Sep
26
2024
Is a $20,000 Salary Good?

Is a $20,000 Salary Good?

By | Building Your Career, Life & Career, money | Comments Off on Is a $20,000 Salary Good?

While there’s no official guideline on what makes a salary “good,” a $20,000 salary is not typically enough for a household to live comfortably in most parts of the United States. Certainly, each person’s situation is unique in terms of their assets and expenses, but an individual making $20K a year may have a hard time making ends meet. They might need to rely on assistance from family, friends, and/or the government to afford basic necessities.

A $20,000 salary puts a single person above the poverty threshold for 2024. An individual supporting themselves plus one or more people on $20K a year, however, will live below the poverty threshold. With the record-high inflation we’ve seen in recent years, affording basic needs on a $20,000 salary has become even more challenging.

So is $20K a year good? While a $20,000 salary averages out to more than the federal minimum wage of $7.25/hour for full-time work, it is likely not an adequate income for anyone living independently and especially those with a family. In this piece, we’ll cover:

•   The current American median income.

•   Is $20K a year good?

•   A breakdown of a $20,000 salary.

•   The best and worst places to live on $20,000.

•   Tips for living on $20K a year.

Factors to Determine if a $20,000 Salary Is Good

A $20,000 salary will be challenging for anyone to live on, but a few factors may determine if it can be done — or if it’s impossible:

•   Taxes: If you are filing singly, a $20,000 salary will put you at the 12% federal income tax bracket. You may owe additional taxes for your state, city, and/or school district. For the sake of example, assume a flat 15%. That means, although you make $20,000, you only bring home $17,000 after taxes.

•   Family size: Single individuals without children can make $20,000 stretch more easily. Two or more people living off a $20,000 salary will face more challenges.

•   Location: Money goes further in some places more than others. If you live in an area with a low cost of living, a $20,000 salary may be more manageable. But if you live in a popular city, $20,000 a year may not even cover rent.

•   Debt: If you have debt, it can be more challenging to allocate your limited money to basic necessities and important financial goals, like building an emergency savings fund. If you are dealing with high-interest debt, you probably know how quickly this debt can grow when you are only paying the minimum amount due.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


How Does a $20,000 Salary Compare to the American Median Income?

According to the most recent U.S. Census Bureau report, median household income was $80,610 in 2023. Keep in mind, though, that this number represents all households, which may include more than one earner. According to the Bureau of Labor Statistics, median weekly earnings for American workers was $1,117 in 2023, which comes out to $58,084.

Either way, $20,000 is far below either estimate for a median income. If you earn $20,000 and have a domestic partner or spouse who earns additional income, your salaries together might get you closer to the median income level.

Recommended: Is a $100,000 Salary Good?

$20,000 Salary Breakdown

Again, no judgment here: It’s not a matter of if a $20,000 salary is good or bad. To someone just out of high school, $20K a year might look like a good entry-level salary. But anyone who has handled monthly bills like rent and utilities will likely recognize that a $20,000 salary may be insufficient.

Here’s how a $20,000 annual salary breaks down:

•   Monthly income: $1,666.66

•   Biweekly paycheck: $769.23

•   Weekly income: $384.62

•   Daily income: $76.92 based on working 260 days a year

•   Hourly income: $9.62 based on working 2,080 hours a year

These estimates do not account for taxes. In the example above, a $20,000 salary may shrink to $17,000 after Uncle Sam has taken his cut.

Recommended: For other salary conversions, use our Salary to Hourly Calculator.

Can You Live Individually on a $20,000 Income?

It is possible to live individually on a $20,000 income, but you will likely only be able to afford the items on your basic living expenses list if you aren’t able to supplement your income. Living comfortably — with easy access to good health care (including mental health), balanced nutrition, safe housing, and efficient transportation — may be far more challenging on $20,000 a year.

If you make $20,000 a year, you might be able to minimize monthly expenses by looking for government assistance, getting a roommate or moving in with family, cooking at home, and using an online bank account with a high interest rate and automatic savings features.

How Much Rent Can You Afford Living on a $20,000 Income?

Wondering how much you can afford to spend on rent? Researchers have long argued that you should spend no more than 30% of your income on housing. With rising inflation and increasing rent prices, however, that’s not always possible.

If you were to stick to the 30% rule (and forget about income taxes for the sake of the example), that means you can spend $6,000 a year on rent, or $500 a month. But the median cost of rent in the U.S. was $2,100 as of September 2024, according to Zillow. That’s about four times what you could afford on $20K a year.

To afford rent on a $20,000 salary, it’s a good idea to live in a place with a very low cost of living and to have one or more roommates who can help share living expenses of rent and utilities with you. Moving in with family is also a solution if you cannot afford rent on your salary.

Best Places to Live on a $20,000 Salary

If you are making $20,000 a year (or $9.62 an hour), it might be a good idea to explore cities and states with a low cost of living.

These are the five least expensive cities to live in for 2024-2025, per U.S. News:

•   Fort Wayne, Indiana

•   Huntsville, Alabama

•   Wichita, Kansas

•   Springfield, Missouri

•   Davenport, Iowa

Living outside a city altogether is usually more affordable. Consider a rural location in one of these five cheapest states to live in:

•   Arkansas

•   Mississippi

•   Alabama

•   West Virginia

•   South Dakota

Recommended: Typical Monthly Expenses for a Single Person

Worst Places to Live on a $20,000 Salary

On the flip side, there are some major cities that are exorbitantly expensive to live in. If possible, it’s a good idea to avoid living in the following locations when you are living on $20,000 a year:

•   Hartford, Connecticut

•   Los Angeles, California

•   Miami, Florida

•   New Haven, Connecticut

•   New York City, New York

California cities clearly carry a high cost of living, but other states are also expensive. If you have a $20,000 annual salary, it’s a good idea to steer clear of any of the five most expensive states to live in:

•   Hawaii

•   New York

•   California

•   Massachusetts

•   Oregon

Is a $20,000 Salary Considered Poverty?

A $20,000 salary is above the poverty line for an individual, but if you are a couple or a family of three or more people living on a $20,000 salary, the government considers you to be below the poverty line.

These numbers do not consider factors like variable cost of living. A localized poverty line could be more telling, especially if you live in a place with a high cost of living. If you are, say, living in a pricey city and earning $20,000 a year, you might be feeling the financial pinch more.

Tips for Living on a $20,000 Budget

While advocating for a higher salary can infuse your line item budget with more funds, you can’t necessarily count on a raise. Taking other steps now may make it easier to live on your $20,000 salary.

Finding Out What Assistance You Qualify For

If you are making $20,000 or less, you may qualify for government assistance. Here are a few actions to consider taking:

•   Work with the U.S. Department of Housing and Urban Development for assistance with rent, including the Section 8 program.

•   Determine if you are eligible for assistance with grocery bills through the Supplemental Nutrition Assistance Program (SNAP).

•   Research the Low Income Home Energy Assistance Program (LIHEAP) to help with utilities.

