $2 to $6 per square foot.

While painting the exterior of your home can be a little more challenging, painting the interior is not complicated at all. If you are willing to take the time to learn, you can save yourself thousands of dollars every time you want to change up the inside of your living space. You could use that extra money to open a savings account or add to the one you already have.

3. Gardening

Yes, professional landscapers can weave a certain kind of magic. But doing your own gardening can be a tremendously satisfying and creative pursuit, not to mention that it can save you a lot of moolah. Spending time learning the basics about what zone you live in and which plants will thrive, plus wandering around nurseries and garden centers, can provide plenty of inspiration.

You can grow fresh produce for the small price of starter seeds and the occasional watering, which means less money spent at the grocery store.

What’s more, when selling your house, landscaping is an important part of curb appeal. A well-cared-for garden might attract potential buyers and help your home sell more quickly.

Recommended: How Much Should I Spend on Groceries a Month?

4. Plumbing

Plumbing emergencies like a flooded basement or a broken water heater are probably still better left to a licensed contractor, but teaching yourself to be handy with a wrench and a screwdriver might save you on smaller problems, like a leaky faucet or a running toilet.

This money-saving skill can serve you well over the years. Calling a plumber for every small problem that your house encounters over the years can add up. In fact, most plumbers charge $45 to $200 an hour and may charge a fee of $100-$250 just for a service call.

Beyond plumbing, you can teach yourself basic electrical and carpentry skills so that you can tackle some easy home improvement projects for beginners.

5. Budgeting

Knowing how to make a budget — and sticking to it — is a crucial life skill. When you are able to analyze your monthly expenses against your monthly income in an easy-to-read format, you can quickly discover which spending habits you need to scale back. Many people like the 50/30/20 rule, which spells out that you should spend 50% of your after-tax income on needs, 30% should be put towards wants, and 20% should go into savings.

And you don’t even need to pay for fancy budgeting software. Many online banking platforms make it easy to see all of your transactions in one place, and you can use a simple spreadsheet to design a budget that works for you.

6. Haggling

Not every price is negotiable, but when it is, it’s important to know how to haggle with confidence. While you might immediately think of haggling at a used car lot (and that’s a great place to do it), you can also haggle over things like your monthly cell phone bill, your rent, and even credit card interest rates. Politely asking, “Is there any flexibility on the price?” may yield a surprising positive response.

Even if you’re only successful in lowering one expense, that’s money in your wallet that you wouldn’t otherwise have had.

Recommended: How to Negotiate Medical Bills

7. Sewing

You might not ever create your own clothes from scratch (though you certainly can!), but knowing how to sew can come in handy when you get a rip in your favorite shirt or a parka’s zipper starts to detach. Instead of throwing out clothes with holes or lost buttons, sew them back together. Mending the torn back pocket on your favorite jeans, for instance, and you’ll save yourself from dropping $50 or much more on a new pair.

8. Cutting Your Family’s Hair

Haircuts at chain salons are certainly not cheap, often ranging from $30 to $70+, but boutique salons are even more expensive. Learning to cut your family’s hair (or your own, if you’re brave) can cut out one monthly expense. Check out the tutorials on YouTube and other video platforms and see if you can’t hone your skills.

9. Investing

The average stock market return over the last 10 years has been more than 10%. And though you can certainly pay a traditional broker to manage your portfolio, it’s totally possible to do it yourself.

In fact, there are many platforms for investing to choose among, some of which enable automated investing. Plus, you can help build your financial know-how by reading blogs and books on investing, as well as listening to podcasts or taking an online class to sharpen your skills. Just remember that investing entails risk, so make sure to choose an investment vehicle you are comfortable with.

10. Changing Your Car’s Oil

Done by a professional, the average oil change costs from $20 to $100, but the cost of doing it yourself is $30 to $45. Being able to change your car’s oil by yourself (typically twice a year, depending on how much you drive) can mean you pocket an extra $10 to $55 every time. It’s a great life skill to learn and then stash the cash you save, year after year.

11. Cutting Firewood

If you have ample trees in your yard — or a generous neighbor has just taken down a tree and doesn’t mind sharing the spoils — you can chop the wood yourself for an outdoor firepit or your fireplace. If your home has a fireplace, you can use that wood to heat a single room while leaving the heater setting lower in the rest of your home, cutting down on your utility bill.

