When checking out at a store, you might be prompted to select whether you want the purchase processed as a credit or debit card transaction. Some debit cards with a credit card network logo can be processed as a credit payment, but the reverse — processing a credit card as a debit transaction — isn’t possible.
Still, it can make sense to use credit cards like a debit card. Understanding the difference between a credit card and debit card can help you to make strategic purchasing decisions with your credit card.
Can You Use a Credit Card Like a Debit Card?
In terms of being a convenient, cashless payment method, a credit card can be used in-person or online in a similar way as a debit card. Credit cards require you to insert, swipe, or tap the card on a payment processing device to initiate a transaction. If used online, you can enter your credit card information into the payment field at checkout in the same way you would with a debit card payment.
However, there are also significant differences between a credit card and debit card. The most notable distinction is where the funds come from. When you use a credit card, the money is drawn from your card’s available credit line, and you might get charged additional fees and interest on your purchase.
In contrast, a debit card draws the funds you already have in an associated checking or savings account. Also, in certain situations where the final total amount might vary, such as at the gas pump, the processor might request that your card issuer place a temporary hold on your debit card funds to ensure you have enough funds to cover the transaction.
Reasons You May Want to Use a Credit Card Like a Debit Card
Although credit cards offer numerous advantages when used responsibly, there are valid reasons to prefer using a credit card as a debit card. This may include:
• To avoid overspending. Debit cards, particularly when you’ve opted out of overdraft protection, help you to avoid spending more than you can afford to pay back. With a debit card, you can only use the funds already in your associated account, which is a tactic you could try with a credit card as well.
• To avoid finance charges or extra fees. Debit cards generally incur few charges. Additionally, they do not accrue interest since debit transactions are immediately pulled from your deposit account, in contrast to how credit cards work.
• To amass rewards without debt. The potential to earn credit card rewards is appealing, but “chasing points” can be a risky game if you overspend. The ability to use a credit card like a debit card can help keep your spending in check while earning rewards.
You can’t technically process a credit card payment as a debit card purchase. But if your purchasing strategy is to use a credit card as your go-to payment method instead of a debit card, remember the following tips and credit card rules:
• Don’t spend more than you can afford.
• Do pay your monthly credit card statement in full.
Pros and Cons of Using a Credit Card Like a Debit Card
The benefits of credit cards in comparison to debit cards vary since they’re two distinct banking products. However, each payment option has its own pros and cons.
Pros
Cons
Credit Card
• Can offer greater purchasing power
• Can buy items now and pay for them later
• Can help build your credit
• Potentially zero liability for unauthorized charges
• Can accumulate burdensome debt
• Late and missed payments can adversely affect your credit score
• Can incur interest charges and fees
Debit Card
• Can avoid debt by using cash you already have
• Can avoid interest charges on purchases
• Can request cash back at checkout
• Buying power is limited to the funds you have
• Insufficient funds may lead to overdraft fees
• Doesn’t help build credit
• Fewer protections with fraudulent charges
Alternatives to Using a Credit Card Like a Debit Card
If you’re averse to using a credit card in a traditional sense, there are a few alternatives payment options that are akin to a debit-style transaction:
• Prepaid credit card. A prepaid credit card gets loaded with funds which then become your card’s available credit line. It gives you the convenience of a credit card but taps into cash you already have, which is similar to a debit card. Note that prepaid cards often incur fees for various types of activity.
• Cash-back rewards debit cards. If you want the perks of a credit card, like cash-back incentives, but in the form of a debit card, a cash-back debit card might be an option. These limit you to spending the funds you already have on deposit, but let you earn cash back when you use the card.
The Takeaway
Using a credit card like a debit card ultimately boils down to only spending on your card with funds you already have. Since a credit card is essentially a loan, it’s easy to accumulate overwhelming debt, plus interest charges, if you’re overspending. If you can comfortably afford to repay your credit card transactions in full each month, using your credit card in lieu of a debit card can provide access to valuable benefits, like earning rewards, enhancing fraud protection, and possibly building your credit.
