Having to get a root canal is already painful enough — but then comes the prospect of paying for it.
While the specific cost of a root canal will vary depending on your geographical location, the location of the tooth, your dentist, and other factors, it can easily cost as much as $1,600 or even more out of pocket if you don’t have insurance — and several hundred even if you do.
Fortunately, there are a variety of ways to finance dental work that make it possible to afford the care your teeth require. Here’s what you need to know.
What Is a Root Canal Treatment?
A root canal is a dental treatment that can remove infection and bacteria from the pulp beneath the hard exterior of the tooth. It’s a pretty common procedure — millions of them are performed each year.
While root canals are often characterized as unpleasant, modern dentistry means this medical intervention can take place relatively painlessly while preserving the natural tooth for both chewing and complementing a smile. All of which is to say, if you’re in need of a root canal, you’re not alone.
Reasons for a Root Canal
There are many different reasons your dentist might prescribe a root canal, including:
• Tooth decay
• Large cavities
• Chips in tooth enamel
• Periodontal disease
• Dental trauma
In any of these situations, bacteria might infect the pulp of the tooth and, if left untreated, the infection can spread to the surrounding structures such as gums, other teeth, or even the jawbone. In extreme cases, dental infections can contribute to heart attack or stroke, along with causing a lot of pain.
Taking good care of your teeth can help prevent these causes, but sometimes, accidents or predisposition to decay can play into the equation. In any case, if your dentist prescribes a root canal, it’s probably worth heeding their advice.
How Much Does a Root Canal Cost on Average?
While, again, the cost of a root canal procedure varies greatly depending on factors we’ll dive into in more depth below, the average cost hovers around $1,600 without insurance. With insurance, your bill might be considerably lower: between $200-$1,000 out of pocket, depending on your coverage and the extent of the procedure.
In many cases, you may also require a crown along with a root canal, which can help protect the tooth for future chewing and use. A crown can add a substantial amount to the overall bill: as much as $1,000 if you’re paying out of pocket.
Factors That Impact the Cost of a Root Canal
Here are some of the specific factors at play that can pull the cost of your root canal up or down.
Insurance Coverage
Obviously, the cost of a root canal — or any dental or medical procedure — is likely to be higher if you don’t have insurance coverage or if your provider is out of your insurance company’s network. Because root canals are usually medically necessary, as opposed to just cosmetic, it’s likely your insurer will cover the procedure itself.
Tooth Location
The location of the infected tooth in your mouth can also have an impact on the total cost of the root canal. That’s because certain teeth are more difficult for dentists to work on than others.
For instance, molars, which are set more deeply in the mouth, are harder to reach and thus command higher costs for dental procedures. Bicuspids, or premolars, cost slightly less, while front teeth needing root canals are likely to cost the least.
Geographical Location
Like most other goods and services, the cost of a root canal can vary largely depending on the local economy — or the prices set by the dental professional you choose.
Type of Dentist
While most general dentists can perform a simple root canal, some teeth with more complicated infections might require an endodontist, who specializes in dental pulp specifically (the part that is treated during the procedure).
Root canal treatment cost by a specialist may be more expensive than treatment by your general dental professional, as can the use of high-tech equipment such as an ultrasonic needle or water laser.
Root Canal Complications
Although they’re very common and generally safe, like most other medical procedures, root canals do come with some risk.
For example, the root canal can fail due to a breakdown of materials or the provider’s failure to remove all of the bacteria during the procedure. In addition, sometimes the tooth becomes slightly discolored after the procedure due to bleeding on the inside of the tooth.
Ways to Pay For a Root Canal
Although root canals can be expensive, there are many ways to pay for this vitally important procedure without chewing through your savings.
Dental Insurance
Carrying dental insurance is a great way to lower the cost of procedures such as root canal — though keep in mind you’ll be responsible for monthly premiums as well as a potential copay or coinsurance costs.
Health Savings Account
A health savings account is a tax-incentivized account that can help you save and pay for out-of-pocket medical expenses more affordable. However, you must have a high deductible health plan to contribute to one.
Personal Loan
Personal loans are a type of financial product that allows you to borrow money for almost any purpose, including dental or medical care. Because they’re unsecured, meaning no collateral is required, they tend to have higher interest rates than auto loans or mortgages — but the rates can be lower than those offered by credit cards.
As with most financial products, your specific rates and terms will vary depending on your credit score and other financial aspects. While rates may be higher, there are still personal loans for low-credit borrowers — and taking one out may still make more financial sense than decimating your emergency fund or putting the procedure on credit.
Credit Card
Although they usually have fairly high interest rates, credit cards are another option for paying for necessary medical interventions in a pinch. If you can qualify for a credit card with a 0% promotional interest rate, you’ll have some time to pay the balance without interest if you can pay it off before the promotional period ends.
Along with root canals, personal loans can be used to cover other common dental procedures, as well, including:
• Periodontal surgery
• Dentures
• Tooth bonding
• Wisdom tooth removal
• Dental fillings
The Takeaway
Having a root canal can be an important medical intervention for your health and the survival of your affected tooth. And although the procedure is expensive, there are ways to pay for it that won’t add financial pain to your dental pain.
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FAQ
How much is a root canal and a crown?
