It might seem strange to think about having a relationship with money. But it makes sense when you consider that everyone has feelings about money and those feelings can deeply impact our financial behavior.
Your parents, friends, and life experiences have likely helped you develop different perceptions and biases about money. Those attitudes can influence the financial decisions — both large and small — that you make throughout your life. These decisions, in turn, can have a significant impact on your financial health.
When you have a healthy relationship with money, you feel confident, in control, and satisfied with your financial situation. An unhealthy relationship with money, on the other hand, can lead to avoidance, impulsiveness, anxiety, and increased levels of stress. Indeed, in a March 2024 Bankrate survey, 47% of U.S. adults said money has a negative impact on their mental health, including effects like stress, anxiety, depression, and loss of sleep, at least occasionally.
Exploring and understanding your relationship with money can be the first step to improving that relationship and enhancing your financial (and overall) well-being.
Why the Psychology of Money Matters
It’s almost impossible to separate money and emotions. Those feelings may come from the way we grew up and what our parents showed us and told us about money. Or they may come from what we’ve learned about money over the years. Regardless of their roots, negative emotions — like fear, guilt, jealousy and shame — can get in the way of making smart financial decisions. Some examples of how this can play out:
• The market plummets and fear tells you to get out — which is likely the opposite of what up should do.
• You’re living paycheck to paycheck but guilt tells you that you should take the kids on vacation anyway.
• You’ve racked up a lot of credit card debt but feel so ashamed about overspending, you freeze up and avoid your finances altogether.
• A friend posts photos of their beautifully decorated home on social media and jealousy prompts you to buy furniture you can’t afford.
Emotions aren’t necessarily bad, however. Positive emotions, such as gratitude, serenity, and compassion, can inform our financial habits and decisions in positive ways. Feeling grateful for the money we earn can help us establish a disciplined savings plan. A sense of responsibility and optimism helps motivate long-term financial planning.
The more you understand how emotions impact your relationship with money, generally the easier it is to manage your wealth to achieve your goals.
Money management habits tend to fall into five financial personality types. Your money “type” can impact your relationship with money and the decisions you make about how to spend, save, and invest it. Often, we fall into a combination of types and not just one. You may find you identify with one or more of these money mindsets.
The Spender
Spenders have no qualms about buying things. They like spending money on material items and experiences that bring them joy, whether it’s the latest iPhone or a vacation in Hawaii.
Spenders are generous with their friends and likely to support charitable causes. However, they often make spontaneous spending decisions and tend to live beyond their means. Many spenders are also investors and aren’t afraid of a risky portfolio.
Potential pitfalls: If you spend everything you make, you can end up going broke. Also, if you spend impulsively (rather than plan your purchases), your spending may not line up with what you truly value.
The Saver
Unlike spenders, savers don’t like to part with money. They continually sock away their paychecks, sometimes with no actual goal in mind. Saving simply makes them feel more secure in life.
Savers don’t keep up with the latest trends and will happily shop around, comparing prices to find the best deal. They will often drive used cars, pay their credit card balance in full each month, and watch their bank accounts grow. Savers tend to be conservative investors.
Potential pitfalls: If you save everything you make, you’re going to miss out on a lot of experiences that can bring happiness and purpose to your life. You could possibly live your whole life without spending much of what you’ve worked so hard to save.
The Avoider
Avoiders don’t like to deal with finances and don’t spend much time thinking about money. It isn’t because they don’t care about money — their head-in-the-sand approach to finance often stems from anxiety about money or a feeling that they don’t deserve to have money.
Avoiders will generally ignore their accounts so that they don’t have to think about money. They tend to let bills pile up and have difficulty making money decisions. Just the idea of going through their financial statements and budgeting makes them feel uneasy.
Potential pitfalls: That lack of attention can result in overdrawn accounts, late payments, and racked-up debt. Avoidance may also mean missed long-term opportunities such as not signing up for a 401(k) match.
The Gambler
These folks are willing to make giant leaps of faith with their money, whether it’s investing in crypto or spending more than they can afford on a home (because it’s bound to go up in value). The thrill of risk and the promise of reward bring them pleasure.
Gamblers also tend to be instinct-driven and don’t pay much attention to sound financial advice. Their risk-taking doesn’t necessarily come from a place of irresponsibility but rather strong gut feelings and a sense of optimism that everything — including their finances — will turn out fine in the long run.