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 I transfer money from my credit card to my bank account?
No, you can’t transfer money from your credit card to your bank account. A bank account is a deposit vehicle for your available cash; this cash can be accessed using a debit card. Conversely, a credit card is a financial tool that lets you access a credit line that you need to repay.
Can I use my credit card like a debit card at an ATM?
Yes, you can use your credit card like a debit card to get a cash advance at an ATM. Be warned that this is a costly option. Credit card cash advances typically have a different limit compared to your purchase limit, and they usually charge a higher APR with no grace period. Plus, you’ll owe a cash advance fee.
Can I use a credit card as a debit card with no interest?
Possibly. You might be able to use a credit card like a debit card for everyday transactions without incurring interest, if you pay every billing statement in full each month. Rolling over a balance month after month, however, will cause you to incur interest charges.
Is it better to use a debit or credit card?
Whether using a debit or credit card is a better option depends on the types of purchases you’re making and your borrowing habits. For example, credit cards are generally safer when shopping online, but buying on credit can get out of control quickly if you’re not careful.
Photo credit: iStock/filadendron
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.
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 .
Here’s some nice news: It may be possible to change the due dates of some of your monthly bills.
This might come as a relief if you find that the bulk of your bills are due around the same time, such as early or late in the month, making cash flow a challenge. Or, perhaps you have some bills that are maddeningly due a couple of days before you get paid, which can also cause money management issues. Being able to spread out your bills, or push one or two due dates a few days further out, could give you some helpful breathing room.
These adjustments may be possible. Though not every company will allow you to change your billing due date, it doesn’t hurt to ask. Here’s a closer look at why you might want to change some of your bill due dates and how to do it.
Can You Change the Due Dates on Your Bills?
You may be able to change the due dates on some — or, if you’re lucky, all — of your bills. Each company will have its own policy. To find out what’s possible, simply reach to customer service via phone, email, online chat, or even old-fashioned letter. If the service provider is local, you may also be able to make the request in person. Your request may well be honored, down to exactly which day of the month your bill is due.
However, setting your own bill due dates is never guaranteed. Many companies offer this service as a courtesy to loyal customers, but they have the right to reject your request.
Why Might Someone Change the Due Dates of Their Bills?
Here are some reasons why you might benefit from changing the due dates of some or your bills.
Aligning Better with Paydays
If your bill dates are not aligned well with your paydays, you may find that you don’t always have enough money in your checking account to cover your bills when they are due. If you struggle with spending and budgeting, it could be helpful to schedule bills shortly after a payday. That way you won’t accidentally spend money that was earmarked for bills later that month. Scheduling your bill paying like this might help you better manage your money and make your bill payment on time.
While some people like to stagger their bill-paying throughout the month, others find it more convenient to pay all of their bills at the same time each month. A single due date each month for all of life’s bills could certainly make them easier to track and remember.
Ability to Spread Out Payments
While paying bills all at once — like right after payday — might make it easier for some people to stay on top of bill payments, others may prefer not to have their bank account significantly drained on a single day.
If you’d prefer to have your due dates spread out throughout the month, it may be worth trying to change some of your due dates. This could be especially helpful if your paychecks are irregular — say, if you are a freelancer who depends on clients paying their invoices before you have cash in the bank.
Remembering Pay Dates May Be Easier
Regardless of when you arrange your bill due dates to be, it will likely be easier for you to remember them if you get to pick the dates. By picking an important date, like the first or last day of each month or the day after payday, it may be easier for you to stay on top of your bills, even without reminders in your phone or on your calendar. And if you sign up for automatic bill payment, it might be a totally seamless process.
Benefits of a Bill Date Change
So what are the pros of changing a bill due date?
• It puts you in control of your budget.
• It can make remembering due dates easier.
• It might help you avoid missed payments and late fees.
Drawbacks of a Bill Date Change
So are there cons to changing a payment date? If you are making the conscious decision to change your billing schedule, you likely have a good reason for it — meaning you probably won’t encounter any drawbacks with the bill date change itself.
