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If you need to send money with a credit card, there are several ways you can complete the transaction, including taking a cash advance, using a peer-to-peer (P2P) app, or using a money transfer service. While it’s convenient to send money by credit card, it may be costly and it could impact your credit.

Before you transfer money, here’s a rundown on how to send money with a credit card and what you need to know about doing so.

Transferring Money From a Credit Card to a Bank Account or Debit Card

You usually have three methods to choose from in order to send money by credit card. Here’s a breakdown of how each one works.

1. Cash Advance

The first way you can send money using a credit card is through a cash advance, which is one of the ways credit cards work. Essentially, a cash advance is like a personal loan that you can use to pay bills or make purchases.

Since you’re borrowing money from your creditor, the cash advance will begin accruing interest immediately. Also, you must pay a fee. Therefore, it’s best to be timely when repaying the loan amount.

Depending on your credit card issuer, you may have several options for taking a cash advance, including:

•   Visiting an ATM

•   Requesting a convenience check

•   Going to a bank branch in person

•   Getting a cash advance from a loan agency (though you’ll need a credit card PIN for the agency to distribute the funds, which is different from the CVV number on a credit card)

If you’re requesting a cash advance from your local bank, they may allow you to visit a bank branch and deposit the funds directly into your bank account. A convenience check works similarly to a traditional check, except the funds come from the line of credit on your credit card instead of directly from your bank account. You can then deposit the money into your bank account or use it to pay for another expense.

2. Peer-to-Peer Applications

Another option is to download a P2P app like Venmo, Cash App, or PayPal. Then, you can link your account to your credit card and send money to another receiver.

It’s important to note that all P2P apps have different requirements for sending funds, and they can charge a fee to do so. For example, if you choose to use the Cash App to send money with a credit card, you’ll pay a 3% fee.

3. Money Transfer Services

Lastly, you could use a money transfer service to send money by credit card. For example, Western Union allows customers to pay for a money transfer using a credit card. You can do so via the app, in person, or online. But, like the other solutions for transferring money with a credit card, a money transfer service may charge a fee.

You may also be able to transfer funds from your credit card to your bank account through your bank.

Banks vs Money Transfer Providers for Credit Card Payments

Here’s a difference to consider if you are deciding between how a bank vs. money transfer service may look at credit card payments.

•   Usually, if you decide to transfer money using your bank, your creditor will categorize the transfer as a cash advance. Your creditor will charge a fee, and if you’re sending the money internationally, you also may have to pay a foreign transaction fee. A cash advance interest rate — which is usually higher than the average credit card interest rate for purchases — will also apply.

You can request that the cash advance get directly deposited into your bank account, or you can take the cash advance from an ATM or request a convenience check. Once you receive the funds or the check, you can deposit the money into your bank account.

•   On the other hand, when you use a money transfer service, you will link a credit card to your account. This gives you the ability to send money, often within minutes. However, depending on the company, you may have to pay a fee for the transaction. Creditors generally treat this transaction just like any other purchase transaction, meaning the purchase APR on a credit card will apply.

Things to Consider When Transferring Money From a Credit Card

Although using credit cards to send money is a convenient solution, it’s not always advisable. When you have the choice, using cash or your savings is a better option since you can avoid paying high fees or going into debt that might not be easy to shake (here’s what happens to credit card debt when you die, for instance).

But, if you find yourself in a bind and have limited options, you may need to send money with a credit card. Before you do so, however, here are a few considerations to keep in mind.

Credit

When you take a cash advance from your credit card, it can negatively impact your credit. Credit bureaus use your credit utilization ratio to determine your credit score, which is the amount of credit you’re using versus the amount of credit you have available. Ideally, you want your credit utilization ratio to fall under 30%, ideally closer to 10%.

If you take a cash advance, there’s a chance it will spike your credit utilization ratio and ding your credit. For example, let’s say your credit limit is $5,000, and you take a $3,000 cash advance. This would make your credit utilization ratio 60% — double the recommended benchmark. Keeping your credit limit above this threshold for too long can affect your credit score.

