Life & Career Archives | Page 43 of 87

Oct

2023

Tips to Avoid Schemes Disguised as Multi-Level Marketing Companies

By Timothy Moore | Family Finances, Life & Career, money | Comments Off

Multi-level marketing businesses— also called direct sales, direct marketing, or network marketing — are legitimate enterprises that involve selling products or services to a network of peers (i.e., friends and family) and recruiting more salespeople.

The problem? According to the Federal Trade Commission (FTC), many illegal pyramid schemes disguise themselves as legal multi-level marketing (MLM) companies. Even legal MLMs can be bad news; most people make little or no money with MLMs, and some even lose money.

Read on to learn:

• What’s an MLM?

• What are the differences between MLMs and pyramid schemes?

• How can you avoid multi-level marketing companies?

What Is a Multi-Level Marketing (MLM) Company?

A multi-level marketing business, or MLM for short, is a legitimate business that sells products and services through independent distributors. These companies rely on such distributors to sell to networks of peers, typically friends and families. The distributors, often called “participants” and “contractors,” must also recruit new distributors for the program.

The companies are found in a variety of categories. They might be selling supplements, personal-care products, kitchen utensils, or any other number of items.

Recommended: Common Credit Card Scams

How Do Multi-Level Marketing Companies Work?

What is an MLM company, and how does it operate? In a multi-level marketing business, distributors must first buy the products wholesale from the company. They then make commissions off the products that they sell at retail prices.

Distributors also earn a commission from their recruits’ sales, which incentivizes distributors to recruit more people into the business. Those at the top of the company, with multiple levels of distributors beneath them, thus earn the most money without even needing to purchase more products to sell.

Multi-Level Marketing vs. Pyramid Schemes: What’s the Difference?

Though sometimes questionable, multi-level marketing programs are legal. Pyramid schemes, however, are illegal types of money scams. Unfortunately, many pyramid schemes disguise themselves as legitimate MLMs. Here are key differences:

• Pyramid schemes are more focused on recruiting than actually selling the products. While MLMs do ask you to recruit more distributors, the focus is on sales.

• Pyramid schemes may also require distributors to buy more products at regular intervals, even if they have not sold all the products they already have. Sometimes, in a pyramid scheme, you have to buy more products just to get paid or earn a bonus. This is a major red flag.

In the end, most people who are swindled into pyramid schemes run out of money, are stuck with products that they can’t sell, and quit — meaning they lose everything they invested in the business.

Real-Life Examples of Multi-Level Marketing Companies

Some products marketed and sold through network marketing companies are from legitimate MLM businesses — and you can feel comfortable purchasing them. In other cases, recognizable products can emerge from pyramid schemes.

Here are some real-life examples of legal, established MLMs. You may be surprised to learn that what is an MLM can be a familiar and trusted brand:

• Amway

• Avon

• Herbalife

• Vorwerk

• Mary Kay

• Infinitus

• Perfect

• Quanjian

• Natura

• Tupperware

• Nu Skin

• Primerica.

Why Is Multi-Level Marketing Legal?

Multi-level marketing businesses must adhere to strict FTC guidelines to be considered legal. The FTC regularly goes after suspicious MLM companies that may actually be pyramid schemes.

Though sometimes seemingly predatory, MLM is just a form of direct sales. When adhering to FTC guidelines, these businesses aren’t breaking any laws.

Recommended: What’s a Pump-and-Dump Scheme?

What Is the 70% Rule?

Though not technically a law, the 70% rule is a common term in MLM discussions. It arose in a 1979 case against Amway.

In analyzing the business structure of Amway, the FTC determined that, because Amway required distributors to sell at least 70% of the products they bought in a given month to earn a bonus, Amway was attempting to operate as a legitimate MLM. Their business model involved profited from sales, not shady recruiting tactics.

Now, the 70% rule is a loose term that means an MLM is focused on sales, rather than requiring distributors to buy more products or recruit more people to earn bonuses. The trouble with this rule is that it is difficult to enforce: MLMs typically trust their distributors to tell the truth about how much product they’ve sold but cannot always verify the numbers.

Are the Products That MLMs Sell Legitimate?

The products and services that MLMs and even pyramid schemes sell can be completely legitimate. Just think of that trusty Tupperware in your kitchen cabinet or your favorite lipstick from Mary Kay.

But even if a product is good, the distributor requirements of a legitimate MLM or shady pyramid scheme can still cause the seller to lose money.

Recommended: A Guide to Credit Card Protection

Can You Create Financial Freedom by Joining an MLM?

Multi-level marketing companies require a lot of entrepreneurial hustle from distributors to make money. As contracted sellers, distributors don’t earn a salary but instead make commissions.

While someone with a true sales spirit may make some money in an MLM, most do not make enough money to achieve any kind of financial freedom without another source of income. In fact, the FTC says some people even lose money from legitimate MLMs.

Pyramid schemes are worse, having left some people in economic ruin.

Tips for Recognizing Predatory MLMs and Pyramid Schemes

While MLMs are legitimate, they may not be worth the effort and could also cause you to lose money. Illegal pyramid schemes, however, are usually designed to hurt the low-level distributor.

So how can you spot a predatory MLM or pyramid scheme? Here are a few warning signs:

• Hyperbolic claims of excess income: If a brand promoter is promising outlandish amounts of income — even saying you can quit your day job and retire early — that’s typically a red flag.

• “Act fast” pressure: You should be able to think about any financial decision and be given the time to talk it over with friends and family. Brand promoters of pyramid schemes and predatory MLMs may use high-pressure tactics, like telling you that you must act now or you’ll lose out on the opportunity.