However, you might find that you spend a lot of time trying to get a company to change a bill due date, only for them to say no. This could lead to wasted time and effort.
When you should schedule new bill pay dates will depend on your own paycheck schedule and personal preferences. The Consumer Finance Protection Bureau (CFPB) offers a helpful worksheet for organizing all your current bills and due dates. Seeing them on paper may help you determine the best date(s) in your calendar month for bills to process.
Tips for Changing Pay Dates
Changing payment dates require a little bit of effort but can pay off by helping you gain better control of monthly bills like rent, utilities, subscription services, and even credit card payments. Here are a few tips for changing your bill due dates:
1. Get organized. A good first step is to make a list of all your recurring payments. When organizing your bills, you might want to create a master calendar that includes when each bill is due every month, as well as when your paycheck(s) are deposited. This can help you determine the ideal dates for bills to process.
2. Decide which bill dates should change. Once you have a list of all your recurring bills and paydays, you can more easily identify which bills need to change. From there, you’ll want to investigate whether the company will even allow you to change due dates. You may be able to find this information on their websites.
3. Make the necessary requests. To get your due dates changed, you’ll need to contact the company by phone, email, online chat, or letter. If you aren’t sure what to say, the CFPB offers a useful script: “I am requesting a change in my bill payment due date for my [company] bill. I would prefer to have my bill payment due date be on the __th of each month. Thank you for your assistance.”
4. Set up autopay. If a service provider has an automatic bill pay option, it might be a good idea to schedule this. How bill pay works is that you schedule electronic payments in advance so you don’t have to manually transfer funds or write a check as your due date approaches. It can be an especially good option if you have a bank account with no-fee overdraft coverage. Because of the risk of overdrafting when you set up autopay, however, it might only make sense if you regularly keep more than enough funds in your checking account to cover monthly bills.
5. Schedule reminders. Once you’ve changed your due dates, it’s a good idea to schedule reminders in your phone or on your calendar ahead of the payment date. This allows you to make sure you have the funds in your account ahead of an automatic payment or reminds you to manually complete the payment (online, by mail, or in person) if you don’t have autopay set up.
Can You Always Change Bill Dates?
Many companies will allow you to change bill dates to a schedule that makes sense for your finances. However, no company is required to do this. You may encounter some service providers that do not allow you to change bill dates.
What if You Can’t Change Your Due Date?
If you cannot change your due dates, you can still take some actions to ensure you pay all your bills on time, such as:
• Setting reminders: If you often forget to pay your bills on time but have the funds available, you may just need to schedule reminders for yourself ahead of the due date. Putting a recurring reminder in your calendar (perhaps the one on your phone) can be a wise move.
• Setting money aside until you need it: If you can’t resist the temptation to spend the money available in your checking account and often struggle with a low current or available account balance on the day that bills are due, it might be wise to move money to a separate account for paying bills. And of course, don’t touch those funds for any other sort of spending.
Banking With SoFi
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.
FAQ
How easy is it to change the due date for your bills?
Changing the due dates for your bills can be as easy as making a phone call or sending an email to the service provider. However, not every company allows you to change your bill due dates. It is solely done at the company’s discretion.
Can I pay my bill before the due date?
Yes, if you are worried about missing a payment or spending too much money before a bill is due, you can make an early bill payment. This can help you avoid late fees and develop good financial habits.
Is it better to have your bill dates close together or spread out?
It depends on your financial situation, including your pay schedule and spending habits. Some people may prefer their bill dates to be close together (even on a single day per month) while others might benefit from having them spread out throughout the month.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
SoFi 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. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Bank accounts generally aren’t included in credit reports, which means that your banking activity (including opening and closing accounts) won’t have any direct impact on your credit scores.
That said, having a negative balance when a bank account is closed could hurt your credit scores if the bank sends that balance to collections. Here are key things to consider before closing your bank account to make sure it doesn’t end up causing any credit-related issues.
