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This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.

Car refinancing is a financial tool that allows you to change the terms of your existing auto loan. It can offer benefits such as lowering your monthly car payment and reducing the interest you pay, but also comes with potential drawbacks like added costs and longer loan terms. Below, we’ll explore what car refinancing entails, its advantages and disadvantages, and alternative options to help you make the best choice for your financial situation.

What Is a Car Refinance?

Car refinancing involves replacing your current car loan with a new one, typically from a different lender. You use the new loan to pay off the balance of your existing loan, and you begin repaying the new lender based on updated terms.

The main goal of car refinancing is typically to secure better loan terms, such as a lower interest rate, reduced monthly payments, or a shorter loan term. But refinancing also comes with costs and risks, so it’s important to weigh the benefits and drawbacks carefully before you jump in.

Pros of Refinancing a Car Loan

Here’s a look at some of the key benefits of refinancing your current auto loan.

You May Reduce Your Rate

A major pro of refinancing is the potential to secure a lower interest rate. If interest rates have decreased since you took out your original loan or your credit score has improved, refinancing could help you score a better rate, and lower the total interest you pay over the loan’s life. Also, if you took out dealer financing and didn’t shop around for a loan when you bought your car, it’s possible you’re paying a higher rate than necessary. Reducing your interest rate by just two or three percentage points could help you save thousands over the life of your loan.

Recommended: Smarter Ways to Get a Car Loan

You Can Lower Your Monthly Payment

Refinancing can also lower your monthly payments, either by lowering your interest rate, extending the loan term, or both. This can free up funds in your budget for other expenses, and might provide much-needed financial relief. It can also keep you from falling behind on your payments, which can lead to late fees and negatively impact your credit.

Just keep in mind that going with a longer term can also have drawbacks, as it can lead to higher overall costs (more on that below).

You Might Be Able to Access Quick Cash

Some lenders offer cash-out auto refinance loans using your car’s equity (the value of your car minus the amount you owe on it). On top of the new loan that pays off your current one, you receive a lump sum of cash based on your equity. For example, if your car is worth $15,000 and you have $8,000 left on your loan, you might get a refinance loan for $11,000 and take $3,000 in cash. You’ll pay interest on the full amount, and cash-out refis come with some risks. As a result, you generally only want to consider this option for financial emergencies or to pay off high-interest debt.

You Can Change Your Loan Terms

Refinancing may allow you to switch from a variable interest rate to a fixed rate, offering more stability and predictability. It can also give you an opportunity to modify your loan term to better suit your financial circumstances. For example, if your income has increased, or monthly expenses have decreased, since you took out the original loan, you might be able to refinance for a shorter term and pay off your loan earlier than you originally planned.

You Can Remove a Cosigner

If your initial auto loan required a cosigner, refinancing can allow you to remove them once your financial situation improves. This can simplify your financial obligations and release your cosigner from sharing responsibility for your auto loan.

Cons of Refinancing a Car Loan

If you are debating whether to refinance your car loan, you’ll also want to keep these potential downsides in mind.

You Could Pay More in Interest

If you refinance to a longer loan term to lower your monthly payment, you’ll likely end up paying more in interest over the life of the loan. Even scoring a lower interest rate may not make up for the additional months of interest you’ll pay. While the short-term relief may be helpful, it may not be worth the added cost.

Refinancing Comes With Fees

Refinancing is generally not free. Your new lender may charge an application or origination fee, and your current lender may charge a penalty for paying off your loan early. In addition, your state may charge a fee to re-register your car or transfer the title after refinancing. These fees can diminish or eliminate the potential savings of refinancing.

You Could End Up Upside Down

Refinancing to extend the term of your car loan, or cash out equity, could put you in a position of owing more than what your car is worth. This is known as negative equity, or being upside-down on a loan. This can be problematic if you need to sell the car or if it’s totaled in an accident

For example, if you want to trade in or sell your vehicle, you’ll need to cover the difference between what the buyer/dealer pays and what you owe your lender before you can transfer the title. And if your car is totaled, your insurance agency will pay out the value of your vehicle. However, you’ll still owe the full amount of the loan (a higher amount) to your lender.