Potential pitfalls: Gamblers are willing to lose it all – and they just may, which can be a huge problem if they are the primary earner in a household. They may also compensate for losses by borrowing against their retirement money or children’s college fund.
The Risk Averse
Unlike gamblers, risk-averse people prize security, financial stability, and planning. Fear of losing money or that they are not doing a good enough job managing their money is at the heart of this money type. A volatile stock market stresses them out, and they’ll spend hours finding the source of a $1.90 error on their bank statement. Above all, the risk-averse wants to be in control.
This group is usually very organized about money, which serves them well. They also tend to prefer safe investments and will be thorough in their research prior to investing.
Potential pitfalls: A more conservative, risk-averse approach can hold you back from worthwhile opportunities to grow your money. Problems can arise if you are too risk-averse to make sound long-term investments.
6 Ways to Improve Your Relationship with Money
Like all relationships, cultivating a good relationship with money takes time and effort. Below are six tips that can help you build a better relationship with money and feel more satisfied — and less stressed — about your financial situation.
1. Examine Your Behaviors
Take a look at your money patterns in the past few months to a year. Are you spending more than you are taking in each month? Have you been making impulsive purchases or investment decisions? Are you avoiding financial decisions, such as how much to contribute to your retirement account?
If you’re unsure what your patterns look like, you may want to track your spending for a few months to get an idea of what money is coming in and going out of your accounts. An easy way to do this is to link your accounts to a budget planning or money tracker app. These tools automatically categorize your spending and provide a bird’s eye view of your finances. This can help you quickly spot trends in your financial behavior.
2. Consider How Emotions Have Impacted Your Financial Decisions
For many people, emotions surrounding money are most acute when they are faced with a big financial decision. It might be when you’re buying a home or making another major purchase, such as a car, or when choosing how to invest your money.
Think back to what emotions you’ve felt while making important financial decisions. Were you focused on what you wanted when you made a large recent purchase, as opposed to what you actually needed? Did your decision line up with your long-term financial goals? Were you gambling on the next big investment trend hoping for a huge reward?
If you see that your emotions are causing you to make poor choices, consider how you can work through those emotions in future scenarios.
3. Set Some Financial Goals
One of the best ways to manage your relationship with money is to know what you want to accomplish financially. If you aren’t working towards anything specific, you may spend more than you should, or the opposite — never reap the rewards of your hard work.
Keep in mind that you can have multiple financial goals with different timelines. Consider where you’d like your finances to be in one year, three to five years, and 10 or more years. Here are some examples of goals you might set:
• Short-term: Building an emergency fund, buying a new car, or going on vacation
• Mid-term: Paying off credit card and student debt or putting a downpayment on a home
• Long-term: Saving for a child’s education or growing your nest egg with retirement planning
Once you’ve come up with a list of achievable and measurable goals, you’ll want to create an action plan to make them happen. This could mean cutting cable to save extra monthly cash, setting up a recurring monthly transfer from your checking to your savings account, and/or contributing more to your 401(k).
4. Communicate with Your Partner
Talking honestly and positively about finances with your significant other can help you have a healthier relationship with that person and also with money. Sharing how you feel about money and the attitudes you learned from your own family can help you and your partner understand each other better.
To get started, you may want to sit down together and talk about what money means to you, what your parents taught you about money, what you want to accomplish with it, and what your fears about money are. Having an understanding of your partner’s beliefs and perceptions can help you avoid conflict and set the stage for healthy discussions about your joint finances. You and your partner can then work together towards shared goals.
You may also want to set up a weekly or monthly money meeting with your partner to go over current challenges and anticipate future needs
5. Talk to a Financial Planner
Working with a professional can be an effective way to take emotions out of your financial decision-making. A financial planner will generally assess your current financial situation, then work with you to develop an individualized financial plan. They can help you set and work towards long-term financial goals, create a budget, build wealth through an investment portfolio, and put protections in place to help secure your future.
6. Review What Resources Your Employer Might Offer
Many companies now offer a range of financial wellness tools and resources that workers can use to strengthen their finances and make sure they’re on the right path for long-term goals. These benefits might include help with student loan repayment, a 401(k) with employer matching, and access to free financial planning and coaching.
If you work for a company that has a benefits portal, that can be a good place to start to see what’s open to you. Ideally, you don’t want to leave anything (money or support) on the table.