•   See if you can lower your phone bill through the Lifeline Modernization Order .

•   Find out if you are eligible for free or low-cost health coverage through Medicaid and the Children’s Health Insurance Program (CHIP).

Coming Up With a Housing Plan

If you do not qualify for rental assistance from the government, you may need to come up with another plan to avoid high rent costs. Roommates can be a good way to keep rent low.

Alternatively, family and friends may be willing to offer free lodging while you save money. While it can be hard to lean on others in this way, it can be a form of financial self-care to do so until you are able to be out on your own. If you do move in with a loved one, just remember to be helpful around the house and chip in with utilities and groceries if you’re able.

Cutting Costs

After reducing your largest cost (rent), it may be possible to reduce other costs in your budget. For example, a car payment, gas, and car insurance can be costly monthly expenses. If you live in an area with great public transportation or are comfortable walking and riding a bike, you may be able to get around without owning your own vehicle.

Other costs you might be able to cut include streaming services, gym memberships, and bills from dining out.

Getting on a Budget

After finding low-cost housing and trimming unnecessary expenses, it’s a good idea to make a monthly budget that accounts for your post-tax income and your monthly expenses.

Not sure how to budget on a $20K salary? Taking care of all necessary bills (housing, utilities, groceries) is the perfect first step. Once you’ve accounted for those monthly expenses, see how much you can allocate to paying down debt or building your savings.

Recommended: How to Save Money From Your Salary

Avoiding the Wrong Kinds of Debt

Taking on debt is often necessary — when buying a house, purchasing a car, or even going to college. But when you make a low salary and struggle to pay the bills, it can be tempting to take out a payday loan or overuse a high-interest credit card.

When possible, it’s a good idea to avoid high-interest loans. In fact, instead of taking on more credit card debt, you may be able to take control of your bad debt by applying for a debt consolidation loan. These are typically personal loans that charge an interest rate that may be significantly lower than your credit cards’ rates. You use the loan to pay off the cards and then you work to eliminate the personal loan.

You might also meet with a counselor from a nonprofit debt counseling organization like the National Foundation for Credit Counseling, or NFCC .

Recommended: Debt Repayment Strategies

Supplementing Your Basic Income

You might also consider ways to bring in more income to pump up your spending power. This could include seeing if additional hours are available at your primary workplace, as well as taking on a seasonal part-time job or starting a side hustle. These are all ways to use some of your leisure time to bump up your income.

The Takeaway

A $20,000 is usually not enough for a family to live on, and it may be difficult for individuals to get by on this salary too. It may be wise to research government assistance, look for roommates to lower housing costs, and build (and stick to) a monthly budget that prioritizes paying down debt and building emergency savings. These steps can help you live on a $20,000 annual income.

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

Can you live comfortably on $20,000 a year?

It can be difficult for an individual to live comfortably on $20,000 a year. With the right assistance from friends, family, and the government, however, it may be possible to meet basic needs. Families will face more challenges living off $20,000 a year.

What can I afford making $20K a year?

A $20,000 salary may leave room in your budget for the most basic expenses: rent, utilities, transportation, and groceries. Even then, getting government assistance and a roommate might be necessary for managing monthly expenses on $20K a year.

Is $20,000 a year middle class?

According to the most recent data from the Pew Research Center, middle class, middle-income households have incomes ranging from about $56,600 to $169,800. Thus, a family living on $20,000 is not middle class; it’s actually below the poverty level. While an individual earning $20,000 a year is not below the poverty line, they are still not considered middle class.

Photo credit: iStock/svetikd

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with 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.

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.

​​*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

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

SOBNK-Q324-098

Read more
Sep
26
2024
women sitting on desk with camera and tablet mobile

39 Passive Income Ideas to Build Wealth in 2024

By | Budgeting & Goals, Life & Career | No Comments

With inflation and interest rates rising, many people are looking for ways to generate additional income these days — and finding reliable sources of passive income, which require less effort than most jobs — has become particularly desirable.

Creating and managing passive income streams isn’t a truly passive activity, however. Generating passive income usually requires upfront work, or sometimes a substantial investment to get the ball rolling. And depending on what your passive income ideas are, whether you’re renting out property or selling a product via online platforms, you’ll likely have ongoing tasks to keep the money coming in.

That said, passive income can in some cases deliver more income with less effort than a traditional job that requires a fixed number of hours per week.

Key Points

•   Passive income is money earned without active involvement.

•   High-interest savings accounts, investing in business, P2P lending, and rental properties are some ways to generate passive income.

•   Benefits of passive income include extra money with less effort, freedom, and flexibility.

•   Initial work and investments are often needed to set up a stream of passive income.

•   The opposite of passive income is active income, which usually involves a job and is also known as earned income.

What Is Passive Income?

Passive income is money that you earn without active involvement. In other words, it is income that isn’t attached to an hourly wage or annual salary. Passive income ideas could include things like cash flow from rental properties, dividend stocks, sales of a product (that requires little or no effort), royalties, and more.

Essentially, these side hustles can help you earn money without contributing much, if any, active effort. If you are paid for a service you perform, that’s active income — you have to put in time and energy in order to get paid. If you can continue making money while staying mostly hands-off, that can be a form of passive income. That doesn’t mean you won’t have to put work in up front to get started — you probably will. But besides some maintenance, passive income shouldn’t require your active involvement.

There are obvious benefits to these low-effort side hustles over traditional active income. Earning more money without putting in more hours offers the opportunity to make extra cash without burning yourself out. If you’re successful enough, it might even give you the freedom and flexibility to quit your day job and do whatever you want instead, whether that’s going to school, traveling, writing, or making art.

39 Passive Income Ideas to Help You Make Money

There are a number of ways to earn passive income. Some options, like the following types of passive income, take relatively little active supervision.

1. Open a High-Yield Savings Account

A high-yield savings account (HYSA) is an alternative to traditional savings accounts, and they’re attracting more attention these days thanks to higher interest payments that might be 2% or more. By simply putting your money in the bank, you may be able to start to earn passive income on it. If you invest in an FDIC-insured account, the first $250,000 of your money is protected. There are both banks and online platforms which offer a high-yield savings account.

Savings accounts are generally appealing because they are a separate place to store money you don’t necessarily want to use on day-to-day expenses. For example, it could be a good place to save for emergencies, or even to save for a vacation or a move across the country.

When you find a high-interest savings account, take a look at the fine print. What conditions are attached for you to get that rate? The financial institution may require you to have a certain amount of money deposited into that account each month, maintain a certain balance or have your bills automatically deducted from it. You may need to use your debit card a predetermined number of times, as yet another example — or be limited in the number of transactions that can take place each month.

Tip: Using an online high-yield savings account calculator can help you estimate how much you can earn in interest over time.

Earn up to 4.00% APY with a high-yield savings account from SoFi.

No account or monthly fees. No minimum balance.

9x the national average savings account rate.

Up to $2M of additional FDIC insurance.

