Guide to Commercial Banking

Guide to Commercial Banking

Commercial banks provide financial services for small and large businesses, including checking and savings accounts, loans, lines of credit, letters of credit, underwriting, and payment processing. These services enable businesses to operate in domestic and international markets. What’s more, financing from commercial banks may help businesses grow, which could potentially help drive the domestic economy.

What Is Commercial Banking: A Definition

Commercial banking involves financial institutions that are dedicated to serving businesses. This differs from retail banking, which provides personal banking services to individuals, such as checking and savings accounts.

Typically, a commercial bank offers businesses everything from deposit accounts, loans, and lines of credit to merchant services, payment processing, international trade services, and more. In these ways, a commercial bank can be a vital partner in helping a business succeed and grow.

While commercial banks offer a suite of services for medium and large businesses, small and new business owners can also take advantage of their offerings. Sometimes, people starting an enterprise use their personal accounts for banking. However, it is typically better to seek out commercial banking and open separate accounts for business vs. personal finances. This simplifies record keeping and the payment of taxes, and it also helps keep these two realms separate in case of any legal action.

How Commercial Banking Works

Commercial banks serve small- to large-sized businesses. You may be familiar with their names, as many of them also have retail banking divisions. Three examples of commercial banks in the United States are JPMorgan Chase & Co., Bank of America Corp., and Wells Fargo & Co. All are regulated by the United States Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC).

One very important function of commercial banks: providing financing to businesses. Before a commercial bank extends a loan to a business, it assesses the creditworthiness of the borrower by looking at its assets, profitability, and size.

In addition, commercial banks provide an array of services, supporting businesses with transfers from one account to another, lines of credit, lockbox services, payment processing, and foreign exchange services. Here is a closer look at what a commercial bank may offer:

Deposit Accounts

Commercial bank deposit accounts function like retail bank checking and savings accounts. They enable businesses to pay suppliers and employees by holding cash and, in some cases, account holders may earn interest on the balance.

There are three main types of deposit accounts: demand, fixed, and savings.

•   Account holders can use demand deposits or current account deposits for business transactions. They typically do not earn interest and are subject to service charges.

•   The bank holds fixed deposits for a specific term. Deposits likely earn interest, and the account holder can make withdrawals.

•   Savings deposits function as both fixed deposit and current accounts. Depositors can withdraw cash from these accounts, but the amount may be limited. Savings accounts earn interest but probably less than a fixed deposit.

Loans

Businesses need capital to thrive. Whether hiring staff, renting office or manufacturing space, or buying materials and supplies, operating a business and growing it takes cash. Commercial banks extend business loans vs. personal loans and charge interest on the loans. That’s one of the key income streams for banks. The bank likely turns a profit on lending, and the business gets the funds it needs to launch its enterprise or to expand or buy real estate or new equipment.

Lines of Credit

Commercial banks usually provide businesses with lines of credit. A line of credit is short-term funding that can help a company manage its obligations while it waits for cash flow to improve. For example, a company may have to wait for receivables’ payment in order to meet this month’s payroll. A line of credit can help bridge that gap.

Letters of Credit

A business may need to request a letter of credit from a commercial bank to show creditworthiness and to secure goods or services from an overseas trading partner. A letter of credit can serve as a guarantee from the issuing bank of payment for the goods once the letter’s requirements are met. The requirements might include the shipping date and the address the goods should be shipped to. In this way, a commercial bank can smooth international trade and help its clients’ business grow.

Lockbox Services

Lockboxes facilitate faster payments for businesses. Bank customers can send payments to a post office box near the bank, and the bank deposits the payments or funds to the customer’s account. This helps expedite the receipt of deposits and subsequent payments from the client to its providers. It can be a helpful cash flow tool for commercial enterprises.

Payment and Transaction Processing

Commercial banks typically facilitate the payments that businesses receive from their customers through electronic checks, paper checks, and credit card payments. Commercial banks may also provide services such as chargeback management fraud protection. All of these services can help keep a business humming along.

Foreign Exchange

Cross-border payments are complex because of exchange rates and the fact that each country has a different legal system. Commercial banks can provide foreign exchange services so that a company can do business overseas with a minimum of time and effort. This can streamline operations for a business enterprise so they can focus their attention on other activities.

The Significance of Commercial Banks

Commercial banks play a vital role in the financial life of the U.S. They help support the country’s economy by providing capital and services to businesses. By providing loans, they likely allow businesses to increase production and potentially expand, which may, in turn, boost the economy, lower unemployment, and encourage consumer spending. In addition, commercial banks support cross-border trade and transactions (say, by issuing revolving letters of credit) so that businesses can operate in international markets.

