Nov
08
2024

What Is a Crossed Check? Definition & Example

By | Financial Topics, Terminology | Comments Off on What Is a Crossed Check? Definition & Example

While not common in the United States, a crossed check has parallel lines running across it or across its top left corner, indicating that it is only able to be deposited, not cashed. This can provide an additional level of security and can help prevent fraud.

Learn more about crossed checks and how they impact financial processes.

Key Points

•  Crossed checks, marked with parallel lines, must be deposited, not cashed, enhancing security and preventing fraud.

•  These checks are uncommon in the U.S., but prevalent in parts of Europe and Asia, as well as Mexico and Australia.

•  Benefits include increased security, fraud prevention, and risk mitigation by requiring deposit into a bank account.

•  Drawbacks include restricted use in countries like the U.S. and potential delayed access to funds.

•  Crossed checks cannot be “uncrossed” by the payee, but possibly by the payor.

Definition of a Crossed Check

A crossed check is one that is marked, usually with two parallel lines horizontally across the entire front of the check or just across the top left corner. The words “& Co.”, “& Company”, “And Company” or “Not Negotiable” may also appear with the lines.

A crossed check may not be directly cashed — instead, the funds from a crossed check must be first deposited into an account such as a checking account. It can’t be signed over to anyone else, nor can the payee “uncross” it (though the payor might be able to).

Crossed checks originated with the British, codified with the Bills of Exchange Act of 1882 in the United Kingdom and the Negotiable Instruments Act of 1881 in India. Crossed checks (sometimes referred to as crossed cheques) are still common in certain areas of the world, including several European and Asian countries, Mexico, and Australia. However, they are virtually unused in the U.S. banking system.

If you are overseas and sending a crossed check to someone in the U.S., you should make sure that the recipient has an account that is able to accept it.

Recommended: APY Calculator

Benefits of a Crossed Check

Here are a few of the benefits of crossed checks:

Enhanced Security

Whether you’re using online or traditional banking, security can be paramount for many consumers. When you cross a check, you are ensuring that the check cannot be cashed and instead must be deposited into an account. This increases security and ensures that there is a trail of who deposited the check.

Fraud Prevention

Another benefit of crossing a check is helping to ward off fraud. While it is typical for banks to require identification when cashing a check, this process is not quite as secure as requiring a check to be deposited into a bank account, such as a high-yield checking account.

By requiring deposit, a crossed check can be fully verified and the transaction then processed. This can help reduce the risk of banking fraud.

Risk Mitigation

Businesses often engage in risk mitigation, trying to reduce the risk of certain types of transactions. Using crossed checks can help reduce the risk of something going wrong with a particular type of check. This is because a crossed check is required to be deposited into a bank account and cannot immediately be cashed. This can provide an additional level of security to these types of check payments, allowing time for verification and lowering the overall risk of the transaction.

Limitations and Drawbacks

While there are some benefits and reasons to use crossed checks, there are a few limitations and drawbacks that you’ll want to be aware of.

Restricted Use

One of the biggest drawbacks is that the recipient may not have a bank account that is able to accept crossed checks. This is especially true if the recipient lives in a county where crossed checks are not particularly common (such as the United States). If a U.S. bank does accept a crossed check, you will have to wait for it to clear vs. being able to cash it.

Delayed Access to Funds

Another drawback is that it may cause delays for the recipient to access their money. When you cash a check at a bank or other financial institution, you can generally receive the money right away. However, with a crossed check, the check must be deposited into an account with a financial institution. This may mean a delay of several days for the check recipient to access their money, depending on how long it takes for the check to clear.

Example of a Crossed Check

You are unlikely to see an example of a crossed check in the U.S. However, if you are in another country, you might see one. It would likely have these elements:

•  It would have two crossed parallel lines that were added when the payor was writing the check. These might go horizontally across the entire front of the check. Or they might cross the top left-hand corner on a diagonal.

•  Sometimes, the words “& Co.” or “not negotiable” (or similar phrases) may also be added.

Typically, it’s not possible for a recipient to uncross a check once these marks have been made.

Recommended: 39 Passive Income Ideas to Help You Make Money

The Takeaway

A crossed check (sometimes referred to as a crossed cheque due to its British origins) is marked by two parallel lines across the front of the check. A crossed check cannot be cashed directly — instead, it must be deposited into an account at a bank, credit union, or other financial institution. This can help to mitigate risk, prevent fraud, and enhance the overall security of the process. While crossed checks are not generally used in the United States, they are still quite common in several other countries around the world.

