For millennia, people have used precious metals like gold and silver to store their wealth. And while there are other options in the modern world, investing in gold is still quite popular. In terms of how exactly to do that, you may be able to buy gold with a credit card — but it may not be the best choice.
One of the biggest drawbacks to doing so are the credit card charges for gold purchase on credit cards. If you buy gold with a credit card, you’ll likely owe a processing fee on top of your purchase price. This can make investing in gold with a credit card a less desirable option, and it may make it worth considering alternatives.
Can You Buy Gold With a Credit Card?
It is possible to buy precious metals with a credit card, but it may not be the best investment option for you.
Part of what a credit card is includes processing fees, which are charged to merchants and often get passed down to the consumer. These fees typically range from around 1.5% to 3.5% of the purchase amount. If you have to pay processing fees in order to buy gold with a credit card, you may want to consider other investment options.
Guide to Buying Gold With a Credit Card
If you decide to buy gold with a credit card, here are a few steps to help guide your journey.
Searching for Reliable Dealers
First, you’ll want to look around for reliable gold dealers. There are many different websites where you can buy gold online with a credit card, and each site has its own pros and cons. It’s smart to read up on the company to help ensure you’re choosing a reliable dealer.
Comparing Prices and Reviews
Once you’ve found a few dealers who appear reliable, you can start comparing prices and reviews. Reading reviews from other investors can give you a sense of what you’re likely to go through with this particular dealer. You’ll also want to compare gold prices at different sites, since the price may vary from dealer to dealer.
Completing the Checkout Form
Once you’ve settled on a dealer, you can go through their checkout process. Before you enter your credit card or other financial details, you may need to enter in additional information. This will likely include your name and address or other identifying information.
Submitting Your Credit Card Details
You’ll then likely be taken to the checkout screen to complete your purchase. If you are using a credit card, you’ll enter your credit card information. Make sure to read the terms and conditions for your purchase, as some dealers charge a market loss fee if you cancel your order.
Completing the Purchase
Once you complete the purchase, you can await the delivery of your gold. If you’re taking physical hold of your gold, it will be shipped to your address on file. If you have made other arrangements, your gold will get delivered per the instructions you entered during the purchase process.
After the purchase is added to your credit card balance, make sure to follow essential credit card rules. This includes making on-time payments and attempting to pay off your balance in full each month to avoid paying interest.
Besides investing in gold with a credit card, there are a few other ways to buy gold.
Debit Card
You may be able to buy gold with a debit card, depending on the dealer that you choose. Investing in gold with a debit card may also come with processing fees. However, it’s common that debit card fees are less than those associated with using a credit card, given how credit cards work compared to debit cards.
ACH or Wire Transfer
Another option to consider is sending the money electronically through your bank. You may be able to fund your purchase using ACH or a wire transfer. Just make sure you understand any fees associated with buying gold in this manner.
Money Order
You also may be able to use a money order to invest in gold. How to do this will depend on the dealer you use. Generally, you’ll need to mail a money order to the dealer. Once your funds are deposited, you’ll be able to use them to make a gold purchase.
Cash Deposit
If you live near the physical establishment of a gold dealer, you may also be able to use cash to invest in gold. You can deposit your cash funds and then use that amount to purchase gold. Of course, you will want to be cautious if you are transporting a large sum of cash, as loss or theft are risks.
P2P Apps
Peer-to-peer (P2P) payment apps like Cash App, and Venmo may serve as additional ways to invest in gold. Check with your dealer to see if these (or any other) P2P apps are options to fund your investment. Also make sure you look at the terms and conditions to understand any additional fees that you may owe.
The Takeaway
While it is possible to invest in gold with a credit card, it may not be the best investment option. Not all dealers allow you to buy gold with a credit card, and many that do pass along processing fees of 1.5% to 3.5%. These additional fees mean that you may be better off with another type of investment or a different funding source.
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
Does it still pay to invest in gold?
If you’re wanting to invest in gold, it can still make sense, depending on your individual financial priorities. The price of gold varies from day to day (and even within the same day), so just like any other type of investment, you’ll want to make sure you understand the underlying value and if or when buying gold makes sense for you.
Can you buy precious metals with a credit card?