• An emphasis on recruiting: In a true MLM where you at least have the potential to earn money, the emphasis should be on sales. If during initial conversations with a promoter, the emphasis is on recruiting other members, this is likely an indicator of a pyramid scheme.

Recommended: How to Verify a Check

Tips for Avoiding Predatory MLMs and Pyramid Schemes

The first step to avoiding a shady MLM or full-on pyramid scheme and protecting your finances is recognizing them when you see them.

Here’s what you can distinguish what are MLMs from pyramid schemes and avoid the latter:

• Researching the company: Take the time to conduct research online. The FTC recommends googling the name of the company with terms like “scam” or “complaint” and then analyzing the results. The FTC even suggests reaching out to your state attorney general to inquire about complaints for a specific company. Uncovering evidence of lawsuits during your research is often a tell-tale sign.

• Analyzing the products: Legitimate MLMs can sell good products. Pyramid schemes might even have products that you recognize. But if any company has poor-quality products that they expect you to sell, there’s a good chance it’s a pyramid scheme. Watch for products that are priced too high, claim to have “miracle” ingredients, or “guarantee” results.

• Asking good questions: If the promoter is unwilling to answer very basic questions, like how refunds work or what happens if you can’t sell the product, they are likely hiding something.

• Not making decisions in a vacuum: It’s a good idea to discuss all major financial and business decisions with a trusted friend or family member. If you have paperwork for an MLM that you’re unsure about, you can even have a personal accountant or lawyer review it before you sign.

Recommended: Jobs That Pay for Your College Degree

The Takeaway

Multi-level marketing companies are legitimate and legal direct-sales businesses, but they rarely enable a distributor to make good money; some distributors may even lose money. Pyramid schemes are typically disguised as MLMs and can lead to financial ruin. Such schemes are illegal. In general, it’s a good idea to avoid any kind of MLM company if you are unsure of their trustworthiness.

Looking for other ways to grow your finances? Open an online banking account with SoFi to take advantage of our super competitive APY and the fact that we don’t charge account fees, which can help your money grow faster.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

Is it legal to join an MLM?

Yes, it is legal to join an MLM. However, very few people earn enough money from multi-level marketing companies to make them worth the effort. In fact, some people lose money in MLMs.

What makes an MLM illegal?

MLMs are legal, but pyramid schemes are not. Pyramid schemes often disguise themselves as legitimate MLMs. However, with pyramid schemes, the emphasis is on recruiting new members and forcing distributors to buy more products, rather than focusing on empowering distributors to successfully sell to customers.

Are MLMs the same as pyramid schemes?

No, MLMs are not the same as pyramid schemes, but pyramid schemes often disguise themselves as MLMs. Multi-level marketing companies are legitimate businesses that require distributors to buy products and earn commissions by selling them to a network of peers. Pyramid schemes are more focused on recruiting new distributors and forcing them to buy products than empowering distributors to sell the products.

Photo credit: iStock/Makhbubakhon Ismatova

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

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 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 4.50% 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 4.50% 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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

SOBK0822005

Oct

2023

What Is a Freelancer? Guide to Freelancing

By Timothy Moore | Building Your Career, Life & Career, money | Comments Off

A freelancer is a self-employed worker who provides services for a client or multiple clients as an individual contractor. Freelancers typically have flexible hours, work remotely, and can be involved in as many or as few projects as they would like. Think about people you may know who provide social-media consulting for a few businesses, drive an Uber, or take catering gigs. All of them are freelancers.

Because freelancers are not employees, however, they do not receive typical work benefits like health insurance and paid time off. They are also subject to self-employment tax and are responsible for paying taxes entirely on their own.

Are you committed to being a freelancer or just curious about how it works? In this piece, you’ll get the answers you need to move ahead, including:

• What is a freelancer?

• How does freelancing work?

• What are common types of freelancers?

• What are the pros and cons of freelancing?

What Is Freelancing?

So what does freelancing mean? Freelancing is when a self-employed individual offers professional services to a company in exchange for payment. Unlike a traditional employee, the freelancer can set their own rates and hours. They can work for one or multiple companies.

In exchange for this flexibility, freelancers must be prepared to fund their own benefits like health insurance. They also typically pay their own taxes which are potentially higher.

Some people freelance as their sole source of income. If they work on a large or long-term project, you may hear the term “independent contractor” used (you’ll learn more about different terminology below).

However, it is possible to freelance on top of a regular salaried or hourly position. Such freelance work is commonly referred to as a side hustle or side gig and can help people bring in more cash.

Recommended: 15 Low-Cost Side Hustles

How Does Freelancing Work?

Now that you know the answer to “What is freelancing,” here’s more detail on how this kind of employment works. Freelancers make money by selling a service to another individual or company (i.e., a client). Typically, freelancers and their clients will enter into a contract with one another that specifies the nature of the work, the duration of the professional relationship, and the payment for services rendered.

After completing the work, a freelancer will usually submit an invoice to the client, who will then pay the freelancer by a predetermined method (direct deposit, paper check, peer-to-peer transfer, etc.). During tax season, a freelancer will receive an IRS 1099 composite form from each client instead of a W-2. This form will detail the total compensation the freelancer earned from the client.

Because freelancers are self-employed, they are solely responsible for paying federal, state, and local taxes on all earned income. In addition to paying what an employee would traditionally have withheld from their paycheck, a freelancer must also pay what an employer usually contributes toward taxes (typically Social Security and Medicare taxes). And because there is no steady paycheck from which funds are being withheld for taxes, freelancers are responsible for paying quarterly estimated taxes to avoid a penalty from the IRS.

If you decide to become a freelancer, it is a good idea to work with a certified accountant to ensure you are handling your taxes correctly. Not only can an accountant help you with quarterly taxes, but they can also point out important freelancer tax deductions you can be taking.