If you are based in the U.S. and looking for a bank account that can make money management easier, see what SoFi offers.

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

Are crossed checks still widely used?

Crossed checks are still widely used in the banking industry, but only in certain countries. Crossed checks are not very common in the United States, which may explain why many Americans have not heard of them or are not familiar with them. Rather, they are usually part of personal banking in some European and Asian countries, as well as Mexico and Australia.

Can a crossed check be uncrossed?

Generally a crossed check can not be uncrossed by the payee. The whole purpose of crossing a check is to make sure that it must be deposited into a bank account. This lets the signer of the check be able to track where the funds have gone, in case there are any issues. However, in some cases the payor (the person making out the check) could write “crossing canceled” across the face of the check to undo the crossing.

Are crossed checks common in the United States?

Crossed checks are not common in the United States, though they are still widely used in other parts of the world. In fact, because crossed checks are so uncommon in the United States, you may have trouble depositing a crossed check in the U.S.

Photo credit: iStock/AndreyPopov

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.

*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.

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Nov
08
2024

What Is a Microdeposit?

By | Family Finances, money, Terminology | Comments Off on What Is a Microdeposit?

Microdeposits are small amounts of money, usually less than $1, temporarily added to your account. They are generally used to confirm that a bank account is valid and able to accept funds. Another reason a microdeposit might be used is as a security feature when you are linking your bank account to another bank account or to a third-party service, such as a budgeting app.

You are typically asked to verify the amount of a microdeposit to ensure that you are the account holder. This can help reduce the risk of fraudulent activity on a bank account. Learn more about microdeposits and how they can impact your banking activity.

Key Points

•   Microdeposits are small, temporary deposits, usually under $1, that are used to verify bank account ownership.

•   Microdeposits can help verify someone is the legal owner of a bank account they’re trying to link to or otherwise access.

•   To verify ownership of an account, users must report the exact amounts of (typically) two small deposits received during account linking.

•   Verifying accounts through microdeposits can help reduce the risk of someone trying to fraudulently access account funds. Unexpected microdeposits can, however, indicate a scam.

•   Microdeposits deposits are usually temporary and withdrawn by the issuing bank within a few days.

Defining a Microdeposit

Microdeposits are a type of deposit, or funds added to your bank account, but in this case in very small amounts. Here are more details about how they work.

Small Temporary Deposits

The term microdeposit describes one or more small transfers of funds, each typically less than $1. They are usually sent by one bank to another bank when an account holder tries to link two bank accounts, such as for transferring money between them or perhaps for overdraft protection. They may also be sent when you are validating that you want your bank account linked to a particular service.

These deposits are usually temporary; you aren’t actually being paid for anything. After the microdeposits are sent, the account holder typically verifies their amounts. The funds are usually withdrawn by the issuing bank within a few days.

Purpose and Use Cases

One of the biggest reasons banks use microdeposits is to verify that a particular person is the owner of a specific bank account. Microdeposit verification is often used when someone tries to link a bank account to a type of account at a different bank. Using microdeposits allows the bank to authenticate that the person requesting the linkage actually is the owner of the account. This helps to reduce fraud and ensure the safety and security of accounts.

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How Microdeposits Work

The way microdeposits work is typically straightforward. If you enter your bank’s routing and account number to link your account to another bank or third-party service, you may receive microdeposits. Generally two microdeposits are sent, each for an amount under $1.

Once you receive the microdeposits in the bank account that you are trying to link, you will go back to the other site and verify the microdeposits by typing in their amount. Shortly after the microdeposits are sent (generally within a couple of days), the bank will then withdraw the money that was deposited. This ensures that there is no net change in your account’s value after the microdeposit process is complete.

Why Microdeposits Are Used

One of the primary reasons that banks use microdeposits is to prevent bank account fraud. These deposits help to verify that you are the legal owner of a bank account you are trying to link to or otherwise use. Without this step, it might be possible for an unauthorized person to link your account to another account and then possibly withdraw money from your account or commit other fraudulent activity.

Identifying and Confirming Microdeposits

A crucial step to the microdeposit process is identifying and confirming the microdeposits. It usually takes a few days for the microdeposits to show up in your account. Once you see them, you can return to the app or bank account where you initiated the linking process. By entering the amount of the microdeposits, you usually complete the microdeposit confirmation process.