How Bank Accounts Relate to Credit
The three major credit bureaus (Equifax®, Experian®, and TransUnion®) maintain reports on how consumers manage borrowed money. As a result, your credit report will contain information on your credit accounts, such as mortgages, personal loans and credit cards, including balances and payment history.
What’s not typically included in a credit report is information about your bank accounts, such as your checking account. As a result, closing an account in good standing won’t hurt (or build) your credit. If, on the other hand, you close a bank account that has a negative balance or unpaid fees, the bank may send those debts to a collection agency, which can report the delinquency to the credit bureaus.
An overdrafted account can also get reported to ChexSystems, a reporting agency for the banking industry. ChexSystem collects information about your previous problems with deposit accounts. This information stays on your ChexSystems report for five years, and can be used by banks and credit unions when deciding whether to approve bank account applications. Closing a bank account in good standing, however, won’t put a negative mark on your ChexSystem report.
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.
Reasons a Closed Account Could Impact Credit
While the act of closing a bank account doesn’t directly affect your credit scores, there are some situations when closing a bank account could have a negative impact on your credit.
Charged-Off Debt Sold to Collections
If you close a bank account with an outstanding negative balance (which could happen if you overdrafted the account or got hit with unexpected bank fees), the bank may charge off the debt after a period of non-payment.
A charge-off means the bank has written off a debt because it does not believe it will receive the money that it’s owed. Charged-off debts are often sold to collection agencies, which can then report the unpaid debt to the credit bureaus. If an account in collections is added to your credit report, it can drag down your score and stay on your report for up to seven years.
Closing an Account Used to Pay a Credit Card or Loan
If you close a checking account that was set up to automatically pay your credit card bill or make a monthly loan payment — without making another arrangement to pay your bills — you could end up missing a payment, which could impact your credit. Since payment history is the biggest element in what makes up your credit scores, going 30 days or more past due can do significant harm to your scores. On top of that, your creditor may slap you with a hefty late fee.
You Want to Apply for A Credit Card or Loan With the Same Bank
For some institutions, having a checking or savings account in good standing could help you get approved for a credit card, mortgage, car loan, or other type of credit, since they already know you and may feel more confident extending you a line of credit. If you close your account, you could potentially lose this advantage.
To ensure that closing a bank account does not hurt your credit, you’ll want to follow these simple steps when shuttering your account.
1. Open Your New Account
It’s important to have a new checking account in place before you close your old one. This will give you a place to transfer direct deposits and payments or debits. Be sure to take your time and do your research, though. There are a number of factors that go into choosing a new bank, including rates, fees, account offerings, and whether you prefer a traditional brick-and-mortar bank or an online-only bank.
2. Switch Your Recurring Payments and Direct Deposits
Next, you’ll want to make a list of all of the recurring payments and direct deposits you have set up, then move everything to the new account. You can typically change banking information with service providers and creditors online. To avoid having your direct deposit go to a closed bank account, check with your employer to see if there are any forms you need to fill out for direct deposit so your paycheck can be rerouted to your new account.
3. Pay Off Any Outstanding Balances
Don’t close that old account just yet — you’ll want to first pay off any outstanding balances, including any overdrafts or fees you owe the bank. Clearing a negative balance will prevent the bank from taking further action to recover the funds, which could negatively impact your credit. You’ll also want to leave some cash in your old account to cover any pending transactions you might have overlooked.
4. Close Your Old Account
Once you’re sure that any automatic bill payments are now coming from your new account, all direct deposits are going in, and there are no outstanding checks, you can transfer any leftover money to your new account and close your old account. Depending on the bank, you might be able to do an account closure online, or you may need to mail in a form, visit a branch, or call to close your account.
There are a number of valid reasons to close a bank account. Here are a few scenarios where closing an account might be the right decision.
Moving
If you are moving to a new location, especially if it’s far from your current bank, closing your account and opening a new one that has more conveniently located branches could make sense. Some brick-and-mortar banks operate regionally and once you move out of the area, you may not have access to branches or in-network ATMs.