12. Doing Your Own Taxes

If you have a complicated tax situation, an accountant might be a good investment, especially if they can help you maximize your credits and tax deductions even if you’re a student. However, if you have a straightforward income and financial situation, it might be beneficial to skip the accountant fees and file by yourself.

Check out the IRS Free File hub to find programs that will help you do it all by yourself.

13. Bartering

The time-honored tradition of bartering, or trading goods and services, can help you lower your expenses. Let’s say there’s a spinning class you love that’s beyond your budget. Could you offer to swap your digital savvy (say, filming videos and posting on social media for the studio) in exchange for no-cost sessions? Think creatively about the skills you have and how you might use them to get some freebies. It never hurts to ask about such arrangements, and it could help.

14. Roasting Your Own Coffee

Buying a latte at a coffee shop every morning may be convenient (and relaxing), but it also gets expensive. If you spend $5 (or more!) every day on a cup of coffee, that’s more than $1,800 a year. Instead, learn how to save on coffee expenses. Brew coffee at home — and better yet, learn how to grind and roast your own coffee beans for maximum savings. You’ll find that whole beans are typically less pricey than pre-ground ones at the supermarket.

15. Baking

Going to the bakery when you said you’d bring a dessert to your family’s holiday get-together may be convenient, but buying fresh cakes and cookies can get expensive. Baking can be a little more challenging than cooking, but it’s certainly a great way to save money. And it can be a wonderful creative pursuit and a new pastime. Need inspiration? Just watch any of the addictive shows on TV, like The Great British Baking Show.

16. Upcycling

Upcycling is a buzzword for reusing an item instead of buying something totally new. For example, you might use reclaimed wood or an old door to make a desk or table, turn a sweater with torn elbows into a vest, or use old towels as cleaning rags for a while before tossing them. Upcycling can help you save on common expenses, and it’s great for the environment; less goes into the trash.

17. Cleaning

Most people probably don’t like to clean, but it’s a big part of being an adult. Whether it’s scrubbing the bathroom, vacuuming the rug, or wiping down kitchen counters, these are chores that just need to be done.

It might be tempting to pay for a cleaning service, but doing so is expensive. Cleaning professionals typically charge $30 to $50 per hour — or more than $600 for a large home over 3,000 square feet.

Don’t give into that temptation to farm it out. Grab a rag (or an upcycled towel), a bottle of cleaning solution, and a monthly house maintenance checklist. You’ve got this!

18. Riding a Bike

Gas is expensive (and you probably know its impact on the environment). While you probably can’t bike everywhere you need to go, each trip on a bike you make — to work, to school, or just to a friend’s house — means you won’t be spending money on gas or bus fare.

19. Hosting

Hanging out with friends at your favorite bar is nice, but a fun night out adds up quickly when you do it every weekend. Instead, host your next friend or family gathering at your own home. Stock some wine, cold beer, and snacks, and you’re good to go. (You can be next-level and make a pitcher of a signature cocktail; it’s a fun way to build your mixology skills.)

Or switch things over to a morning meet-up with a pot of coffee and some home-made muffins. You’re likely to save big.

20. Doing It Yourself

Our final life skill ties all the rest together: Do things yourself instead of paying someone else to do them. If you don’t know how to do something, research online or find someone who does and learn. Once you’ve mastered the skill, share your knowledge with others.

Whether mowing your lawn, washing windows, or doing yoga or Pilates at home, you can really open up room in your budget when you DIY.

Banking With SoFi

Honing these valuable money-saving skills is a great way to establish financial freedom, and having a quality bank account will elevate your efforts. That way, you can immediately stash all the money you’re saving into your account so you won’t be tempted to spend it.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

Is saving money a life skill?

Saving money is an important life skill. By learning to do various tasks yourself around the house and in your daily life, you can avoid paying for a lot of expensive goods and services. Also, being a smart consumer and comparison-shopping will help you save money. This is especially important when making a big purchase; look around for the best price, coupons, and other discounts.

How do I find the time to develop these life skills?

Most of these life skills can fit into your regular day. If you normally spend a couple of hours going out to dinner, you can instead spend that time finding a recipe and trying to cook it at home. You may also find that some of these tasks (cooking, gardening) become hobbies in which you happily invest time.

What is the most valuable life skill?

Learning to do things yourself, from cooking to filing taxes to changing your car’s oil, can be the most valuable life skill. This can give you confidence, know-how, and self-reliance, plus it requires you to be curious and willing to educate yourself, all of which are important traits.