Sort savings into Vaults, auto save with Roundups.


2. Invest In a Business

Although this may take an up-front investment, buying into a business and becoming a silent partner can be another passive income source.

Even if the company you are thinking of investing in seems solid, it’s important to have an understanding of the challenges the organization may face. There are some red flags to look out for, such as a company whose revenue is earned from just a couple of clients — or just one client — as opposed to several.

It’s also important to lay out the exact terms of your investment and compensation.

3. Become a Peer-to-Peer (P2P) Lender

Peer-to-peer (P2P) lending platforms are another type of crowdfunding that allows people to borrow money from individual investors. Through these sites, you can be matched with an individual seeking a loan, and lend your money at a rate that could be higher than the usual bank rates.

That’s because investors taking part in peer-to-peer lending tend to bear the bulk of any risk. It is possible that borrowers will default on their loans, leading to a higher risk if an investor were to lend money with a lower credit rating, for example. Returns are never guaranteed and while investors will receive a return on the money they invest, they could also lose some or all of it in the long run.

💡 Learn more: Understanding How P2P Lending Works

4. Buy a Rental Property

Another popular passive income source is rental property. You might want to purchase a home to rent out to an ongoing tenant or list a property on a short-term rental site. Hiring a property management company lessens your day-to-day involvement, thereby making this venture a more passive income strategy than active.

Obviously, setting up this type of income requires a pretty big outlay, and it may be a while before your investment property generates a profit over and above the many expenses required to run it. In addition, there are always risks in the rental markets to keep in mind.

💡 Learn more: Investment Property Guide for Beginners

5. Invest in Crowdfunded Real Estate

If you don’t have thousands of dollars to spend on a piece of property, you can always check out your options on crowdfunded real estate sites. These may require a smaller initial investment, and likewise the costs are also shared.

Crowdfunded real estate investments can be complex, however, and you’ll want to balance the risks and rewards.

6. Invest in Dividend Stocks

When companies choose to share a portion of their profits with the investors who own shares of the firm, those payments are called dividends, and they work generally the same way from company to company.

Typically, dividends are paid in cash (though some might be paid in stock), on a regular schedule. Dividends are usually paid quarterly, though there are variations.

dividend yield formula

Investors might receive dividends from companies they’re invested in, or from mutual funds they’re invested in that hold shares of dividend-paying companies.

There is no guarantee that investing in dividend stocks will continue to earn you passive income. As Liz Young Thomas, Head of Investment Strategy at SoFi, points out, “A stock’s dividend yield will fluctuate because it’s based on the stock’s price and prices can be volatile. You should also consider other factors like a company’s track record of increasing the dividend, the dividend payout ratio, debt load, and cash on hand when determining the overall health of an investment.”

💡 Learn more: What Is Dividend Income? Can You Live Off It?

7. Invest with an Automated Advisor

If you’re just getting started with investing, you may want to use automated investing tools to help you choose the appropriate allocation of assets for your goals.

Typically, an automated platform — also called a robo-advisor — is a digital investing service that provides you with a questionnaire so you can establish your financial goals, risk preferences, and time horizon.

On the backend, a sophisticated algorithm then recommends a pre-set, automated portfolio that aligns with your responses. These portfolios often have lower account minimums compared with traditional brokers, and the portfolios themselves are typically comprised of low-cost exchange-traded funds (ETFs) — which adds to the cost efficiency of some robo products.

You can use a robo investing as you would any account — for retirement, as a taxable investment account, or even for your emergency fund — and you typically invest using automatic deposits or contributions. The allocation in each portfolio is usually pre-determined, and investors cannot change the investments.

Tools such as SoFi’s Automated Investing allow you to automatically invest each month and potentially grow your portfolio over time.

8. Start a Retirement Account

When you open your retirement account, you can choose to invest it however you want. For example, you could open an individual retirement account (IRA) online.

One way to earn income in a retirement account is by investing in mutual funds. You can choose the level of risk you want to take with your money by finding a mutual fund that is higher or lower risk.

💡 Learn more: 4 Easy Steps to Starting a Retirement Plan

9. Join an Affiliate Program

When you join a company’s affiliate program, you earn a commission from every product that someone purchases from that company. All you have to do is post the link on your blog, website, or social media pages. Amazon Associates is a great place to start.

10. Rent Out Your Car

Another one of the best passive income opportunities is renting out your car on a site like Turo. It’s basically the Airbnb of cars, and, according to Turo, the average annual income for one car on the site is $10,516.

If you have a clean driving record as well as a newer car, consider getting in touch with a car advertising agency. You simply drive around town with ads on your car and easily generate passive income.

woman driving in car with advertisement

12. Rent Your Parking Space

Do you have space in your driveway that you aren’t using? Then rent it out on platforms like Stow It, where you can find people who will pay to rent out the space.

13. Rent Storage Space

If you have extra space in your garage, shed, or storage unit, then you could start earning passive income by using a peer-to-peer storage site like Stashii to find people who need your space.

14. Invest in Real Estate Investment Trusts (REITs)

An alternative to becoming a property owner or landlord are real estate investment trusts, or REITs. REITs are publicly traded companies on the stock market that own income-producing real estate. They give you the chance to invest in real estate portfolios. REITs sometimes come at a higher risk than other funds.

You might consider investing in a REIT that focuses on storage units. For example, one option is Public Storage, which has ownership or interest in 2,548 properties located in 38 states.

💡 For more alternative investment options, check out: Alternative Investments: Definition and Types

15. Rent Your Bike

Perhaps you don’t have a car, but you do have a bike that’s just sitting around. Your bike could be a lucrative passive income source, especially if you live in a high-traffic area. List your bike on Spinlister to get started.

16. Airbnb or Rent Out a Room

Even if you don’t own an investment property, with your landlord’s permission, you may be able to rent out a room in your apartment or list it on Airbnb.

travels staying at an airbnb summer rental

17. Pet Sit in Your Home

If you love pets, you can earn passive income by welcoming pets into your home while their owners are on vacation. For instance, you could charge $30 to $80 per day just for running a doggy daycare. You can gain clients through word of mouth or use a site like Rover to find customers.

18. House Sit for Someone

When your friends go out of town, they may need someone to stay in their home and do simple things like water their plants and collect their mail. You can easily make money and have somewhere new to stay for a little bit. Along with making yourself available to friends, you can sign up to be a house sitter on HouseSitter.com.

19. Buy and Sell Domain Names

Some domain names are cheap, while others cost a lot of money because they are in high demand. One thing you could do to start another passive income stream is to purchase domain names you think will be popular. Purchase low for around $10 to $100 and then sell them for a much higher price later on.

desktop computer ready to buy domain name

20. Rent Your Tools

Have you ever done a home improvement project that required you to purchase tools? You may never need to use those tools again. Thankfully, now you can rent tools, and rent out your tools, on peer-to-peer platforms such as Sparetoolz to earn passive income.