One thing to watch out for is if you receive microdeposits you are not expecting. If you see microdeposits in your account when you have not tried to link it to another account, contact your bank’s customer service or fraud department. You may be targeted by a fraud or phishing attack, meaning that someone may be attempting unauthorized access to your account.

Recommended: How to Transfer Money From One Bank to Another

Potential Drawbacks and Limitations

While they are quite common, there are a few potential drawbacks and limitations of the microdeposit process:

Delayed Transactions and Clearance Times

The microdeposit process typically takes a couple of days for the deposits to arrive and be verified. This means that linking your bank account to another account or service is unlikely to happen instantaneously or even in a single day.

Account Restrictions and Holds

If you see microdeposits hit your account and you haven’t tried to link your account to any other bank or third-party app, you’ll want to contact your bank’s fraud or customer service department right away. This is because it may mean that someone else has tried to link your bank account to another account or service. This is one of the common bank scams, and your account may need to have some restrictions put in place.

Confusion and Misunderstandings

Seeing microdeposits in your checking account may cause confusion, even if they are part of a process you initiated. You might well see one of these little deposits and spend time asking yourself who would be sending you 17 cents or whatever the amount may be. Understanding what microdeposits are and perhaps noting in your calendar when they are likely to hit can help clear up any confusion or misunderstandings.

Recommended: 10 Personal Finance Basics

Scams Using Microdeposits

If you see microdeposits in your account when you have not tried to link your account, you may be the victim of a mobile deposit scam or other type of fraud. Here’s how these typically work:

•   Scammers may try to link your account to another account, generating microdeposits in your account.

•   They then try to get you to authenticate the deposits via a verification message.

•   If you do confirm the amounts (thinking the request is legitimate), they may be able to link your account to one they control, with the goal of withdrawing money from your account.

If you ever see microdeposits in your account that you didn’t initiate, follow these steps:

•   Do not verify the microdeposit.

•   Do not click on any links or downloads connected with the microdeposit and verification request.

•   Contact your bank’s security or fraud department immediately.

•   You might also let the Federal Trade Commission at ftc.gov know of this scam so they can take appropriate steps.

Protecting yourself from this kind of scam is important as fraud rises, with 2.6 million Americans enduring some form of fraud in 2023, according to the FTC.

Recommended: How to Write a Check

The Takeaway

Microdeposits (sometimes referred to as micro deposits or micro-deposits) are small deposits to your account, generally used to verify that your account is valid and owned by you. Microdeposits are often two small, temporary deposits (usually under $1) that, when confirmed, allow two accounts or your account and a service to be linked. Though microdeposit verification is usually a security measure, unexpected microdeposits can be a signal of a scam in progress, so be wary.

If you’re looking for a banking partner that makes accessing and growing your money easy, see what SoFi offers.

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

Are microdeposits refunded or removed from the account?

Yes, microdeposits are generally refunded from your account, usually a few days after they are deposited. One example might be if you receive two microdeposits, for $0.11 and $0.34. A few days after the deposits, the bank will generally withdraw the money, usually with one withdrawal transaction. In this case, it would be a withdrawal for $0.45. This means that the microdeposit process has no long-lasting effect on your overall balance.

Do microdeposits affect my available balance or account status?

Microdeposits don’t have a huge impact on your available balance, because of how small they are. You will see a very small increase in your available balance due to the microdeposits, but that will go away after a few days. That is because the bank that put the microdeposits into your account will also withdraw that money after a few days, leaving your account balance as if there had been no deposits.

What if I can’t locate or identify the microdeposit amounts?

If you can’t locate or identify the microdeposit amounts, it may mean that there was a problem with the linking process. It’s possible that you had a typo or other error when inputting your routing and account numbers. Keep in mind also that it can take a couple days for these microdeposits to show up in your account. If it’s been a few days, you might try to restart the linking process or contact your bank’s or the third-party service’s customer service department.

Photo credit: iStock/SrdjanPav

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.

*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.

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Nov
07
2024

How to Buy a House Out of State

By | Home Ownership, mortgage | Comments Off on How to Buy a House Out of State

If you’re one of the more than 20 million Americans working remotely, you might be tempted to buy a house out of state. Or maybe you just need a change of scenery.

Buying a house long distance can be a challenge, but it’s doable with a plan in place.