Photo credit: iStock/blackCAT

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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 every 31 calendar days.

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 the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, 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 the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit 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, Wise, 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 Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

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

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.

SOBNK-Q324-065

Want to know how to never pay full price for anything? There are plenty of tips and tricks that can help you get a better deal on everything from a car to a big carton of cereal.

Saving money does more than put money back in your pocket. It can truly help you feel in control of your finances, which can, in turn, help motivate you to continue building good financial habits.

If you’re interested in becoming more conscious about how you’re spending money, be sure to take a look at these 15 tips. Even if you’re already a savvy shopper, you may be able to learn some new ways to optimize your spending and saving habits.

Common Retail Markups

Before delving into strategies for saving money off of retail, consider how much most items are marked up for sale. While there is no set or ideal number, many businesses charge 50% more than the actual cost of the item. So if it cost a company $50 to make a sweater, they would sell it for 50% more than that, or $75.

This means that, while not optimal for their financial goals, they could sell the garment for less than $75 and still be recouping their costs, plus a profit.

Some categories of products are known for having even higher markups. Consider these:

•   Mattresses, up to 900%

•   Designer jeans, up to 500%

•   Furniture, up to 400%

•   Coffee to go, up to 300%

•   Diamonds, up to 100%

Places Where the Price Is Non-Negotiable

While there isn’t a rule about where you can and can’t negotiate, you are more likely to be able to get a better price at some locations than others. For instance, bargaining is more appropriate at:

•   Flea markets

•   Car dealerships

•   Small shops

It’s less likely to be effective at:

•   Luxury retailers

•   Chain stores

•   Malls

That said, some top-notch negotiators say they have scored discounts almost anywhere. Read on for tips to help you do the same.

15 Tips to Avoid Paying Full Price for Anything

Smart shoppers often get the latest and greatest – without having to pay full price for it. These tips can help boost the balance in your bank account by helping you save money on many of the things you buy.

1. Install Browser Extensions on Your Computer or Apps on Your Phone

There are a whole host of browser extensions and apps that can save you money with minimal effort on your part. You can see cash back options, rebates, price drops, and places where you can find an item for a lower price on another website. Some examples of boosting your money-saving skills this way include:

•   The Honey Extension will automatically look for and apply digital coupons and promo codes when you’re shopping online.

•   Rakuten is a rebate extension that offers cash back, coupons, and deals at more than 3,500+ stores.

•   CamelCamelCamel is an Amazon price tracker that alerts you when the price drops on an item you’ve been looking to buy.

•   Booklovers alert: The Library Extension works when you’re searching for a book to buy, such as on Amazon. It’ll allow you to check the online catalog of your local library so you can save some money by borrowing a book from the library instead of buying it online.

Recommended: How to Save Money: 33 Easy Ways

2. Find Rebates

You’ll find rebates from many manufacturers and retailers. Order new contact lens or an electric toothbrush, and you may get $25 or $50 back. Don’t let that piece of paper (which you may have to mail back in to get your reward) wind up in the trash.

Another popular source: Your power company likely offers some type of rebate for energy-efficient appliances, air conditioners, water heaters, smart thermostats, light fixtures, and more. For example, you may be able to find a $50 rebate for an energy efficient refrigerator. Pair that with a $50 credit for recycling your old one, and you have $100 off a new fridge. Just be sure to check with your power company to make sure your appliance meets the requirements and you send in the rebate on time.

3. Buy Used or Refurbished Products

Buying used consumer items can net you substantial savings — upwards of 90% off — and sometimes you can find these things for free. Essentials for babies and kids, clothing, and home decor can be found for a fraction of their original retail price. They’re often in great shape and there’s such an abundance of used items for sale that you can be picky with what used items you buy.

Where to look? Try the following:

•   Freecycle sites

•   Local thrift shops and flea markets

•   Nextdoor and Facebook Marketplace

Buying discounted goods this way can be part of your financial freedom plan and help you find more money in your monthly budget.

4. Buy Items in the Offseason

You’ll score major discounts if you can buy things you need in the offseason. When a store is trying to make room for new inventory, you’ll often see several price drops. Buying snow boots in March or swimsuits in September could save you 50% or more.