The Takeaway
Everyone feels emotions about money. Exploring and understanding your relationship with money can help you take steps to overcome emotional obstacles, reduce money stress, and build a more secure financial future.
Sofi at Work offers a variety of financial wellness and financial education resources to help employees make objective decisions about money and build a positive foundation for financial success.
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Products available from SoFi on the Dashboard may vary depending on your employer preferences.
Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.
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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The Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) are independent federal agencies that insure their customers’ deposits. The FDIC insures deposits at banks typically up to $250,000 (though there are exceptions); the NCUA offers the same insurance and consumer protection but at credit unions.
Account holders don’t have to apply or qualify for this coverage; it comes with different deposit accounts, assuming the institution is a FDIC or NCUA member. The coverage is meant to cover deposits if the institution were to fail; it doesn’t cover investment products or losses.
While these two entities serve similar purposes for consumers, they operate a little differently. Read on to learn more.
Key Points
• The FDIC and NCUA are government agencies that insure deposits at banks and credit unions, respectively.
• FDIC stands for the Federal Deposit Insurance Corporation, and NCUA stands for National Credit Union Administration.
• Both agencies typically provide insurance coverage of up to $250,000 per insured financial institution, per depositor or share owner, per account ownership category.
• FDIC and NCUA insurance covers various types of accounts, such as checking, savings, money market, and certificates of deposit. Insurance coverage does not extend to investment products, stocks, bonds, mutual funds, annuities, life insurance policies, or safe deposit boxes.
• It is important to verify if a financial institution is insured by the FDIC or NCUA before opening an account to ensure deposit protection.
What Is the FDIC?
The Federal Deposit Insurance Corporation (FDIC) is over 90 years old. President Franklin D. Roosevelt established the Federal Deposit Insurance Corporation when he signed the Banking Act of 1933 amid the Great Depression.
The main purpose of the FDIC is to “maintain stability and public confidence in the nation’s financial system.” As part of that remit, the FDIC insures consumer deposits and is “backed by the full faith and credit of the United States government.”
The FDIC insures $250,000 per depositor, per insured bank, per account ownership category. “Account ownership category” refers to single account holders, joint accounts, and other accounts like revocable and irrevocable trusts. (See table below.)
If you are a person who keeps a considerable amount of money in a bank, whether in checking or savings accounts, you’ll likely want to know that some banks participate in programs that extend the FDIC insurance to cover millions, usually by dividing the assets into holdings of no more than $250,000 each among separate banks.
According to the FDIC, a depositor has not lost a single penny of FDIC-insured deposits because of a bank failure.
What Is the NCUA?
NCUA stands for National Credit Union Administration. Though the first credit union opened in the United States in 1909, and there were nearly 10,000 credit unions in the U.S. by 1960, Congress did not create the National Credit Union Administration until 1970.
Like the FDIC, the purpose of the NCUA is to insure deposits made by credit union members and protect those members who own credit unions. (Credit unions are not-for-profit and are owned by the members.)
Also like the FDIC, the NCUA is “backed by the full faith and credit of the United States government,” and insures deposits up to $250,000 per share owner, per insured credit union, for each account ownership category, share accounts, and some IRAs and trusts.
Rivaling the FDIC’s track record, the NCUA states that no member has ever lost a cent from accounts insured through the NCUA.
All federally chartered credit unions are a part of the NCUA while state-chartered credit unions adhere to state-specific regulations. That said, many state-chartered credit unions are also insured by the NCUA.
FDIC vs NCUA Insurance: Similarities and Differences
So what’s the difference between the FDIC and NCUA? The biggest difference regarding FDIC vs. NCUA is the customers they protect. The FDIC insures deposits for bank customers while the NCUA insures deposits for credit union members. As a customer of a financial institution, you will not likely notice a difference in your day-to-day banking.
In fact, it may be easier to talk about all the ways the FDIC and NCUA are similar. The table below explores these similarities (and minor differences).