21. Invest in Royalties

Let’s say you don’t have any songwriting ability, but you would like to make money on other artists’ work. You can invest in royalties through Royalty Exchange and earn passive income on the intellectual property.

22. Purchase a Billboard

You can make thousands of dollars per month if you own a billboard where companies can advertise their products and services. Do your research and make sure you get the right permits before committing to a billboard.

23. Purchase a Blog

If you don’t have the time or energy to create content for your own blog, then look into ones that are already successful and see if the owners are willing to sell. You could also hire someone to manage your blog so that you’re truly earning in a passive way.

24. Create an Online Course

If you have a special skill or knowledge about a certain topic, you may be able to create a video course where you teach people about that topic and charge them to take the course.

25. Sell Digital Products

You may want to research online platforms where you can sell everything from digital art to e-books. Whether you’re an artist, graphic designer, or writer, you can create digital products to sell online.

woman smiling after selling art online

26. License Your Photos

Many companies, bloggers, and individuals use stock photos on a regular basis. You may be able to upload your best photos to stock media platforms and earn passive income on them.

27. Create a Mobile App

If you’ve been dreaming about an amazing phone app that you think a lot of other people would use, you may want to look into hiring a development team to create it.

28. Sell a Product

You may be able to earn passive income through sales of a product that you create. This could be a book that you write or a physical product that you design and make. You might also list items you already own on sites like eBay and earn extra income through those sales.

young woman selling bowls at market

29. License Your Music

Do you love to write songs? Then you could license your music and start earning passive income. You’ll just have to team up with a music licensing company to get started.

30. Self-Publish a Book

Through platforms like Amazon’s KDP, you can self-publish a book and earn a royalty on it every time someone makes a purchase. You will be able to set the price of your book and be in full control of your book’s Amazon page, where you can list pictures of the book, reviews, and videos promoting it.

31. Sell Blank Books

You can start selling books online without having to write anything. How? By focusing on blank books, such as journals, sketchbooks, and planners. Simply find a design you believe will appeal to people and begin collecting royalties when people buy your books.

32. Create Greeting Cards

Another artistic endeavor that could be a good passive income stream is creating greeting cards that you sell to a wholesale or retail stationery company that accepts independent artist submissions.

33. Sign Up for Dropshipping

If you want to sell products and make money online but don’t want to store any of the goods, you could always look into dropshipping to create passive income. With dropshipping, you don’t have to have much money to start since you don’t need inventory to fulfill orders for customers.

34. Start a Blog

Blogging seems like a pretty cool space to operate in and gives you a lot of creative freedom. You can make your blog all about crafts, share tutorials, ideas, and more. It’s up to you how your space operates.

Blogging might seem like too much work to many people, but it doesn’t have to be a full-time job for everyone. For some people, blogging can be fun after a day at the office — and, with time and effort, it could turn into something more lucrative.

Here are a few ideas on how you can make passive income from blogging:

•   Affiliate marketing

•   Google AdSense: Cost Per Click and Cost Per Impression

•   Sponsored posts

•   Selling products

35. Start a YouTube Channel

If you enjoy creating videos more than writing, then consider starting your own YouTube channel. Once you get enough viewers, you can begin to generate passive income through YouTube advertising.

young woman recording a new video for youtube

36. Publish an Ebook

Like an online course, an ebook is a way to share your expertise with the world. Anyone can self-publish a book online through services like Amazon’s Kindle Direct Publishing, iBooks Author, or Kobo Writing Life.

The percentage of royalties you earn varies depending on the publisher. Of course, the more marketing you do, the more copies you’re likely to sell — and there’s no shortage of online marketing strategies to investigate. But once you write and publish the e-book, it’s out there ready to generate passive income for you.

37. Create a Podcast

Podcasts are still popular, and they can generate some passive income for you. If you start a podcast that resonates with people, then you can grow your audience and monetize your show by sponsoring with ad partners. If you get enough listeners, you may be able to sign up for podcast advertising networks.

38. Start an ATM Business

When people are out at a bar or nightclub or they’re frequenting a cash-only business, they may need cash right away. If you own an ATM business and you place your ATM in high-traffic locations, you could start to generate passive income through surcharge fees. Typically, you could earn around $3 per withdrawal.

39. Start a Vending Machine Business

Similar to an ATM business, a vending machine business allows you to use your creativity and determine high-traffic areas where you could make a lot of money. If you buy in bulk, you’ll be able to save on the snacks and drinks you purchase for your machines.

Potential Benefits of Earning Passive Income

There are only 24 hours in a day. If you go to a job each day that pays you a set amount of money, that is the maximum amount that you’ll ever make in a 24-hour period. That is called earned income.

By investing some of that earned income into different passive income ideas, you may be able to increase your earnings. Diversifying your income stream may also improve your financial security. Some benefits of passive income are:

•  More Free Time: By earning money through passive income sources, you might be able to free time in your schedule. You may choose to spend more time with your family, pursue a creative project or new business idea, or travel the world.

•  Financial Security: Even if you still plan to keep your 9-to-5 job, having multiple sources of income could help increase your financial security. If you lose your job, become sick, or get injured, you may still have money coming in to cover expenses. This is especially important if you are supporting a family.

•  Tax Benefits: You may want certain legal protections for your personal assets or to qualify for tax breaks. Consulting with an attorney and/or tax advisor to explore setting up a formal business structure like a sole proprietorship, a limited liability company (LLC), or a corporation, for example, might help you decide if this is a good route for your particular situation.

•  Location Flexibility: If you don’t have to go into an office each day, you’ll be free to move around and, possibly, live anywhere in the world. Many streams of passive income can be managed from your phone or laptop.

•  Achieve Financial Independence: The definition of financial independence is having enough income to cover your expenses without having to actively work in order to cover living expenses. This could allow you to retire early and have more freedom to live your life the way you choose. Whether you’re interested in retiring early or not, passive income can be one way to help you reach financial independence.

•  Pay Off Debt: Passive income may help you to supplement your income so that you will have the opportunity to pay off any debts more quickly.

Potential Downsides of Earning Passive Income

Although it might sound like a dream come true to quit your job and travel the world, earning through passive income is not quite that simple.

•  Earning Passive Income Is Not a Passive Activity: Whether you’re generating passive income through a rental income, running a blog, or in another way, you will still need to put in some time and effort. It takes upfront investment to get these income sources up and running, and they don’t always work out as planned.

If, for example, you run an Airbnb, you have to maintain the property, ensure a high-quality experience for guests, and address any issues or concerns guests may have to secure positive reviews.

•  Passive Income Requires Diversity: In order to earn enough passive income to quit your job and cover all your expenses, you would most likely need more than one source of income. Although you may no longer need to clock into a 9-to-5 job, you will likely still need to spend time managing multiple income streams.

•  It’s Lonely at the Top: It might sound great to never have to go to the office again and to have the freedom to travel, but earning money through passive income can become lonely.

Not having anyone to talk to during the day might make you feel lonely, and if you aren’t self-motivated, you may find it difficult to stay on task if you need to manage your passive income streams.