A root canal procedure averages $1,600, and the restorative crown can add another $1,000 the total cost. Costs can vary depending on what part of the country the procedure is performed in and which tooth is being treated.
Why is a root canal so expensive?
Root canals are performed by licensed medical professionals who use specialized equipment. More complex situations may need to be treated by an endodontist, a dental specialist who has completed additional years of training beyond dental school.
What does a root canal cost without insurance?
The full, out-of-pocket cost of a root canal may range from $800 to $1,800, depending on a variety of factors.
Photo credit: iStock/AndreyPopov
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A Roth IRA is an individual retirement account that allows you to contribute after-tax dollars, and then withdraw the money tax free in retirement. A Roth IRA is different from a traditional IRA, which is a tax-deferred account: meaning, you contribute pre-tax dollars — but you owe tax on the money you withdraw later.
Many people wonder what a Roth IRA is because, although it’s similar to a traditional IRA, the two accounts have many features and restrictions that are distinct from each other. Roth accounts can be more complicated, but for many investors the promise of having tax-free income in retirement is a strong incentive for understanding how Roth IRAs work.
Key Points
• A Roth IRA is a retirement savings account that offers tax-free growth and tax-free withdrawals in retirement.
• Contributions to a Roth IRA are made with after-tax dollars, but qualified withdrawals are not subject to income tax.
• Roth IRAs have income limits for eligibility, and contribution limits that vary based on age and income.
• Unlike traditional IRAs, Roth IRAs do not require minimum distributions during the account holder’s lifetime.
• Roth IRAs can be a valuable tool for long-term retirement savings, especially for individuals who expect to be in a higher tax bracket in the future.
What Is a Roth IRA?
A Roth IRA is a retirement account for people who want to make after-tax contributions. The trade-off for paying taxes upfront is that when you retire, all of your withdrawals will be tax free, including the earnings and other gains in your account.
That said, because you’re making after-tax contributions, you can’t deduct Roth deposits from your income tax the way you can with a traditional IRA.
Understanding Contributions vs Earnings
An interesting wrinkle with a Roth IRA is that you can withdraw your contributions tax and penalty-free at any time. That’s because you’ve already paid tax on that money before initially depositing or investing it.
Withdrawing investment earnings on your money, however, is a different story. Those gains need to stay in the Roth for a minimum of five years before you can withdraw them tax free — or you could owe tax on the earnings as well as a 10% penalty.
It’s important to know how the IRS treats Roth funds so you can strategize about the timing around contributions, Roth conversions, as well as withdrawals.
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Roth IRA Eligibility
Technically, anyone can open an IRA account, as long as they have earned income (i.e. taxable income). The IRS has specific criteria about what qualifies as earned income. Income from a rental property isn’t considered earned income, nor is child support, so be sure to check.
There are no age restrictions for contributing to a Roth IRA. There are age restrictions when contributing to a traditional IRA, however.
How to Open a Roth IRA
Roth IRA Annual Contribution Limits
For 2024, the annual limit is $7,000, and $8,000 for those 50 and up. The extra $1,000 is called a catch-up provision, for those closer to retirement.
Remember that you can only contribute earned income. If you earn less than the contribution limit, you can only deposit up to the amount of money you made that year.
One exception is in the case of a spousal Roth IRA, where the working spouse can contribute to an IRA on behalf of a spouse who doesn’t have earned income.
Other Roth IRA Details
Since Roth IRAs are funded with after-tax income, contributions are not tax-deductible. One exception for low- and moderate-income individuals is something called the Saver’s Credit, which may give someone a partial tax credit for Roth contributions, assuming they meet certain income and other criteria.
Note that the deadline for IRA contributions is Tax Day of the following year. So for tax year 2023, the deadline for IRA contributions is April 15, 2024. But, if you file an extension, you cannot further postpone your IRA contribution until the extension date and have it apply to the prior year.
In addition, with a Roth there are important income restrictions to take into account. Higher-income individuals may not be able to contribute the full amount to a Roth IRA; some may not be eligible to contribute at all.
It’s important to know the rules and to make sure you don’t make an ineligible Roth contribution if your income is too high. Those funds would be subject to a 6% IRS penalty.
For 2023:
• You could contribute the full amount to a Roth as long as your modified adjusted gross income (MAGI) was less than $138,000 (for single filers) or less than $218,000 for those married, filing jointly.
• Single people who earned more than $138,000 but less than $153,000 could contribute a reduced amount.
• Married couples who earned between $218,000 and $228,000 could also contribute a reduced amount.
• For single and joint filers: in order to contribute the full amount to a Roth you must earn less than $146,000 or $230,000, respectively.
• Single filers earning more than $146,000 but less than $161,000 can contribute a reduced amount. (If your MAGI is over $161,000 you can’t contribute to a Roth.)
• Married couples who earn between $230,000 and $240,000 can contribute a reduced amount. (But if your MAGI is over $240,000 you’re not eligible.)
If your filing status is…
If your 2023 MAGI is…
If your 2024 MAGI is…
You may contribute:
Married filing jointly or qualifying widow(er)
Up to $218,000
Up to $230,000
For 2023 $6,500 or $7,500 for those 50 and up. For 2024 $7,000 or $8,000 for those 50 and up.