Recommended: Passive Income Options

Common Fields for Freelancing

Traditionally, freelancers have been thought of as roles like writers, photographers, consultants, and coaches. But today’s gig economy has broadened the definition of freelance work. Rideshare drivers, dog walkers, and online tutors — these just scratch the surface of jobs one can do as a freelancer.

In terms of what a freelancer is specifically, take a look at some common fields and roles:

• Editorial

◦ Copywriters

◦ Journalists

◦ Bloggers

◦ Proofreaders

◦ Editors

• Creative

◦ Graphic designers

◦ Photographers

◦ Podcasters

◦ Vloggers

◦ Animators

◦ Videographers

◦ Social media influencers

◦ Musicians

• IT and Development

◦ Web developers

◦ Mobile developers

◦ Software developers

• Admin

◦ Virtual assistants

◦ Transcribers

◦ Administrative assistants

• Financial and Legal

◦ Accountants

◦ Bookkeepers

◦ Tax preparers

◦ Lawyers

• Sales and Marketing

◦ Social media marketers

◦ Public relations specialists

◦ Digital advertisers

◦ SEO marketers

• Consultants

◦ Business consultants

◦ Medical consultants

◦ Legal consultants

• Gig Economy

◦ Delivery drivers

◦ Rideshare drivers

◦ Dog walkers

◦ Babysitters

◦ House cleaners

◦ Fitness instructors

The important thing to remember: Most of these jobs can be done as an actual employee, and many other jobs not listed here can now be done by freelancers. Many businesses rely on a healthy mix of freelancers and independent contractors to achieve success.

Recommended: How to Make Money Through Social Media

Types of Freelancers

You may hear different terms used and wonder what does freelancing mean exactly? Are independent contractors and freelancers the same thing? Here, the answer to that question as well as clarity on some other phrases you may encounter that describe this kind of work:

1. Independent contractor: Most freelancers are independent contractors. They provide their services to multiple clients and companies, as specified by the contracts they agree to. An independent contractor may do a short, one-off project with a client, but it tends to be used (as noted above) when one is contracted to provide a service on an ongoing basis or does a larger scale project.

2. Part-time freelancer: People who hold down a full-time job but make extra money on the side — like a weekend wedding photographer or a doctor who does some medical consulting with clients — are considered part-time freelancers.

3. Small business owners: Some freelancers may earn enough work that they need to hire actual employees to keep up with it. For example, a freelance writer may attract enough clients to eventually form an agency.

4. Temporary workers: Individuals who find temporary work, often through a temp agency, are considered freelancers. Sometimes, businesses need to fill a full-time role but only for a set number of months or years, like to cover for a full-time employee’s parental leave. The contracted worker who temporarily fills that role is also considered a freelancer but may enjoy some company benefits during their tenure, depending on contract specifics.

Recommended: 5 Ways to Achieve Financial Security

Tips on Becoming a Freelancer

Thinking about becoming a freelancer? The following tips may help you find success:

• Finding clients: Before quitting a full-time job with steady income and benefits, it’s a good idea to have some clients as a freelancer. Many freelancers start out part-time and transition to full-time freelancers once they have enough steady work.

• Understanding the financial implications: Knowing how you will pay taxes as a freelancer is an important requirement before transitioning into this career. It’s also wise to have a plan for health insurance, disability insurance, and other benefits that you may be losing by transitioning out of full-time work.

• Staying organized: Having an organizational system to keep track of clients, projects, communication, and deadlines can be crucial. Successful freelancers often make their own work schedule with standard hours and stick to it, even if no one else is holding them accountable.

• Networking: Word-of-mouth referrals are a great way to earn business as a freelancer; networking on sites like LinkedIn and in person with potential clients and others in your field is a great strategy. Depending on your line of work, having a website and portfolio advertising your services can make it easier to win new business.
Feeling unsure about the transition to independent contractor? Consider researching and following some financial planning tips for freelancers.

Pros of Freelancing

Freelancers enjoy plenty of perks, including:

• Setting your own rates: As a freelancer, you can determine how much you’ll charge a client per project or hour. Just remember that if you set the price too high, companies may go with another contractor.

• Setting your own hours: You can also work as much or as little as you’d like — and at the time of day you’d prefer. You don’t have to ask for permission to go to the grocery store, take a mental health day, or go to yoga class in the morning.

• Diversifying your client list to keep work interesting: You can choose which clients you work with and have more freedom to define your job responsibilities.

• Flexible time off: Freelancers may not get paid for their time off, but as long as you fulfill contractual obligations to clients, you can take vacation (or just lazy days) whenever you like.

• Freedom from regular meetings and office politics: While freelancers may hop on a call or meet up with a client for lunch on occasion, there is typically more freedom to do the actual work instead of sitting through unnecessary meetings. This may not apply to some freelancers, like consultants.

• Remote work: Most freelancers are able to work on the go or from a home office.

Cons of Freelancing

But there are also downsides to freelancing, like:

• Lack of company-paid benefits: Freelancers are responsible for getting their own health insurance and can’t count on a company’s 401(k) match. (That’s where the solo 401(k) comes in!) Freelancers also won’t get paid while they’re on vacation.

• Higher and more complicated taxes: If you’re self-employed, you’ll need to cover some taxes beyond those you would pay as a traditional employee. Freelancers must also pay their taxes quarterly to avoid fines from the IRS.

• Less job security: Because freelancers are not employees, it is easier for a company to sever ties. Freelance work is sometimes on a per-project basis, so as a freelancer, you may need to spend a significant portion of your time just trying to market your services to find more work.