•  Getting Started May Require Investment: Depending on how you plan to create passive income, it may require an initial financial investment. You may need money for a down payment on an investment property, the development of a product you plan to sell, or for investment into dividend stocks.

Managing Passive Income Streams

No matter which type of passive income you choose to pursue, it’s important to keep track of your personal finances and both your short-term and long-term financial goals.

Tracking multiple sources of income in a monthly budget can be a complex task. To be profitable, it’s important to pay attention to how much money you put into the maintenance of your passive income stream(s), such as property upkeep or monthly online services.

SoFi is one option to simplify how you manage your income streams because it allows you to see all of your financial information in one place. In the app, you can keep track of your monthly income and create goals for your passive income, such as a home, vacation, or retirement, and automate your personal finances.

The Takeaway

Establishing passive income streams is one way to diversify your income and can help you build wealth and achieve financial freedom in the long term. There are a variety of ways to earn passive income, such as through investing, rental properties, and automated investing.

Some passive income sources require a financial commitment or upfront investment, such as purchasing a rental property, and others may require a time commitment. And passive income, of course, is rarely 100% passive. Often there is considerable time and effort that goes into setting up a passive income stream. And some sources of passive income (from investing, real estate, running a business or creative endeavor) require ongoing maintenance.

Once you’re earning passive income, you can think about where to put that money. Whether you’re able to generate a passive income stream from your investments, or that’s a goal of yours, consider opening an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds, and SoFi also offers an automated portfolio.

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.


Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

SOIN0423006

Read more
Sep
26
2024
What Are Get Rich Quick Schemes?

Understanding and Avoiding Get-Rich-Quick Schemes

By | Life & Career, money | Comments Off on Understanding and Avoiding Get-Rich-Quick Schemes

Unless you’re already a millionaire, you might be interested in finding ways to make more money and increase your net worth so you can join the ranks of the rich. You may even be tempted to participate in a get-rich-quick scheme to achieve your goals.

But hold on a minute: Get-rich-quick schemes attract people with the lure of easy money, but all too often, they create more financial problems instead of solving them.

Understanding these scams can help you avoid them — and avoid getting scammed by fraudsters.

Key Points

•   Get-rich-quick schemes promise large amounts of money for little to no investment but often fail to deliver.

•   Scammers use enticing language and false claims to attract victims to these schemes.

•   Examples of get-rich-quick schemes include MLMs (multi-level marketing), work-at-home scams, investment scams, and debt relief scams.

•   Spotting a get-rich-quick scheme involves looking out for upfront payments, misleading claims, secret tips, and unrealistic guarantees.

•   Legitimate alternatives to get-rich-quick schemes include starting a business, investing, and working with financial advisors.

What Is a Get-Rich-Quick Scheme?

Generally speaking, a get-rich-quick scheme is any plan or strategy that promises to put large amounts of money in your bank account for little to no investment. The term “get rich quick” has a less than desirable connotation, since these ventures often fail to live up to their claims.

It’s not uncommon to see get rich-quick-schemes advertised or promoted using language that’s designed to pique consumers’ interest. For example, you might come across a social media influencer that promises to help you “make money while you sleep” or “make money instantly without paying anything.”

That type of wording is often a red flag, and it may be a sign that a get-rich-quick scheme is actually a thinly veiled scam.

Get-rich-quick schemers can also take a more subtle approach and make promises that seem legitimate when taken at face value. Student loan forgiveness scams that claim to be able to help you wipe out student debt in exchange for a fee are a great example of this (you’ll learn more examples of these traps in a minute).

Recommended: 8 Common Online Bank Scams and How to Avoid Them

How Do Get-Rich-Quick Schemes Work?

Get-rich-quick schemes work by drawing people in and using some type of financial incentive as bait. Potential victims may be told that they’ll be able to make a large amount of money very quickly if they just pay a fee or make an initial investment. Or they’ll be told that they can get their debts eliminated for much less than what they owe.

In other cases, a get-rich-quick scheme is a major money scam that’s designed to get people to part with their hard-earned money in exchange for a product or service that will supposedly help them make more money. The purpose of this type of scheme is to get people to purchase something; the individual who’s hawking it can then make money themselves. Put simply, you are unlikely to benefit financially.

Using social media influencers as an example again, an influencer might promote a book or a course that teaches a “proven” system for how to make money online. They encourage their followers to buy the book or course and suggest that if they do so, they’ll be able to grow their income and get rich.

What their followers may not realize is that the influencer is likely getting paid for that promotion. Their posts may be sponsored by the book author or course creator. Or perhaps they’re earning affiliate commissions for referring people to the products. If the influencer convinces enough people to buy whatever it is they’re selling, they might get rich quick while their followers may not.

Technically, influencers and bloggers are required to disclose paid relationships to their audience. But disclosure alone doesn’t convey any guarantee that the product they’re promoting will work the way they say it will. So people buy in, expecting results that they may or may not see.

Recommended: How To Make Money Even With No Job

Are Get-Rich-Quick Schemes Illegal?

Get-rich-quick schemes themselves are not outlawed, though there are numerous regulations that attempt to protect consumers from scammers. As mentioned, influencers are required to disclose relationships they have with the brands that they promote. The Truth in Advertising Act exists to prevent companies or individuals from making false or misleading claims when advertising products and services. Advertisers must also be able to back up the claims they make with scientific evidence, when appropriate.

Whether a get-rich-quick scheme falls within legal boundaries or is illegal can largely depend on the nature of the scheme. Multi-level marketing (MLM) is a great example. What is an MLM? In simple terms, it’s a business structure in which people earn commissions by selling products or services to friends and family members. Mary Kay and Avon are two well-known examples of multi-level marketing operations that are legit.

MLMs are not illegal, but pyramid schemes are. What’s known as a pyramid scheme can resemble an MLM, but the difference is that all the money is made by bringing new people into the program. The person who recruited a new participant earns money by charging them an entry or registration fee or perhaps an introductory product package of some sort. The higher up you are in the pyramid, the more money you can make.

A Ponzi scheme is another type of illegal get rich quick scheme. In a Ponzi scheme, the person or persons at the top promise investors they can double or triple their money. They take the investors’ money and keep it for themselves, paying out nominal amounts to people who invested earlier in the scheme. The scheme can keep going — and continue making the people at the top rich — as long as new investors keep joining. Bernie Madoff, the convicted financial fraudster, was notorious for running one of the largest Ponzi schemes in history.