It Can Impact Your Credit Score

Refinancing triggers a hard credit inquiry, which will appear on your credit reports and can temporarily lower your credit score. While the impact is usually minor and short-lived, it’s important to consider if you’re planning other financial moves, like getting a mortgage or personal loan, in the near future.

Limited Savings for Older Loans

Generally, if you have less than 24 months remaining on your car loan, the potential savings from refinancing may not justify the effort and cost. You typically pay the most interest in the first few years of the loan, which limits the benefit of refinancing toward the end of the repayment period.

Alternatives to Car Refinancing

If refinancing doesn’t align with your financial goals, there are other ways to manage your car-related debt.

Balance-Transfer Credit Card

If your lender allows it, you may be able to transfer your auto debt to a balance-transfer credit card. If you can qualify for a transfer card with a 0% introductory rate and pay off the balance within the promotional timeframe (typically 12 to 21 months), you could save significantly on interest. You might even earn rewards from your new credit card in the process.

However, balance transfers often come with fees, usually 3% to 5% of the transferred amount. And if you fail to pay off the balance before the promotional period ends, the interest rate can jump, potentially costing you more than your original loan. This option generally works best for small loan balances and disciplined borrowers.

Personal Loan

A personal loan can be used for a variety of expenses, including paying off your car loan. These loans often come with fixed interest rates and predictable payment schedules, making them a possible alternative to auto refinancing. Going this route also gives you the option of applying for more than you need to pay off the car loan and use any additional cash you borrow for other expenses.

However, personal loans often have higher interest rates than auto loans, particularly for borrowers with average or below-average credit scores. Before opting for a personal loan, you’ll want to compare rates and calculate whether this approach would save you money compared to your existing loan.

Recommended: Personal Loan Savings Calculator

The Takeaway

Car refinancing can be a smart financial move under the right circumstances, such as securing a lower interest rate or reducing your monthly payments. However, it’s not without potential downsides, including fees, extended loan terms, and the risk of negative equity.

If refinancing doesn’t seem like the best fit for your situation, alternatives like balance transfer credit cards or personal loans may offer other ways to manage your car loan or give you more financial flexibility.

Why consider a SoFi Personal Loan? SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What are the advantages of refinancing your car?

Refinancing your car offers several advantages, such as lowering your interest rate, which reduces the total cost of the loan. It can also decrease your monthly payments by extending the loan term, improving your cash flow. In addition, refinancing provides an opportunity to change your loan terms, like switching from a variable to a fixed interest rate, or removing a cosigner from the loan. However, refinancing also comes with costs and risks, so you’ll want to weigh the pros and cons before you proceed.

When should you refinance a car loan?

You might look into refinancing your car loan when interest rates have dropped, your credit score has improved, or you need to lower your monthly payments. Refinancing can also be a good option if you want to adjust your loan terms for more stability, such as moving from a variable to a fixed interest rate. However, it’s important to consider potential fees and ensure the savings outweigh the costs before you proceed.

How soon can you refinance your car loan after purchase?

You can refinance your car loan as early as a few months after purchase, but it can be a good idea to wait at least six months to a year. This timeframe allows your credit score to recover from any temporary drop (due to the original lender’s hard credit inquiry). This also gives you time to establish consistent payments on the loan and shows potential refinance lenders that you are a responsible borrower. Also, some lenders require six to 12 months of on-time payments to even consider a refinancing application.

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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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

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 .

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This content may include information about products, features, and/or services that SoFi does not provide and is intended to be educational in nature.

Dealing with medical bills can be stressful, especially when the charges are unexpectedly high. However, the “amount due” on a medical bill is not necessarily set in stone. Negotiating medical bills is a common practice, and many health care providers are open to discussions about reducing costs or setting up a manageable payment plan.

Whether you’re dealing with a large hospital bill or an unexpected charge from a doctor’s visit, these six steps can help you effectively negotiate your medical bills and potentially save you thousands of dollars.