• Lack of steady income: As a freelancer, you might not be able to depend on the same amount of money every week; it can vary by the type and amount of projects you take on. This can make it more challenging to build a monthly budget.

• Loneliness: Working from a home office as a freelancer can be isolating. If you feed off other people’s energy and really enjoy networking and socializing with coworkers, you may find that freelancing isn’t right for you.

• The constant need for “hustling”: Workers who do an average job might be able to skate by as a traditional employee and still earn a paycheck. To turn a profit as a freelancer, you must constantly impress clients with high-quality work and no missed deadlines. Otherwise, they might look elsewhere.

Here’s a look at the pros and cons of freelancing in chart form:

Pros of Freelancing	Cons of Freelancing
• Set your own rates • Set your own hours • Choose your clients • Have flexibility with time off • Avoid meetings and office politics • Can work remotely	• Don’t get benefits • Must cover more taxes • Lack job security • Don’t receive steady paycheck • May be lonely • Must constantly be pitching new work

Pros of Freelancing

Cons of Freelancing

• Set your own rates

• Set your own hours

• Choose your clients

• Have flexibility with time off

• Avoid meetings and office politics

• Can work remotely

• Don’t get benefits

• Must cover more taxes

• Lack job security

• Don’t receive steady paycheck

• May be lonely

• Must constantly be pitching new work

Banking With SoFi

Freelancers rely on many tools to turn a profit, including a bank account that puts their hard-earned money to work. If you sign up for an online bank account with SoFi, you’ll enjoy a suite of tools that makes organizing your earnings, spending, and saving super convenient. Plus you’ll earn a hyper competitive interest rate and pay no monthly fees, so your money can grow faster.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

Is freelancing better suited for full-time or part-time?

Many freelancers are able to turn their work for a client or clients into a full-time career. If you are just starting out, it might be a good idea to freelance part-time and then transition to full-time if you feel confident that you can sustain a freelance career.

What skills are necessary for freelancing?

Beyond the actual job skills required by whatever field you’re freelancing in, being a successful freelancer requires several key skills, including:

• Excellent communication

• Strong organization

• A commitment to deadlines

• The ability to network

• A solid understanding of finances.

Is freelancing difficult?

Freelancing can be difficult: You won’t enjoy employer-sponsored benefits, you’ll have to pay self-employment taxes, and you’ll need to “hustle” to win clients — and then deliver impressive work that convinces clients to keep you around. That said, freelancing offers freedom and flexibility and can be lucrative if your business is successful.

Photo credit: iStock/AleksandarNakic

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 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 4.50% 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 4.50% 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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

SOBK0822038

Oct

2023

Is Money Really Everything?

By Timothy Moore | Family Finances, Life & Career, money | Comments Off

Some people may believe that money is everything, but is it actually? After all, money is embedded in a sense of well-being, from healthcare to the ability to pursue one’s passions. Money grants security and freedom — and, at its core, it ensures basic survival.

But research also suggests that having more money is correlated with depression and can lead to more stress. Comparing money with one’s peers can create dissatisfaction, and money arguments are the second-highest cause of divorce.

So is money really everything in life? Here’s a closer look at:

• Is money everything in life?

• What can money do for us?

• What can money not do for us?

Needing Money to Survive

Money has the ability to improve one’s life, but it can also create complications and lead to unhappiness. The question of whether a person needs more money to be happy is certainly up for debate (and researchers continue to conduct new studies about this very topic), but amid all the misconceptions about money, there is a fundamental truth: We need money to survive.

According to the American Academy of Family Physicians (AAFP), poverty and low-income status can lead to shorter life expectancy, higher death rates for the 14 leading causes of death, and higher infant mortality rates.

From food and shelter to health care and education, money provides the things needed to survive.

What Money Can Do For Us

Is money everything? Probably not: Things like love, friendship, time, and passion are all important aspects of life (though money can help in those areas —for example, money can enable you to pursue passions and afford experiences with family and friends).

But even if money isn’t everything, it can do a lot of important things, such as:

Meeting Basic Needs

Money allows us to meet our most basic needs, like food, shelter, and health care. Without those things, we would die.

On Maslow’s hierarchy of needs — a popular tenet of psychology — humans must satisfy such basic needs before they can focus on more complex needs like love and belonging, esteem, and self-actualization.

Recommended: How to Manage Your Money

Paying Down Debts

Multiple studies indicate that carrying debt is bad for your mental and physical health. Adverse effects include high blood pressure, anxiety, depression, and even a weakened immune system.

On top of that, debt can lead to money fights with a significant other. It can also impact your ability to secure credit in the future — whether for a car, house, or even a credit card.

Thus, having enough money to pay down your debts can help avoid a lot of figurative and literal headaches.

Recommended: Paying Off Debt: 9 Strategies to Try

Improving Our Quality of Life

Beyond meeting basic needs, money can help improve quality of life. Having more money makes it easier to see expensive doctors, join a gym, and buy healthier foods. It also enables the pursuit of higher education without needing to open a student loan.

Money also allows you to afford experiences with friends and family — whether it’s going to a concert, affording a family vacation, or just having a drink with a coworker. Beyond that, money allows a person to pursue passions and hobbies, such as gardening, woodworking, painting, playing in sports leagues, and fixing up cars.

Feeling Secure and Free

Having enough money to pay the bills and provide for your family can create a sense of security. With a well-padded emergency fund, you may not worry about the cost of emergencies like unexpected vet bills or car trouble like those living paycheck to paycheck might.

Not only can money provide you with a sense of security, but it can also give you more freedom to pursue passions and buy material goods you enjoy without worrying about the price tag.