Commercial Banking vs Investment Banking

When considering the definition of commercial banking, it can be helpful to compare and contrast it to other kinds of banking. For instance, investment banking is a subset of banking that is focused on creating capital for companies, governments, and other organizations.

While some financial institutions may combine commercial and investment banking, because of the Gramm-Leach-Bliley Act of 1999, the two kinds of banking serve different markets. Here’s more detail of what investment banks do:

•   Underwriting

•   Overseeing mergers and acquisitions and initial public offerings (IPOs)

•   Facilitating reorganizations

•   Aiding in the sale of securities

•   Brokering trades for institutions and private investors

Commercial Banks vs Retail Banks

Another important distinction is how commercial banks differ from retail ones. Some banks will offer both sets of services, but here’s what retail banks typically offer in terms of personal banking services:

•   Savings accounts and checking accounts (you can often open these bank accounts online)

•   Mortgages

•   Personal loans

•   Debit cards

•   Certificates of deposit (CDs)

There are also alternatives to traditional banking that can assist with personal finance transactions.

Examples of Commercial Banks

It can be helpful to have specific examples of commercial banks to better understand what they do and how they work. There are three types of commercial banks: public sector banks, private banks, and foreign banks.

•   A public sector bank is one where the government owns a major share. Public banks provide funding for projects that benefit the local public and community, which could include infrastructure projects or affordable housing. The Bank of North Dakota (BND) is the only active public bank in the United States.

•   Most of the banks in the United States are private banks run by individuals or limited partners. Examples are JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo.

•   A foreign bank is any bank headquartered in another country but doing business in the United States. Two examples are Barclays Bank PLC, headquartered in the United Kingdom, and the Royal Bank of Canada (RBC).

Benefits of a Commercial Bank Account

There are several reasons for a business to consider opening a commercial bank account.

•   Clients are likely to feel more confident making payments for services rendered to a business rather than an individual. Simply put, it’s more professional and may be perceived as more trustworthy.

•   Having separate bank accounts for business and personal transactions can simplify accounting and taxes (business expenses are more easily deducted).

•   If a business owner faces legal or financial challenges with their business activity, their personal liability could be limited and protected.

•   A business can apply for business loans from a commercial bank and finance expansion or costly equipment purchases with favorable lending terms.

•   Business accounts are FDIC-insured in the event the bank fails.

Is My Bank a Commercial Bank?

If your bank provides services to businesses, such as checking accounts, financing, lines of credit, and international trade services, it is likely a commercial bank. A retail bank, on the other hand, will provide services to individuals (joint vs. separate accounts, debit cards, personal loans, and more) and could be a department within a commercial bank.

The Takeaway

Commercial banking differs from retail banking in terms of the clientele it serves. Retail banks provide checking and savings accounts, loans, and other services to individuals to manage their day-to-day finances. Commercial banks help businesses launch, operate, and potentially grow with services like deposit accounts, loans, lines of credit, payment services, and more.

If you are hunting for personal banking services, explore what different retail banks have to offer, such as direct deposit, low or no account fees, and mobile banking, to find the best option for your financial 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 3.80% APY on SoFi Checking and Savings.

FAQ

What is the difference between commercial banking and retail banking?

Retail and commercial banking serve different clients. Retail banking provides checking and savings accounts, financing, lines of credit, credit cards, and other services to individuals. Commercial banking usually provides checking and savings accounts, financing, underwriting, letters of credit, lines of credit, and other functions to businesses.

Is my money safe in a commercial bank?

Your money is essentially as safe in a commercial bank as it can be. It is generally protected from loss due to bank failure by federal insurance up to $250,000.

What role does a commercial bank play in the economy?

Commercial banks may support the economy by providing capital and services to organizations. These, in turn, could stimulate the economy by doing business, growing, and employing more workers. Commercial banks may also facilitate cross-border payments so that businesses can move into international markets.


Photo credit: iStock/Passakorn Prothien


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.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


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

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

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

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

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

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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Dormant Account: What Is a Dormant Bank Account?

Guide to Dormant Bank Accounts

Dormant bank accounts have had no activity for a certain period of time, typically three to five years. That means no deposits, withdrawals, transfers, or other processes. They have just been sitting untouched. These inactive accounts can be charged inactivity fees by financial institutions, and if there is no activity for an additional period, the account may be closed.