5. Redeem Credit Card Rewards for Travel, Gift Cards, and Merchandise

A great way to never pay full price on travel is to redeem credit card points for airfare, hotel stays, transportation, and other travel expenses. Some credit cards have partners (such as airlines and hotel chains) where you can transfer points and book directly with the travel provider. Other credit cards offer a simpler redemption based on cash back rewards.

The benefit for redeeming points depends on which credit card you have, but many offer a tremendous value for the frugal traveler who never pays full price.

You may also be able to redeem cash back in the form of gift cards. You may be surprised to see a 25% bonus for cash back when you redeem it as a gift card. To do a bit of the math, that means $40 in cash back might become a $50 gift card for your favorite retailer.

Many credit cards also offer consumers the ability to use cash back or points to pay for purchases. You may have a card that offers you the ability to erase charges with the cash back you’ve earned after you receive your statement. Or, you may see an option to pay for a purchase at checkout with your cash back or points (usually if you’re using a third-party site like PayPal). These can be a good way to avoid paying retail.

Recommended: 25 Ways to Cut Costs on a Road Trip

6. Use Coupons and Promo Codes

You don’t need to become an extreme couponer to avoid paying full price. If you find something you want to buy online, for example, getting a discount may be as easy as searching online for a promo code.

Promo codes are essentially just digital coupons for the site you want to buy something from. They can help you avoid overspending money by reducing the cost of buying the product or service you need.

7. Learn the Pantry Principle

The pantry principle is to stockpile goods at a low price. For example, if a can of corn normally costs $1 and goes on sale for 50 cents, you would buy in bulk to take advantage of that reduced price. You’ve cut your cost for corn in half for as long as you have the cans in your pantry.

The same idea can work with other non-perishable essentials. If you can buy, say, your favorite yoga pants or cleaning products on sale and in bulk, you’ll reduce your spending.

Recommended: 23 Tips to Help Save Money on Groceries

8. Shop at Warehouse Clubs and Outlet Stores

Warehouse clubs and outlet stores offer different ways to save money. Costco and Sam’s Club, for instance, focus on selling products in bulk, which can result in a decent amount of savings. Keep in mind, however, that not all products sold at a warehouse are cheaper than what you can find at other retailers, so just be sure to check your price, especially per unit, whether that’s by the ounce or the liter. Also take advantage of discounts your membership may offer on health services, entertainment, tires, and more.

Likewise, outlets can offer savings by selling overstock items from other retailers. You might find a pair of boots you’ve been coveting or a new armchair at a deep discount.

Recommended: 15 Easy Ways to Save Money

9. Take Advantage of Birthday Deals at Certain Places

Want a free dessert? $10 off your meal? A surprise gift? Take advantage of special perks on your big day. Birthday deals abound, particularly at restaurants and certain retailers, like Sephora, Macy’s, and Petco, among others. To take advantage of a great birthday deal, you may need to sign up online in advance.

10. Look for Price Matching and Price Drop Refunds

If you’re about to make a significant purchase, do your research online first. You might find, for example, that one retailer is offering no delivery fees on refrigerators, but that they charge $75 more for the model you want than a competitor. You could see if they will match the price of the competitor in order to snag the best deal possible

Also, some retailers offer a price drop refund on items you previously purchased. This works by taking your receipt back to the retailer if the item you just bought went on sale shortly after your purchase (usually within two weeks, but the time can vary by each retailer’s policy).

Recommended: Using the 30 Day Rule to Control Spending

11. Haggle With Sellers and Ask for Discounts

Sometimes, scoring a deal is as easy as asking for it. You can politely ask, “Is there any discount you can offer me for this?” or “Would it be possible to ask for a discount on this?” The best places to ask for a discount are the ones where there is some discretion at giving discounts, such as a seller on Facebook Marketplace, a retail manager, or even a hotel clerk.

Nevertheless, even a big-box salesperson can help you identify any current or upcoming discounts if you take a moment to inquire.

12. Wait for Sales

Eventually, many of the items you’re shopping for will go on sale, so it’s best to never pay full price at retailers that have frequent sales. Retailers will often use any excuse to hold a sale. (Ever see an ad for a furniture store selling mattresses on Presidents’ Day?) After all, retailers know you’re more likely to spend money if you feel like you got a good deal.

13. Abandon Your Online Cart

This one is a little sneaky. Abandoning an online cart occurs when you add something to your online shopping cart but don’t actually complete your purchase. Nearly 70% of carts are abandoned by consumers. To help increase sales of abandoned shopping carts, retailers have some smart ways to get consumers to come back and finalize the purchase. Sometimes, the retailer will email you a coupon or entice you with another offer to get you to finish your purchase.