High Fees
Banks often charge various fees, including monthly maintenance fees, ATM fees, and overdraft fees. If your current bank charges high fees and you can find a bank with lower or no fees, closing your account and switching to the new bank can save you money in the long run.
Low Interest Rates
If your savings account is earning the average rate, which is 0.41% APY as of December 16, 2024, it can be well worth making the switch to a high-yield savings account, which can pay 3.00% APY or more. Competitive yields on savings accounts are often found at online banks, which don’t incur the cost of maintaining physical branches and can pass along the savings to customers in the form of higher rates.
Poor Service
If you are dissatisfied with the service provided by your bank, such as limited or lackluster customer service, switching to a bank that better meets your needs can improve your banking experience.
If you are hesitant to close your bank account due to potential complications, here are some alternatives to consider.
Switch to a No-Fee Account
Many banks offer no-fee or low-fee account options. Switching to one of these accounts can help you avoid high fees without the need to close your current account. This can be particularly useful if you want to maintain a long-term banking relationship.
Negotiate Fees
Sometimes, banks are willing to waive certain fees or offer fee reductions if you ask. Contact your bank’s customer service department to discuss your concerns and see if you can negotiate better terms. Banks typically value customer loyalty, and they may accommodate your request to retain your business.
Keep It Open but Don’t Let It Go Dormant
If you want to keep the account open but rarely use it, you’ll want to be sure to maintain some activity to avoid letting it go dormant. When an account has been inactive for an extended period, it can become the unclaimed property of the state. You can avoid this problem by occasionally withdrawing or depositing cash into the account, periodically using your debit card to make small purchases, or signing up for one auto payment (just make sure to keep a high enough balance to cover it).
The Takeaway
Closing a bank account does not directly affect your credit score, as checking and savings accounts are not reported to credit bureaus. However, if you close an account with unresolved issues, such as outstanding balances, overdraft fees, or unpaid checks, it can lead to negative marks on your credit report if the debt is sent to collections.
By understanding the potential impacts of closing a bank account and taking proactive steps, you can close a bank account and seamlessly begin using your new account without any negative impact on your credit.
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 reopen a closed bank account?
It depends on the bank’s policies and the reason for closure. If the account was closed recently and in good standing, you may be able to reopen the account by contacting customer service. However, if the account was closed by the bank due to issues like overdrafts or fraud, reopening might not be possible.
How long does a closed account stay on my record?
While a closed loan or credit card account can stay on your credit reports for up to 10 years, a closed bank account won’t show up on your credit report. However, If you close a bank account with a negative balance and don’t pay the debt in a timely fashion, the bank may send your debt to a collections agency. The agency can then report the collections account to the consumer credit bureaus. A collection account can stay on your credit reports for up to seven years.
Will my credit score increase when I close unused accounts?
Closing unused credit accounts doesn’t necessarily build your credit score and can sometimes lower it. This is because closing accounts reduces your overall available credit, which can increase your credit utilization ratio, a key factor in credit scoring. Additionally, it might shorten your credit history, another important scoring factor.
Instead of closing unused credit accounts, consider keeping them open with minimal or no activity. This maintains your available credit and supports a lower credit utilization ratio, which can build your credit score.
Photo credit: iStock/Drazen Zigic
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.
*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.
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 .
If you’re often surprised (and not in a good way) when you open up your credit card and bank statements and see how much money you spent, you are not alone. In this scenario, there could be a simple solution: a personal cash flow statement.
Creating a personal cash flow statement can give you a clear picture of your monthly cash inflow (money you earn) and your monthly cash outflow (money you spend). Armed with that intel, you can determine if you have a positive or negative net cash flow.
The process is relatively simple. It involves doing some basic math calculations with a month or two worth of bank statements and bills. Once you have your personal financial statement, you’ll know where you stand and likely be better able to budget your money.
What Is a Personal Cash Flow Statement?
“Cash flow” is a term commonly used by businesses to detail the amount of money flowing in and out of a company. Companies can use cash flow statements to determine how well the business is generating income to pay its debts and operating expenses.