You can buy precious metals like gold with a credit card, but it may not be the wisest investment option. Many credit card processors charge a fee to merchants using a credit card, and in many cases, that fee is passed down to consumers. This additional cost can mean it may not be worth it to buy gold with a credit card.
What are the charges for gold purchases on a credit card?
The exact list of fees and charges for buying gold with a credit card will depend on the exact dealer you use to make your purchase. It’s common for dealers to charge a processing fee (up to 3.5% or higher) if you use a credit card to buy gold.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
Many people are aware of the number of data breaches and scams today and want to feel reassured that they are protected from identity theft and other forms of credit card fraud.
If you are among their ranks, you might benefit from a credit freeze, which is typically free, or credit lock, which may involve a fee. Both of these processes block access to your credit file. This can prevent credit checks that may be the first step in unauthorized applications for a new loan or credit card.
It can be a wise idea to apply for a credit lock or credit freeze at one or all three of the major credit bureaus if you are dealing with a data breach or identity theft.
Learn the pros and cons of a credit freeze vs. lock here, as well as when what’s known as a fraud alert might provide the right level of protection.
Key Points
• A credit freeze is a free service that blocks access to your credit report, making it harder for identity thieves to open new accounts in your name.
• Credit locks also block access to credit reports but typically require a subscription fee and allow for instant activation and deactivation via an app.
• Both credit freezes and locks prevent unauthorized access to credit files but differ in terms of ease of use and the potential for legal protections.
• A fraud alert is a less severe option that allows lenders to see your credit report but requires verification of identity before processing new credit applications.
• Regular monitoring of financial accounts is essential, regardless of whether a credit freeze, lock, or fraud alert is in place, to catch any fraudulent activity promptly.
What Does a Credit Freeze Do?
A credit freeze (also known as a security freeze) is a free tool that allows you to block all access to your credit report and makes it tougher for identity thieves to open new accounts in your name.
That’s because nearly all creditors want to see your credit report before they approve an account and extend credit to you.
If they can’t access your credit report, it’s unlikely that you will get approved. That works in your favor when someone other than you is trying to open an account in your name and perhaps commit identity theft.
Fortunately, according to the Federal Trade Commission (FTC), freezing your credit will not harm your credit score, nor will it impair your ability to get your free annual credit report.
A credit freeze also won’t limit your ability to open new accounts. However, because credit freezes prevent lenders from checking your credit, you will need to lift the freeze temporarily before applying for a loan or credit account, and then place the freeze again when you are done accessing your account.
In addition, freezing your credit won’t hurt your ability to apply for a job, rent an apartment, or, say, buy insurance for your family. According to the FTC, the freeze doesn’t apply to those actions.
It’s important to keep in mind, however, that a freeze won’t prevent a thief from making charges to your existing accounts.
For that reason, you will still need to stay on top of your finances and monitor all of your bank, credit card, and insurance transactions carefully for fraudulent transactions.
You may also want to be aware that, even with a freeze, certain entities will still have access to your credit report.
These include your existing creditors, debt collectors acting on their behalf, and government agencies who need to have access in response to a court order.
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How to Freeze Your Credit On Your Own
Putting a freeze in place simply requires contacting each of the nationwide credit bureaus, which include:
You will need to supply your name, address, Social Security number, date of birth, along with some other personal information.
After receiving your freeze request, the credit bureaus will give you a PIN (personal identification number) or password. You’ll want to keep this in a safe place since you will need it whenever you choose to lift the freeze.
By law, credit bureaus must activate a credit freeze within 24 hours of receiving a request by phone or online, and they must lift a freeze within one hour of receiving a request to do so accompanied by your PIN or password.
Your freeze will remain in place until you temporarily lift or completely remove it (more on how to do that below). In some states, a freeze lasts indefinitely; in others, up to seven years.
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How to Lock Your Credit Report
If you’re wondering about a credit freeze vs. a credit lock, here’s more intel. Like a credit freeze, a credit lock blocks access to your credit report but won’t harm your credit score.
Like a freeze, to be fully protected, you must place locks with all three credit reporting agencies. However, it may offer lesser legal protection if you do encounter an issue.
With locks, however, there’s no PIN, and usually, there is no delay of up to 24 hours when locking your credit file, nor a delay of up to an hour for unlocking it.
With a credit lock, you can activate and disable it instantly via a smartphone app or secure website.