FDIC
NCUA
Year Created
1933
1970
Applicable Financial Institution
Banks
Credit Unions
Insurance Amount
$250,000 per depositor, per insured bank, for each account ownership category
$250,000 per share member, per insured credit union, for each account ownership category
What Is Insured
Checking accounts Savings accounts Money market accounts Time deposits (like CDs) Other deposit accounts
Single ownership Joint ownership Revocable trust account Irrevocable trust account Certain retirement accounts (like IRAs) Employee benefit plan accounts Corporation/Partnership/Unincorporated Association Accounts Government Accounts
Single ownership Joint ownership Revocable trust account Irrevocable trust account Certain retirement accounts (like IRAs, KEOGHs) Employee benefit plan accounts
What Does NCUA Coverage Protect?
NCUA coverage comes from the National Credit Union Share Insurance Fund (NCUSIF). The following account types are insured via the NCUSIF:
If your credit union carries insurance through the NCUA, you can depend on coverage up to $250,000 for common accounts like a checking or savings account. However, NCUA insurance does not cover:
Insurance through the FDIC covers account types that are comparable to those covered by the NCUA, but it’s for those held at most traditional or online banks vs. credit unions:
The FDIC also notes that its insurance covers Negotiable Order of Withdrawal (NOW) accounts, cashier’s checks, money orders, and other local items issued by a bank.
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Up to $3M of additional FDIC insurance.
What Isn’t Covered by FDIC?
The FDIC has coverage exclusions similar to those of the NCUA. Insurance through the FDIC does not extend to:
Treasury securities like bills, bonds, and notes are, however, “backed by the full faith and credit of the U.S. government.”
How to Know if Your Institution Is Insured by the FDIC or NCUA
Because the FDIC and NCUA insure deposits up to $250,000 for checking and savings accounts (some external programs allow for higher insurance limits with the FDIC), it’s important to know when selecting a new financial institution that it is insured by one of the two organizations.
So how do you know if a bank is insured by the FDIC? The FDIC provides a few easy options:
• Call and ask. Calling the FDIC is toll-free. You can reach them at 1-877-275-3342.
• Search online. The FDIC has a database called BankFind that allows you to search for insured banks.
• Look for the sign. When you enter a brick-and-mortar (aka physical) bank location, look for official FDIC signage.
• Search the bank’s website. If you fall on the digital side of the traditional vs. online banking debate, you can scour a bank’s website instead. Usually you can find language like “Member FDIC” in the footer if the bank is insured.
Determining whether a credit union is insured by the NCUA is just as easy:
• Look for the sign. Similar to the FDIC, the NCUA requires federally insured credit unions to place NCUSIF signage in their advertisements, offices, and branches to indicate insurance coverage.
• Search the credit union’s website. Credit unions that are federally insured will include NCUA verbiage in the footer of their websites, just like banks do for the FDIC.
Remember, some state credit unions may not be federally insured. A credit union that includes “federal” in its name should automatically be insured by the NCUA. If you aren’t sure about a state credit union’s insurance, you can ask a credit union representative on site or over the phone for more information.
Most banks are FDIC insured — but not all of them. Any bank that is not insured federally through the FDIC likely carries insurance through its state, so your deposits are typically still safe. However, it is a good idea to thoroughly research a bank and its insurance policies before storing any money in an account at the institution.
Are All Credit Unions NCUA Insured?
Not all credit unions are NCUA insured. All federal credit unions are automatically insured by the NCUA, but state credit unions must opt into NCUA share insurance. Those that don’t are typically insured through the state. As with banks, it is a good practice to understand a credit union’s insurance status and how it can affect your money before opening any account.
How to Maximize FDIC and NCUA Insurance
Both the FDIC and NCUA are typically very clear on how much they insure — $250,000 — careful to use specific terminology like “per depositor” or “per share owner”; “per insured bank” and “per insured credit union”; and “for each account ownership category.”
Knowing that, there are a few ways you can maximize your insurance coverage:
Find a Program That Insures for More Than $250,000
As briefly noted above, some banks offer programs that allow depositors to insure their account for more than the usual $250,000 amount, typically by dividing assets into $250,000 chunks or less and holding those at different banks within a participating network. Check with financial institutions to see what may be available that can extend your account insurance to cover millions.
Open Accounts at Multiple Financial Institutions
You receive $250,000 of insurance coverage at each institution with applicable accounts. That means you could open up accounts at multiple banks and credit unions, spread your wealth across those accounts, and wind up with coverage on much more than $250,000.