Recommended: 5 Ways to Achieve Financial Security

Making a Difference

Parents with more money may be able to provide things for their children that others cannot — like better education for a more promising future. Beyond your own family, money can allow you to make a difference in the world through charitable donations to causes you care about.

What Money Can’t Do For Us

After reading the list above, you may wonder, Is everything about money? While money can purchase material possessions and enable certain experiences, there are some things money simply cannot do.

Buying More Time

No matter how much money you have, no one can buy more time. If you spend a large chunk of your life working at a job you don’t like — and miss out on experiences and memories with people you love — you can’t buy that time back. And while deep pockets can perhaps enhance one’s health and healthcare, it’s not as if it can necessarily extend your life.

Creating Real Relationships

You cannot buy connections with true friends and family. You may win new friends with more money, but real relationships are based on love and respect for one another. The more time you spend trying to make money, the less time you’ll have to focus on building relationships with people you care about.

Recommended: How to Change Your Money Mindset

Fulfilling Passions

Some people may have high-paying jobs and love what they do. But others may take high-paying jobs just for the paycheck, even if there’s something else they’d rather be doing.

While it’s important to earn money to care for yourself and family, remember that it’s also valuable to allow yourself to do things that make you happy.

Can Money Buy You Happiness?

Is money everything in life? Clearly, money can offer security and opportunities — and allow you to meet basic needs — but there are other things in life worth pursuing.

But can money buy you happiness? Science says yes, though researchers continue to debate the extent to which it can.

More than a decade ago, Daniel Kahneman and Angus Deaton released their now-famous research that indicates money does buy you happiness, to a certain point. According to this research, money no longer improves emotional well-being and happiness beyond $75,000 a year.

A more recent study, however, throws that into question. The 2021 paper by Matthew Killingsworth demonstrates a continued, linear correlation between money and happiness beyond $75,000. That is, a person who makes $100,000 a year could scientifically be happier than one who makes $75,000.

Of course, other research demonstrates that money leads to unhappiness. For example, per capita income in the United States increased by 150% from 1946 to 1990, yet the percentage of people who considered themselves happy dropped during that time.

Research also shows that more income can mean more stress, that materialism can contribute to unhappiness, and that comparing one’s finances with one’s peers can contribute to dissatisfaction.

So can money buy you happiness? The answer: yes and no.

Recommended: 30 Low-Stress Jobs for Introverts

What’s More Important Than Money?

Science can only go so far to prove fundamental truths about the human experience. How can a person truly measure the value of love, family, and friendship to each individual? And how can you separate money from things you deem important, like your mental and physical health?

Understanding that it’s a nuanced subject, here are some things that you may find are more important than wealth; things that refute the the idea that money is everything:

• Love: For many people, sharing love and companionship with friends, family, partners, and children is paramount. It’s the most valuable thing in the world.

• Health: Having a sound body and sound mind are important. Many rely on jobs for health insurance and the money they need to afford everything from prescriptions to gym memberships to emergency room visits. However, one can overdo it at work. It can be important to remember to also focus on your mental health, especially if you’re working too much and too hard to earn your money.

• Passion: While some people would prefer to work a high-pressure job for more money, the Great Resignation (in which people left their jobs in droves as the COVID-19 pandemic progressed) has shown us that many people would rather pursue their passions and accept a lower paycheck for it. To them, a passion-filled life is more important than money.

• Time: Each person has a finite amount of time in life. If you spend too much of it focused on making money, you may miss out on life-changing experiences and wonderful memories with friends and family.

The Takeaway

Money can allow you to satisfy basic needs like food and shelter, but it may also enable you to pursue higher education, access higher-quality health care, and fund experiences and hobbies that you are passionate about. That said, money can never buy you more time or true relationships, and having more money may even make you unhappy. So while money may matter, it’s not necessarily what makes the world go around when one thinks about happiness at a basic, human level.

3 Money Tips

1. Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

2. If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

3. When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

Where did the phrase “money isn’t everything” come from?

The origin of the phrase “money isn’t everything” isn’t clear, but it’s a common expression in the English language. The intent of the expression is that you shouldn’t focus solely on money because other things — love, friendship, time, passion, etc. — are also important and can bring you happiness.

What happens if we are too dependent on money?

Money is important for affording the basic things we need to survive, but research shows that focusing too much on money can lead to more stress, isolate us from people we care about, and even cause depression.

Is too much money a bad thing to have?

We need money to survive and to improve our quality of life. Having more money allows us to care for ourselves and the people we love. However, if you’re earning that money at the expense of your mental and physical health — and missing out on core life experiences because you’re busy with work — having more money could be a bad thing. Some research indicates that having more money can lead to unhappiness and even depression.

Photo credit: iStock/Irina Kashaeva

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 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 4.50% 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 4.50% 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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

SOBK1122005

Oct

2023

Who Regulates My Bank?

By Janet Siroto | Family Finances, Life & Career, money | Comments Off

If you’re curious about how banks are regulated and your money is protected, it’s important to understand that multiple agencies help keep America’s financial institutions safe and compliant with the law. Some of the key regulatory agencies you may hear about are the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC), although there are others involved as well.

This topic has been in the spotlight recently. You may have read the headlines and wondered who those agencies were and how they knew when to spring into action to help ensure that customers’ finances didn’t suffer.

Here, you can learn more about how bank regulation works, including:

• What is the history of bank regulation?

• What exactly do bank regulators do?

• Who regulates banks?

What Do Bank Regulators Do?

Now that you have read about a few of the critical moments in U.S. banking regulation history, you may be interested to get a little more insight into what bank regulation accomplished during the ups and downs of America’s economy.