Recommended: Avoiding Mobile Deposit Scams, Fakes, and Hacks

Examples of Get-Rich-Quick Schemes

Get-rich-quick schemes can take many different forms, and it isn’t always easy to recognize them for what they are. Some of the most common examples of legal (and illegal) get-rich-quick schemes include:

•   MLMs and pyramid schemes disguised as MLMs

•   Work-at-home scams that promise you’ll earn major money

•   Investment scams that promise high returns for very little money

•   Side hustle and online business scams

•   Debt relief and credit repair scams

•   Lottery scams

•   Fake job listing scams

•   Scams related to student loan forgiveness or government benefits

•   Home improvement scams

•   Mystery shopping scams

•   Giveaway or free prize scams

And of course, there’s the ever-enduring “Nigerian prince” scheme. This scam and its many variations promise you a large inheritance, finder’s fee, or compensation in exchange for accepting a deposit into your bank account. Scammers, who claim to be royalty (perhaps hoping that will impress their target and sound legitimate), ask that once you receive the deposit, you send part of the money back to them and keep the rest.

In reality, the scammer is trying to trick you into handing over your bank information, so they can try to use your account number and routing number to cheat you. Or else they ask you to wire them a small amount to cover processing fees before they can send the money along to you. It’s an ongoing get-rich-quick scheme that unfortunately continues to collect victims.

Are Get-Rich-Quick Schemes Reliable?

A get-rich-quick scheme can make lots of promises, but they generally fall short when it comes to the delivery. What you can usually count on with a get-rich-quick scheme is that you’ll lose money if you participate. That’s because that’s how these schemes are designed to operate.

Getting money for nothing sounds attractive, and so it’s easy to fall victim to influencer schemes when you see the lavish lives they lead on social media. But there’s a significant difference between rich vs. wealthy and, again, there’s no guarantee that any get-rich-quick scheme will produce the results you want.

Even if you don’t lose money outright, you may only get a small return on investment. Or it can take much longer to see results. For example, say you’re interested in becoming a blogger so you can quit your full-time job. You see a popular writing course advertised by lots of different bloggers who claim to be making six figures a year.

You buy the course, believing that in exchange for your payment of just $497 you’ll soon be on your way to making $10,000 or more each month from home. Except you complete the course and don’t see instant results. In fact, it takes you more than three years to build up your business to the point where you’re making any kind of steady income.

You might eventually get rich, but there’s no “quick” about it. That’s why get-rich-quick schemes are so problematic. They rely on people looking for a shortcut to easy money, despite the reality that building one’s income and net worth typically takes years.

Recommended: Are You Bad with Money? Here’s How to Get Better

Tips to Spot a Get-Rich-Quick Scheme

Identifying a get-rich-quick scam isn’t always easy since some scammers can be so convincing and seem so sincere. And in some cases, schemes for quick riches are based on legitimate ways to make or invest money. If you’re worried about getting conned by a get-rich-quick schemer, here are some of the ways to spot a scam in action.

Upfront Payment

A request for upfront payment is often a dead giveaway that a scam is afoot. Email phishing scams like the “Nigerian prince” scheme are a great example. There are some common credit card scams that fall into this category as well. These scams make false claims about being able to raise your credit scores overnight or wipe out credit card debt instantly, as long as you pay their fee first.

Misleading Headlines With False Claims

Scammers often use clickbait-y headlines to grab consumers’ attention. They can make claims that are grandiose or outright false to get you to click and check out their product or service. You may not realize how misleading those claims are until you’ve bought into the scheme.

Secret Tips and Information

Another tactic scammers may use to get your attention is to tell you they have insider information that they’re willing to share with you to help you get rich. Of course, you’ll only be able to access those secret tips once you’ve purchased something or paid them a fee. It’s particularly important to be wary of those so-called secrets when it comes to investing, since insider trading is illegal.

“100% Success Rate Guaranteed!”

Scammers may also use language that suggests that everyone who’s ever used their product or service has seen success or that success is guaranteed. That could fall under the heading of misleading information in violation of the Truth in Advertising Act. And even if it’s technically true that the success rate is 100%, the results may not be the same for everyone.

Recommended: 8 Ways to Make Your Money Work For You

If It Sounds Too Good to Be True

Here’s perhaps the easier rule for spotting a get-rich-quick scam: if something seems too good to be true, it probably is, as the saying goes. Attempting to fact-check or verify claims that someone is making about a product or service can help to weed out scammers. If you can’t verify any of the claims they’re making, that’s a sign to be wary of their statements.

Going to Trusted Sources, Not Influencers or Celebrities

Influencers and celebrities can make a lot of money promoting products or services that are designed to help you get rich. But again, they may be getting paid for that promotion, so they can’t be considered a reliable source.

Researching get-rich-quick offers through trusted sources is important for separating fact from fiction. For example, the Federal Trade Commission (FTC) can be a great resource for reading up on the latest scams targeting consumers.

Unwilling to Share Their Business Model

Transparency is key to rooting out get-rich-quick scammers. Let’s say someone claims to be able to help you make $10,000 by starting your own business from home but is unwilling to tell you how they do it. That’s a sign that you might not want to take them at their word.

“You Do Not Need Any Experience!”

Wouldn’t it be nice if you could make a fortune with no prior experience or knowledge? That’s the hope upon which some get-rich-quick fraudsters capitalize. While there are legitimate ways to make money that don’t necessarily require years of experience, scammers can use that to persuade people to buy into a product or service that leaves you holding the bag. Or they can twist their wording to make it seem like you can make money even without experience, when really, there’s a steep learning curve involved.

Recommended: 6 Money Habits to Develop Financial Success

Alternatives to Get-Rich-Quick Schemes

Getting rich overnight probably isn’t the cards for most people, unless they happen to win the lottery or a wealthy relative passes away and leaves them a huge inheritance. If you want to get rich (or become wealthy), you’ll most likely need to put in some effort and give it some time.

Here are some legitimate wealth-building alternatives to get-rich-quick schemes:

•   Starting and growing a business

•   Using side hustles to supplement your income

•   Asking for a raise or promotion at work

•   Moving to a higher-paying job with a different company

•   Reducing spending and paying down debt

•   Investing money consistently

•   Working with a financial advisor or wealth manager

Admittedly, these ideas may seem a lot more boring and difficult than get-rich-quick schemes. But they’re all proven ways to increase financial stability and raise your net worth.

Banking With SoFi

Trying to get rich can be a lofty and elusive goal, but you can certainly take steps to improve your financial situation. Keeping your money in the right bank account can be a great place to start.

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

Can get-rich-quick schemes be good?

Get-rich-quick schemes often require you to pay money for an investment or product that claims to help you grow your wealth immediately. Typically, though, the results you get can be very different from what you expect. In other words, they are unlikely to be good.

How many businesses are considered get-rich-quick schemes?

There are no definitive statistics on how many businesses are considered to be get-rich-quick schemes. Multi-level marketing companies and direct sales companies often get labeled as get-rich-quick operations, even when those businesses are legitimate. This makes hard numbers difficult to find.

What can I do if I have fallen for a get-rich-quick scheme?

If you’ve fallen for a scam, try to minimize or limit your losses by not funneling any more money into the scheme. If you believe the scheme is illegal, you can report it to the Federal Trade Commission. You could also file a police report and report the scheme to your state attorney general’s office. If a scammer tricked you into handing over your banking or financial information, alert your bank to monitor your account for potentially fraudulent transactions. You may also need to update your login details for financial websites.