Recommended: 10 Ways To Save Money Fast

14. Sort From Low to High When Shopping

It’s common for websites to show their newest (and most expensive) products first, but if you sort your search to have the lowest-priced items shown first, you’ll likely find the things you need for less.

15. Subscribe to Email Lists or Newsletters

Many retailers offer a discount when you subscribe to their email list or newsletter for the first time. Retailers know that a major portion of their sales come from offering coupons or discounts. This means the discount they offer has to be good enough for a consumer to subscribe, so offering up your email could save you a bit of money.

These offers might be for 10% or more off, free shipping, or other deal sweeteners. And you can opt out of future emails whenever you like. Additionally, some retailers will offer these deals or increased savings if you allow them to text you with their latest news and sales.

The Takeaway

It pays to be a smart shopper. And, not only that, it just plain feels good to know you’re saving money off of retail prices. If you have a few tricks up your sleeve, you’ll know how to never pay full price for anything ever again. Whether it means using a browser extension when shopping online, taking advantage of cash back offers, or tapping your negotiation skills, there are many ways to make sure you get the best possible price tag whenever you buy.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

Is paying retail bad?

If you feel the price is fair, there’s nothing wrong with paying full retail price. In fact, studies have shown that always focusing on a deal can result in spending more, rather than less, money. If you’re also more conscious of what you buy, that’s often more important than saving a few bucks on something that won’t last or doesn’t hold value.

Why are wholesale and outlet stores cheaper?

While not every item is going to be cheaper at wholesale and outlet stores, in general, you will find better prices shopping at stores that offer an alternative to full retail price. Wholesale stores can offer better prices by focusing on fewer products and selling inventory in bulk. Outlet stores often have better prices because they sell overstock items.

Should I pay retail if an item is limited?

The adage, “spend according to your values,” can help you decide when to pay retail price. If you’re purposeful with spending your money, paying retail price on a limited item is a decision that may make sense for you.

Photo credit: iStock/Mongkol Akarasirithada

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

*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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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 every 31 calendar days.

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 the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, 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 the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit 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, Wise, 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 Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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.

SOBNK-Q324-062

A tradeline is the term used by the three major credit reporting bureaus — Equifax®, Experian®, and TransUnion® — to describe any one of the accounts listed on your credit report. Each account has its own tradeline, and each tradeline contains information about the creditor, your account, and your debt.

Tradelines make up a good portion of your credit report, which means the information within them plays a big role in determining your credit score. And, as you probably know, your credit score is an important number that can prove your creditworthiness and help you snag lower rates on loans, among other benefits.

The more you understand about what a tradeline is and what creditors see when they read your credit report, the better equipped you’ll be to use that information to maintain the best credit score possible.

What Is a Credit Tradeline?

A tradeline in a credit report is a record for each of the credit accounts that you have. This includes revolving credit accounts, such as credit cards, and installments loans, such as student loans, auto loans, mortgages, and personal loans.

Each tradeline may contain a host of information reported by the creditor about themselves and your debt.

Recommended: Tips for Using a Credit Card Responsibly

What Information Is Reported by a Creditor?

When it comes to knowing what a tradeline is on a credit report, you may be surprised by just how much intel is shared. Quite a lot of information is reported about a creditor and your debt. The list includes:

•   Creditor’s name and address

•   Type of account

•   Partial account number

•   Date the account was opened

•   The account’s current status

•   Date of latest activity

•   Original loan amount

•   Credit limit

•   Current or recent balance

•   Monthly payment

•   Payment history

•   Date the account was closed, if this situation applies

By looking at a tradeline, you can view all of the most recent information reported by your creditors to the three credit reporting bureaus, all in one place. This is the information that will have an impact on your credit score.

Recommended: When Are Credit Card Payments Due?

What Other Information Is Gathered by the Credit Bureaus?

In addition to the information listed above, the credit reporting bureaus will also gather:

•   Personal information, including your name, date of birth, Social Security number, home address, phone number and employer

•   Information from the public record, including bankruptcies

•   Who has made recent inquiries about your credit and when (for example, if you’ve applied for new credit and a hard inquiry has been made)

The credit bureaus don’t know everything about you, however. They don’t have access to information such as your income, bank account balances, or marital status, though the report could include a spouse’s name if a creditor reports it.