This can be a rude awakening for some consumers, but a bank or credit union has the right to close a dormant account without your permission. Here are the facts you need to know to protect yourself.

What is a Dormant Account?

A dormant account is a financial account in which there hasn’t been any posted activity for a time period set by the bank or credit union. Activity includes such transactions as deposits, withdrawals, ATM usage, or transfers. FYI, earning interest doesn’t count as a posted activity because it is not initiated by you, the account holder.

The official definition of a dormant bank account varies by state and account type, but it most often happens if an account is inactive for three to five years. As with having a negative bank account balance and letting it sit, an inactive account is not a good sign for your wealth health.

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 3.80% APY, with no minimum balance required.

How Does a Dormant Account Work?

These steps change a bank account from active to dormant:

1.    No deposits, withdrawals, or transfers for one year. Some accounts get no love. Perhaps you ignore rainy-day savings while balancing your day-to-day budget and forget about an account. But 12 months with no transactions in an account will set this dormancy process in motion. (One of the top benefits of bank account linking on your bank’s website or app is that you can see all accounts at a glance. This can be a good way to fend off an account going dormant.)

2.    The financial institution flags account as inactive. Nada is happening, not even a deposit, withdrawal, or transfer to pay for a Starbucks latte. The bank takes note and declares it a dormant bank account.

3.    The financial institution starts charging an inactivity fee. Some banks charge zero, but others slap on fees of $5 to $15 per month. Look for these fees on your monthly bank statement.

4.    After beginning one year, there’s no account activity for another two years. The timing varies by state. In California, Connecticut, and Illinois, for example, most bank accounts go dormant after three years. In Delaware, Georgia, and Wisconsin, five years must pass.

5.    The financial institution changes the account from inactive to dormant. The bank will try to contact the account holder (a problem if you moved and didn’t update your address) and allow a certain amount of time for a response.

6.    The financial institution closes the account and sends any leftover funds to the state. This is an automatic legal process called escheatment. But the story is still not officially over. You do have options if your assets have been transferred to the state due to a forgotten or lost bank account (more on this below).

Types of Accounts That Can Be Considered Dormant

Several different types of bank accounts can fall under the dormant account heading, including checking accounts, savings accounts, money market accounts, certificates of deposit (CDs), and investment accounts. Even safe deposit box holdings can be considered a dormant account if inactive for a number of years.

Worth noting: Your bank account might also be locked, or frozen, because of suspected fraud, unpaid child support, or unpaid bills. These are reasons why you have a frozen bank account, which is different from a dormant one.

What Is Escheatment?

If you have a bank account that is dormant, escheatment will likely occur. Escheatment is the process by which unclaimed assets are automatically transferred by the bank to the state. When this transfer happens, it means you can no longer reclaim your funds from your financial institution. If you want to get them back, you will have to take other steps.

Recommended: Guide to Bank Account Closure Letters

How Can I Reclaim Escheated Funds?

Every state must follow procedures to document the escheatment and is required to allow time for the original owner to come forward. Here is the process to get your money back:

1.    Search a public database such as Unclaimed.org or MissingMoney.com to link to your state’s unclaimed funds. The search should be free of charge. Don’t put your trust in fraudster sites that charge any fee at all, even $1 for a “trial search period.”

2.    If you see your name and property listed, follow the stated procedure to verify ownership. You will need to provide specific documents and of course, identification.

3.    The money will be released to you.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $3M of additional
FDIC insurance.


Consequences of Having a Dormant Account

Having an account go dormant can impact your ability to access and use the funds.

•   No withdrawals at ATM or branch

•   No address changes

•   Cannot add or delete joint account holder

•   No online banking transactions

•   No investment transactions

•   No ATM card renewal

•   You might wait months or even years to reclaim escheated funds from the state

•   Risk of fraudsters stealing your escheated funds

Difference Between a Dormant and Frozen Account

A dormant account is a bank or investment account so named after showing no transactions over a period of three to five years.

A frozen account is a bank or investment account that is temporarily locked, meaning you cannot withdraw money or funds. Usually, an account is frozen because you owe money to a creditor or the government. You may need to take steps to remove a hold on your bank account.

Whether dormant or frozen, both situations can cause you financial hardship.

Why Does an Account Go Dormant?

An account goes dormant when the bank does not see any activity in it for three to five years. This can indicate that the account has been abandoned or forgotten.