$218,000 to $228,000
$230,000 to $240,000
A reduced amount*
Over $228,000
Over $240,000
Cannot contribute
Single, head of household, or married filing separately (and you didn’t live with your spouse in the past year)
Up to $138,000
Up to $146,000
For 2023 $6,500 or $7,500 for those 50 and up. For 2024 $7,000 or $8,000 for those 50 and up.
From $138,000 to $153,000
From $146,000 to $161,000
Reduced amount
Over $153,000
Over $161,000
Cannot contribute
Married filing separately**
Less than $10,000
Less than $10,000
Reduced amount
Over $10,000
Over $10,000
Cannot contribute
*Consult IRS rules regarding reduced amounts. **You did live with your spouse at some point during the year.
Advantages of a Roth IRA
Depending on an individual’s income and circumstances, a Roth IRA has a number of advantages.
• No age restriction on contributions. With a traditional IRA, individuals must stop making contributions at age 72. A Roth IRA works differently: Account holders can make contributions at any age as long as they have earned income for the year.
*You can fund a Roth and a 401(k). Funding a 401(k) and a traditional IRA can be tricky, because they’re both tax-deferred accounts. But a Roth is after-tax, so you can contribute to a Roth and a 401(k) at the same time (and stick to the contribution limits for each account).
• Early withdrawal option. With a Roth IRA, an individual can generally withdraw money they’ve contributed at any time, without penalty (but not earnings on those deposits). In contrast, withdrawals from a traditional IRA before age 59 ½ may be subject to a 10% penalty.
• Qualified Roth withdrawals are tax-free. Investors who have had the Roth for at least five years, and are at least 59 ½, are eligible to take tax- and penalty-free withdrawals of contributions + earnings.
• No required minimum distributions (RMDs). Unlike IRAs, which require account holders to start withdrawing money after age 73, Roth IRAs do not have RMDs. That means an individual can withdraw the money as needed, without fear of triggering a penalty.
Disadvantages of a Roth IRA
Despite the appeal of being able to take tax-free withdrawals in retirement, or when you qualify, Roth IRAs have some disadvantages.
• No tax deduction for contributions. The primary disadvantage of a Roth IRA is that your contributions are not tax deductible, as they are with a traditional IRA and other tax-deferred accounts (e.g. a SEP IRA, 401(k), 403(b)).
• Higher earners often can’t contribute to a Roth. Affluent investors are generally excluded from Roth IRA accounts, unless they do what’s known as a backdoor Roth or a Roth conversion. (There are no income limits for converting a traditional IRA to a Roth, but you’ll have to pay taxes on the money that goes into the Roth — though you won’t face a penalty.)
• The 5-year rule applies. The 5-year rule can make withdrawals more complicated for investors who open a Roth later in life. If you open a Roth or do a Roth conversion at age 60, for example, you must wait five years to take qualified withdrawals of contributions and earnings, or face a penalty (some exceptions to this rule apply; see below).
Last, the downside with both a traditional or a Roth IRA is that the contribution limit is low. Other retirement accounts, including a SEP-IRA or 401(k), allow you to contribute far more in retirement savings. But, as noted above, you can combine saving in a 401(k) with saving in a Roth IRA as well.
Since you have already paid tax on the money you deposit, you’re able to withdraw contributions at any time, without paying taxes or a 10% early withdrawal penalty.
For example, if you’ve contributed $25,000 to a Roth over the last five years, and your investments have seen a 10% gain (or $2,500), you would have $27,500 in the account. But you could only withdraw up to $25,000 of your actual deposits.
Withdrawing any of the $2,500 in earnings would depend on your age and the 5-year rule.
The 5-Year Rule
What is the 5-year rule? You can withdraw Roth account earnings without owing tax or a penalty, as long as it has been at least five years since you first funded the account, and you are at least 59 ½. So if you start funding a Roth when you’re 60, you still have to wait five years to take qualified withdrawals.
The 5-year rule applies to everyone, no matter how old they are when they want to withdraw earnings from a Roth.
There are some exceptions that might enable you to avoid owing tax or a penalty.
Non-Qualified Withdrawals
Non-qualified withdrawals of earnings from a Roth IRA depends on your age and how long you’ve been funding the account.
• If you meet the 5-year rule, but you’re under 59 ½, you’ll owe taxes and a 10% penalty on any earnings you withdraw, except in certain cases.
• If you don’t meet the 5-year criteria, meaning you haven’t had the account for five years, and if you’re less than 59 ½ years old, in most cases you will also owe taxes and a 10% penalty.
There are some exceptions that might help you avoid paying a penalty, but you’d still owe tax on the early withdrawal of earnings.
Exceptions
Again, these restrictions apply to the earnings on your Roth contributions. (You can withdraw direct contributions themselves at any time, for any reason, tax and penalty free.)
You can take an early or non-qualified withdrawal prior to 59 ½ without paying a penalty or taxes, as long you’ve been actively making contributions for at least five years, in certain circumstances, including:
• For a first home. You can take out up to $10,000 to pay for buying, building, or rebuilding your first home.
• Disability. You can withdraw money if you qualify as disabled.
• Death. Your heirs or estate can withdraw money if you die.