Key Points

•   Millions of people are working remotely and may want to purchase a home out of state.

•   To begin, research potential new locations online and engage with local communities through social media platforms like Nextdoor to gain insights about the area.

•   Partner with a reliable real estate agent who knows the local market and can assist with navigating regulations and attending inspections.

•   Consider visiting the location in person if possible.

•   The closing process can now be easily handled online using remote notarization for efficiency.

Why Buy a House in Another State?

There are multiple reasons to consider a house in a different state. Here are some.

Affordability

People may be lured by the cost of living of a state and its quality of life, or trying to escape high costs in the state they are leaving.

More than 350,000 people left California (the country’s third-highest state in cost-of-living rankings) from April 2020 to January 2022 for Arizona, Texas, Florida, Washington, and other states. This trend slowed in 2023, but the state still lost more than 250,000 people.

Job Relocation

Some companies move personnel out of state, and some employees are good with that. A Graebel report exploring the Great Resignation found that 70% of knowledge workers who resigned in the past two years may have stayed if they’d been offered the same role in a different region of the country.

Family Reasons

Some folks choose to buy a house out of state to be closer to parents, children, or grandchildren. And people in their 40s,especially, may have aging parents and financial concerns on their minds.

Retirement

Americans entering retirement may want to buy a home in a state where the weather and lifestyle are more appealing. When it comes to a home, some may want to downsize.

How to Purchase a Home in Another State

Buying a house from out of state may be a challenge, but people do do it.

It can be tough to buy a house if you already have a house and a home mortgage loan. Homeowners have been known to use a home equity loan or bridge loan to fund the down payment on another house.

A personal loan can fund travel and moving costs.

If you’re ready to move on, it might be a good idea to sell and maybe ask for a leaseback. If you’re in a hurry, learn how to sell a house fast.

1. Virtually Explore

It’s easy to research cities, states, and communities online. There’s a listicle for almost everything.

For example, maybe you’re interested in the safest cities in the U.S.

Or the 50 most popular suburbs.

It can also be helpful to explore housing market trends by city.

Areavibes, BestPlaces, and HomeSnacks provide rankings or information. Coldwell Banker introduced Move Meter, to compare locations across the country. Or you could use Google Maps or Google Earth to study an out-of-state home’s proximity to schools, medical centers, law enforcement agencies, parks, and restaurants.

2. Link Up to Social Media

Social media platforms like Facebook Groups and Nextdoor can provide a personal sense of home buying and community. These groups are user-friendly to newcomers, and many group members are happy to answer questions about life in their city or town.

3. Ask Co-Workers, Friends, or Family

If you’re moving out of state for a job, check in with future co-workers for advice about the homes and neighborhoods. If you’re moving near friends or family members, pick their brains. Is this going to be a good spot for you?

Moving is stressful enough. If you’re one of the growing number of people interested in financially downsizing, you may want to just exhale and enjoy when you land.

4. Consider Talking to a Relocation Specialist

Yes, home relocation professionals exist. And they do everything from connecting clients with a real estate agent to finding a long-distance moving company, scouring school districts, securing a storage space, and supervising a contractor’s work if the client is buying or building a house.

Relocation companies can also suggest local service providers and transport pets and vehicles across state lines.
Relocation services are often free of charge because the specialists earn their money from third-party vendors like real estate firms and employers transferring employees.

If you’re not inclined to hire a relocation specialist, here’s some helpful reading before making a big move:

•   How to move across the country

•   How to move to another state

•   The ultimate moving checklist

You can look into the safety record of carriers on the U.S. Department of Transportation website.

5. Find a Reliable Real Estate Agent

A brave few who are interested in buying a house out of state opt to go without an agent.

It’s true that you can buy a house without a Realtor® — but even a local home sale may be challenging without a buyer’s agent in your corner.

Partnering with an experienced real estate agent who is based in the area where you hope to move could be highly beneficial.

Besides familiarity with neighborhoods, schools, and vibe, a buyer’s agent can walk a future homebuyer through local zoning regulations and the permit process.

6. Consider Visiting IRL

It’s not that rare to buy a house sight unseen. That can work out.

But someone looking to buy a house in a new state may want a real visit. You may receive short notice on a viewing date, so it could be helpful to budget for out-of-state travel as part of the buildup to buying a home in another state.