Just like the ones used by companies, tracking your own cash flow can provide you with a snapshot of your financial condition.
You might learn, for example, that you have less leftover at the end of each month than you thought or that you are indeed operating at a shortfall.
Once you have the numbers down in black and white, you can then make any needed changes, such as cutting your expenses to save money, increasing income, and making sure that your spending is in line with your goals.
So, how do you set up one of these cash flow statements? You may find a personal cash flow statement template or a personal cash flow statement example online, but what follows will explain how and why to create one.
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How to Build a Personal Cash Flow Statement
Here are the steps to take to build a personal cash flow statement.
Listing All Your Sources of Income
A good first step when creating a personal cash flow statement is to get out all of your pay stubs, bank statements, credit card statements, and bills or review them online.
• Next, list any and all sources of income — the inflow, such as salaries, anything you make from side hustles, interest from savings accounts, income from a rental property, dividends from investments, and capital gains from the sale of financial securities like stocks and bonds.
• You might want to avoid listing money in accounts that aren’t available for spending. For example, you may not want to list dividends and capital gains from investment accounts if they are being automatically reinvested or those that are part of a retirement account from which you aren’t actively taking withdrawals.
• Since income can vary from one month to the next, you might choose to tally inflow for the last three or six months in order to come up with an average.
Once you’ve collected and listed all of your income for the month, you can then calculate the total inflow.
Listing All of Your Expenses
Now that you know how much money is coming in each month, you’ll want to use those same statements and bills, as well as any for debts (such as mortgage, auto loan, or student loans) to list how much was spent during the month.
• Again, if your spending tends to fluctuate quite a bit from month to month you may want to track it for several months and come up with an average.
• To create a complete picture of how much of your money is flowing out each month, you’ll want to include necessities like food and gas, and also discretionary expenses, such as trips to the nail salon or your monthly streaming services.
• Remember to include infrequent expenses such as birthday gifts for loved ones, annual insurance premiums, and the like.
• Once you’ve compiled all of your expenses, you can calculate the total and come up with your total outflow for the month.
Determining Your Net Cash Flow
To calculate your cash flow, all you need to do is subtract your monthly outflow from your monthly inflow. The result is your net cash flow.
• A positive number means you have a surplus, while a negative means you have a deficit in your budget.
• A positive cash flow is desirable, of course, since it can provide more flexibility. You can decide how to best use the surplus. There are a variety of options. You could choose to save for an upcoming expense, make additional contributions to your retirement fund, create or add to an emergency fund, or, if your savings are in good shape, consider splurging on something fun.
• A negative cash flow can signal that you are living a more expensive life than your income can support. Some people refer to this as not living within your means. In the future, maintaining this habit could lead to additional debt.
• When creating personal cash flow statements, it’s also possible to have net neutral cash flow (all money coming in and going out is fairly equal).
In this case, you may still want to jigger things around if you are not already putting the annual maximum into your retirement fund and/or you don’t have a comfortable emergency cash cushion.
The Difference Between a Personal Cash Flow Statement and a Budget
A personal cash flow statement provides a comprehensive look at what is currently coming in and going out of your bank accounts each month. You might think of a cash flow statement telling you where you are, financially speaking.
Whichever budget method you use, on the other hand, helps you to get where you want to go by giving you a spending plan that is based on your income and expenses. A budget can provide you with some general spending guidelines, such as how much you should spend on groceries, entertainment, and clothing each month so that you don’t exceed your income — and end up with a negative net flow.
Creating a budget can also be a good opportunity to check in with your financial goals.
Using Your Personal Financial Statement to Create a Simple Budget
Because a cash flow statement provides a comprehensive look at your overall spending habits, it can be a great jumping off point to set up a simple budget.
When you’re ready to create a budget, there are a variety of resources:
• Break out a pencil and paper or buy a journal for this purpose
• Use an app that’s part of your bank’s suite of tools
• Download an app that isn’t connected to your financial institution but offers budgeting services
A good first step in creating a budget is to organize all of your monthly expenses into categories.