Photo credit: iStock/alfexe

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

SoFi members with 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.

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.

SOBNK-Q324-071

Read more
Sep
26
2024

What Happens to a Direct Deposit if It Goes to a Closed Account?

By | Family Finances, Life & Career, money | Comments Off on What Happens to a Direct Deposit if It Goes to a Closed Account?

If a direct deposit goes to a closed account, it won’t vanish into the ether. This kind of issue can usually be resolved, and the money can get to its intended destination or be reclaimed.

It’s a common enough hiccup when a direct deposit goes to a bank account that is closed. Maybe the account holder shut it or the financial institution did, but either way, the money can be tracked and re-directed.

Key Points

•   Direct deposits to closed accounts are usually returned to the sender.

•   The bank may hold onto the funds and give the account holder time to reopen the closed account.

•   Banks may issue a paper check to the individual who owns the closed account.

•   To avoid a misdirected deposit, it’s important to double-check account numbers and cancel direct deposits before closing a bank account.

What Is a Closed Account?

A closed account refers to a deactivated or terminated account; in other words, it’s no longer open and available for deposits and withdrawals. The account holder, a custodian or the account, or the banking institution can usually close an account.

Why might a bank close an account? This can be what happens when your bank account is negative and you fail to replenish it and/or pay overdraft fees. Or perhaps the bank has seen activity they don’t think is legitimate, among other reasons.

Once this happens, it’s generally not possible to deposit funds by direct deposit or otherwise into the account. Often the term “closed account” refers to a checking or savings account, but it can also refer to a derivative trading, auto loan, brokerage, or credit card account.

What Can Happen to a Direct Deposit if It Is Sent to a Closed Account?

Sometimes, you may have gone to the trouble of setting up direct deposit in the past, but then the account later winds up closed. You might wonder what happens if a direct deposit is sent to a closed account.

Most banks have a standard process they follow when misdirected money is received. Here are a few different situations that can play out.

Direct Deposit Will Be Returned to the Sender

In many cases when someone tries to send money to a closed bank account, the bank will simply return the funds to the sender or decline the transaction. It can take about five to 10 days for funds to be returned to the sender. This timeline can speed up if the account holder to whom the deposit was intended is in good standing with the bank.

Bank Can Possibly Hold Funds

If a deposit is issued to a closed account, the bank may choose to hold onto the funds and may give the account holder time to reopen a closed bank account. Reopening a closed account, however, is only possible in a couple of scenarios. It’s not a sure thing.

Sometimes, a situation arises with what is known as a dormant account. This means there hasn’t been any activity over a period of time except for interest accruing. You may be able to get the account fully up and running again by contacting your financial institution.

In other cases, you might be able to reopen an account that is frozen. In the case of a frozen account, you may not be able to withdraw funds due to the financial institution’s decision (perhaps there is activity that doesn’t seem legitimate) or a court order (that is, a judgment against you). In some of these scenarios, you may be able to fix a frozen account by talking with your bank, or you may need legal assistance.

Banks may be more willing to work with customers if this is the first time a situation like this (meaning a dormant or frozen account) has happened. If a deposit was intended for you and you are able to reopen your account, this issue can resolve quickly—possibly within 24 hours.

Bank May Issue a Paper Check

Some banks choose to issue a paper check to the individual who owns the closed account. Other times, the company or individual with whom you set up direct deposit may get their funds back from the bank and then may make the payment via a paper check.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


When Does a Bank Return a Direct Deposit to the Sender?

If a bank receives a direct deposit for a closed account or for a faulty account number, they may choose to return the direct deposit to the sender or to simply decline the transaction.

Can a Direct Deposit Reopen a Closed Account?

Occasionally, a direct deposit being sent to a closed account can trigger its reopening. A bank may choose to give a customer the chance to reopen their account. They might hold onto the funds until the account is reopened so they can complete the direct deposit.

This happens very much on a case-by-case, bank-by-bank decision. Communication with your financial institution can be very important in this situation.

Recommended: How Long Does a Direct Deposit Take to Go Through?

What Can I Do if My Direct Deposit Was Sent to a Closed Account?

If a direct deposit was sent into a closed account, the best thing to do is to contact the bank the funds were sent to. This can help you resolve the issue as quickly as possible. Every bank has its own processes for handling situations like this. Yours can help you understand what the best next steps may be.

The bank may or may not play a role in getting the funds to you. In some cases, you may need to deal directly with the payor. But in either case, your financial institution should be able to give you guidance.

Also, remember that while it can be stressful when a direct deposit goes to a closed account, the money won’t be lost. You should be able to get your funds back.

Avoiding a Misdirected Direct Deposit

To avoid having a direct deposit sent to a closed account, it’s best to get ahead of the issue. These are some steps you can take to help avoid a misdirected direct deposit.

•   Double-check account numbers on direct deposit forms. Whenever filling out a new direct deposit form, it’s a good idea to double (if not triple) check the account numbers on the form. Likewise, if you are expecting a recurring direct deposit to a closed bank account, it’s important to get it redirected to a current open account and carefully check that the digits are correct.

•   Cancel direct deposits before canceling a bank account. To help avoid any issues with direct deposits, it’s a good idea to cancel or alter any direct deposits before closing a bank account. Then, you can make sure payments are heading to a bank account that can receive the funds. That way, any issues can be resolved before the account closes so the money doesn’t get stuck in limbo.

Recommended: Are You Bad with Money? Here’s How to Get Better

Banking With SoFi

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


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

FAQ

Can a direct deposit go into a closed account?

If a direct deposit goes to a closed account, there are several outcomes that vary bank to bank. In some cases, the financial institution may hold onto the funds and let the customer reopen their account to claim the money; it might send the funds back to the payer or decline the transaction; or it may choose to issue a paper check to the payee.

How long does it take for a payment to bounce back from a closed account?

If an individual or business issues a direct deposit to a closed account, the bank may choose to either decline the transaction or send the funds back to the payer. If they choose to send the funds back to the payer, it typically takes anywhere from five to 10 days for them to get their money back.

What happens to money refunded to a closed bank account?

A few different scenarios can happen if money is refunded to a closed bank account. The bank can simply decline the transaction or to send the funds back to the payer. Other options include issuing a paper check to the payee or possibly holding onto the funds and giving the payee the option to reopen their closed account.

Photo credit: iStock/MissTuni

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with 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.

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.

*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.

SOBNK-Q324-068

Read more
Sep
25
2024
aerial view of parking lot

Smarter Ways to Get a Car Loan

By | Life & Career, personal_loan | No Comments

For many of us, a car is the second-biggest purchase we’ll make, next to a home. The average price a buyer paid for a new car in June 2024 was $48,644, according to Kelley Blue Book. But sticker price isn’t the only thing to consider when budgeting for new wheels. There’s also insurance, maintenance, gas, and depreciation.