While a real estate agent can act as a proxy for homebuyers, there may be nothing like being onsite during the home inspection of a property you’ve made an offer on.

Then again, if you adore a property and must have it, you might waive some contingencies in the case of multiple offers.

7. Get Preapproved for a Mortgage

It can be easier to find a real estate agent or relocation specialist with a mortgage preapproval letter in hand.

When a lender preapproves a mortgage (a credit check and a review of financial assets is typical), it is tentatively greenlighting a specific home loan amount at a particular interest rate, which is not locked unless the lender offers a lock.

Obtaining preapproval tells home sellers that you’re qualified for a home loan up to a certain amount.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

8. Handle the Closing Online

Get ready, because closing on a house may take only 20 or 30 days.

In some cases, everyone huddles to sign closing paperwork. Other times, buyers and sellers sign separately.

But most states have approved remote online notarization, when buyers join a video call, present their government-issued IDs to a title company rep and a notary, and sign all paperwork electronically.

The Takeaway

Buying a house out of state requires investigation and probably a good real estate agent. Getting preapproved for a mortgage can ease the path to a new address.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

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.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

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Nov
07
2024
woman on laptop in office

How Long Is a Mortgage Preapproval Letter Good For?

By | Home Ownership, mortgage | No Comments

A mortgage preapproval letter is usually good for 30 to 90 days, and some lenders will lock the rate for that time.

Having a letter of preapproval from a financial institution can help ensure that you’re ready to snap up a home you love.

Key Points

•   Mortgage preapproval letters are valid for 30 to 90 days, depending on the lender and loan type.

•   Interest rates may be locked during the preapproval period, providing cost stability.

•   Preapproval helps you understand your homebuying budget and shows sellers you are a serious shopper.

•   Updated financial information is required if preapproval expires.

•   Renewing preapproval is usually not hard if your finances are unchanged.

What Is Mortgage Preapproval?

Mortgage preapproval has become an essential part of the home-buying process. Real estate agents often want to see a preapproval letter before showing houses.

Note: A SoFi Verified Preapproval Letter is valid for 90 days.

A letter shows sellers that you are serious about buying their home — even if you’re a first-time homebuyer — and that a mortgage lender is likely to give you a home loan of a specific amount quickly.

The lender will review your credit history, credit score, income, debts, and assets to determine the amount you tentatively qualify for.

Preapproval will help you focus on homes that are in your price range. Knowing how much of a mortgage you can afford is important when you don’t want to waste time reviewing homes outside your range.

Mortgage Preapproval Process

The mortgage process starts informally for many would-be homebuyers.

Some buy into the 28% rule — spend no more than 28% of gross monthly income on a mortgage payment — and play with calculators like this home mortgage calculator with taxes and insurance or the one later in this article.

Seeking mortgage preapproval means you’re getting serious. First, you’ll need to understand the different types of mortgage loans — fixed rate, adjustable rate, conventional, government insured (FHA, VA, USDA), jumbo — and what you can qualify for.

Then you’ll need to apply for a loan from one to several lenders and provide a good deal of documentation. Each lender will perform a hard credit inquiry, and you’ll receive a loan estimate within three business days.

If you’re shopping for a home loan, allowing multiple mortgage companies to check your credit within 14 or 45 days, depending on the credit scoring model being used, will minimize the hit to your credit scores.

How Long Does It Take to Get Preapproved?

It usually takes seven to 10 business days to receive a preapproval letter after submitting all the requested information.

Mortgage Preapproval Letter

Other than stating the specific amount you’re preapproved for, a mortgage preapproval letter may outline stipulations to gain the loan, such as maintaining your employment or not taking on any additional debt.

How Long Does Mortgage Preapproval Last?

Some lenders will make a commitment of 60 or 90 days. That time frame tends to work, since homebuyers typically shop for a home for 10 weeks, according to the National Association of Realtors®.

Other lenders will issue preapproval for only 30 or 45 days.

Recommended: How Mortgage APR Works

Mortgage Prequalification vs. Mortgage Preapproval

Since they sound similar, it’s worth mapping out the difference between prequalification and preapproval.
Prequalification is a key first step, when borrowers tell lenders about their income, assets, and debts. Lenders use that unverified information, and usually a soft credit inquiry, to give a ballpark estimate of how much they might be willing to lend.

The response is quick: You can often get prequalified immediately or within a day or two. Just realize that prequalification does not mean that a lender is guaranteeing a loan.