Likewise, not handling your credit card usage responsibility can harm your credit. So, even when using a P2P app to send money, it’s important to make on-time credit card payments (ideally of more than the credit card minimum payment) to avoid late fees or potential damage to your credit score.

Fees

Most options for using a credit card to transfer money will involve your paying transfer fee. This may be a fixed amount or a percentage of the cash advance.

While you can compare options to identify the cheapest solution, it’s best to find a solution that doesn’t charge any fees. This way, you don’t have to worry about losing money on the extra fees you must pay.

Interest

In addition to fees, you must pay interest on all of your credit card purchases — including money transfers — if you don’t (or can’t) pay off your balance in full each billing cycle given what a credit card is and how it works.

And, if you take a cash advance, your interest rate is usually higher on those transactions. Further, interest on cash advances starts accruing immediately. (You may have noticed these points when applying for a credit card and reviewing the disclosures.)

So, even if it is an emergency, you must consider the interest you’ll pay if you choose to send money with a credit card.

Pros and Cons of Sending Money With a Credit Card

Understanding the advantages and disadvantages of sending money with a credit card will help you make a more informed decision. Like with most financial decisions, there are pros and cons to using a credit card to send funds.

Pros

•   Rewards. You could earn credit card rewards if you have a card that offers cashback, miles, or bonus points when you spend money. Purchases may include a money transfer if you decide to use a money transfer service.

•   Convenience. Using a money transfer service can help you transfer funds from your credit card to another party within minutes. So, if you need money fast, this could be a good solution.

•   Security. Using a credit card is often more secure than using a debit card. Credit cards typically have stronger fraud protection and other security features to keep your money and identity safe, especially when sending money abroad. For instance, if you believe a charge is fraudulent, you can request a credit card chargeback.

Cons

•   High interest rates and fees. If you choose the credit card cash advance route, you must pay the cash advance fee and cash advance interest rate. Even if you use a money transfer service, you’ll usually pay a fee.

•   Not accepted everywhere. Some companies may not accept a credit card as a form of payment for a money transfer.

•   Potential impact to your credit. If you’re unable to pay off the cash advance or your credit card balance, it could impact your credit score. This can make it harder to get approved for a loan or a mortgage in the future.

Alternatives to Using Credit Cards for Sending Money

Again, if you send money with a credit card, you’ll have to pay fees and interest. With this in mind, there are other alternative solutions that can help you save money. Some other options you may consider include:

•   Low-interest personal loan. If you have a good credit score, you could qualify for a competitive interest rate, potentially one that’s lower than your credit interest rate. Also, personal loan approval can happen quickly, so you may not have to wait too long for the money to come through.

•   Credit card with 0% introductory offer. Some credit cards offer promotional periods where the APR is 0%. Some may simply offer a good APR on a credit card that’s lower than the standard APR. This means you could make purchases and not have to pay interest. However, you’ll still have to pay the transfer or cash advance fee if you go this route, and that introductory period will end at some point.

•   Home equity line of credit. A home equity line of credit (HELOC) lets you access the equity you have in your home. You may have a lower interest rate compared to unsecured lines of credit, and your lender may even waive the closing cost for the line of credit. Keep in mind that this loan is secured by your home though, so if you fail to repay it, your home may be on the line. An unsecured credit card, meanwhile, doesn’t require any collateral.

The Takeaway

It is possible to send money via a credit card in certain situations. However, this can involve significant fees. It may be wise to consider your options before sending money with a credit card. Doing so can help ensure you use your credit card wisely.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can you transfer money with a credit card?

Yes, you can transfer money using a credit card via a cash advance, P2P app, or a money transfer service. But, many of these options come with extra fees, so before you choose one, make sure you understand the costs involved.

Is it secure to use a credit card to transfer money?

Yes, usually credit cards provide fraud protection and additional security features to protect your money. This can make them more secure to use than debit cards, for instance.

Photo credit: iStock/Damir Khabirov

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.