1. Ask for an Itemized Bill

A good first step in negotiating a hospital bill you can’t afford, or any type of medical bill, is to ask for a complete breakdown of charges. An itemized bill will list every service, procedure, and medication you’re being charged for, providing full transparency. This can be particularly helpful if you’re looking to negotiate a medical bill after insurance. You can compare the itemized bill with your Explanation of Benefits (EOB) document and verify that the charges align with your coverage and what you’re responsible for paying yourself. Reviewing your bill can also identify any billing mistakes (more on that next).

2. Check for Billing Errors

Billing inaccuracies — from duplicate charges to incorrect billing codes — are surprisingly common in the medical industry and can be highly costly to consumers. When reviewing your itemized bill, you’ll want to keep an eye out for these common billing errors:

•   Duplicate charges: Ensure you haven’t been billed multiple times for the same service or medication.

•   Incorrect services: Verify that you’ve been billed only for treatments and procedures you actually received.

•   Incorrect billing codes: Mistakes in medical coding can lead to inflated charges. Look over your bill (you may have to look up the CPT codes online) and ensure the charges accurately reflect your treatment.

•   Unbundled charges: Sometimes a group of procedures that occurred together (and should be charged under a single code) get listed as separate services. Keep an eye out for any services that appear to have been “unbundled.”

If you spot errors, you’ll want to contact the billing department immediately to have them corrected. Be sure to document your conversations and keep copies of all correspondence for reference.

Recommended: How Does Debt Consolidation Work?

3. Ask About Financial Assistance Programs

Many hospitals and health care providers offer financial assistance programs to help patients struggling to pay their bills, but they may not make you aware of them unless you ask. These programs are often based on income and can provide significant discounts or even forgive a portion of the debt entirely.

When speaking to the billing department, ask if you might qualify for any of the following:

•   Charity care programs: Designed for low-income patients, these programs can reduce or eliminate medical debt.

•   Sliding scale discounts: Some providers adjust fees based on your income level.

•   Hardship waivers: If you’ve experienced financial difficulty due to a job loss or medical emergency, you may qualify for reduced bills.

If assistance is available, you’ll likely need to apply. This typically involves submitting information about your budget, the assets you own, recent tax returns, and proof of income (e.g., pay stubs).

4. Ask for a Lower Bill

Sometimes, all it takes to reduce your medical bill is to ask for a discount. Many health care providers have flexibility in their billing and are willing to negotiate with patients, especially if you’re uninsured or paying out of pocket.

When negotiating your medical bill, keep these tips in mind:

•   Be calm and polite: Getting angry or becoming emotional generally won’t work in your favor. For your best chance of success, you’ll want to explain your financial situation in a clear and calm way, then politely (but assertively) ask if the provider can offer a discount.

•   Offer to pay right away: Many providers are willing to offer a reduced price — or “settlement amount” — if you agree to pay immediately, as it saves them the hassle of pursuing collections. You might ask if they can offer a self-pay discount if you pay all or part of the bill that day. This strategy could result in as much as 30% to 50% off.

•   Compare market rates: Research what other providers charge for similar services in your area. Websites like FAIR Health Consumer and Healthcare Bluebook can help you determine if a provider overcharged you for a service.

If the first person you speak with isn’t helpful, ask to speak to a supervisor or someone in the billing department who is authorized to make adjustments.

5. Negotiate a Payment Plan

Even providers who won’t budge on price are often willing to offer payment plans, allowing you to pay off your debt in smaller, more affordable installments. Here are some tips for how to approach setting up a payment plan:

•   Determine your budget: Before you ask about payment plans, it’s a good idea to look at your monthly cash flow and calculate how much you can realistically afford to pay toward your medical bill each month.

•   Propose a plan: A good negotiating tactic is to start by offering a lower monthly payment amount than you can afford, as this leaves room for negotiation.

•   Request interest-free terms: Many providers offer payment plans without added interest, making this option more affordable than making monthly payments on your credit card.