Here are some of the key points to know about what bank regulators do and how they can provide a sense of financial security:

• Review the financial health of banks and step in as they deem necessary

• Regulate foreign banks that are in business in the United States

• Examine banks to make sure their practices are safe, sound, and fair

• Intervene if banks are failing and ensure that depositors are protected up to the limits of insurance (and sometimes beyond, as mentioned above).

Who Regulates Banks?

The next aspect to delve into is who has the responsibility of regulating banks and can intervene when they deem necessary. Here are the three key players when it comes to oversight of commercial banks:

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the U.S. Department of the Treasury. Its role is to charter, regulate, and supervise America’s national banks and federal savings associations.

In addition, the OCC oversees federal branches and agencies of foreign banks doing business on U.S. soil.

The OCC describes its mission as:

• Ensuring that these institutions conduct business in a safe and sound manner

• Determining that there is equitable access to financial services and customers are treated fairly

• Making certain that the banks it oversees are complying with all applicable laws and regulations.

The Federal Reserve

The Federal Reserve, or the Fed, is responsible for regulating a different set of entities: some state chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations.

The Federal Reserve is America’s central bank, and has a broad jurisdiction as it works to promote the health of the U.S. economy and the stability of the financial system. Among its key functions are:

• Conducting on-site and off-site examinations of banks to make sure they are operating in accordance with applicable laws.

• Making sure that banks have enough capital available to withstand economic fluctuations. This can involve reviewing balance sheets, projections, and other financial materials.

• Possibly reviewing “resolution plans,” which detail how a financial organization would resolve a situation in which it was in financial trouble or failed.

The Federal Deposit Insurance Corporation

As mentioned above, the FDIC plays a role in insuring its member banks so that, in the rare event of a bank failure, depositors are covered for $250,000 per account holder, per ownership category, per insured institution.

However, the FDIC does more than this. It also supervises state-chartered banks that are members of the Federal Reserve. It this capacity, it oversees more than 3,500 banks, and does the following:

• Checks for safe and sound operations

• Examines institutions to be sure they are complying with consumer protection regulations and laws.

A Brief History of Bank Regulation

America’s banking history has taken some twists and turns, as regulation has gone in and out of favor. Here are some key points in U.S. banking to consider:

• In 1791, the First Bank of the United States was created, but its charter was not renewed in 1811. The reason? While the bank provided some stability to the new nation’s economy, people worried that it put too much financial control in the hands of the federal government.

• State banks began to flourish and funded the War of 1812, but, with a large amount of credit being extended, the federal government stepped in again, chartering the Second Bank of the United States in 1816.

• There were again worries that the federal government had too much power over the nation’s purse strings. In 1836, the Second Bank was dissolved.

• An era of free banking emerged, without federal oversight or, in many cases, the need to have an official charter to do business. The federal government tried to rein this in with the National Banking Act of 1863; the OCC was formed to charter banks and ensure that they backed their notes with U.S. government securities.

• The next few decades were a bit of a bumpy ride, with bank panics, such as the Panic of 1907, occurring. The Federal Reserve was created in 1913 to help bring order to the economy.

• With the debilitating Great Depression, which began in 1929, new regulations were needed. The FDIC was formed in 1933 to help shore up the faltering economy.

• More recently, after a period of deregulation, the government responded to the financial crisis of 2007 and the subsequent Great Recession. It passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, designed to improve accountability and financial transparency in America’s financial system.

• In 2021, President Biden signed an executive order that charged federal regulators with improving their oversight of bank mergers, as part of a larger effort to increase competition in the country’s economy.

• An example of financial regulation in action occurred in mid-March 2023, when the federal government stepped in as two banks faltered. The government even took the step of guaranteeing deposits over the typical FDIC insurance maximum of $250,000 per depositor, per ownership category, per insured institution.

Recommended: How Much Money Do Banks Insure?

Who Regulates Credit Unions?

Not everyone, however, keeps their accounts at a bank. There are other financial institutions, such as credit unions.

If you have an account (or multiple accounts) at a credit union, the institution that holds your money will be regulated at either the state or federal level. The National Credit Union Administration (NCUA) has oversight of federal credit unions. State-chartered credit unions are regulated by their state.

Also, credit union accounts can be insured by NCUA vs. FDIC. It’s NCUA that provides $250,000 coverage per depositor, per ownership category, per insured institution.

Who Regulates Savings and Loan Associations?

As of 2023, there are 624 savings and loan associations (sometimes called “thrifts”) operating in the U.S. While these financial institutions used to be federally regulated by the Office of Thrift Supervision (OTS), that bureau ceased to operate in 2010.

Now, savings and loans are regulated by the Fed and the OCC. These organizations are tasked with ensuring the thrifts are following the applicable laws and operating safely and soundly.

How Do I Know Who Regulates My Bank?

If you are curious about how your own bank is regulated, you can try the following, which will narrow down the field somewhat. The OCC, which regulates national banks and savings associations, has a “Who Regulates My Bank?” website.

If you don’t get the answer you are seeking there, you can call the OCC Customer Assistance Group at 800-613-6743 for further assistance.

The Takeaway

Banking regulation helps keep our financial institutions safe and sound and compliant with the appropriate laws. It also helps protect our economic stability and consumers’ deposits.

Several agencies are involved in banking regulation, such as the Fed, FDIC, OCC, and NCUA. While they rarely need to take action such as overseeing a bank closure, it can be wise to know who they are and how they function. This can help you feel more secure, knowing that they are there, backing you up; transparency in financial matters is important.

If you’re looking for a home for your funds, SoFi can be the reliable, transparent banking partner you seek. When you open an online bank account with SoFi, you pay no account fees and earn a competitive annual percentage yield (APY), which can help your money grow faster. Plus, you have tools at your disposal to help increase your savings, such as Vaults and Roundups. And, with our Checking and Savings, you’ll spend and save in one convenient place and be able to track your money with our easy-to-navigate app.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.50% APY on SoFi Checking and Savings.