Locking your credit involves enrolling in one (or all) of the programs offered by the three major credit bureaus, Equifax, (Lock & Alert), Experian (CreditWorks), and TransUnion (TrueIdentity).
There is often a monthly fee involved in enrolling in one of these services. Credit locks, however, often come with additional services, such as monthly access to credit reports from all three bureaus, alerts when there’s new credit activity on your accounts at any of the three bureaus, identity theft insurance, and fraud resolution assistance.
Credit bureaus typically require you to provide proof of identity when you set up a credit lock. You can submit the necessary documents electronically or mail in hard copies.
The security benefits of a credit lock are the same as those for a credit freeze, and the limitations on access to your credit are the same as well–criminals won’t be able to access your credit file.
By the same token, new lenders whom you are legitimately working with to apply for loans or credit won’t be able to either unless you temporarily lift the block.
Unlike credit freezes, credit locks are not regulated by state law but are instead governed by a contract between you and the credit bureau.
If you want to lift or remove a freeze, you’ll need to call the credit bureau or visit the credit freeze page on its website, then use the PIN code or password you set up when you activated your credit freeze.
If you are lifting a freeze because you are applying for credit and you can find out which credit bureau the lender will contact for your credit file, you may be able to lift the freeze only at that particular credit bureau. Otherwise, you need to make the request with all three credit bureaus.
When you call or go online, you’ll likely have the option to thaw your credit temporarily (in which case, you will likely be issued a single-use PIN or password that you can provide to a creditor to access your frozen credit file), or to lift the freeze permanently.
Removing a credit lock, on the other hand, is typically just a matter of turning off a virtual switch online or in an app provided by the credit bureau.
When access to your credit file is no longer required, you can simply turn the switch back on.
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How Is a Credit Freeze or Lock Different from a Fraud Alert?
Now that you’ve learned about a credit lock vs. freeze, there’s another scenario to consider. If you are worried about catching credit card fraud and/or identity theft but haven’t yet become a victim, you might consider placing a fraud alert on your credit report, which is less severe than a credit freeze or lock.
Unlike a freeze or lock, which shuts down access to your credit information, a fraud alert allows lenders to see your credit file, but it requires verification of your identity before any credit application is processed or any new account is opened in your name.
For example, if you have a phone number in your credit file, the business must call you to verify whether you are the person making the credit request.
A fraud alert can make it harder for an identity thief to open more accounts in your name, and can be a good idea if your wallet, Social Security card, or other personal, financial or account information is ever lost or stolen.
To place a fraud alert you simply need to contact one of the credit bureaus. It will then put the alert on your credit report and tell the other two credit bureaus to do so.
A fraud alert is free, and the alert stays on your report for one year. It’s a good idea to mark your calendar, so you can then place a new fraud alert.
If you’ve been a victim of identity theft, credit bureaus often offer a free extended fraud alert that lasts for seven years.
A credit freeze vs. a credit lock can each provide a layer of protection if you’re an identity theft victim or you have good reason to believe someone with criminal intent has accessed your information. Credit freezes and credit locks both restrict access to your credit reports. But you can turn a credit lock on and off instantly while adding or lifting a credit freeze requires making a request to the credit bureau.
Another key difference is that credit freezes are free, while credit locks are typically offered as part of paid services from the three national credit bureaus.
Whatever form of fraud protection you choose, it’s still important to stay on top of and regularly check all of your financial accounts.
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FAQ
Can I freeze my credit for free?
Yes, you can freeze your credit for free by contacting each of the three credit bureaus, Equifax, Experian, and TransUnion.
What’s the difference between a credit freeze vs. credit lock?
A credit freeze limits access to your credit reports, is free, and must be filed with each of the three credit bureaus. A credit lock can be a paid service, can be instantly turned on and off, and may in some cases provide a lesser degree of legal protection.
How long does a credit freeze vs. credit lock last?
A credit freeze lasts until you remove it or up to seven years in some states. A credit lock lasts as long as you subscribe to the service providing it.
SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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An ACH routing number is a nine-digit code that identifies a financial institution during an electronic financial transaction. It ensures that money transferred using the ACH (Automated Clearing House) network is taken from and sent to the right place. ACH transfers are usually faster than paper checks and are used for various transactions like autopay and direct deposits.