It’s a good idea to get the terms of your payment plan in writing to avoid confusion later. Sticking to the agreed schedule can also help you avoid additional fees or collection efforts.

Recommended: Can Medical Bills Go on Your Credit Report?

Employer Resources

Many employers offer benefits that can help reduce medical costs, such as health-related savings accounts (HSAs), health reimbursement arrangements (HRAs), and stipends. These resources can significantly reduce the financial strain of medical bills, so it’s worth exploring any options offered by your employer.

Possible benefits you might be able to tap:

•   Health Reimbursement Arrangements (HRA): Employers fund HRAs to help employees cover qualified medical expenses. You may want to check with your HR department to see if this benefit is available and how to access it.

•   Health Savings Accounts (HSA): If you have a high-deductible health plan, an HSA can be used to pay for eligible medical expenses with pretax dollars. This account can also be used to cover deductible costs, prescriptions, and certain treatments.

•   Flexible Spending Accounts (FSA): Similar to HSAs, FSAs allow you to use pretax funds for medical expenses, but they usually have a “use it or lose it” policy, meaning funds must be spent within the plan year. You’ll want to use your FSA funds strategically to cover eligible medical costs.

•   Health stipends: Some employers offer additional financial support in the form of taxable health stipends, which can be used for medical bills or health-related expenses. Contact your HR department to explore this benefit.

What to Do If You Can’t Negotiate Lower Medical Bills

If you’re unable to negotiate your medical bills to an affordable price and your employer doesn’t offer benefits like HRAs or stipends, you’re not necessarily out of options. Below are two ways you may be able to affordably finance your medical bills.

•   Personal loan: An unsecured personal loan can be used for virtually any purpose, including paying medical bills. Interest rates can be significantly lower than those of credit cards, particularly if you have strong credit. And unlike credit cards, personal loan rates are typically fixed, allowing you to pay off your debt on a fixed payment schedule. If you can qualify for a personal loan with a good rate and manageable monthly payment, you might use it to pay off your medical bills immediately and avoid accruing late fees or having the bill move into collections. A personal loan calculator can help you run the numbers.

•   Zero-interest credit card: If you have strong enough credit to qualify for a credit card with a 0% introductory rate, you may be able to put the bill on your card then make interest-free payments for 12 to 21 months. Additionally, some providers offer medical credit cards with interest-free promotional periods, which may be anywhere from six to 24 months. These can help you pay off large bills over time, but be cautious of high interest rates once the promotional period ends.

Recommended: Personal Loan vs Credit Card

The Takeaway

Medical bills can be overwhelming, but they aren’t necessarily the last word. You may be able to negotiate the amount due by requesting an itemized bill, checking for errors, exploring financial assistance programs, and simply asking for a lower bill. Other tools that can help make medical bills more manageable include setting up an interest-free payment plan, tapping employer health benefits, and taking advantage of low-interest financing options.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Do medical bills affect your credit?

If the medical bill stays with your provider, it won’t impact your credit. If your payment is several months past due, however, the provider may sell your debt to a collections agency. Unpaid medical debt in collections (over $500) can be reported to credit bureaus after one year.

If medical debt does end up on your credit reports, it can lower your FICO® score. However, due to recent changes in how FICO calculates scores, medical debt generally has less impact on your scores than other types of debt.

Should I pay a medical bill that’s gone to collections?

Paying a medical bill in collections can protect your credit and resolve the debt, but you’ll want to first verify it’s legitimate. To ensure the debt amount is correct and has not already been paid, ask for documentation from the collection agency.

If the debt is valid, consider negotiating a reduced payoff amount or setting up a payment plan. Once paid, it’s a good idea to ask for written confirmation that the account will be marked as resolved. Under new guidelines, paid medical collection debt is no longer included in credit reports.

How long do I have to pay a medical bill?

The timeline to pay a medical bill varies depending on the provider’s policies. Many hospitals and health care providers expect payment within 30 to 90 days of issuing the bill and will charge late fees and/or interest if you miss the due date.

The statute of limitations — how long a provider or collection agency has to sue you for an unpaid medical bill — typically ranges from three to 10 years, depending on the state. However, the debt remains collectible even after that period.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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

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.