Spending categories typically include necessities, such as rent or mortgage, transportation (like car expenses or public transportation costs), food, cell phone, healthcare/insurance, life insurance, childcare, and any debts (credit cards/loans).
You’ll also need to list non-essential spending, such as cable travel, streaming services, concert and movie tickets, restaurants, clothing, etc.
You may also want to include monthly contributions to a retirement plan and personal savings into the expense category as well.
And, if you don’t have emergency savings in place, put that on the spending list as well, so you can start saving towards that every month. How big an emergency fund do you need? Use an emergency fund calculator, and aim to cover at least three to six months’ of living expenses.
Once you have a sense of your monthly earnings and spending, you may want to see how your numbers line up with general budgeting guidelines. Financial counselors sometimes recommend the 50/30/20 budget rule, which looks like this:
• 50% of money goes towards necessities such as a home, car, cell phone, or utility bills.
• 30% goes towards your wants, such as entertainment and dining out.
• 20% goes towards your savings goals, such as a retirement plan, a downpayment on a home, emergency fund, or investments.
Improving Your Net Cash Flow
If your net cash flow is not where you want it to be or, worse, dipping into negative territory, a budget can help bring these numbers into balance.
The key is to look closely at each one of your spending categories and see if you can find some ways to trim back.
• One of the easiest ways to change your spending habits can be to cut some nonessential expenditures. If you’re paying for cable but mostly watch streaming services, for example, you could score some real savings by getting rid of that service and its bill.
• Not taking as many weekend getaways and cooking more often instead of getting takeout could add up to a big difference. If you tend to be a compulsive or impulsive shopper, you might take steps to understand your triggers, change your behavior, and rein in the outflow of money.
• Living on a budget may also require looking at the bigger picture and finding places for more significant savings. For example, maybe rent eats up 50% of your income, and it’d be better to move to a less costly apartment. Or you might want to consider trading in an expensive car lease for a less pricey or pre-owned model.There may also be opportunities to lower some of your recurring expenses by finding a better deal or negotiating with your service providers.
You may also want to look into any ways you might be able to change the other side of the equation — the inflow of funds.
• One option could be asking for a raise.
• Another could be training for a higher-paying field.
• Or you might find an additional income stream (making more money is a key benefit of a side hustle).
The Takeaway
One of the most important steps towards achieving financial wellness is cash flow management — i.e., making sure that your cash outflow is not exceeding your cash inflow.
Creating a simple cash flow statement can show you exactly where you and your money stand. It can also help you create a budget that can give you greater control over your finances and achieving your goals.
If you need help tracking your spending, banking with SoFi may be a good option for you.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.
FAQ
How do you create a personal cash flow statement?
To create a personal cash flow statement, gather information on how much you typically take in (income) after taxes per month and how much your outflow (spending and saving) is. That captures the amount you spend on necessities, like housing and food, as well as wants and debt payments. When you subtract the outflow from the income, you’ll see where your cash flow stands.
What is the importance of a personal cash flow statement?
A personal cash flow statement is an important way to track your personal spending and see where pain points may be. It will also reveal if you are going into debt or if you have surplus funds you can put towards future goals. Also, a personal cash flow statement can be an important factor in establishing your budget.
What is the difference between a personal balance sheet and a cash flow statement?
A personal balance sheet captures your assets (money in the bank and real estate, for instance) and liabilities (your credit card balance and any loans), which allows you to determine your net worth. A cash flow statement, on the other hand, tracks your spending versus your income, to see whether you are operating with a deficit, a surplus, or if you are breaking even.
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.
Almost half of all Americans carry a balance on their credit card, month after month. If you’re among their ranks, you know that the combination of high prices and high credit card interest rates can make it challenging to pay that debt off in full.