FAQ

How do I know which agency regulates my bank?

The agency that regulates your bank will likely depend on the kind of bank that holds your money: The Office of the Comptroller of the Currency (OCC) oversees national banks and federal savings associations; the Federal Reserve (the Fed) regulates some state-chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations; and the Federal Deposit Insurance Corporation (FDIC) supervises state-chartered banks that are members of the Federal Reserve.

Does the FDIC regulate banks?

The FDIC regulates state-chartered banks that are members of the Federal Reserve. In addition, an array of banks are insured by the FDIC. This means that clients’ accounts are insured for $250,000 per depositor, per ownership category, per insured institution.

What level of government regulates banks?

Banks are typically regulated by the federal government, with the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC) overseeing many banks. State-chartered banks may also be regulated by their state’s agency.

Photo credit: iStock/ismagilov
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 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 4.50% 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 4.50% 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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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

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

SOBK0323039

Oct

2023

Guide to Adding a Beneficiary to a Bank Account

By Rebecca Lake | Family Finances, Life & Career, money, Money & Life | Comments Off

Adding a beneficiary to a bank account is similar to naming a beneficiary to a life insurance policy or retirement account. A bank account beneficiary is entitled to receive the assets in the account when you pass away.

Should you name a beneficiary to your bank accounts? Maybe, if you’d like to ensure that the money goes to a specific person, group of persons, or entity after you die.

There are, however, some bank account beneficiary rules to keep in mind when deciding how to handle your accounts. Here, you’ll learn more about:

• What a bank account beneficiary is

• What privileges a beneficiary has

• The pros and cons of naming a beneficiary to a bank account.

What Is a Beneficiary on a Bank Account?

A bank account beneficiary is an individual or entity who’s entitled to inherit assets once the account owner passes away. Generally, the beneficiary to a bank account can be anyone you choose to name, including:

• A spouse

• Adult children

• Siblings or other relatives

• Trusts

• Charitable organizations.

It may be possible to name a minor as the beneficiary to a bank account if your financial institution allows it. However, you might be better off appointing someone to act as a custodian for them and naming that person as the beneficiary, since leaving assets to children can get tricky from a legal perspective.

You could also set up an account in their name if you want to establish an account for a minor. The minimum age to open a bank account alone is typically 18 or 19, depending on which state you live in. However, parents can open youth savings accounts or teen checking accounts on behalf of minor children.

All beneficiaries to the account have an equal share. So, if you have five adult children and you name each of them as beneficiaries to your bank account, it would be a five-way split when it’s time to divide the assets. Each person would receive 20%.

Bank Account Beneficiary Rules

If you’re interested in naming one or more beneficiaries to your bank accounts, it’s helpful to understand a little more about how it works. Your bank can offer more information on adding beneficiaries or removing them, if necessary. In the meantime, here are a few key things to know.

Is a Beneficiary Required?

You’re not required to name a beneficiary to a bank account. However, if you’re opening a new bank account, the bank might ask you if you’d like to name one or more beneficiaries.

Is there an advantage to naming a bank account beneficiary? There are a couple, actually.

• Naming a beneficiary ensures that the person you choose will inherit the assets in your account after you’re gone.

• Bank accounts that have a beneficiary are not subject to probate. Probate is a legal process in which a deceased person’s assets are inventoried, outstanding debts are paid, and remaining assets are distributed to their heirs. It can be costly and time-consuming, but accounts with named beneficiaries are exempt from the process.

Can Beneficiaries Interact With Your Account?

You might be wondering what control, if any, a beneficiary might have over your account. For example, when can a beneficiary withdraw money from a bank account?

The simple answer is that a beneficiary can’t do anything with the account until you pass away. Unless you add them as a joint owner, they wouldn’t be able to make withdrawals or get information about the account.

Once you pass away, however, the money becomes theirs. At that point, they could do whatever they like with it since they technically own it. Keep in mind that naming a beneficiary wouldn’t prevent a government withdrawal from your account if your balance is offset for unpaid debts.

Recommended: What Is Private Banking?

Does Marriage Affect Beneficiary Rules?

Whether marriage impacts bank account beneficiary rules can depend on how the account is owned and what state law dictates.

If you and your spouse are both listed as joint account owners, for instance, then the beneficiary you name would likely need to wait until both of you pass away to collect any money. An account that’s owned solely by you could be passed on to your beneficiary without any of the money going to your spouse.

However, your spouse may be able to contest the beneficiary designation with the probate court. You may also need your spouse’s consent to leave assets in a bank account to someone other than them after your death.

If you get divorced and your spouse was the beneficiary to your bank account, you’d likely want to update that designation. Otherwise, they’d still be entitled to any money from the account after you’re gone.

Are There Any Downsides to Having a Beneficiary?

Naming a beneficiary to a bank account has its upsides, but there are some potential drawbacks to keep in mind as well.

• The beneficiary can do what they want with the money once they inherit it. If you’d like to have a say in how they manage those funds after you’re gone, you might be better off leaving the money in a trust instead. With a trust, you can specify exactly how and when your heirs can access their inheritance.

• Beneficiary designations can also get tricky if you change your mind later. You may need to close the account and open a new one to remove a beneficiary, depending on your bank’s policy.

• Naming beneficiaries can also be problematic if it causes infighting among your heirs. For example, you might name your daughter the beneficiary to your checking account but not your son. That could lead to squabbles between them and even legal disputes if your son challenges the beneficiary designation after your death.

Do All Banks Allow Beneficiaries?