Additionally you can avoid the penalty, although you still have to pay income tax on the earnings, if you withdraw earnings for:
• Medical expenses. Specifically, those that exceed 7.5% of your adjusted gross income.
• Medical insurance premiums. During a time in which you’re unemployed.
• Qualified higher education expenses.
Not only are the early withdrawal restrictions looser than with a traditional IRA, the post-retirement withdrawal restrictions are lesser, as well. Whereas account holders are required to start taking distribution of funds from their IRA after age 73, there is no pressure to take distribution from a Roth IRA at any age.
Roth IRA vs Traditional IRA
There are certain things a Roth IRA and a traditional IRA have in common, and several ways that they differ:
• It’s an effective retirement savings plan: Though the plans differ in the tax benefits they offer, both are a smart way to save money for retirement.
• Not an employer-sponsored plan: Individuals can open either type of IRA through a financial institution, and select their own investments or choose an automated portfolio.
• Maximum yearly contribution: For 2023, the annual limit is $6,500, with an additional $1,000 allowed in catch-up contributions for individuals over age 50. For 2024 it’s $7,000, and $8,000 if you’re 50 and older.
There are also a number of differences between a Roth and a traditional IRA:
• Roth IRA has income limits, but a traditional IRA does not.
• Roth IRA contributions are not tax deductible, but contributions you make to a traditional, tax-deferred IRA are tax deductible.
• Roth IRA has no RMDs. Individuals can withdraw money when they want, without the age limit imposed by a traditional IRA.
• Roth IRA allows for penalty-free withdrawals before age 59 ½. While there are some restrictions, an account holder can typically withdraw contributions (if not earnings) before retirement.
Is a Roth IRA Right for You?
How do you know whether you should contribute to a Roth IRA or a traditional IRA? The quiz below or this checklist might help you decide.
• You might want to open a Roth IRA if you don’t have access to an employer-sponsored 401(k) plan, or if you do have a 401(k) plan but you’ve already maxed out your contribution there. You can fund a Roth IRA and an employer-sponsored plan.
• Because contributions are taxed immediately, rather than in retirement, using a Roth IRA can make sense if you are in a lower tax bracket or if you typically get a refund from the IRS. It may also make sense to open a Roth IRA if you expect your tax bracket to be higher in retirement than it is today.
• Individuals who are in the beginning of their careers and earning less might consider contributing to a Roth IRA now, since they might not qualify under the income limits later in life.
• A Roth IRA can be helpful if you think you’ll work past the traditional retirement age.
The Takeaway
A Roth IRA has many of the same benefits of a traditional IRA, with some unique aspects that can be attractive to some people saving for retirement. With a Roth IRA you don’t have to contend with required minimum distributions (RMDs); you can contribute to a Roth IRA at any age; and qualified withdrawals are tax free. With all that, a Roth IRA has a lot going for it.
That said, not everyone is eligible to fund a Roth IRA. You need to have earned income, and your annual household income cannot exceed certain limits. Also, even though you can withdraw your Roth IRA contributions at any time without owing a penalty, the same isn’t true of earnings.
You must have been funding your Roth for at least 5 years, and you must be at least 59 ½, in order to make qualified withdrawals of earnings. Otherwise, you would likely owe taxes on any earnings you withdraw — and possibly a penalty. Still, the primary advantage of a Roth IRA — being able to have an income stream in retirement that’s completely tax free — can outweigh some of the restrictions for certain investors.
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FAQ
Are Roth IRAs insured?
If your Roth IRA is held at an FDIC-insured bank and is invested in bank products like certificates of deposit (CDs) or money market account, those deposits are insured up to $250,000 per depositor, per institution. On the other hand, if your Roth IRA is with a brokerage that’s a member of the Securities Investor Protection Corporation (SIPC), and the brokerage fails, the SIPC provides protection up to $500,000, which includes a $250,000 limit for cash. It’s important to note that neither FDIC or SIPC insurance protects against market losses; they only cover losses due to institutional failures or insolvency.
How much can I put in my Roth IRA monthly?
For tax year 2023, the maximum you can deposit in a Roth or traditional IRA is $6,500, or $7,500 if you’re over 50. How you divide that per month is up to you. You just can’t contribute more than the annual limit.
Who can open a Roth IRA?
Anyone with earned income (i.e. taxable income) can open a Roth IRA, but your income must be within certain limits in order to fund a Roth.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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While both ACH and checks have their upsides, ACH tends to be the quicker and more secure payment method. However, in your financial life, there will probably be times when one is a lot better suited to your needs than the other.
Here’s a detailed breakdown of ACH vs. check, the pros and cons of each, and how they stack up.
What Is ACH and How Does It Work?
An ACH transfer (named after the Automated Clearing House network) is an electronic banking transaction that is processed through the ACH network. The network is a major financial hub, made up of around 10,000 institutions. Through the ACH network it is possible to process the following transactions:
Businesses and consumers have the option of using ACH transfers to make direct payments (known as ACH debit transactions) or direct deposits (ACH credit transactions). Some financial institutions even make it possible to schedule and pay bills electronically via ACH transfers. You are probably familiar with ACH transactions when you set up autopay on an account, whether it’s a utility bill or your gym membership.