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Paying off debt is a long-term commitment that requires discipline, and staying motivated until your debts are paid off can be a major challenge. Consider these examples:

•   If you have a student loan of around $38,000, it can take seven and a half years to pay off with monthly payments of roughly $500, according to the Education Data Initiative.

•   If you have $10,000 of credit card debt at a 20.39% interest rate and want to pay it off in three years, you’ll have to pay $373 every month.

It may sound daunting, but here’s a pep talk: The advantages of paying off debt are well worth the effort. With more money to spend each month, you can invest and build a nest egg toward retirement or simply save for luxuries like vacations. Paying down debt can also help build your credit, giving you access to loans with more attractive rates and terms in the future.

To help you buckle down and say goodbye to your debt, read on to learn how to stay motivated while paying off your debt.

Why It’s Hard to Stay Motivated When Paying Off Debt

Paying down debts can feel like an uphill, almost endless battle. Depending on how much you have to pay off, the process may take many months to years and require some uncomfortable sacrifices you’d rather not make.

With a few changes to your money mindset, however, you’ll likely find that paying down debt becomes easier as you go along and learn better money management.

If you are ready to get rid of debt, read on to learn 15 ways to stay motivated.

15 Ways to Help You Stay Motivated When Paying Off Debt

Here are 15 tips to help setting yourself up for success. They’ll give you a boost as you consider how to stay motivated while paying off debt.

1. Remember the “Why”

Why have you decided to pay off your debt? Are you tired of never having as much spending money as you’d like and watching the debt pile up? Do you hate the idea of dollars flying out of your bank account to pay for interest? Do you have financial goals that are falling ever further out of reach?

Whatever your reasons, remind yourself regularly why you are working so hard and monitor your progress so that you can see the results.

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

2. Get Organized

Achieving a goal is easier if you have a plan. Your strategies to become debt free might include consolidating your debt with a lower-interest loan, or you might decide to get a roommate and save on rent.

Whatever your method, plan a budget that you can live with and set up automatic payments each month so that you don’t have to think about your bills daily. (This will also help you avoid late fees.) Then, be disciplined, stick to your budget, and watch your debt diminish.

3. Have an Accountability Partner

Telling someone you are working on paying down debt can help motivate you. Called an accountability partner, this person could be your spouse, a friend, or a financial advisor. If you worry about telling your accountability partner that you fell off the proverbial wagon, remember that nobody’s perfect. Don’t beat yourself up. Just get right back on track with some encouraging words from your partner.

4. Put Yourself in an Uncomfortable Situation

Achieving a goal often takes acknowledging the difficulty saving money can present and then pushing through it. Paying down debt will require making changes to your lifestyle so that you can live more economically.

That might mean going out less with friends, not spending so much on clothes, or moving in with parents temporarily. Feeling uncomfortable is not a bad thing; it can be a powerful motivator. You will power through any feelings of deprivation to get on better financial footing going forward.

5. Track Your Progress

When you initially decide to tackle accumulated debt, it can seem overwhelming. By tracking your payments and your diminishing debt, you will see progress. This in turn can give you confidence and enhance your saving motivation as you stick with your plan.

6. Have a Vision Board

Staying motivated while paying off debt can involve having a vision of what you will do once you are debt free. Use that as a motivator, not just in your mind but in your home. Perhaps you want to take a vacation to London once you pay off your credit card balances. You might post your goal where you can see it so you are reminded each day of your intention. You might even create a vision board with photos of your goal to help spur you on. Whether it’s pics of the West End theaters or teatime at a posh hotel, those photos can be motivating.

7. Celebrate the Small Wins

Find ways to reward yourself as you gradually pay down your debt. These special treats should be inexpensive (so as not to blow your budget) but meaningful. It could be picking up and reading the latest book by your favorite author, a meal out with friends, or buying yourself new running shoes. Build room into your budget for rewards.