Keeping Your Account From Going Dormant

To keep your checking or savings account from going dormant, be sure to use it regularly, even if it’s just to make a transfer or deposit from another of your linked bank accounts a couple of times a year. If you let it sit without any activity, you run the risk of the account going dormant.

When an account goes dormant but the funds haven’t been transferred out or your bank account is closed for any other reason, it’s wise to take steps to remedy the situation and either reopen your bank account or officially close it.

The Takeaway

Banks and credit unions take note of accounts that show no transactions for a long period of time. The dormant account process starts with one year of no activity. After three to five years, depending on your state, ends with your money being turned over to the state.

Looking for options for a bank account you’ll use often?

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


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

FAQ

What happens if my account is dormant?

If your account is deemed dormant due to inactivity for three to five years, your bank will try to notify you before closing it. If you don’t respond in the given period of time, the account will be closed and the money turned over to the state.

How do I reactivate my dormant account?

You can reactivate a dormant account with your bank or credit union between the time it has been declared dormant and the time the funds are turned over to the state. The key is responding promptly to the bank’s communication saying your account will be closed.

How many years is an account dormant for?

After a total of about three to five years “asleep” with no transactions (though this can vary by state), a bank moves an account to dormant status. The account remains dormant while the bank tries to contact the account holder before turning the funds over to the state.


Photo credit: iStock/AntonioSolano

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


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

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

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

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

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

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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


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


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

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What Is the 30-Day No-Spend Challenge?

A 30-day no-spend challenge is a set period of time — 30 days, in this case — during which you can only spend money on absolute necessities. Allowed expenses include utility bills, rent, transportation costs, and groceries. Anything that falls outside the necessity bucket is banned for the 30-day duration.

With many people looking to cut back on expenses due to recent price increases, a 30-day no-spend challenge can be a great way to take stock of your spending habits and find ways to use your money more wisely.

How Does the 30-Day No-Spend Challenge Work?

Again, a no-spend challenge is a time period during which you stop spending money on anything other than what you absolutely need to live. To get started, you create a list of items and services you consider essential. When you review the list, ask yourself if all of your so-called essentials really are that important, or are some superfluous or impulsive?

Keep in mind that this challenge is designed to help curb troublesome overspending or more specific bad spending habits. So don’t beat yourself up if you do spend some money on wants versus needs.


💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.

Allowed Expenses During the 30-Day No-Spend Challenge

During the no-spend challenge, you will still need to pay your rent or mortgage, gas, utility bills, insurance, and things like your internet and phone bills. You can purchase essential personal care items, too, such as medications, groceries, and cleaning products. A budget planner app can help you decide on your “needs” list.

But the lines can get blurry. For instance, what happens if you wear out your shoes and want/need a new pair? After all, walking in cheap, poorly made shoes could lead to injury or avoiding activity. Feel free to give yourself some wiggle room in deciding what’s essential for you.

Track your credit score with SoFi

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Recommended: The 70/20/10 Rule for Budgeting

Forbidden Expenses During the 30-Day No-Spend Challenge

Remember that before you begin the challenge, you’ll be questioning what’s essential and how strict you want to be. It’s smart to decide in advance which of the following will be on your do-not-spend list:

•   Eating out: fast food, restaurants, takeout, alcohol, coffees, etc.

•   Personal care items or services

•   Clothing

•   Gifts and gift cards

•   Home decor and furnishings

•   Hobbies

•   Entertainment: movies, concerts, books, streaming services

You may determine ahead of time that there will be certain exceptions to these categories. For example, you can decide on “no gifts” except for your mom’s birthday. Or no salon appointments except for a needed haircut.

Tips for Completing the 30-Day No-Spend Challenge

Anticipate what will be the most difficult part of the challenge for you, and create strategies for coping. Is your busy social life going to tempt you to break the rules? Or will the siren call of online shopping be your undoing?

Come up with a plan on how you will get past your specific spending challenges. If your social life will be tough to navigate that month, recruit pals to join the challenge and make it a friendly competition. If online shopping is your budget-killer, unsubscribe from retail email lists and delete shopping apps from your phone. The point is to make the challenge as easy on yourself as possible.

Here are a few additional ways to set yourself up for success:

•   Unsubscribe from memberships and apps

•   Set aside time during the week for meal prep, and bring lunch to work

•   Dust off your travel mug, and skip the coffee shop

•   When you get an urge to buy something, add it to a post-challenge wish list

•   Print out a 30-day calendar and make a checkmark at the end of each successful day. Visual reinforcement can motivate you to keep going.