Since ACH routing numbers play a vital role in everyday banking, let’s take a closer look.
Key Points
• An ACH routing number is a nine-digit code essential for identifying financial institutions during electronic transactions, facilitating faster money transfers compared to traditional checks.
• This number is crucial for various financial activities, including setting up direct deposits, authorizing online payments, and managing automatic bill payments.
• To locate an ACH routing number, individuals can check their checks, access their online banking account, search the bank’s website, or contact customer service.
• ACH routing numbers differ from ABA routing numbers, which are used for paper checks and wire transfers, although many banks now use the same number for both.
• Understanding and knowing the ACH routing number is vital for conducting secure and efficient electronic transactions in today’s banking environment.
What Is an ACH Routing Number?
An ACH routing number is essentially a digital address for your bank. It’s used specifically for transfers made using the Automated Clearing House (ACH) network, a system that facilitates electronic payments and direct deposits between financial institutions in the U.S.
Smaller banks and credit unions may have only one ACH routing number, while big banks may use several different ACH routing numbers based on region.
You’ll need your bank’s ACH routing number for a number of financial transactions. This includes setting up direct deposit at work, getting a tax refund directly deposited into your bank account, authorizing a one-time online payment, setting up autopay, and using a P2P payment app.
To set up an ACH transaction, you also need to provide your account number, which (unlike an ACH number) is unique to you. Your account number identifies the specific account, such as a traditional or online checking account, within the bank you want to use for the ACH credit or debit.
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How Do I Find My ACH Routing Number?
Let’s say you want to sign up to pay your homeowner’s insurance automatically every month or you need to enroll in a P2P app to send someone money. To find your bank’s ACH routing number, you have a few options.
Using Your Checkbook
If you have paper checks, you can find your routing number by looking at the string of numbers printed along the bottom of a check. Your bank’s routing number is the first set of nine digits on the bottom left. It is usually followed by your account number and then the check number.
Using Your Online or Mobile Bank Account
Another way to get your ACH routing number is to go to your bank’s website and sign into your account. Methods vary by bank but, typically, here’s how you do it: Click on the last four digits of your account number (which appears above your account information) and choose “see full account number” next to your account name. A box will then open to display your bank account number and routing number.
You can also find your ACH routing number by signing into your bank’s mobile app. Typically, you just need to choose your account title and then tap “show details,” and your bank account and routing number will appear.
Using the Internet
If you don’t have access to online banking, you can also find your ACH routing number by going to your bank’s official website. You can then use the search function to look for “ACH routing number” or check the “Help” or “FAQ” sections.
Another option is to do a simple internet search. Put “ACH number” and the name of your bank into a search engine and you should be able to find it. Keep in mind that some large banks may have multiple regional ACH numbers. You want to make sure you are getting the one associated with your location.
Contacting Customer Service
If you can’t get online, you can always contact your bank’s customer service department by phone. They can provide you with the correct ACH routing number.
What Are ACH Routing Numbers Used For?
ACH routing numbers serve several essential functions in the banking system. Here are some of the main uses for ACH routing numbers:
• Direct deposit Employers use ACH routing numbers to deposit salaries directly into employees’ bank accounts. This method is fast, secure, and convenient for both employers and employees.
• Bill payments Many people use ACH routing numbers to pay bills electronically. This includes payments for utilities, mortgages, and other recurring expenses.
• Tax refunds The IRS and state tax agencies use ACH routing numbers to deposit tax refunds directly into taxpayers’ bank accounts.
• Transfers between accounts ACH routing numbers are used to transfer money between different bank accounts, whether within the same bank or between different banks. This is common for personal transactions, such as moving funds from a checking account to a savings account.
ACH vs ABA Routing Numbers: The Differences
An ABA (American Bankers Association) routing number is similar to an ACH routing number in that it identifies your bank. However, these numbers are used in different contexts.
ACH routing numbers are specifically used for electronic transactions processed through the Automated Clearing House network. This includes direct deposits, bill payments, and other electronic funds transfers. ABA routing numbers (also known as check routing numbers) are used for processing paper checks and for wire transfers. ABA and ACH simply refer to the method in which the money is moved.