How a Credit Tradeline Works

Tradelines are like the heartbeat of your credit report. Without them, you can’t have a score. If you are keeping your credit utilization low (that is, keeping your balance low vs. your limit on credit cards), paying your bills on time, and showing that you are a dependable borrower, your tradelines will be positive. Your three-digit credit score number should be in good shape.

If, on the other hand, you pay your bills late, skip payments, and rack up loads of debt, your tradelines will reveal negative information. Your score is likely to be low or decline.

What Are Tradelines for Credit Used for?

Creditors use your score to help them determine whether or not to extend credit to you and what terms and interest rates they’re willing to offer. Good credit is important. For example, if you have a good credit score, your lender may see you as less of a risk and offer a lower interest rate on a loan.

Higher-risk loan applicants with lower scores may be offered much higher rates. In other words, buying a car or home will be that much more expensive if your score is low.

While your credit score gives lenders an overall sense of the shape of your personal finances and credit history, it doesn’t give them any details. For those, they may look at individual tradelines contained within your credit report.

How Tradelines May Affect Your Credit and Banking

Your tradelines have a direct impact on your credit, since activity within the account is used to calculate your credit score.

Here’s a closer look at the five factors used to generate your FICO® score, and the weightings used for each.

•   Payment history: 35%

•   Amounts owed: 30%

•   Length of credit history: 15%

•   New credit: 10%

•   Credit mix: 10%.

Any credit activity that pertains to one of those categories can have an impact on your score when reported in your tradeline. For example, delinquent payments could damage your credit history. Or closing an account may have an impact on your length of credit history.

When Are Credit Tradelines Removed?

From time to time, a tradeline can be removed from your credit report. For example, if you’re an authorized user of a credit card and you are removed from the account, the tradeline will be dropped from your credit report in about two months.

When you close an account, the tradeline isn’t removed immediately. In fact, if that account has a positive impact on your credit score, the tradeline may stay on your report for as long as 10 years. Nice!

Worth noting: If a tradeline was opened fraudulently — someone opened a credit line or took on a loan in your name without your knowledge — you may ask to have the tradeline removed. In fact, it can be a very good idea to do so. It can help build your credit score since many fraudulent accounts contain negative credit information.

What Happens to Your Banking When a Tradeline Is Removed?

Removing a tradeline can be a positive or negative thing for your credit. If the tradeline was associated with positive information, removing it can hurt your credit. Luckily, a positive closed account stays on your report for a decade.

Closing an account with negative information can be a plus for your credit score. If an account is delinquent when it’s closed, the entire account will be removed after seven years.

How Is This Information Collected?

Creditors report the information collected in the tradelines to the credit reporting bureaus. They do so voluntarily, at their discretion, and on their own timeline, though the credit bureaus prefer that credit information is updated every month.

Each credit bureau may use different sourcing for the information they gather. What’s more, while some creditors will report to all three bureaus, some may only report to two, one, or even none of them.

Why You Should Check for Errors

As we’ve mentioned above, your tradelines are the source of information that determines your credit score. So it’s important to check your credit report regularly to make sure that there are no errors negatively impacting your score. Inaccurate information could also be a sign of identity theft.

You can request one free credit report from each of the three major credit reporting bureaus each year, according to the Fair and Accurate Credit Transactions Act. Since you can get three reports each year, you could even request one report every four months, to help ensure your finances are as up-to-date as possible. A popular site to check your credit report is Annualcreditreport.com .

You may also consider signing up with a credit score monitoring service.

Can You Buy New Tradelines?

Some companies will offer the opportunity to buy tradelines to help build your score. It’s not necessarily advisable to purchase from these third-party services.

First, a little background info: When you’re trying to build credit, one common strategy is to become an authorized user on an already existing account. For example, your parents might make you a user on their credit card. Good credit history and maintaining a low balance on this account could help you build credit.

When you purchase a tradeline, you enter into a similar agreement with a stranger. You’ll pay a third-party service to set up the transaction. You won’t know the person whose account you’re joining, and you will not be able to use the account. The account will usually remain open to you for a short period of time only.

You are paying for the privilege of being on this account, which will supposedly help positively impact your credit rating.

Is Buying Tradelines Legal?

Technically speaking, buying tradelines through a reliable tradeline service is legal. Congress has said that under the Equal Credit Opportunity Act, authorized users cannot be denied on existing credit accounts, even if the person being authorized is a stranger.