10 Free Things to Do Instead of Spending Money

Taking part in a 30-day no-spend challenge doesn’t have to mean isolating yourself at home in an effort to save money. This is a time to get creative and search out free activities. You may find that some free experiences are more fun than what you normally spend money on.

1. Take a Hike

Whether you’re walking a mile or seven, hiking is a great way to spend the day outdoors. You can invite friends or go solo and get in tune with nature.

2. Get Some Exercise

Many great athletes and trainers offer workouts on social media and YouTube. Or download one of the many free apps that feature yoga, strength training, and high-intensity workouts.

3. Set Up a Sports League

Call your friends and organize a weekly game of flag football, basketball, or frisbee. Encourage folks to BYO beverages and snacks so that there’s no need to visit a restaurant or bar after the game.

4. Dine Al Fresco

Get your picnic blanket and paper plates ready, and propose a pot-luck in the park.

5. Host a Movie Night

Try a free, library-affiliated streaming service like Hoopla or Kanopy, and immerse yourself in a great film. If you’re feeling inspired, select a classic film, and ask friends to come dressed in the style of that time period.

6. Sand and Surf

Sticking to your challenge budget during summer is simple: Head to the nearest free parking beach. Bring towels, chairs, and umbrellas and set up shop for the day. And of course, pack a cooler full of sandwiches and drinks.

7. Have an At-home Spa Night

You don’t need to spend hundreds at the spa. Set the tone with candles and music.
And use personal care items that you already have to pamper yourself.

8. Check Out a Local Park

Odds are, there’s at least one park near your home that you’ve never visited. If you live near a botanical garden, even better. Also, see if any national or state parks nearby have free visitor days.

9. Visit Art Galleries and Museums

Support local artists by visiting small art galleries, or see if any local museums have free visitor days.

10. Whip Up a Gourmet Meal

Instead of dining out, try recreating your favorite meal yourself. Take your time, find recipes, get groceries, and have fun with it. You can pull up an online recipe or follow along with a cooking show.

The Takeaway

Intended to encourage better spending habits, the 30-day no-spend challenge asks you to limit your purchases for one month to essential items and services only. Utilities and groceries are allowed; dining out and other “treats” are not. You’ll likely learn a lot about your money habits, and perhaps let go of some “needs” that you really aren’t.

Before the challenge, review your monthly spending habits with SoFi.

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

See exactly how your money comes and goes at a glance.

FAQ

What is the no-spend challenge?

A no-spend challenge is a stretch of time during which participants vow not to spend money unnecessarily. Essentials are still allowed, such as bills, transportation, and groceries. Anything that falls outside of your predetermined needs has to wait until the challenge is over.

How do you do a no-spend month challenge?

Don’t spend any money you don’t have to — it can be as simple as that. Before you begin the challenge, ask yourself which items are essential (such as groceries) and how strict you want to be. The goal is not to purchase anything unnecessary.

How do you challenge yourself to not spend money?

Make spending less money a game by trying a 30-day no-spend challenge. Motivate yourself to stick with it by setting up a reward once the challenge is over. And be sure to track how much you save over those 30 days.


Photo credit: iStock/Seiya Tabuchi

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

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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


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

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What Is a Credit Reference on a Rental Application?

What Is a Credit Reference on a Rental Application?

Credit references are documents that verify your credit history. They can come in the form of a credit check report, asset documentation, or character references.

A limited or poor credit history can potentially impact your approval when applying for a rental. If you have a spotty payment history, a low credit score, or little to no history, your chances of getting approved may go down. Landlords or property management companies can approve or deny rental applications based on these references.

If this description of a less than stellar reference fits you, don’t fret. There are ways to put your best foot forward with credit references in today’s competitive market.

Definition of a Credit Reference

Credit references paint a picture of your borrowing and payment habits and history. Property managers and landlords use it to help determine whether you’re likely to pay rent on time and in full.

Documents of financial agreements can be used as a credit reference. They come in the form of:

•   Credit reports

•   Character references

•   Asset documentation

•   Credit reference letters

In some cases, letters from personal lenders or documents from a car loan can be used. Be sure to clarify what the landlord needs when applying for an apartment. It’s also helpful to pull together the documents ahead of time, so you can pull together references for multiple apartments at once.


💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.