These days, the same nine-digit number can serve as both an ACH routing number and an ABA routing number, which means that the ABA and ACH routing number for your bank is likely the same. If that’s the case, your bank will simply refer to its ABA/ACH routing number simply as its “routing number.”
Some banks, however, may provide separate ACH numbers (for electronic transfers) and ABA numbers (for checks and wire transfers).
ACH vs ABA Routing Numbers: History
ABA numbers were created in 1910 by the American Bankers Association (ABA) to help facilitate the sorting, bundling, and shipping of paper checks. They are still used for the processing of paper checks (and also for wire transfers).
More than a half century later, in the late 1960s, a group of California banks banded together to find a speedier alternative to check payments. They launched the first ACH in the U.S. in 1972; that was a key milestone in the evolution of electronic banking.
ACH vs ABA Routing Number: Numerical Differences
In the past, ABA and ACH numbers were slightly different, specifically the first two digits. Today, though, they are typically identical. Your bank’s ABA routing number and ACH routing number are likely to be one and the same. The reason is that both ABA and ACH numbers are used for the same purpose — transferring funds to the correct destination.
The Takeaway
An ACH routing number is a nine-digit code that identifies a bank during an electronic financial transaction. The ACH system has been used for decades and makes life easier by keeping transactions quick and secure. While ACH numbers used to be different from ABA routing codes, today these two numbers are typically the same.
Whether you are setting up direct deposits, paying bills, or transferring money between accounts, it’s essential to know your bank’s ACH routing number. You can find it by looking at your checks, logging into your account, or doing a simple online search. It’s that easy.
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FAQ
Is the routing number different for ACH and wire transfers?
In some cases, the routing number for ACH transactions may be different from the routing number used for wire transfers. ACH routing numbers are used for electronic transactions processed through the Automated Clearing House network, such as direct deposits and bill payments.
Wire transfers, which are often faster and more direct, require an ABA or wire transfer routing number. It’s a good idea to confirm with your bank to ensure you use the correct routing number for the type of transaction you are making.
Do all banks have an ACH routing number?
All banks and credit unions that process ACH transactions have an ACH routing number. This nine-digit number is your bank’s digital address, and is essential for facilitating electronic transactions such as direct deposits and bill payments. Each financial institution has its own specific ACH routing number to ensure that transactions are routed correctly.
Is your ACH number your account number?
No, your ACH routing number is not the same as your account number. The ACH routing number is a nine-digit code that identifies your bank or financial institution. Your account number, on the other hand, is a unique identifier for your specific bank account within that institution.
Both numbers are required for electronic transactions, but they serve different purposes. The routing number directs the transaction to the correct bank, while the account number specifies the particular account to be credited or debited within that bank.
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SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
If you’ve used your credit card outside of the U.S. — or simply made a purchase online through a merchant that wasn’t U.S.-based — you may have noticed an extra cost added to your purchase. Called a foreign transaction fee, these charges can add up quickly.
Luckily, it is possible to steer clear of credit card fees for international transactions. Let’s take a closer look at what a foreign transaction fee on a credit card is, how much they typically run, and how you can avoid them.
What Is a Credit Card Foreign Transaction Fee?
A credit card foreign transaction fee is a surcharge, or an additional charge, that some credit cards add to transactions that are processed outside of the U.S. Put another way, it’s a cost that applies for credit card processing when certain conditions are met.
Credit card foreign transaction fees may apply when you make an online purchase from a merchant that’s located outside of the U.S. Additionally, they may apply when you’re using a credit card in another country.
While broadly referred to as a foreign transaction fee, this fee is actually composed of two different charges. One part comes from the credit card issuers and the other is from the credit card network (think Visa or Mastercard, for example).
How Are Credit Card Foreign Transaction Fees Calculated?
To find out how international credit card fees are calculated for your particular credit card, check your card’s terms and conditions. You’ll likely find information on foreign transaction fees in a section titled “Rates and Fees” or “Pricing and Terms.”
In general, however, the amount of your credit card’s international fees is calculated based on a set percentage of the transaction amount.
For example, say your credit card charges a 3% foreign transaction fee, and you’re paying about $50 for souvenirs you bought at a merchant abroad. In this instance, the credit card network may take 1.5% of the transaction, while the credit card issuer would deduct 1.5%. That would result in a total foreign transaction fee of $1.50 for that particular purchase.