You may wonder how long ACH transfers take. Because they are electronic, ACH transfers can clear banks in a matter of a few business days as long as there are enough funds in the account. However, there are times where ACH transactions will take longer. This is especially common if a transaction is suspected to be fraud.
However, for something like a direct deposit of a paycheck, ACH can be quite quick. When the payment hits your checking account, it’s immediately available. You don’t have to run around with a paper check that needs to be deposited. That can make a big difference between getting paid by ACH vs. a check.
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Pros and Cons of ACH
Like any financial tool, ACH transfers have some advantages and disadvantages worth considering. Here’s a closer look at some important pros and cons.
Pros
Cons
• Free. Most, but not all, ACH transfers are free.
• Errors can be reversed. You can sometimes request a transaction reversal for ACH transfers if an error occurs.
• Simple and straightforward. Convenient form of payment allowing you to pay without cash.
• Secure. The digital nature of these payments can make them less likely to have funds stolen.
• Fees can apply. May need to pay a fee to expedite bill-pay services or to make a transfer to an outside bank.
• Slow timeline. Can take up to three days for a transfer to go through.
• Potential roadblocks. Daily transfer limits apply.
What Is a Check?
A check is a payment method that involves making a payment using a paper check that has the payment amount and the payee’s bank account information on it. Once someone writes a check, the recipient can cash it and receive the funds.
Pros and Cons of Using a Paper Check
While not as popular as in the past, checks are still one of the most basic and time-honored financial tools at your disposal. They allow you to move money around without paying a fee, and they are a secure way to do this. What’s more, checks create a paper trail with proof that funds have been received.
But they can wind up costing you, they can take longer than you might expect, and sadly, there are scams that prey upon those who use checks. Here are some of the pros and cons of using a check to make payments or to receive payments in chart form.
Pros
Cons
• No fees. Electronic payments can come with fees, but there are no fees for standard checks once you purchase them.
• Safe way to send money. Cash can be lost or stolen. If a check is lost or stolen, the person who finds it will have a hard time cashing it thanks to handy security features.
• Proof of payment. Checks have a paper trail confirming proof of payment.
• Check scams exist.Check scams can be dangerous and easy to fall for.
• Checks cost money. Typically, you don’t pay a fee when you use a check, but it costs money to buy checks, and depending on your situation, you might have to pay a fee to cash a check at some locations.
• Processing delays occur. Paying by cash, credit, or electronic transfer can usually occur more quickly than paying by check.
Here, a side-by-side comparison of ACH vs. checks. It’s important to note that both have their own unique set of advantages and disadvantages, but much of the choice about which to use will depend on your particular circumstances and preferences.
ACH
Check
• For the most part, ACH transfers are free unless a rush fee or a fee for transferring to an outside bank applies.
• It is sometimes possible to request a transaction reversal for ACH transfers if an error occurred.
• ACH payments are fairly simple and easy to conduct.
• ACH transfers can take a few days to clear.
• There are no fees associated with checks, but consumers do have to buy the checks to be able to use them.
• Checks offer a safe way to make payments, but there can be issues with scams and stolen checks.
• Checks provide a convenient paper trail that cash payments lack.
There’s no right or wrong answer when it comes to choosing a check over an ACH transfer. Both have unique advantages and disadvantages. Consider these scenarios:
• Because it’s possible to set up recurring ACH transfers, that can be a much more convenient option if someone wants to schedule ongoing automated payments such as rent or bills.
• Checks, which are very secure and convenient, may be a better fit for one-off payments such as paying the babysitter or a hairdresser.
As you see, the decision depends on what best suits your needs for a particular transaction.
The Takeaway
Both ACH transfers and checks offer benefits. They can be convenient, secure ways to transfer money, though ACH may be faster and safer. Which one is the “best” will often depend on the unique preferences of both parties involved in the transaction. You may well find yourself toggling between the two during your everyday financial life.
While you’re thinking about which kinds of payments work best for you, consider your banking options.
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FAQ
Is an ACH payment a check?
No, ACH payments are an electronic transfer processed through the Automated Clearing House network, which is a network made up of around 10,000 financial institutions. A check is a different kind of payment, using a paper document and being processed in a different way.
Is ACH better than checks?
Not necessarily. ACH can be faster, cheaper, and more secure in certain scenarios, but both can be useful ways to make payments.
Is ACH cheaper than checks?
When it comes to check vs. ACH costs, ACH payments can be cheaper than checks in some cases, but not always. ACH payments are free, whereas consumers generally need to buy checks to use for payments. However, you may run into fees when doing certain ACH payments.
Is ACH safer than a check?
Both checks and ACH transfers are very secure, but ACH payments are known to be more secure, thanks to the extra layers of protection in place due to encryption that occur during the transfer. Both checks and ACH transfers do require that the identity of the recipient be verified before the transaction can complete. Fraud and mistakes can occur for both payment types.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
If you’re no longer being well-served by your current savings or checking account, it may be time to make a switch. Maybe you’re moving and need a bank with closer branches or ATMs. Or, perhaps you’re annoyed by your current bank’s fees or poor customer service. A common reason for closing a bank account is finding a new account that pays a higher annual percentage yield (APY).
Whatever the reason, closing a bank account isn’t complicated. However, you’ll want to make sure you follow certain steps, in a certain order, to prevent hassles and fees. Here’s what you need to know about closing a bank account.