Track your credit score with SoFi

Check your credit score for free. Sign up and get $10.*


When You Need Credit References

At the end of the day, landlords want to know if you’re able to pay rent. Getting an apartment rental is a business transaction between two strangers. Credit needed for an apartment plays a key role in rental applications.

Why Landlords Want Credit References

A credit reference is proof of your financial history. They detail how much debt you have, how timely your payments are, and your credit score, among other factors.

For instance, if your credit references show that you’ve been able to pay off your debts in full in a timely manner, a landlord will likely approve your rental forms.

Applicants with low credit scores or poor payment histories have lower chances of being approved.

Recommended: Does Net Worth Include Home Equity?

Types of Credit References

As mentioned, credit references come in different forms, like credit reports, character references, or formal letters from bank loan officers.

Credit Report

The most available type is a credit report. Three major credit bureaus provide credit reports: Equifax®, Experian®, and TransUnion®. You can obtain a free credit report every 12 months to check your score and scan for errors. The credit scoring system known as FICO® can be used by all three.

Credit reports contain information like your credit history, current debt, bankruptcies and foreclosures. It can also include the age of your debt and how many credit inquiries you’ve had. Importantly, it’ll also contain your score; credit scores range from 300 to 850.

Landlords will look at this report to determine the financial risk of each applicant. Generally speaking, a credit score of 670 or higher is considered acceptable, though requirements may vary based on the lender or circumstances.

Another factor that can impact your credit score and report is the number of inquiries into your credit history. If there are a lot of inquiries, it may lower your score since it can be perceived that you may be struggling financially. Some rental applications will include a fee for running the credit check.

Bad or no credit may give a landlord pause — but it may be possible to strengthen your case.

Recommended: What is The Difference Between Transunion and Equifax?

Asset Documentation

Asset documentation is proof of income, liquid cash, or investments. It shows landlords that you are financially stable and able to handle unforeseen circumstances, like a job loss.

Your landlord may request a verification letter from your employer, pay stubs, or an offer letter to prove income. You may also have to provide documentation of your savings or investment funds like mutual funds or retirement plans. Reach out to your financial institution or brokerage to provide you with documents of your accounts.

The more assets you have, the stronger your application will be.

Recommended: What Credit Score is Needed to Buy a Car

Character and Credit Reference Letters

Credit reports and asset documentation only tell part of the story. A character or credit reference letter may give context to a spotty part of your credit history. Someone who you’ve had financial transactions with, such as an employer, previous landlord, or business partner, can write a letter confirming your character and values. For example, if you went through hardship, such as a medical illness, but still met your financial obligations, someone such as a prior landlord can vouch for you.

If you have bad credit, for example, an institution can demonstrate if you have taken courses, been given resources such as a debt payoff planner, or worked out a new payment plan to successfully pay off your debt. It demonstrates a commitment to improving personal finance.

Don’t be afraid to ask for a reference letter — many may be willing to write on your behalf. Remember, however, that these types of letters are not as concrete as credit and asset reports. They work better as supporting documentation.

Financier Support Letters

If you have troubled credit history, a financier support letter from a cosigner on a lease can help. These letters are typically for business owners who need to prove they have the capital to meet rent or buy.

For a lessee, a guarantor would write a letter with context on how they can support your rent if needed. This can be helpful if you have an adverse credit history. For business owners, the letters would be obtained from financial institutions or financial partners backing a business lease or purchase.

Credit Reference Examples

If a landlord requests written credit reference letters, have a list of people in mind who can type up a quick letter. You could also ask them to type up a generic letter that you can use across multiple applications, or you might offer to supply a draft of the letter for them to edit as they see fit. Sometimes a property management company or landlord will have their own template, so be sure to clarify which format is acceptable.

A credit reference letter can be brief. But it must include key details such as:

•   Reference full name and contact information

•   Length of relationship

•   Payment history

Additional details may be requested depending on what your landlord requests. Below is a sample template:

   Dear [Landlord Name]:

   I have known Ben as a tenant for three years. He paid rent ahead of time, was quiet, respectful, and took care of our property. Also, he ended his lease in search of a bigger space. He got his deposit returned in full, so he’s highly recommended as a tenant.

If you do not have a history of renting, you can ask a financial institution to vouch for you. Here’s an example letter:

   [ABC Bank] lent $30,000 to Tina Jones in 2014. She made her payments on time and paid off the loan ahead of schedule in 2017.

If you’re still short a reference, try an employer to vouch for your stability at your current job:

   Tim has been an employee of ACB Company for 3 years and has been promoted once. Her current salary is $92,000. She’s responsible and puts our clients’ interests first. She will make a great tenant.