How Much Do Credit Card Foreign Transaction Fees Cost?
Some cards don’t come with credit card international fees, meaning you don’t have to worry about this credit card cost. For cards that do charge foreign transaction fees, this fee can range from 1% to 3% per transaction, with 3% being the average rate.
When this credit card fee for international transactions is charged once, it may not seem like a big deal. But if you make a lot of overseas purchases, it can really add up. If you have a 3% foreign fee credit card, for example, that will tack on $3 for every $100 you put on the card.
Foreign Transaction Fees vs Currency Conversion Fees
A foreign transaction fee isn’t the same thing as a currency conversion fee. Rather, a currency conversion fee is generally one portion of the overall foreign transaction fee you may be charged.
A currency conversion fee is the cost charged by the credit card network to cover the cost of converting funds into the currency of the merchant. So, if you were making a purchase in Spain, the currency would get converted from U.S. dollars to the euro.
Visa and Mastercard charge a 1% currency conversion fee to card issuers. It’s up to the card issuer whether to pass along that fee to the cardholder as part of the overall foreign transaction fee charged — an example of how credit card companies make money.
Spotting Credit Card Foreign Transaction Fees
Aside from looking at the terms and conditions you were provided when you received your credit card, you can look at your card issuer’s website to learn more about any foreign transaction fees. Information is typically listed in the “fees” section. You also could use the search function on that webpage to find any mentions of foreign transaction fees.
Another option is to look at your credit card statement, as issuers must list fees separately on your monthly bill. By reviewing this section of your statement, you’ll see what you’re actually being charged for purchases you’ve made that trigger this fee. Besides, routinely reviewing your credit card statement is a good credit card rule to follow anyways, as it can help you track your spending and notice any potentially fraudulent activity.
When Are Credit Card Foreign Transaction Fees Charged?
Just like every credit card doesn’t charge a credit card annual fee, not all credit cards charge a foreign transaction fee. If yours does, then the credit card issuer will charge them when you’re using your card for purchases made outside of the U.S. This can include when you’re traveling in a foreign country and buying goods and services, or if you shop online with a merchant located abroad.
Tips for Avoiding Credit Card Foreign Transaction Fees
Hoping to steer clear of a foreign fee on credit cards? Here are some ways you may be able to do so.
Find a Card With No Foreign Transaction Fees
The most straightforward way to avoid foreign transaction fees is to simply choose a credit card that doesn’t charge them. Some travel reward cards, for example, list zero foreign transaction fees as a benefit for card holders.
This isn’t limited to travel reward cards, however, and it doesn’t apply to all of them. In other words, you’ll want to make sure to shop around before committing to a card.
If you’re a frequent traveler or have a big trip coming up, you may decide to get an international credit card. This will allow you to make purchases and use ATMs in many (but not all) countries around the world. An international credit card also can be helpful if you don’t want to convert U.S. dollars to that country’s currency or use traveler’s checks for your expenditures.
However, some international credit cards do have foreign transaction fees, so check carefully before signing up for one.
Exchange Your Money Before Traveling
You can also avoid foreign transaction fees by exchanging U.S. currency into the native currency for the place(s) you plan to travel. Then, you can simply pay cash for purchases.
Most major banks in the United States will exchange U.S. dollars for the appropriate foreign currency before you travel. They may not have less commonly used currencies available though, so double check before you head to the bank.
You may be able to directly exchange cash at a local bank, or you may need to place an order with a bank online or over the phone. Exchanges may occur the same day, or they may take a couple of days to complete.
If you run out of time, airports will likely have currency exchange services available, either in-person or through a kiosk. Although convenient, the exchange rates are usually less favorable to you than what your bank can offer.
Also keep in mind that carrying cash while traveling can involve risk of loss or theft.
Open a Bank Account With No Foreign Transaction Fees
Another possibility is to open a bank account that allows you to use ATMs without foreign transaction fees or out-of-network fees. Or, you might check to see if your local bank already offers this feature. Some banks have partnerships with financial institutions abroad that can allow you to withdraw funds without paying fees, while others simply reimburse any incurred costs.
Before taking out too much cash, however, keep in mind the potential safety risks of carrying around a large amount of money.