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

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

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When life insurance policy types are listed and described, the focus is usually on two of them: term life and whole life policies. There are more types than those two, though, and they’re typically more complex. They include universal life insurance — and, as a subset, indexed universal life insurance, or IUL. This is an advanced type of policy, where interest on the cash value component is linked to a market index.

In this post, we’ll define IUL, explain how it works, share its pros and cons, and more.

Definition of Indexed Universal Life Insurance (IUL)

First, let’s define universal life insurance. Universal life insurance is a permanent policy, which means that it doesn’t have a set term (say, for 10 or 20 years) and it comes with a cash value. A universal life insurance policy allows policyholders to flexibly adjust premiums and death benefits, though this can have an adverse effect on the policy.

Now, what is IUL? Indexed universal life insurance adds another twist to the equation. This is a type of universal life insurance that doesn’t come with a fixed interest rate. Instead, its growth is tied to a market index. (More about the index soon.)


💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.

How Does IUL Work?

After someone buys an IUL policy, they pay premiums, which is similar to other types of life insurance policy structures. Part of that premium covers the insurance costs that, like with other types of life insurance, are based on the insured’s demographics. Remaining fees paid go towards the cash value of policy. Interest paid is calculated in ways that are based on an index (or indexes).

This may sound similar to investing in the stock market, but there’s a key difference. The part of the premium that goes towards the cash value of the policy doesn’t get directly invested in stocks. Instead, the market index(es) is how the interest rate and amount is determined, with a minimum fixed interest rate usually guaranteed.

IULs typically offer policyholders a choice of indexes and allow them to divide the cash value portions of their premiums between fixed and indexed account options.

Explaining the “Index” Feature

A market index represents a broad portfolio of investments with the use of weighted average mathematics to come up with the index figure, which then plays a central role in the amount of interest paid. The three most commonly used market indexes in the United States are the Dow Jones, the S&P 500 and the Nasdaq Composite.

Note that funds invested for the cash portion of the insurance policy do not need to be invested in the index used to calculate the interest. Many times, insurers invest these dollars in bonds rather than stocks.

Benefits and Drawbacks of IUL Insurance

Like other types of life insurance policies, indexed universal life insurance comes with pros and cons. Here is an overview of the benefits and drawbacks of IUL.

Benefits of IUL Insurance

Benefits include:

•   There’s a death benefit for beneficiaries, as well as the cash value of the policy.

•   Withdrawals can be tax-free up to the amount of premiums paid.

•   Premiums are flexible — you can pay different amounts each month as long as it’s enough to cover fees and doesn’t go beyond an IRS limit.

•   Gains are locked in each year, which means you can’t lose the previous years’ gains. However, if the market is down the following year, it can decrease unless the policy has a built-in floor.

•   Because of the annual reset feature, you never need to make up any losses from prior years.

•   No mandatory distributions exist.

•   You can explore your tax benefits with your accountant or other financial advisor, and they may be significant for your situation.

•   You can borrow against this policy and, if you do, you typically won’t face negative tax consequences.

Recommended: Life Insurance Definitions

Cons of IUL Insurance

Challenges include:

•   An IUL is complicated and, to get the most benefits from this policy, you’ll need to understand how to maximize its value.

•   Although you can pay a minimal premium amount when you want, this can have a negative overall effect on the policy’s cash value.

•   Because the cost for the insurance portion depends on your rating, how much is insured and your age, the cost will go up over the years as you get older.

•   Although the rate is based on an index, policies come with a cap. So, during high index years, you likely won’t realize the full benefit because of this cap. On the flipside, however, many policies also have built-in floors to offset the cap.

•   Fees can take a big chunk out of the policy, causing you to lose much of its value.

•   If you don’t keep the policy in force, you may lose the death benefit (which is true of other types of policies), along with the extra money paid into the premiums.

Alternatives to IUL Insurance

Whether you’re not sold on IUL insurance or simply want to know what your other life insurance options are, here are some of the alternatives to indexed universal life insurance:

•   Adjustable life insurance: This combines aspects of term life insurance with whole life and provides policyholders with the flexibility to adjust the policy’s amount, term premiums and more. Adjustable life policies also come with a cash value component. A key benefit of adjustable life insurance is that you can make adjustments to your policy without the need to cancel the current policy or buy a new one.