Do bank accounts have beneficiaries automatically? Usually, the answer is no. But most banks allow you to name a beneficiary to bank accounts. Credit unions can allow them too. You can check with your bank to see if naming one or more beneficiaries is an option.

If your bank does allow beneficiaries, it’s a good idea to familiarize yourself with the rules. For example, the bank might restrict who you can name and the number of beneficiaries allowed. Or it might have certain guidelines for changing or removing beneficiaries later.

Can you open a bank account for someone else if your bank doesn’t allow beneficiaries? You might be able to, depending on the bank’s rules. For example, you could set up a joint account for yourself and someone else or open an account for a minor child. Either one could allow you to bypass beneficiary designation rules.

Payable-on-Death Accounts vs. Bank Account Beneficiaries

When you open a new bank account you may be able to designate it as a payable on death (POD) account. Payable on death means that when you pass away, the money in the account is payable to the beneficiary or beneficiaries that you named at the account opening.

It’s possible to add a beneficiary to a bank account after the fact. That may be as simple as filling out a form or logging onto online banking and adding the beneficiary’s information to an existing account. The money in the account would still be payable on death to the beneficiary once you pass away.

Whether your bank specifically refers to your account as payable on death or not, the beneficiary rules are the same. Anyone who’s named to inherit the assets in the account would not be able to touch them until after you’ve died.

Recommended: How Many Bank Accounts Should I Have?

The Takeaway

Adding a beneficiary to a bank account could make transferring money to loved ones easier, especially if you’d like them to be able to sidestep probate or just feel financially secure during a trying time. If you’re not sure whether you can add a beneficiary to a bank account or not, you can ask your bank for more details.

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 4.50% APY on SoFi Checking and Savings.

FAQ

Can a beneficiary take over a bank account?

A beneficiary is entitled to inherit a bank account when the original account owner passes away. Someone who is listed as a beneficiary, but not a joint owner, would not be able to take over the account or access it during the owner’s lifetime.

What happens when you add a beneficiary to your bank account?

When you add a beneficiary to your bank account, you’re telling the bank that you’d like the money in the account to go to that person (or persons) when you pass away. The beneficiary would be able to inherit the account from you after your death.

Who gets the money in your bank account after your death?

If you name one or more beneficiaries to a bank account, then those beneficiaries would be entitled to get the money in your account when you pass away. On the other hand, if you don’t name a beneficiary, then your bank account can get included in your estate. It would then be distributed to your heirs, according to the terms of your will or state inheritance law if you die intestate (without a will).

Photo credit: iStock/g-stockstudio
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 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 4.50% 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 4.50% 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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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

This article is not intended to be legal advice. Please consult an attorney for advice.

SOBK0323016

Tips to Avoid Schemes Disguised as Multi-Level Marketing Companies

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.50% APY on your cash!

What Is a Multi-Level Marketing (MLM) Company?

How Do Multi-Level Marketing Companies Work?

Multi-Level Marketing vs. Pyramid Schemes: What’s the Difference?

Real-Life Examples of Multi-Level Marketing Companies

Why Is Multi-Level Marketing Legal?

What Is the 70% Rule?

Are the Products That MLMs Sell Legitimate?

Can You Create Financial Freedom by Joining an MLM?

Tips for Recognizing Predatory MLMs and Pyramid Schemes

Tips for Avoiding Predatory MLMs and Pyramid Schemes

The Takeaway

FAQ

Is it legal to join an MLM?

What makes an MLM illegal?

Are MLMs the same as pyramid schemes?

What Is a Freelancer? Guide to Freelancing

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.50% APY on your cash!

What Is Freelancing?

How Does Freelancing Work?

Common Fields for Freelancing

Types of Freelancers

Tips on Becoming a Freelancer

Pros of Freelancing

Cons of Freelancing

Banking With SoFi

FAQ

Is freelancing better suited for full-time or part-time?

What skills are necessary for freelancing?

Is freelancing difficult?

Is Money Really Everything?

Get up to $300 when you bank with SoFi.

Open a SoFi Checking and Savings Account with direct deposit and get up to a $300 cash bonus. Plus, get up to 4.50% APY on your cash!

Needing Money to Survive

What Money Can Do For Us

Meeting Basic Needs

Paying Down Debts

Improving Our Quality of Life

Feeling Secure and Free

Making a Difference

What Money Can’t Do For Us

Buying More Time

Creating Real Relationships

Fulfilling Passions

Can Money Buy You Happiness?

What’s More Important Than Money?

The Takeaway

3 Money Tips

FAQ

Where did the phrase “money isn’t everything” come from?

What happens if we are too dependent on money?

Is too much money a bad thing to have?

Who Regulates My Bank?

What Do Bank Regulators Do?

Who Regulates Banks?

Office of the Comptroller of the Currency

The Federal Reserve

The Federal Deposit Insurance Corporation

A Brief History of Bank Regulation

Who Regulates Credit Unions?

Who Regulates Savings and Loan Associations?

How Do I Know Who Regulates My Bank?

The Takeaway

FAQ

How do I know which agency regulates my bank?

Does the FDIC regulate banks?

What level of government regulates banks?

Guide to Adding a Beneficiary to a Bank Account

What Is a Beneficiary on a Bank Account?

Bank Account Beneficiary Rules

Is a Beneficiary Required?

Can Beneficiaries Interact With Your Account?

Does Marriage Affect Beneficiary Rules?

Are There Any Downsides to Having a Beneficiary?

Do All Banks Allow Beneficiaries?

Payable-on-Death Accounts vs. Bank Account Beneficiaries

The Takeaway

Student Loan
Refinancing

Personal
Loans

Online
Investments