The mortgage preapproval process is a deeper dive and requires documentation.

To gauge whether you qualify for a mortgage, lenders will scrutinize:

•   Income: Employees will need to provide pay stubs, W-2s, and tax returns from the past two years, as well as documentation of any additional income, such as work bonuses. Self-employed workers often need two years’ worth of records and a year-to-date profit and loss statement, although many lenders and loan programs are flexible.

•   Assets and liabilities: You’ll need to provide proof of savings, investment accounts, and any properties. Lenders view assets as proof that you can afford your down payment and closing costs and still have cash reserves.

Lenders also look at monthly debt obligations to calculate your debt-to-income ratio.

•   Credit score: Your credit score is a three-digit representation of your credit history.

Recommended: What Is Considered a Bad Credit Score?

Once your lender has reviewed the information, it may offer a preapproval letter. Importantly, receiving preapproval from a lender does not obligate you to use them.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Estimate Your Mortgage Payment

Before you seek prequalification or preapproval, you might want to get an idea of how much your monthly mortgage payment could be. Use the mortgage calculator below to quickly see the difference in mortgage payments based on down payment, interest rate, and a 15- or 30-year term.

What Should I Do If My Mortgage Preapproval Expires?

Lenders put an expiration date on preapproval letters because they need to have your most up-to-date financial information on hand. The credit, income, debt, and asset items they reviewed for your preapproval typically need to be updated after the letter expires, and your credit may be checked again.

You can minimize the effect of “hard pulls” on your credit score by avoiding seeking a renewal when you’re not actively shopping for a home.

If your finances have mostly stayed the same, your lender is likely to renew your preapproval.

Finalizing Your Mortgage

If you find a house while your mortgage preapproval is still valid, you can choose a lender and move on to finalizing your mortgage application. At this point, in many cases, the lender will check again to see if there have been any changes in your financial situation.

The mortgage underwriter will review all the information, order an appraisal of the chosen property and a title report, and consider your down payment. Then comes the verdict: approved, suspended (more documentation is needed), or denied.

Your mortgage is officially approved when you receive a final commitment letter. A closing date can be scheduled. It generally takes 43 days to close on a house, but it could happen in as little as 20 days.

Buyers may want to minimize changes, like applying for other loans or credit, when a home loan is in underwriting.

The Takeaway

How long is mortgage preapproval good for? Often 30 to 90 days. Getting prequalified is a smart precursor to getting preapproved for a mortgage. Preapproval can give you a competitive edge in a tight home market, and helps you more clearly understand how your home mortgage loan will affect your monthly budget.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How does mortgage preapproval affect my credit score?

The preapproval process involves a hard credit inquiry, which may cause a dip in your credit score. Each hard pull may lower your credit score but typically by less than five points. Multiple hard inquiries are usually counted as one inquiry as long as they are made within the same 14 to 45 days.

What’s the difference between mortgage prequalification and preapproval process?

Prequalification usually takes just minutes and requires you to provide only the most basic financial information in the application process. It also results in only a soft inquiry on your credit score. Preapproval will require more in-depth information, such as pay stubs and tax returns, and involves a hard credit inquiry. Getting preapproved may take a week or 10 days.

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.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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

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

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

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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Nov
05
2024
What Is a Cashier’s Check & How Do You Get One?

What Is a Cashier’s Check and How Can You Get One?

By | Budgeting & Goals, Financial Independence, money | Comments Off on What Is a Cashier’s Check and How Can You Get One?

Checks may not be as common as they once were, but there’s one kind of check that remains a gold standard in large financial transactions: a cashier’s check.

Also known as an official check, a cashier’s check is backed by bank funds rather than personal funds. This provides assurance to the recipient that the money is available and ready to go. Due to their security, cashier’s checks are often required for high-value transactions or when certainty of payment is critical. For example, you may need a cashier’s check when making a large purchase or putting a down payment on a home.

To get a cashier’s check, you need to provide the full amount of the check, plus any fee, up front to the bank. This allows the bank to stand behind the check. Read on to learn more about this important financial tool.

Key Points

•   A cashier’s check is backed by bank funds, making it more secure than a personal check.

•   Cashier’s checks are often used for large purchases, real estate transactions, and online marketplace payments.

•   Since they’re drawn from bank funds, cashier’s checks are often considered more secure than certified checks, and allow for higher amounts than money orders.