•   Variable universal life insurance: Variable universal life is similar to IUL, as it is a permanent life insurance policy that has a cash value and flexible premiums. The investment portion comes with subaccounts and can resemble investing in mutual funds. When the market is doing well, this can benefit the policyholder, but when it’s not, significant losses can occur.

•   Standard universal life insurance: Then, of course, there are universal life insurance policies. These come with a fixed interest rate rather than one tied to an index.

•   Whole life insurance: Additionally, there’s the more basic whole life insurance policy with standard premiums. There is also a guaranteed death benefit and a cash value component.

•   Term life insurance: Then, life insurance at its simplest: term life insurance policies. These don’t come with cash value components or any real bells and whistles. These policies have a term limit (perhaps 10 to 20 years) and are more straightforward and affordable than other options, coming with a death benefit to beneficiaries when the covered individual dies while the policy is paid up and in force.

•   Current assumption whole life insurance: Another type of cash value insurance is called current assumption whole life (CAWL), and it has similarities to universal life insurance policies. Premiums are fixed for a certain period of time and, on predetermined dates, premiums are recalculated (and perhaps the death benefit is, as well). Plus, interest is handled in a way that’s similar to universal life.

Recommended: How to Buy Life Insurance

Is IUL Insurance Right for Me?

By comparing this overview of indexed universal life insurance with, say, term or whole life insurance, you can see that IUL insurance is quite complex. If, though, you’re earning a high income or want to explore long-term investment opportunities, it can make sense to consider whether the tax benefits associated with an IUL would be worthwhile.

For those who do consider moving forward with exploring indexed universal life insurance, it’s important to compare its pros or cons against those of other types of life insurance. Also take the time to research and compare different life insurance policies.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

The Takeaway

Although the question of “What is IUL?” is quite short, the answer isn’t. If this type of policy interests you, consider exploring it in more depth to ensure that you’re clear about its complexities.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Photo credit: iStock/DragonImages

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

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.

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.

SOPT0224007

Life insurance policies are available for children and are often marketed as paying out a death benefit if the child were to pass away as well as potentially providing a savings vehicle for the insured.

It’s a lot more comfortable to contemplate these policies funding, say, a child’s education than handling expenses at the time of death. But both are facets of these products. In addition, these policies can help prove a child’s insurability later in life. Let’s take a closer look if this coverage might be right for your family.

What Is Child Life Insurance?

Life insurance for children is similar to a policy for an adult. If premiums are paid regularly, then there’s the guarantee of a death benefit if the child dies. A parent, legal guardian, or grandparent takes out the policy (making them the policyholder). This person can be the beneficiary who would receive the death benefit, if applicable, but they don’t have to be.

Before getting into more detail about policies for children, here’s a brief overview of the two types of life insurance: term and permanent. Each is available for children as well as adults.

Term Life Insurance

As the name implies, term life insurance comes with a pre-determined term, often 10, 20, or 30 years. If the insured person dies within that time frame, then a death benefit is paid out to beneficiaries (people designated to receive those funds). At the end of the term, the policy may be able to be renewed, allowed to lapse, or converted into permanent life insurance. If the insured is still alive at the end of the term (and we hope they are), there is not a refund of the premiums paid. The service was there waiting but wasn’t tapped.

For a child, this would typically be an add-on to a parent’s insurance policy. It would be a death benefit-only policy, but it might be able to be converted into an adult policy when the insured reaches adulthood.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

Permanent Life Insurance

Unlike a term policy, permanent life insurance doesn’t expire as long as premiums are paid. Whenever the insured dies, a death benefit is paid. These plans also involve a savings vehicle, in which part of the premiums paid go into a cash account which can later be tapped or borrowed against. Premiums are typically higher than term life insurance (often several multiples of the term life insurance price).

When getting this kind of policy for a child, yes, there’s the death benefit for a worst-case scenario, but there’s also a component that builds a savings account, which is like a gift to the child. When the insured individual reaches adulthood (typically at 18 or 21 years of age, these policies often allow the now-adult to either take the policy’s cash value or continue payments and coverage.