That said, there are times when working with a tradeline service can lead to serious issues:

•   A company may say you can hide bad credit or a bankruptcy using a credit privacy number. In reality, this might be someone else’s Social Security number, landing you in the middle of an identity theft scam.

•   You might also find yourself buying into an account that’s gone into default. You could end up as the primary owner of the account, which could hurt your credit.

•   Also, watch out for companies that use a process called address merging in which the company claims the authorized user (that would be you) lives at the same address as the account holder. This is fraudulent, and it indicates that you are not working with a reliable company.

Risks of Buying Credit Tradelines

Whenever you give out your personal information, including to a tradeline supplier, you are putting yourself at risk of identity theft.

By attempting to take a shortcut to build credit, you also won’t be doing yourself any favors. Beyond the risk of identity theft and other entanglements, you’ll be robbing yourself of the chance to build good financial habits. And this could come back to bite you in the end if you never learn to manage debt responsibly on your own.

How Banking Can Improve Your Credit Report

If you’re looking to positively impact your credit score, there are a number of alternatives to buying tradelines that you can pursue.

•   Always pay your bills on time. Your payment history makes up the bulk of your credit score. Pay close attention to your checking account and bills; make sure you can and do make regular debt payments on time and in full. Consider automated bill pay to help ensure you never miss a payment.

•   Pay down debts. Your available credit plays a large role in the calculation of your credit score. Your credit card utilization ratio, as we mentioned above, shows how much or your available credit you’re using. You can calculate your ratio by dividing credit card balance by loan limit. If your utilization rate is over 30%, build your credit score by paying down your balance. If possible, aim to keep your score at under 10%.

•   Check your credit reports regularly. Learn to read your credit report. Alert the credit bureaus to any inaccuracies. Your credit score should change for the better shortly after a mistake is corrected.

Alternatives to Credit Tradelines

If you’re trying to build credit over time, there are also alternatives to tradelines.

•   Become an authorized user. You may wonder, “Isn’t this what purchasing a tradeline is?” The answer is yes, but it’s far better to become an authorized user on the account of someone you know well or are related to. You’ll have the opportunity to use the account and learn healthy credit habits. Just don’t abuse this privilege.

•   Apply for a secured credit card. Secured credit cards require you to make a security deposit to receive a line of credit. This deposit often becomes your credit limit. These cards are easier for people with no credit history to qualify for, and they help you build credit.

•   Get credit for paying bills. You might look into services that allow you to get credit for on-time payment of bills that usually don’t count towards your credit score. This may include bills for everything from your utilities to your streaming service.

The Takeaway

The tradeline for each of your revolving credit or installment accounts contains all the information necessary to generate your credit score. Understanding your tradelines can help you understand the ways in which you can build your score. Manage those tradelines well, and you may unlock lower interest rates on loans and other elements of financial health.

Here’s another way to boost your financial health: Find the right banking partner.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

Are tradelines good for credit?

The information contained with your tradelines is used to generate your credit score. It reflects how well you manage credit and can therefore be either good or bad, depending on such factors as whether you have been paying back debt on time and how much debt you are carrying.

How much will a tradeline build my credit?

Adding a tradeline can actually lower your credit in the short-term. For example, it will lower the average age of your accounts, which can have a negative impact on your length of credit history. However, if you can maintain the account over the long-term and keep up with payments, the new account may help build your credit score.

How do I get tradelines on my credit?

Tradelines are added to your credit report when you open new lines of credit or take out new loans. A tradeline is also added when you become an authorized user on another person’s account.

Photo credit: iStock/miniseries

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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 every 31 calendar days.

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 the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, 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 the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit 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, Wise, 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 Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://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.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

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 .

SOBNK-Q324-095

Cars and trucks tend to lose value as they age and experience wear and tear through everyday use. This loss of value is known as depreciation. How much these vehicles tend to depreciate will vary. For example, trucks tend to hold their value better than cars.

That said, depreciation depends on a number of factors, such as make and model, age, mileage, and accident history. Here’s a closer look at what impacts car and truck value, and how depreciation can differ between the types.

What Is Vehicle Depreciation?

Cars and trucks lose value each year due to normal wear and tear. The rate of depreciation will vary depending on the make and model of a car. However, the first year tends to see the greatest depreciation, when cars lose as much as 20% of their starting value. For that reason, some consumers believe it’s wiser to buy a used car than a new car. Within the first five years of ownership, a vehicle can depreciate by as much as 60%.