•   To get a cashier’s check, you will likely need the name of the payee (the recipient of the check), the exact amount of the check, and a government-issued ID.

•   To avoid fraud, verify a cashier’s check you receive with the issuing bank, wait for it to clear before providing goods or services to a stranger, and be cautious of overpayment or refund scams.

🛈 SoFi does not offer cashier’s checks.

What Is a Cashier’s Check?

A cashier’s check is a check that is issued by the bank or credit union, rather than the payer. Unlike a personal check, which is drawn from the check writer’s account, a cashier’s check is drawn from the bank’s own funds.

When you get a cashier’s check, the bank moves the money from your bank account into its own and guarantees the payment to the recipient. This makes cashier’s checks one of the most secure payment methods available, as the recipient can be sure that the check will not bounce due to insufficient funds.

A cashier’s check includes details like the bank’s name, the amount, and the recipient’s name, all printed by the bank, which adds an extra layer of security.

Recommended: A Complete Guide to Ordering Checks

When Do You Need a Cashier’s Check

Cashier’s checks are often used for transactions where immediate availability of funds is required or when the seller wants an extra guarantee that the funds are legitimate. You may need to use a cashier’s check in the following situations:

•  High dollar payments: Due to their security, cashier’s checks are often used when making large transactions such as buying a car, a home, a boat, or fine art. When there is a lot of money at stake, sellers often prefer cashier’s checks because they reduce the risk of bounced checks or fraud.

•  Real estate transactions: Cashier’s checks are commonly requested for down payments or closing costs on homes and other types of property. Even if you’re only entering a rental contract on a home, a landlord or property management company may ask for a cashier’s check to cover the first and last month’s rent.

•  Online marketplace purchases: Cashier’s checks are frequently used for payments between individuals that don’t know each other. For instance, if you are buying a used car from a stranger who listed it online, the seller may request a cashier’s check to make sure they will get paid.

How and Where to Get a Cashier’s Check

Banks and credit unions typically provide cashier’s checks to their customers (and sometimes to non-customers). Here’s how to get a cashier’s check.

•  Visit your bank or credit union: Typically, you need to be a bank account holder to get a cashier’s check at a bank or credit union. However, some institutions offer cashier’s checks to non-account holders if they pay the full check amount in cash up front.

•  Provide the necessary details: To issue a cashier’s check, the bank will request the name of the payee (the recipient of the check) and the exact amount you wish to pay. They may also ask for any information (such as the reason for the check) to print in the memo line. You’ll likely also need to present a government-issued ID, such as a driver’s license or passport.

•  Pay the check amount and (if applicable) fee: The bank will typically withdraw the check’s amount from your checking account, along with any fee they charge for issuing the check (more on that below). If you do not have an account with the issuing bank, you may need to pay in cash or with a debit card.

•  Receive the cashier’s check: Once the bank processes your request, they will print the cashier’s check with the payee’s name and the amount. The teller will then sign the cashier’s check and give it to you.

While you typically need to purchase a cashier’s check in person, some banks (traditional and online) will allow customers to order cashier’s checks through their website or mobile app. In this case, the check is typically mailed directly to the recipient.

🛈 SoFi does not offer cashier’s checks.

How Much Do Cashier’s Checks Cost?

The cost of obtaining a cashier’s check varies by bank or credit union, but fees typically range from $5 to $15. Some institutions may waive this fee for premium account holders or customers who meet certain criteria, such as maintaining a certain minimum balance. Fees may be higher for non-account holders.

Cashier’s Checks and Safety

One of the main reasons people use cashier’s checks is their high level of security. Since the funds are guaranteed by the bank, there is little risk that the check will be returned for insufficient funds. These checks also have some extra features, like watermarks and at least one bank employee signature, that make them harder to counterfeit. In addition, you don’t have to worry about sharing your personal checking account information with the recipient, since the check isn’t drawn from your account.

Despite their safety and reliability, however, cashier’s checks are not immune to fraud. They are sometimes forged and used by criminals to solicit payments from unsuspecting victims. One popular scam (called the “job scam”), for example, is when a person is offered a job and then receives a fake cashier’s check for a too-high amount as prepayment. They are then asked to return the excess payment as a gift card. Later, they learn that the cashier’s check was counterfeit.

These tips can help you avoid cashier’s check scams:

•  Beware of any unexpected windfalls being paid out by a cashier’s check.