Key Points
• Closing a bank account involves a series of steps to ensure a smooth transition without incurring fees.
• Before closing an account, it’s crucial to set up a new one to avoid disruptions in financial transactions.
• Updating automated transactions and direct deposits to the new account is necessary to prevent missed payments.
• After transferring funds to the new account, monitoring the old account for a short period can catch any overlooked transactions.
• Obtaining written confirmation of the account closure from the bank is advisable to avoid potential issues with accidental reactivation.
6 Steps to Closing a Bank Account
While closing a savings account (or checking account) is generally a simple process, it requires more than just contacting your bank. There are a series of steps you’ll want to follow to ensure a smooth transition. Here’s how to close a bank account.
Step 1: Decide Where You Want to Keep Your Money
Before you end one banking relationship, it’s a good idea to have another place lined up to stash your money. You may be able to increase your returns and reduce the cost of banking if you take time to research your options. For example, the top high-yield savings accounts currently have APYs of up to 4% or more — that’s many times higher than the average national average rate of 0.45% APY as of October 21, 2024.
If you have multiple financial goals and needs, you may want to have more than one bank account. For example, you might open different savings accounts for different objectives, such as one earmarked for an upcoming vacation or large purchase and another for your emergency fund. Just keep an eye out for any fees.
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Step 2: Update Any Automated Transactions
If you have any direct deposits or automatic payments set up, you’ll need to move them to the new account. Check with your employer regarding any forms you need to fill out for direct deposit so your paycheck can be rerouted to the new account.
It’s also a good idea to comb through your statements and create a list of monthly recurring payments, such as automatic payment for loans, insurance policies, credit cards, streaming services, and the like. If you have any annual subscriptions, go through the last 12 months of transactions. A failed automated payment or negative account balance could trigger penalties.
Step 3: Move Your Money
Once your automatic payments are updated and any pending transactions have cleared, you can move your money out of your old account. However, the timing on this is critical: If an automatic payment or outstanding check goes through after you empty the account, you could end up overdrafting the account, which can trigger a hefty fee.
Also, if your bank account has a minimum balance requirement, you may want to wait to transfer money out of the account until just before you officially close the account, so you don’t get hit with a monthly maintenance fee due to a low balance.
After you’ve funded your new bank account, you can begin using it. However, you may want to keep your old account open for a couple of months as you transition to the new account, as long as it’s not costly to do so. This allows you to catch any automatic transactions you forgot to change over.
Step 5: Download Your Transaction Records
Once your account is closed, you likely won’t have access to your transaction history and online statements. If you require any records of your banking activities under the old account (say, for tax purposes), you may want to download your documentation before you officially deactivate your account.
Step 6: Close Your Old Account
Once you’re set up and using your new savings account, you can close the old one.
The exact process for doing this will depend on your bank — some allow you to close an account online or via a phone agent, while others require you to fill out an account closure request form or submit a written request. Be sure to follow your bank’s guidance on the proper method for closing an account.
If you still have money left in your account, you should be able to request a transfer to your new account or receive a check by mail.
Because closed bank accounts can sometimes be reactivated in error and incur fees, it’s smart to get written confirmation of the account closure for your records. You’ll also want to carefully review your final bank account statement for any errors.
Here’s a look at some reasons why you might want to close your current bank account and open a different one at the same or a different bank.
• You’re moving and your current bank doesn’t have branches and ATMs near your new location.
• Your bank’s hours don’t suit your lifestyle.
• The bank has policies that don’t work for you, such as minimum balance and service fees.
• You have multiple bank accounts and want to consolidate.
• Another bank offers higher interest rates on savings accounts.
• You want to change from a brick-and-mortar bank to an online bank.
• You aren’t happy with your bank’s customer service.
• You’re opening a joint account.
• You’re switching from a child account to an adult account.
Why It’s Important to Close a Savings Account Properly
Once you’ve decided you no longer want or need a certain bank account, it’s a good idea to go through all of the steps involved in properly closing that account, rather than just let it sit around unused. Here’s a look at some reasons why this is important.
Dormancy Fees and Other Penalties
Some banks charge account holders a “dormancy fee” after a period of time without any deposits or withdrawals. These fees can add up over time. Also, if your old bank account charges a monthly maintenance fee when your balance goes below a certain level, you could end up triggering that fee. If you have funds left in your unused savings account, these penalties could deplete them.
Fraud
If you’re not closely monitoring your old bank account, it can be more difficult to spot suspicious activity. Even inactive accounts contain personal information that could be exploited by identity thieves. Closing a rarely or never-used account reduces the likelihood of your sensitive data falling into the wrong hands.
Lost Deposits
If you’ve signed up for direct deposit you don’t receive regularly — your yearly tax refund, for instance — you may forget you’ve done so. And if they one day make a deposit to a savings account you’re no longer using, you may not notice you received that payment.
While there are drawbacks to keeping an unused account open, you may also be wondering: Is it bad to close a savings account? The good news is, closing your account usually comes at no cost. Not only do most banks not charge a fee to close a basic savings account, but doing so will not affect your credit score.
If, however, your account has a negative balance, you will need to repay that at the time of closing the account.