Many cardholders have seen their interest rates creep up in recent years, in line with the Federal Reserve’s recent rate increases. That means interest payments are gobbling up a bigger share of credit card balances. And those credit card balances can be major. This kind of debt hit a staggering $1.12 trillion for the first quarter of 2024, according to data from the Federal Reserve Bank of New York.
But the situation isn’t hopeless, however. If you’re one of the cardholders who can’t pay credit card debt in full, here are five steps you can take to address it.
Step 1: Check your Credit Card Interest Rate
If you haven’t carried a credit card balance before, you may not be aware of what interest rate your credit card is charging. But it’s important to know exactly how much you’re getting charged so if you need to, you can budget for interest expense as well as your purchases.
The average credit card interest rate for all new card offers was 24.84% in mid-2024. (Depending on what type of credit card you have, your credit score, and your credit history, you may have a higher or lower interest rate than the average.)
With interest rates this high, it can be a real financial setback to carry a balance for an extended length of time, making only the minimum credit card payment. You may find that you are only paying interest and making little headway in paying off what you actually spent.
If you pay your credit card statement balance in full by the due date, a credit card grace period will usually take effect for the next billing cycle. That means you won’t owe interest on new purchases until the due date for the next billing cycle. If you pay that statement balance in full by the next due date, the grace period will continue into the next cycle, and on and on.
But, if you make only the minimum payment or a partial payment on the full statement balance by the credit card due date, you’ll get charged interest on the remaining balance and lose your grace period for the next billing cycle. This means you’ll owe interest on any purchase immediately. Even if you go back to paying the full balance, your grace period may not renew for several more cycles, depending on the specific terms of your credit card.
If you’re in a position where you can’t pay credit card bills and must move to partial payments, make sure you’re aware of the additional interest expense you’ll incur on the remaining credit card balance. Try your best to stop making new purchases with that card since interest will be charged on those purchases immediately.
Step 3: Look at Changing Your Due Date
If you’re feeling overwhelmed because many of your bills are due at the same time, talk to your credit card company about changing your due date. You might be able to move your credit card due date to a day of the month that works better for your budget, so the payments you owe are a bit more staggered.
While this switch might not help immediately to pay down credit card debt, it could offer some relief in the long run.
Step 4: Explore Ways to Pay Off Your Balance Faster
You may find that with higher interest rates and inflationary spending, you need a more efficient way to pay off your credit card debt, such as by refinancing credit card debt. Luckily, there are some options for how to pay off credit card debt, though keep in mind the best way to pay off credit card debt will depend on your financial specifics.
Balance transfer credit cards that offer a limited time low or sometimes even 0% interest rate can help — especially if you think you can pay the balance in full during the promotional low-rate period.
Another option you might consider is applying for a low-interest personal loan to pay off credit card debt in full. This could help you secure a lower interest rate, and by consolidating your credit card debt, you’d have fewer due dates to keep track of. Keep in mind, however, that there are pros and cons of personal loans to pay off credit card debt.
If you’re finding it hard to make your credit card payments, that can be a signal it’s time to take a close look at your spending, perhaps with the help of one of the many online budgeting tools available.
Personal finance tools can help you understand just how much your cost of living has risen in recent months and make it easier to flag places you can cut back. Some can help to pinpoint fees you may be paying unwittingly or the automatic payments you’re making on your credit card that could get trimmed. Cutting these costs can then make it easier to pay off credit card debt.
The Takeaway
If you’re struggling with a credit card balance you can’t pay off, taking steps to pay off credit card debt faster and budget smarter can help. These can involve understanding your rate, changing your payment due date, and other moves.
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
What is a fast way to pay off credit card debt?
You might be able to use a balance-transfer credit card and pay down your debt during the 0% APR promotional period. Or you might consider securing a personal loan to pay off the debt. You would then pay off the personal loan, which could have a lower interest rate.
Can you change your credit card payment due date?
You may be able to change your payment due date. See if your card’s website or app allows this kind of shift, or contact customer service.
Do most Americans carry credit card debt?
According to recent data, approximately 49% of Americans carry credit card debt.
Photo credit: iStock/Sneksy
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.