Depreciation may not be front of mind for many car buyers. But in fact it’s a major factor in determining how to finance a new car. We’ll explain why, review different loan options, and recommend steps you can take to help you get a great deal.

Key Points

•   A car is often the second-largest purchase next to a home, with new cars averaging $48,644 as of June 2024.

•  Depreciation significantly impacts the financial strategy for purchasing a new car, with most vehicles losing about 60% of their value within five years.

•   Various financing options are available for car buyers, including loans from banks, dealerships, or private lenders, each offering different terms and rates.

•   Researching car values, negotiating trade-ins, and understanding loan terms are crucial steps before visiting a dealership.

•   Prequalification for car loans can provide leverage in negotiations and help buyers understand their purchasing power.

How To Assess the Value of a Car

You may already know what you want in a new car: the gas mileage, capacity, features. Just as important, you know what you can afford. Or do you? Before heading to a dealership, you’ll want to extensively research the cars you’re interested in.

Once you have an idea of the makes and models you want to test drive, there are a number of services that can offer a baseline estimate for the car’s worth. Edmunds offers a True Market Value (TMV®) guide; Kelley Blue Book provides suggested price ranges based on things like year, model, condition, and mileage (particularly useful for used cars). The National Automobile Dealers Association’s guide focuses on dealers’ sticker prices, and Consumer Reports provides detailed reviews and reports about specific cars.

None of these resources will necessarily tell you the exact price you’ll get, but they can give you some context. It may be helpful to look at listed prices for similar cars in your area. You can even call around for price quotes from dealerships and private sellers, so you’re better equipped by the time you walk onto the car lot.

Got a car to trade in? Here’s how to find out how much your car is worth.

How the Value of Your Car Changes Over Time

A car’s value changes almost from the moment you purchase it: This is called depreciation. The first year is generally the biggest hit, with cars losing around 20% or more of their original value. The loss goes on from there. New cars lose roughly 60% of their purchase price over the first five years of ownership.

Some models depreciate more than others. For instance, cars typically depreciate faster than trucks, and midsize cars depreciate more quickly than smaller cars. It’s smart to research the projected depreciation on the makes and models you’re interested in. Lower depreciation could become a deciding factor when all else is equal.

Recommended: How Much Should I Spend on a Car?

Car Financing Options

One of the biggest car-related costs is the loan itself. Car loans can come either from a traditional bank, online lender, or through a dealership. Here are a few car financing options:

Car Loan

Car loans can be offered directly from a bank, credit union, or online lender, or can be arranged through the car dealer. The average loan rate for a new car for borrowers with good credit is 7.24%, as of July 2024. If you have excellent credit, you may qualify for a lower rate; if you have fair or bad credit, you may pay more. Learn how to check out your credit score for free.

Car loans are “secured” by the car, which means that the car is used as collateral on the loan. Until it’s paid off in full, you don’t own the car outright. So if you default, the lender can seize the car. The qualification process for a car loan can be more difficult than getting an unsecured personal loan, since banks must verify the collateral (think: more paperwork).

Dealer-Arranged Financing

When getting a loan through the dealership, the dealer typically collects your information and offers financing via a finance company owned by the car manufacturer, the dealership, or a third party. Car dealerships are good at helping customers get a car loan quickly, sometimes even without great credit. You may be able to sign a loan and drive off in your new car the same day.

Auto Loan from a Private Lender

Banks, on the other hand, may offer more competitive interest rates or more favorable terms when applying with them directly. However, the application process can be more involved and take longer. Usually, borrowers getting financing from a bank or credit union will get preapproved for a car loan prior to heading to the dealer.

Personal Loan

Another option is to skip car loans entirely and take out an unsecured personal loan. Common uses for personal loans include home repairs, debt consolidation, and other large purchases. On the flip side, a car loan can only be used to pay for a car.

Usually, buying a car with a personal loan is not the best course of action. But there are rare circumstances where it may make sense, such as if you plan on restoring an old car as a passion project. Cars in need of repair can be difficult to finance with a traditional auto loan.

For most car buyers, however, interest rates on any type of personal loan are typically higher than on car loans. Another thing to consider is the repayment period. In general, car loans extend over seven years, whereas a personal loan is typically repaid in three to five years.

Getting your personal loan approved can take time, but prequalification is available. Many people get prequalified before going into the dealership, so they have an idea of how much buying power they have.

Strategies for Getting a Car Loan

As you look for a car loan that meets your needs, here are some strategies that can help.

Do Some Research

Before heading to the dealer, shop around for loans to see the interest rates and terms you may qualify for. Lenders review factors like a borrower’s credit score and financial history to inform their borrowing decisions. So part of your research will go into understanding your credit.

Recommended: What Credit Score Do You Need to Buy a Car?

Prepare a Down Payment

A larger down payment can save you money on your loan. Down payments reduce the amount you have to borrow, which reduces what you spend on interest over time. Trading in a vehicle of substantial value accomplishes the same thing, while reducing the down payment you need to put up.

A higher down payment is helpful for another reason: It can help you avoid a situation down the road where, due to depreciation, the balance of your loan is greater than the value of your car. This is variously called negative equity, being underwater, or an upside-down loan. To avoid this situation, run the numbers to make sure your down payment (or trade-in) is high enough to offset the expected depreciation on your vehicle.

That said, negative equity isn’t usually a bad thing. It only becomes a problem if your car is stolen or totaled, and the payout from your insurance company isn’t enough to pay off your loan balance. (Gap insurance is designed to cover your remaining debt.) Some drivers are comfortable with being upside-down for a short period, while others prefer not to take a chance.

Consider Getting Prequalified for a Loan

Getting prequalified for a car loan helps the borrower understand what kind of car payment they can afford. Prequalification can also be used as a tool in negotiations with the dealer. In some cases, the dealer may be willing to offer a more competitive financing option.

Just keep in mind that prequalification isn’t a done deal: The loan offer is still subject to change.

The Takeaway

For many people, buying a car outright with cash isn’t an option. With an auto loan, the car acts as collateral to secure the loan. A higher down payment can save you money on interest over the life of the loan. It can also help you avoid “negative equity” down the road — where the value of the car is less than the balance of your loan. However, this is only a problem if your car is stolen or totaled, and your insurance company’s payout doesn’t cover your loan obligation. In some circumstances, it’s possible to use an unsecured personal loan to purchase a car, such as when you’re looking for a vintage car to fix up as a passion project.

Why get a SoFi Personal Loan? SoFi offers loans of up to $100,000, low fixed rates, and a quick and easy online application process Checking your rate takes just a minute.

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

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.

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.

SOPL-Q324-032

Read more

CATEGORIES

  • All
  • No categories
Close modal

See what SoFi can do for you and your finances.

Select a product below and get your rate in just minutes.

Student Loan
Refinancing

Personal
Loans

Online
Investments

Other

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

©2025 Social Finance, LLC All rights reserved.
TLS 1.2 Encrypted
Equal Housing Lender