•  If you sell items online and get paid by cashier’s check, it’s wise to wait for the check to fully clear before providing any goods.

•  Be cautious of overpayment scams where a cashier’s check is used to pay for something, and you are asked to send the excess funds back.

•  Verify the issuing bank by contacting them directly and ensuring the check is legitimate.

Recommended: How to Verify a Check Before Depositing

How Cashier’s Checks Compare to Certified Checks and Money Orders

Cashier’s checks look similar to other types of secure payments, such as certified checks and money orders. While there are some similarities between all three payment types, there are also distinct differences. Here’s a look at how they compare and why you’d choose one over the other.

Cashier’s Checks vs Certified Checks

A certified check is a personal check that the payer’s bank has confirmed is backed by sufficient funds and bears an authentic signature. Unlike a cashier’s check however, a certified check is drawn from the payer’s funds, not the banks.

Typically, the bank will set aside the funds needed for the check and won’t allow them to be withdrawn for any other reason. This makes a certified check more secure than a personal check. A special stamp and a signature from a bank representative shows that the check has been certified by the bank.

While certified checks offer a higher level of security than personal checks, they do not provide the same guarantee as cashier’s checks because the bank isn’t responsible for covering the funds directly. Cashier’s checks are generally considered more secure and often preferred over certified checks for larger transactions.

Cashier’s Checks vs Money Orders

Like a cashier’s check, money orders are guaranteed funds. You purchase a money order with cash or a cash equivalent (such as a debit card), assuring that it cannot bounce. Unlike cashier’s checks, however, money orders can be purchased at many different locations. This includes banks as well as post offices, grocery stores, drug stores, convenience stores, and check-cashing stores. Also, fees tend to be lower, often between $1 and $5.

Another difference is that money orders have limitations — they are often capped at no more than $1,000, making them less suitable for large transactions like buying a car or making a down payment on a house. Money orders are often used for smaller transactions or for people who don’t have access to traditional banking services.

The Takeaway

While checks have largely been replaced by digital payments, cashier’s checks are still the payment of choice in many large transactions. These checks are backed by, and paid out by, the bank; you supply the bank with the funds in advance. Just keep in mind that some online banks (including SoFi) do not offer cashier’s checks.

Understanding how cashier’s checks work, and how they compare to certified checks and money orders, can help you choose the right payment method for your needs.

FAQ

How can I avoid cashier’s check fraud?

To help reduce the risk that you’ll be a victim of cashier’s check fraud:

•  Only accept cashier’s checks from trusted sources or individuals.

•  Contact the issuing bank directly to verify that the check is legitimate.

•  Avoid transactions with overpayment or refund requests, as these are common scams.

•  If you’re selling something to a stranger, wait for the cashier’s check to fully clear before providing goods or services, as it can take several days for a bank to verify funds.

What happens if a cashier’s check is lost or stolen?

If a cashier’s check is lost or stolen, contact the issuing bank immediately to report the issue. You will need to provide details like the check amount and payee. The bank will likely require you to file a declaration of loss and may impose a waiting period (often 90 days) before reissuing the check. During this time, the bank verifies that the original check has not been cashed. Some banks charge a fee for reissuing a lost or stolen cashier’s check.

Does a cashier’s check have your name on it?

Yes, a cashier’s check typically has your name on it as the purchaser. It will also include the bank’s name, the payee’s name (the person or entity you’re paying), and the exact amount of the check. Your name is included to ensure the recipient knows who issued the payment and allows for easier record-keeping on both sides of the transaction.

Does a cashier’s check come directly out of your account?

When you request a cashier’s check, the bank withdraws the full amount from your account before issuing the check. Once the funds are withdrawn, the check is backed by the bank’s own funds, providing a guarantee to the recipient.

If you do not have an account with the issuing bank, you may need to provide cash or pay with a debit card.

What info is needed for a cashier’s check?

To obtain a cashier’s check, you need to provide the following information:

•  Payee’s name: The person or entity to whom the check will be made payable.

•  Exact amount: The dollar amount you want to transfer.

•  Your identification: A government-issued ID to verify your identity.
In addition, you’ll need to make sure sufficient funds are available in your account (or provide cash) to cover the check amount and any fee.

Photo credit: iStock/TARIK KIZILKAYA

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.

*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.

SOBNK-Q324-086

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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.

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