Once you know what a foreign transaction fee on a credit card is, you can figure out how to avoid them. At its simplest, a foreign transaction fee is an expense charged by many credit card companies when transactions are made with a merchant outside of the U.S. Not all credit cards charge this fee, so it can make sense to shop around for one that doesn’t if you know you’ll be making these kinds of purchases.
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
Are credit card foreign transaction fees tax-deductible?
In general, businesses (but not individuals) can deduct credit card fees as long as the business can demonstrate that the card was used for business expenses. Check with your accountant for any specific questions.
Do foreign transaction fees apply to online purchases?
Yes, they may. If you’re using a credit card that charges foreign transaction fees, then those fees will apply to online purchases if the merchant is not located in the United States.
Do all credit cards have foreign transaction fees?
No, they don’t. A number of travel cards don’t charge foreign transaction fees, though they’re not necessarily the only type of credit card that doesn’t levy this fee.
Are foreign transaction fees affected by exchange rates?
Typically, foreign transaction fees are based on a predetermined percentage of each transaction. That percentage doesn’t fluctuate when the exchange rate changes.
Photo credit: iStock/Vera Shestak
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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
After you’re approved for a new credit card, you usually have to wait for it to arrive in the mail before you can start using it. But with an instant-use credit card, as the name implies, you can start shopping immediately.
While not all credit card issuers offer this feature, some issuers share account information with cardholders as soon as they’re approved. Getting a credit card you can use instantly can come in handy if you’re eager to start racking up rewards or spending to secure a sign-up bonus.
What Is an Instant-Use Credit Card?
Instant-use is a feature that some credit cards offer, allowing account holders to use the credit card before they receive a physical card. This is a perk given how long it takes to get a credit card otherwise — usually, cardholders can expect to wait between seven and 10 business days for their card to arrive in the mail.
Each credit card issuer can have unique policies and requirements about using an instant-access credit card. For example, you may not have access to your full credit limit until your physical credit card arrives.
How Instant-Use Credit Cards Work
There are a few different ways that credit cards offering instant use may work. After applying and being approved, you may receive a credit card account number before you get the actual card, which allows you to use the account online. Or, the credit card issuer may provide a temporary instant credit card number or barcode that you can use to make purchases before the official card and number arrives. Note that this differs from virtual credit cards, where the credit card numbers you receive are always temporary and disposable.
In other cases, it’s possible to add the instant-use credit card you’re approved for to a digital wallet, such as PayPal, Google Pay, or Apple Pay. You could then use the card as you’d use other cards in your digital wallet.
Benefits of Instant-Use Credit Cards
The exact benefits of an instant-use credit card depend upon the specific policies of the issuer. Besides providing access to the credit card account more quickly, these cards can offer the following perks.
Faster Rewards Accrual
A key benefit of instant-use credit cards is how quickly you can use them. If a credit card for immediate use features a rewards program, you could start accrue these rewards more quickly, thanks to prompt access to your credit card account. Similarly, if your card offers a lucrative sign-up bonus, you can start spending to earn it that much sooner.
Discounts
Many brands offer discounts to those who get their instant-use credit card. For instance, some retailers may provide a 25% discount on the first purchase you make with the instant-use card. You could use that discount strategically on the largest purchase you’d planned to make in order to maximize this benefit.
Financing Offers
An instant credit card number may offer special financing offers, such as a promotional rate of 0% annual percentage rate (APR) for a designated amount of time. Taking advantage of such an offer can save you a significant amount of money if you pay off your full balance before the promotion ends. Otherwise, the regular interest rate will kick in.
When choosing a credit card, it can understandably seem tempting to get a credit card you can use today. Watch out, though, for the following drawbacks of instant-use credit cards.
Limited Availability
There aren’t that many instant-use credit cards available to choose from. Only a select number of issuers offer them, with some only offering instant access on certain cards. Further, even if you do apply for one of the instant-use credit cards offered, there’s the chance you won’t get immediate access if the issuer encounters any challenges confirming your information.
Initial Usage Restrictions
With some instant-use credit cards, you don’t get immediate access to your full credit limit until you activate your physical card. Instead, when you receive your instant credit card number, you’ll only be able to use a limited portion of your approved credit limit. Especially if you were planning to make a large purchase immediately, this could cap your spending power.