How to Secure a Credit or Character Reference Letter

Before you send a mass email to all your contacts, confirm with your landlord what details are needed. If there’s a template letter to use, so much the better. Once details are confirmed, reach out to your contacts. Be sure to provide them with all the information they need to include in the letter.

There’s no formal process to request a letter from financial institutions. You can go in person to speak to a banker who can provide you a letter or you can contact your bank and ask how to obtain one.

How to Improve the Chances of Getting a Reference Letter

Asking with plenty of time vs. saying you need a letter tomorrow is obviously a good move. Also consider authorizing your institution to release personal information while you are actively applying for rentals. Not doing so could cause delays as the letter goes through the chain of command.

The Takeaway

Landlords want to see that you earn income and honor your debts. Credit references are formal documents that support your profile as a reliable tenant. They come in the form of records from credit bureaus and character reference letters from employers, among others.

If budgeting is not your strong suit and you want to build your financial profile, a money tracker app can help.

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

See exactly how your money comes and goes at a glance.

FAQ

What do I put as a credit reference?

That depends. Ask your landlord what documents he or she requires for a reference. It can mean a credit report, bank statements, character reference — or all three.

Who counts as a credit reference?

A credit reference can be someone with whom you have a tenant-landlord or business relationship. It can be a representative at a bank who can give a formal written letter of loans or accounts you have with them. Or, if you have limited or no credit history, a reference can be a current or former employer who can highlight your reliability.

Why do I need a credit reference?

Most property management agencies or landlords require credit references in order to approve a tenant application. This gives them an idea of your financial history and whether you’ll pay rent on time.


Photo credit: iStock/damircudic

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

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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


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

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

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Food Delivery Using a Checking Account for Payment

There’s nothing quite as indulgent as sitting back on your couch, remote control in hand, knowing that your favorite restaurant meal is about to show up at your doorstep. But food delivery can also, unfortunately, lead to racking up credit card debt.

One solution is to use a checking account to pay for food delivery services. Although not every platform allows you to pay directly from your bank account, there are often payment options that still let you tap the funds in your checking account. Learn more about the details below.

What Is Food Delivery?

Third-party food delivery services have revolutionized at-home dining. Gone are the days where pizza was the only option for ordering in. These days, you can get just about any meal your heart desires, all with the tap of a finger.

Third-party delivery platforms connect hungry diners with nearly endless restaurant options. The meals are typically delivered by gig-economy workers who earn income via these apps.

Some of the most popular food delivery services include:

•   Grubhub

•   Uber Eats

•   Postmates

•   DoorDash

There may be other food delivery services available in your area, including restaurants that still deliver directly. However, those options may or may not allow you to use your checking account as payment.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $3M of additional
FDIC insurance.


Using Checking Accounts for Payment

Not every food delivery service allows you to link directly to your banking details. You may have to do a bit of research to find a single food delivery that accepts a checking account. That said, most offer the opportunity to pay through a third-party service like PayPal, which in turn makes bank account payment possible.

As of May 2024, neither Grubhub nor DoorDash had an option to input your checking account details. Both do allow you to use a debit card, however, which works almost exactly like a checking account payment. Grubhub also offers PayPal, Venmo, and Amazon Pay linking, among others, while DoorDash links with PayPal, Venmo, and Apple Pay.

Postmates and Uber Eats both give users the option to input their bank account information, which means you can pay directly with your checking account.

Linking Bank Account to Delivery App

For the apps that do allow you to use a bank account, linking the account is usually fairly straightforward. Both Uber Eats and Postmates use a third-party platform called Link to securely connect your bank account to your food delivery app account using your regular login credentials. The data transferred is encrypted, and you can disconnect linked accounts at any time.

Some delivery services may allow you to manually link your bank account using details like the routing number and account number. In that case, you should always be sure you’re only providing your details to certified and secure parties. If you’re using a lesser-known food delivery app, do some research ahead of time to ensure it’s legit before you enter your banking details.

Recommended: Checking Account vs. Debit Card: What’s the Difference?

Benefits of Checking Account Payments

Why pay for your next plate of Pad Thai or other food delivery with your checking account? Consider the following benefits.

No Credit Card Fees for Merchants

While this one may not benefit you directly, you may be saving a small business some money. That can feel like something of a good deed. Although food delivery services have helped connect more restaurants to more at-home diners, they do usually charge the restaurant a commission fee, which can eat into already-slim profit margins.