If you’re looking to close a joint checking or savings account, you’ll want to check with your bank about the correct procedure. Some banks allow only one account holder’s authorization to close a joint account, while others require both parties to sign an account closure request or to request an account closure online.
Closing a Child’s Account
A childs’ bank account is designed for kids under age 18. Typically, both the child and a parent or guardian act as joint account holders.
In some cases, a bank will automatically convert a child’s account into a regular account when the child turns 18. In that case, the child/now adult can likely close the account on their own. If a parent or guardian is still the co-owner of the account, however, both parties will usually need to request the closure of the account.
Closing an Inactive Account
An account can become “inactive” or “dormant” if its owner does not initiate any activity for a specific period of time, often two years. If your account has been marked inactive or dormant, you’ll need to reactivate it before it can be closed by the bank. Contact your bank’s customer service to reactivate your bank account. There might also be an option to do this through your online or mobile banking.
Closing the Account of Someone Deceased
Closing the bank account of a loved one who has passed away is generally more complicated than closing your own bank account. The first step is let the bank know of the account owner’s death. To do this, you may need to supply an original or certified copy of the death certificate and, possibly, other documents. The bank can then freeze the account, and stop any standing orders or direct debits.
When you’ve notified the bank about the death, they can let you know what the next steps will be and what other documentation they need to officially close the account.
If your bank account has a zero or positive balance and there are no pending transactions, closing a bank account is a quick process. Typically, the bank can close the account as soon as you make the request. If there are still pending transactions or unpaid fees, however, the process can take longer. You will likely need to wait for deposits or payments to fully clear and/or bring the balance into positive territory before you can close the account.
Can You Reopen a Closed Bank Account?
Generally, once a bank account is closed, it can’t be reopened. However, it may be possible to reopen a closed account if it was closed due to inactivity. Also, some banks reserve the right to reopen an account if another payment or deposit comes through.
When closing your account, it’s a good idea to ask the bank about their policy on transactions after an account is closed. If you find out that an old account was reopened due to a new transaction, you’ll want to withdraw or add funds and then close the account again. Be sure to update the person who billed or paid you with your new bank account information.
Does Closing a Bank Account Hurt Your Credit Score?
No, closing a bank account will not have any impact on your credit. Bank accounts are different from credit card accounts and aren’t part of your consumer credit reports. Banks report account closures to the consumer reporting agency ChexSystems. Opting to close a bank account, however, won’t have a negative impact on your ChexSystems report.
Finding an Account That Meets Your Needs
Even if you’ve been with the same bank forever, it’s worth taking a pulse check from time to time to ensure that your current savings and checking accounts meet your financial needs and are helping you get closer to achieving your goals.
If you find an account that offers a higher APY on your deposits and/or charges lower or no fees, it can be well worth making the switch. Closing a bank account is a simple process and there are typically no fees involved.
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.
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FAQ
Does it cost money to close a savings account?
Typically, no. The one exception is if you close your account soon after opening it. Some banks charge something called an “early account closure” fee (ranging from $5 to $50) if a customer closes their account within 90 to 180 days of opening it. However, many banks and credit unions don’t charge early account closure fees. Check the institution’s policy before opening an account.
Can you close a savings account at any time?
Yes, you can request to close a savings (or checking) account anytime. Just keep in mind that some banks charge what’s known as an early closure fee if an account holder closes their account within 90 to 180 days of opening it.
What happens when you close a savings account with money in it?
If you close a bank account but still have money in the account, you should receive a check from the bank for the remaining funds.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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.
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.
Part of teaching your kids to be more independent is giving them money as part of an allowance. It can be an exciting time for your child — remember when you first got your hands on some cash? It can also be fraught with some bumps along the way as your child learns sound money management skills.
That’s not to say it’s not worth it. Rather, deciding on how to give them money and helping them budget their allowance can take time, but your kids will thank you for it. Read on for ways that you may handle this part of parenthood and help your child build financial literacy.
Key Points
• Managing a child’s allowance helps teach them financial independence and responsibility from a young age.
• Allowances can be set up on a weekly or monthly basis and may be tied to chores.
• Different methods include a fixed allowance, a chore-based allowance, or a hybrid of both.
• The amount of allowance can vary based on the child’s age, the complexity of tasks, or family budget constraints.
• Teaching kids about money through allowances can build their confidence and money management skills.
What Is an Allowance?
An allowance for kids is a predetermined amount of money you give them on a consistent basis, most commonly on a weekly or monthly cadence. You can choose to have your child earn their allowance by completing chores or “jobs” or do none at all. The idea is that with an allowance, your child can learn the value of work (if you have them do chores), gain experience handling money, and learn responsibility.
The decision to give an allowance is up to the family. The same holds true regarding whether the allowance is earned by completing chores. Depending on the age, some parents may feel more comfortable with giving their kids cash. Some may feel older kids can handle their own debit card and a children’s checking account — with some limits, of course.
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Types of Allowances
The type of allowance you give your child is based on your preferences, what you want your child to learn, and their needs. Here are some options for how an allowance can work.
Chore-Based Allowance
The chore-based allowance tends to be the most common, where a child is given some household tasks and offered a certain amount once these tasks are complete.