How Does Life Insurance for Children Work?

The adult who plans to take out the policy will fill out an application. There isn’t a medical exam involved like there can be for adults, which streamlines the process.

Life insurance policies for children are often permanent life policies, meaning coverage can last their entire lives if premiums are kept up. Premiums stay the same over the lifetime of the policy, and part of the premium is invested and becomes a cash value that can be withdrawn during the child’s life. These are usually whole life policies, meaning the cash earns a fixed rate of interest.

Check the parameters of a policy that you’re considering buying. Many allow you to buy one for a child who is 17 years old or younger, although some policies won’t go up to age 17. The policyholder commonly transfers the policy to the child when they become adults, but this can be done at any time and some policies automatically transfer into the child’s name at a designated time.

For term life insurance for kids, an option is to add a rider (an optional add-on) to your own term life insurance policy. This can be an affordable option, and one rider may cover all of your children in incremental amounts. The child would be insured to adulthood, at which point the policy would lapse or could be extended by the now-grown child, if they assume paying the premium.

When Does Life Insurance for Kids Make Sense?

Here are four reasons why you might decide to buy life insurance for kids include:

•   Investment purposes

•   Because of health issues or concerns

•   To enhance future insurability

•   In case the worst happens

Here’s more about each.

Investment Purposes

As premiums are paid, the cash value of a whole life policy (a kind of permanent insurance) gradually increases. When your child takes over the life insurance policy, they can surrender — or cancel — it and collect the cash value.

They might choose to use it as collateral for a loan. Or they could keep paying for the policy, which will continue to increase the cash value. If this is your primary motivation, you may want to consider whether this goal is better served by another vehicle, such as a 529 savings account for college costs).

Health Issues or Concerns

If a child is born with health issues or your family has a significant, genetically determined health condition, having a life insurance policy may give you more of a sense of security.

Enhance Insurability

When purchasing a life insurance policy for a child, you are ensuring they have some insurance if they have a major health-altering diagnosis during the term of the insurance. There may be the possibility of extending this coverage.

The Worst Happens

Nobody likes to think about losing a child. If this traumatic event does occur, life insurance will help to cover funeral expenses without being subject to income tax. This can help to eliminate the financial worry of funeral costs and allow you to grieve without this concern. The policy may also cover therapy in this worst-case scenario and/or loss of wages if you were to take a leave of absence from work in the aftermath of this situation.

Recommended: Life Insurance Definitions

Benefits of Child Life Insurance

What you’ve just read outlines some of the reasons why it can make sense to buy life insurance for kids. It can serve as an investment vehicle; provide security if health is a concern; boost future insurability, and cover expenses if the worst situation happens.

Here are some other benefits to consider:

•   Life insurance for children tends to be very affordable. The younger a child is when you purchase the policy, the lower the premium.

•   With whole and term life insurance, premiums remain the same, guaranteed, as long as payments continue being made.

•   With a guaranteed insurability rider on the policy, more coverage can be purchased for that child without the need to answer health questions. This is true even when they’re adults depending on the policy type.

•   If the child later accesses the cash value in the policy, they can use the money for their own unique needs — whether that’s for college tuition, a wedding, a car, or house.

Recommended: 8 Popular Types of Life Insurance for Any Age

How Much Is Life Insurance for Children?

Premiums are based upon the amount of the policy and the age of the child when the policy is first taken out. In some cases, this may be as young as birth or 14 days. Price varies based on gender.

Coverage amounts are typically much lower than for a policy that insures an adult. After all, the goal here isn’t to replace the loss of earning power. Instead, the limits usually range from $10,000 to $100,000, but some companies may allow more than $100,000. At the time of writing this post, a child who is four years old or younger can often be insured for a $10,000 policy for under $5 a month, and a $50,000 one for under $20 a month.

Prices increase incrementally as the child ages. By the time that they’re ages 15 to 17, a $10,000 policy may be closer to $8 per month and a $50,000 one about $35 monthly.


💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.

The Takeaway

Child life insurance allows parents, legal guardians, and grandparents to apply and pay for a policy on behalf of a child. While a child doesn’t have earning power you are seeking to protect, there are benefits to this kind of policy, including creating a savings vehicle for the child. Take a careful look at the insurance options and your family’s financial goals to determine if this is the best path for you.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Photo credit: iStock/FatCamera

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

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.

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.

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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.

SOPT0224008

With costs as low as $10, making a will doesn’t have to be expensive, but you may want to spend more to get exactly what you need.

Granted, the prospect of writing a will can feel boring, morbid, and as if it will be a big drain of time and money. While there’s no doubt that thinking about a world without you in it isn’t “fun,” the peace of mind that people can obtain from making a will, the right will, can be invaluable.

Whether you choose to go with an online template that will guide you through the how-to’s of creating a will or work with an attorney, it’s important to know your options. Let’s dive into that now and see how much making a will costs and which approach is best for you.

How Much Does It Cost to Make a Will?

The cost of a will varies from free to thousands of dollars, depending on whether you do it yourself or work with an attorney. Some people with a fairly straightforward situation (basic assets, one child) may find that an online template provides everything they need at a low cost. In general, however, people with high-net-worth or a complex personal situation, such as needing to provide for a disabled family member, may find it advantageous to work with an attorney.

You may wonder if you need a template at all. Can’t you just take pen to paper to share your wishes? In some states, the answer is yes: A handwritten will is legal. But there are good reasons to not write up a will on a piece of notebook paper. Not only can these take longer to go through probate — a legal process that vets the validity of a will — but a template may help make sure all bases are covered and legally valid.

There are templates online that are free, but some that are state-specific and go into greater depth (say, by guiding you through more questions about your situation) may cost from $40 up to over $100.

If you work with an attorney, you may pay $1,000 or more to create a will. But working with an attorney may be beneficial if you have a complex situation. For example, an attorney can help you create a trust, which can be one way to avoid probate and may provide tax advantages for your heirs. They may also have recommendations for the most tax-advantageous way to set up a will and can also answer any questions that may come up as you make the will.

Regardless of how you create a will, it’s also important to ensure that your will is legal in your state. This may mean having the will notarized or witnessed when you sign. It can also be a good idea to make several copies of the will, and let your executor know where the will can be found.

You also may need to update your will. You can do this via a codicil (this is akin to a PS to your will), but in many cases, it may make sense to create an entirely new will to avoid confusion. You may consider updating or redrafting your will whenever a major life event occurs, such as marriage, divorce, or the birth of a new child. If you’re working with a lawyer, ask them how they will handle potential changes and how much they will charge.


💡 Quick Tip: We all know it’s good to have a will in place, but who has the time? These days, you can create a complete and customized estate plan online in as little as 15 minutes.

The Cost to Have a Lawyer Write a Will

Having a lawyer write a will may be the most expensive option at $1,000 or more, depending on where you live and the complexity of the will. However, this path can have its benefits.

Creating an Estate Plan

Working with a lawyer can ensure you cover all bases and potentially create an estate plan. This can maximize tax-savings opportunities for your heirs. As part of this, a lawyer can be helpful in setting up a trust. A trust can be a tax-advantageous way to distribute assets upon your death and help avoid the possibly long and winding process of probate.

Negotiating a Large or Complicated Estate

You also may want a lawyer if you have a large or complicated estate, with a variety of assets, which could be investments, real estate, and the like. Also, if you have a complicated family situation, a lawyer can be very helpful in creating a will that addresses these situations. In this case, scenarios include divorce, remarriage, step-children, or complex (possibly contentious) relationships.

Developing End of Life Documents

When drawing up a will, a lawyer also can make sure that you have all end-of-life documents in place. While “will” can be used as a catchall term for end-of-life documents and directives, other important documents can include:

•   A medical power of attorney

•   A living will or advanced healthcare directive

•   Do-not-resuscitate orders

All of the above documents reflect what would happen if you were no longer able to advocate for yourself and needed someone to make medical decisions for you.