💡 Quick Tip: Did you know online banking can help you get paid sooner? Feel the magic of payday up to two days earlier when you set up direct deposit with SoFi.^

8. Have Like-Minded Friends

Surround yourself with people who will encourage you to spend less rather than overspend. Friends who like going out to expensive restaurants or shopping at expensive stores are generally not going to help your cause. There are lots of ways to socialize that don’t require spending a boatload of cash. For example, grab a coffee with a friend, or go for a hike. Don’t let keeping up with the Joneses (when the Joneses are big spenders) foil your efforts.

9. Reach out to Others

Knowing that you are not the only one fighting debt is comforting, and hearing success stories will encourage you to continue. Seek support by listening to others.

Podcasts on personal finances and online discussion platforms can provide community and give you ideas on how to manage your debt.

10. Focus on the End Date or End Goal

Have an end date or a final goal, and mark it on your calendar. Plan to reward yourself for your hard work when you reach it. It might be a weekend away or finding a new apartment now that you have freed up some cash in your budget. Looking forward to something will keep you motivated.

11. Listen to Sound Financial Advice

How to stay motivated to pay off debt comes down to making informed decisions that hasten the process. It’s important to make sure the financial advice you listen to comes from reliable sources. Many finance “gurus’ on YouTube and social media platforms may not give out the best advice. Find a financial advisor via recommendations if you are unsure of the steps to take to pay down your debt or need additional guidance.

12. Choose a Repayment Method that Makes Sense

There is more than one way to pay off what you owe, and the debt repayment strategies you choose should suit your particular situation and financial goals. You might choose the debt snowball method, where you pay off your smallest debts first for some early wins, or you might pay off the debts with the highest interest rates first to save the most money.

Feel as if you are in too deep of a debt hole? Consulting with a financial advisor or a credit counselor at a nonprofit can help you find the best ways to get the upper hand over your debt.

13. Break Repayment Down Into Smaller Goals

It helps to break down any overwhelming task into smaller goals. For example, if you’re interested in debt consolidation, the first step might be to do some research on the topic. The next step might be to arrange a loan with the bank and set up payments. Then, set goals to achieve after six months, 12 months, 18 months, and so on. It can help motivate you to pay off debt to see the individual steps that will get you there.

14. Earn Extra Money

You’ll pay off debt quicker if you can earn extra money. Think of ways to increase your income. Can you do overtime, gig work, or part-time work? You might meet new people and expose yourself to a whole new industry that interests you. Who knows? It could be the start of an entirely new career.

Recommended: 11 Benefits of Having a Side Hustle

15. Gamify Your Debt Repayment

Setting a challenge for yourself can add a sense of fun to paying off debt, and it can boost your confidence. For example, you might set a goal of making an additional $1,000 this month from a side hustle. Or each month vow to briefly give up a typical bit of discretionary spending, such as no take-out coffee for one month. The money saved goes towards debt. Gamifying can help you reach your goals quicker, just make sure your challenge is achievable.

The Takeaway

Paying down debt can be a long process, and it is not easy to stay motivated. Some of the ways to stay motivated when paying off debt are to acknowledge exactly how much you owe and then develop a plan, with clear benchmarks, to whittle it down. It also helps to reach out to others to learn their experiences, set achievable milestones, and reward yourself when you reach them. These steps can help keep you going untill you reach that debt-free finish line.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Does paying off debt make you happier?

Paying off debt can be difficult at first, as it usually involves making some uncomfortable changes in your lifestyle and budget. Ultimately, however, paying down debt can come as a huge relief. It also frees up funds you can use to achieve your goals and improve your quality of life.

What are the benefits of paying off debt?

Paying off debt can lift a large weight off your shoulders. It also frees up funds you can now use in other ways, such as saving for an upcoming vacation or a downpayment on a home. In addition, taking control of your finances and paying off debt are huge accomplishments that can boost your confidence to tackle other challenges.

Is it worth it to pay off your debt?

Paying down debt helps reduce the amount you’re paying in interest. This frees up money to use for other purposes, such as saving for short- term goals and investing for the future, which can help you build wealth over time.

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.

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