Depreciation is not necessarily an accurate representation of wear and tear on a vehicle. You may find that after a number of years, your car has lost significant value even if it’s in pristine, like-new condition. Deprecation will continue to affect the value of your car until it reaches $0 on paper. At that point, your car no longer has any equity, and is not considered a financial asset. The only value left is the value of the metal for scrap.

Depreciation is an important factor to understand whether you are buying a used car, a new car, or if you plan to lease a vehicle. When leasing a car, your monthly payment will cover the cost of depreciation.

How Is My Car Value and Truck Value Depreciation Calculated?

There are various sources that supply car depreciation figures, including Kelley Blue Book and Edmunds. Each company has its own algorithm that accounts for the factors that affect depreciation, such as:

Mileage

How much a car or truck has been driven is often seen as a proxy for wear and tear. The more something is used, the more likely it is to wear out. As a result, vehicles that have been driven less tend to fetch higher values.

Make and Model

You can think of the make and model of a vehicle as the brand and specific product on offer. For example, Toyota is the make, while Tacoma is a specific type of truck the company builds. There may be a series of letters and numbers after the model name that further delineates the trim level of the vehicle. Trim level can refer to different features, engine size, or materials used in the making of the car or truck.

Some makes and models are more popular than others, and some models have higher trim levels. Both can help a vehicle hold its value longer.

Reputation

A vehicle’s reputation for safety and reliability can play a big role in its popularity. The higher the demand for a particular make and model, the more slowly it may depreciate.

Larger vehicles are typically safer than smaller cars, which helps explain why trucks tend to hold their value longer.

Fuel Economy

More fuel-efficient vehicles may also hold their value better than gas-guzzling counterparts, especially when fuel prices are high. Diesel trucks may depreciate more slowly than gasoline-powered cars and trucks because they tend to have more powerful engines, better fuel economy, and emit less carbon dioxide. A gallon of diesel contains roughly 10% to 15% more energy than a gallon of gasoline, and as a result, a diesel engine can go 20% to 35% farther on a gallon of fuel.

Local Market

Your local automobile market can also have a big impact on how much your car depreciates. For example, trucks may be in higher demand in rural areas, while cars may be more popular in urban settings. Vehicles with four-wheel drive may be more sought after in places with snow, while convertibles may be in higher demand in warm, sunny climates.

You may be asked for your zip code when you look up the value of your car. This can help valuation companies zero in on how much your car is worth in your locale. You can also use a money tracker app, like SoFi’s, to discover real-time vehicle values in just a few clicks.

Recommended: What Credit Score Is Needed to Buy a Car?

Average Truck Value vs Car Value Depreciation Comparison

Cars and trucks begin to depreciate as soon as they leave the lot. As mentioned above, they can lose as much as 20% in the first year alone, and up to 10% each year after that. By year five, a vehicle may have depreciated by as much as 60%.

That said, various types of cars and trucks tend to depreciate at different rates. And depreciation can vary a lot depending on current market conditions. For instance, iSeeCars research found that all types of vehicles held their value better in 2023 than they did in 2019, thanks in part to fewer new cars being produced and fewer used cars for sale.

In 2023, the average five-year-old vehicle depreciated by 38.8%, compared to 49.6% in 2019. And trucks held their value best of all vehicles, depreciating just 34.8% over five years in 2023, compared to ​​42.7% in 2019.
Here’s a look at of how different types of vehicles have depreciated over a five-year span:

Recommended: What Should Your Average Car Payment Be?

The Takeaway

While all cars are holding their value better than they did in 2019, recent research confirms that trucks hold their value the best of all vehicles. If you plan to trade in your car or truck after a few years, consider buying a vehicle that is likely to hold its value longer to get a better trade-in value.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

At what mileage do cars lose value?

Cars and trucks unfortunately start to lose value as soon as you drive them off the lot. After that, depreciation is calculated each year.

Does mileage affect car value?

Mileage is one of the most important factors that go into car valuation. The higher the mileage, the more wear and tear the vehicle is presumed to have, and the less the vehicle will be worth.

At what age does a vehicle depreciate most?

Cars and trucks depreciate most in their first year, when they can lose 20% or more of their value.

Photo credit: iStock/timnewman

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

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

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