Before you work with a lawyer, make sure you’re clear on the fee structure: Will they charge by the hour? How much will it cost to update things in the future? Is there anything you can do on your own to help save money?

Recommended: What Happens If You Die Without a Will?

Cost Of Writing a Will Yourself

Online templates range from free to several hundred dollars, depending on the complexity and the range of documents provided. Online templates can help guide you through itemizing your assets and can be simple to update if necessary. Here are some details to note:

Online Templates Can Offer a Speed Advantage

Online templates may advertise that wills can be completed in 15 minutes or less. This can be true as long as you have relevant information at your fingertips. Prior to beginning a will (either online or with a pro), it can be helpful to itemize assets and discuss guardianship and executor plans with the people you hope to name prior to starting. This will make the process run more smoothly.

Online Templates May Need Witnessing

Once an online template is filled out, it will likely need to be signed and witnessed to be made legal. Keep this in mind: If you are thinking you can complete your will 100% online and don’t need to leave your home, you may be in for a surprise.

Some online services offer attorney services for an additional cost. This can be a hybrid option that allows you to have a lawyer answer any specific questions while doing the majority of the work yourself.

What’s the Difference Between a Trust and a Will?

You may see the terms trust and will used interchangeably. That’s wrong; a trust is not a will! A trust is a customized estate planning tool that can be helpful to heirs in addition to a will. If you hold assets such as real estate or have a positive net worth, a trust may make sense.

A trust can help your heirs:

•   Avoid probate, the legal (and sometimes lengthy) process in which property is distributed

•   Potentially limit tax implication of any gifts or inheritances

Trusts can be complex, but a fairly simple trust can be created through online templates. Having a trust can help ensure that your assets not only go to the people you intend them to go to, but that your heirs are provided for exactly in the way you intended. The time spent making the trust can pay off in peace of mind, both for you right now and for your heirs in the future.


💡 Quick Tip: It’s recommended that you update your will every 3-5 years, and after any major life event. With online estate planning, changes can be made in just a few minutes — no attorney required.

Does a Will Need to be Notarized?

You’ve taken the time, created a will, and printed it out. You’re done, right? Not so fast! A will usually does need to be signed and watched by a witness.

What’s more, while a will does not always need to be notarized to be valid, it may be in you and your beneficiaries’ best interests to do so. When a will is notarized, it is considered “self-proving,” which helps confirm that you had the mental capacity to create the will and were not under any duress. It proves the validity of the document and therefore can help avoid probate. Notarizing a will is typically a fairly minor expense of up to $15.

While it can be tempting to put off the notarization process (we know, it can be a hassle to find a notary nearby), getting it done immediately ensures that there are no loose ends if the worst were to happen unexpectedly. It can also be a good idea to make sure the will is printed out and put in a safe place, like a bank safe, and that your executor knows where to find it.

What Should You Never Put in a Will?

There are some things you want to sidestep when creating a will. Here are some considerations that can make the probate process more difficult.

•   Certain types of property, including property owned jointly, life insurance, or other accounts with a beneficiary already named.

•   Specific funeral or end of life wishes. The will may not be read until weeks or months after death.

•   “Rules” about who gets what. A will is not the place to put limitations on gifts, such as money only being available if someone were to marry or turn a certain age.

•   Providing money to pets. However, you can set up a trust to ensure that a pet is provided for.

•   Provisions for taking care of a dependent beneficiary. These kinds of long-term care needs can also best be set up in a trust.

In short, a will can’t cover all the what-ifs, but in many cases, a trust can do so. If you’re not sure how to appropriately manage your estate, consider consulting with a lawyer.

The Takeaway

Creating a will does not need to be expensive or time-consuming to be valid. While a trust may make sense for complex needs or if you have a positive net worth, having a will drawn up in the short term can cover your bases, ensure guardianship wishes are met if you have kids, and provide peace of mind now and in the future. Whether you spend $10 or over $1,000 creating one, if you have assets and/or dependents, now is a good time to act!

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 15% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

Photo credit: iStock/fizkes

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