This can be a downside of any credit card. But with a credit card for immediate use, it can be tempting to run up the balance as soon as you have the account number in hand.
If you’re hoping to secure a credit card you can use immediately, here are some tips to keep in mind throughout the process.
Check Your Credit Score Before Applying
Before you move forward with applying — and incurring a dip in your credit score due to a hard inquiry — take a look at your credit score. See if it falls within an issuer’s credit card requirements. If it doesn’t, you might be better off applying for another card you’re more likely to get approved for. Or, you could take steps to improve your credit score before you submit an application, assuming you have the time to do so.
Don’t Skip Researching
If you’re in a rush to find a credit card for immediate use, you might feel tempted to jump on the first instant-use credit card you spot. But don’t let a sense of urgency cause you to skip out on doing due diligence. It’s still important to take the time to compare your options, and to review a credit card’s terms and conditions before you’d move forward with applying.
Remember to Read the Fine Print
When you’re in a rush to get a credit card you can use today, it can seem harmless enough to skip over reading the fine print. However, especially in the case of instant-use credit cards, this can contain some important information when it comes to understanding how credit cards work.
For instance, there may be restrictions on usage of your instant credit card number, such as limited access to your credit limit. If you’d planned to make a massive purchase immediately, you’ll want to know that sooner rather than later.
Tips for Using an Instant-Use Credit Card
If you get approved for a credit card for immediate use, it’s likely you’ll want to start using it as soon as possible. Here are some important tips to keep in mind as you start spending.
Know Your Options for Access
Issuers will provide approved applicants with usage instructions for their instant-access credit cards. The issuer may give you a credit card number that you can then use to make purchases online or using your mobile wallet. If the credit card is attached to a retailer, they may set it up so you can use their app right away with the credit card number they provide.
Don’t Forget to Active Your Physical Card When It Arrives
Even if you’re already off to the races when it comes to spending with your new credit card, don’t neglect your physical card when it does arrive in the mail. Unless you have your card in your digital wallet, an instant-use credit card number limits you to online or over-the-phone purchases. Plus, some issues only offer partial access to your credit limit until your physical card is activated.
Remember That Basic Credit Card Rules Still Apply
Same-day credit cards come with the same set of credit card rules as any other card. Before you get carried away with making purchases, make sure you’re not spending more than you can afford to pay off. You’ll also want to set up a reminder — or even better, auto-pay — to ensure you make timely payments on your new credit card.
What to Do If Your Card Doesn’t Offer Instant Access
If you thought you’d applied for an instant-access credit card only to discover it actually isn’t a credit card you can use instantly, you do have options.
For one, you can call your credit card issuer and request rush delivery. Though this likely won’t be as speedy as instant access, it can expedite the mailing process. Just keep in mind that you may owe a fee to cover the cost of faster shipping.
You might also explore a personal loan. Many online lenders offer same-day funding, and the interest rates for personal loans tend to be lower than those of credit cards. Just keep in mind that applying for multiple loans in a short amount of time can affect your credit score. That’s because each application results in a hard inquiry, which will temporarily lower your score.
Lastly, this could be a good time to dip into your emergency fund — especially if you really need fast access to cash. If you do, just make sure to replenish your savings so you’re covered the next time an unexpected expense comes up.
The Takeaway
Applying for instant-use credit cards can come with benefits, including immediate buying power. There are some downsides to consider, though, before making the right credit card choice for your unique needs. For one, you’ll have a more limited selection of cards to choose from, as not all credit card issuers offer instant-use credit cards.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
Can you use a credit card the same day you get it?
With instant-use credit cards, you can use the card upon approval, which could happen almost instantly. For credit cards that don’t offer instant use, you can typically use the card as soon it arrives in the mail.
How long does it take for a credit card to arrive in the mail?
There are two factors that can impact how long it takes for a credit card to arrive. The first is how long approval takes, which can happen nearly instantly or take up to a week or so. You’ll then have to wait on mailing time, which can take anywhere from five business days up to two calendar weeks.
Can I use my credit card before it arrives?
There are credit cards that you can use instantly, although not all credit cards offer this capability. Some cards require you to wait for the physical card to arrive before you use it. If you have an instant-use credit card, you’ll receive instructions from the issuer on how to start using the account right away.
Photo credit: iStock/Cunaplus_M.Faba
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.