Credit cards, too, often charge merchants a fee that can be as high as 3.5% per transaction. In short, by using your checking account, you may be offering more direct support to your favorite restaurants.

Easier to Budget Food Spending

Sometimes, the money we put on a credit card feels less than real, which is one reason it can be so easy to spiral into credit card debt. But when money is coming directly out of your checking account, it’s often a bit more tangible. Over time, using your checking account can therefore make it easier to track how much you’re really spending on food delivery each month — and stick to a budget for how much you should be spending.

May Qualify for Cash Back/Rewards

In some cases, delivery apps or your bank may offer cash back or rewards for payments made with a checking account (or debit card). Check with your bank, and review offers from the delivery apps you use for further details.

Recommended: Checking vs. Savings Accounts

Potential Risks and Drawbacks

Although there are many upsides to using a checking account to pay for your food delivery, there are some drawbacks to consider, too.

Overdraft Fees from Erroneous Charges

When you’re drawing directly from your bank account — as opposed to putting money on a credit card — you’re at more risk of overdrafting (spending more than you have in your account). Doing so can rack up pricy overdraft fees, and it’s possible even if you’re careful. Occasionally, for instance, a transaction goes through more than once, which is an error that can be easier to rectify with a credit card.

Less Fraud Protection vs Credit Cards

One good thing about credit cards: They often come with robust fraud protection and easy ways to dispute charges. In fact, many credit card issuers will actually stop a charge they feel is suspicious and prevent it from going through until they get confirmation from you that it’s legitimate. Checking account payments don’t generally have this technology, so that’s something to consider when you’re linking your account to a food delivery service.

Difficulty Disputing or Reversing Charges

As mentioned, no matter the reason for an erroneous or fraudulent charge, it can be more difficult to reverse it when it’s basically cash (as opposed to credit). You can check directly with your bank account to learn about their process for such reversals.

Tips for Safe Checking Account Use

If you are going to use your checking account to pay for your food deliveries (or anything else), follow these tips to help ensure you do so safely.

Monitor Transactions Closely

Regardless of whether you’re using it for food delivery payments, regularly checking your bank account is always a good idea. That way, you’ll see any fraudulent transactions and start the process of rectifying them quickly. Plus, you’ll simply know how much money you have at your disposal.

Adjust Spending Limits/Alerts

Some bank accounts offer built-in spending limits, or they alert you when your account gets below a certain dollar threshold. It can be easy to overdo it with food deliveries, so if you’re going to link your checking account, consider adjusting those limits and alerts accordingly.

Consider Using a Prepaid Card

If you’re trying to keep yourself to a specific budget but don’t want to link your checking account to your food delivery app — or use a credit card that you could easily rack up sky high — consider using a prepaid card instead. That way, you know exactly how much you will spend on food delivery (since amounts in excess of the prepaid limit won’t go through). What’s more, you won’t take on any of the risks associated with linking your bank account.

Alternatives To Checking Payments

As mentioned above, if the delivery service you’re using doesn’t allow you to link your bank account directly, you will likely be able to link a digital payment platform like PayPal, Cash App, or Venmo, which can facilitate direct-from-bank transfers. And most apps will allow you to input a debit card in place of a credit card.

Of course, if you go the old-school way and order directly from a restaurant, you may still be able to pay with plain old cash.

The Takeaway

Ordering food delivery is a favorite convenience of the digital age, and you can enjoy it without using your credit card. It is often possible to link to a checking account or a debit card, which pulls money directly from your checking account, to pay for the food you’ve ordered. Or you might use a digital payment service, and link that to your checking account.

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

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

FAQ

Can I earn rewards with checking account payments?

It’s rare to find cash back rewards or other incentives linked to payments that come directly from a checking account. However, many debit cards do offer rewards. Using this kind of card is almost exactly like paying directly from your bank account. Check with the financial institution about any rewards available.

What if a delivery never arrives?

If your meal is marked “delivered” but you don’t find it, you should be able to get help from the food delivery service itself. Most apps offer a way to contact their customer support team right from the interface.

Do all food delivery apps accept checking?

Unfortunately, not all food delivery apps allow you to directly link your checking account. However, virtually all of them allow you to use a debit card instead of a credit card, which works almost exactly the same way. In addition, many of the apps allow you to link a third-party platform like Venmo or Cash App, which can facilitate bank account payments.


Photo credit: iStock/FG Trade

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The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


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

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

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

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

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

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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


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