• Tasks typically will depend on your child’s age and their readiness to handle certain types of responsibilities.
• It can be wise to assign tasks your child can realistically accomplish so that they don’t wind up feeling discouraged.
For example, say your nine-year-old wants to start doing chores regularly to receive allowance money, which they plan to save up to buy a new science kit. Based on what they’ve demonstrated to you in the past, you believe they’re able to load the dishwasher and help put the laundry away. You discuss this with your child, and you both agree that you’ll give them a weekly allowance if they complete all their assigned chores.
Pure Allowance
Some parents would rather teach their child money management skills without connecting this to some sort of labor. Instead of asking your child to complete chores, parents agree to give them an allowance — typically a consistent amount in cash or perhaps put on a debit card connected to a bank account. While your child may still do chores around the house, the allowance isn’t contingent upon its completion.
Hybrid Approach to Allowance
Parents who want to teach their kids about reaching a goal (and also how money is tied to work) can take the hybrid approach. Here, you’ll give your child a regular allowance that isn’t contingent on any chores. However, you give them an opportunity to earn more money by taking on extra chores around the house. In that way, they’d get more experience in allowance management.
• For example, your child receives $5 a week, but they want to earn more so they can head to the local arcade for their friend’s birthday party or see their savings grow.
• Based on their age and ability, you have them do a chore or two (pulling weeds in the yard or taking out garbage). Once the tasks are complete, you give your child the amount you agreed upon.
How Much Allowance Should You Give Out?
The amount you should give your child will depend on several factors. Ultimately, it will depend on your budget and what you can afford to give your child. One popular formula is to give a child $1 or $2 per week for every year of age, which would mean $8 or $16 for an eight-year-old and $16 or $32 for a 16-year-old.
You might consider not just the age of your child but also how challenging or time-consuming the task is. A couple of other pointers:
• If you’re unsure what’s a good amount, you can ask some of your trusted parent friends or family members about what they’re giving their child.
• If your child reaches the age where they can get a part-time job, you may even consider lowering the amount or not giving an allowance at all since they can earn their own pocket money.
Whatever the amount you choose to give, make sure you set clear expectations. This means spelling out the chores in detail (is the child making their bed every day or just on weekdays, for instance?). It also means determining how much money will be paid, when, and how, as well as what (if anything) they will receive if a task is not fully completed. This can result in headaches down the road.
Advantages of Giving an Allowance
There are plenty of upsides to giving an allowance. Consider the following:
Teaching Money Management
Giving an allowance, whether tied to chores or now, gives your child an opportunity to understand how money works. Plus, it can teach them that the items they want to purchase or activities they want to do cost money. It gives them hands-on experience earning, saving, and spending, providing a valuable lesson in money management for kids.
They’ll learn about what it takes to purchase something, such as looking at price tags in the store.
• To go a step further, you can even teach the concept of saving and investing money and why that can help them as well.
• If you open a children’s or teen’s bank account for your child’s allowance money, that will teach valuable basic banking and financial literacy skills too. They might see how interest compounds and grows their savings, for instance.
• The same holds true if they get a debit card (typically one where you can view and possibly approve their spending).
Teaching Responsibility
An allowance can teach your child what it means to be responsible with money. They can learn not to spend their earnings on snacks if they’re saving for, say, a video game. They can learn to safely store their funds, be patient until their next paycheck rolls around, and earn extra money if they’re eager to accumulate a certain amount.
Building Confidence
Giving kids an allowance can help boost their confidence because it can show them you believe they’re ready to earn and manage their own money. They may also feel proud of their ability to make cash and spend it as they see fit, whether that means buying themselves new clothes or making a donation to a favorite charity.
Creating a Safe Space to Learn
Instead of having kids learn about money and other types of responsibilities when they’re grown, giving an allowance can give them a bit of a head start. You can help guide them to make their own decisions, which can include making money mistakes without huge consequences. Any errors they make can be an opportunity for you to teach your kid about what they can do differently next time.
If you choose to give your child an allowance, whether it depends on chores or not, it can be a good way for them to learn how to manage a bit of money responsibly. You might have them work for the money, not work at all, or have them earn a bonus for doing additional chores.
Whatever amount you give, showing your child how to save their money in a savings account is a great teaching opportunity.
Currently SoFi Bank does not offer accounts to minors. But while you’re thinking about money management, why not take a fresh look at your own banking needs?
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 4.00% APY on SoFi Checking and Savings.
FAQ
What is a fair allowance for kids?
A fair allowance for kids should be based on age and what you feel is appropriate. Many parents provide $1 or $2 per week for each year of the child’s age (meaning, if a child is 10, they get $10 or $20 per week). You might survey other parents in your circle and see what they give their kids as a way of coming up with a ballpark figure.
Are allowances bad for kids?
In most cases, allowances can have several advantages for kids, such as learning how to handle money and becoming more responsible. However, some parents may believe that allowances aren’t appropriate and should in no way feel obligated to give one.
How do parents give allowance?
Parents can give an allowance in a weekly, biweekly, or monthly cadence (or whatever other frequency suits them). They can also give a consistent amount or vary it depending upon tasks completed. In addition, an allowance can be paid as cash, on a debit card for older kids, or deposited into children’s bank account or an account that their parent holds for them.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