Use Account Ownership Categories to Your Advantage
Another way to maximize FDIC and NCUA insurance is to utilize multiple account ownership categories. For example, at one bank, you could have a single ownership certificate of deposit with $200,000 and share a joint savings account holding another $200,000 with a partner. Even though you’d be above the $250,000 threshold, these separate account ownership categories each qualify for the max insurance coverage.
Open Accounts for Various Family Members
You, your spouse, and your children could each open a single ownership savings account at the same bank and each deposit $250,000 in your own account. Because each account has a different depositor, each is protected fully for $250,000.
Consider a Revocable Trust
If you and a partner want to put money together and save it as a potential nest egg for a family member, you can create a revocable trust (a type of trust fund). Then you can name beneficiaries for that money should you and the other account owner die. For each beneficiary, the account is insured for $250,000. If you name three beneficiaries, you can deposit $750,000, and it will all be insured.
The Takeaway
The FDIC (Federal Deposit Insurance Corporation) and NCUA (National Credit Union Administration) are government agencies that protect consumers’ deposits at banks and credit unions. The two agencies operate similarly and protect the same kinds of accounts, typically up to $250,000 per account holder, per account ownership category, per insured institution. The key difference? The FDIC only insures money at banks while the NCUA only insures credit unions. Most financial institutions have one of these types of insurance.
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FAQ
What does the NCUA not cover?
The National Credit Union Share Insurance Fund, which operates under the NCUA, does not cover stocks, bonds, mutual funds, annuities, life insurance policies, or safe deposit boxes and their contents.
How are the FDIC and NCUA similar?
Both the FDIC and NCUA are government agencies created by Congress to insure consumers’ deposits, including savings accounts, checking accounts, and CDs, up to $250,000 per person, per financial institution, and for each account ownership category. The main difference between FDIC and NCUA is that the FDIC insures banks and the NCUA insures credit unions.
Why are credit unions not FDIC-insured?
Credit unions are not FDIC-insured because the FDIC insures banks. Federal credit unions (and many state credit unions) are instead insured by the NCUA.
How much of your money is protected by FDIC or NCUA?
The FDIC insures $250,000 per depositor, per insured bank, for each category of ownership. In theory, you could have more than $250,000 across different account types at different FDIC-insured banks, and it would all be insured by the FDIC.
The same is true of the NCUA. The NCUA insures $250,000 per share owner, per insured credit union, for each category of ownership.
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.
As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
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Admittedly, checks and checkbooks aren’t as popular as they were in the past, when they were a standard way to pay for life’s daily expenses. But that doesn’t mean that balancing a checkbook isn’t still a valuable skill and an important way to keep your budget in good shape.
It’s a smart idea to keep tabs on how much is coming into your checking account and how much is going out. This helps you avoid bouncing checks (and paying those steep overdraft fees), spot errors and fraud attempts, and know how well you are doing in terms of spending.
Here, learn the four steps of balancing your checkbook.
Key Points
• Balancing a checkbook can involve four steps, starting with recording the current bank account balance in a checkbook register or digital spreadsheet.
• Then note any pending transactions, including uncleared checks and recent debit card purchases.
• Maintaining a running total can keep track of financial status accurately.
• Verifying transactions against bank records can identify and resolve discrepancies.
• Regularly logging all transactions, such as checks, debit card usage, and deposits, is important to balancing a checkbook.
What Does Balancing a Checkbook Mean?
Balancing a checkbook refers to the process of reconciling and cross-checking the many transactions that occur in your checking account.
To summarize the process of balancing your checkbook: This involves recording all of your deposits and withdrawals on a regular basis, adding and subtracting them as you go, and then comparing your numbers to the bank’s to make sure they agree.
Benefits of Balancing Your Checkbook
Balancing your checkbook, whether with personal vs. business checks, comes with a number of key benefits. These Include:
Knowing Your Balance in Real Time
When you log every transaction, you add to your balance if it’s a deposit or subtract if you’re paying a bill. In this way, you are able to know the true balance of your account, which may not yet be reflected online or in your app.
That’s because when you write a check against your account, the bank won’t deduct those funds from your account until the person you gave the check to deposits it.
Your bank app may show you have $2,000 in your account but if you wrote a $1,000 check yesterday, you actually only have $1,000 available to spend.
Tracking Your Spending and Sticking with Your Budget
During the balancing process, you look at every transaction in your checking account for a period of time, whether it’s a day, a week, or a month.
You might find that you’re spending more than you thought or taking out more cash from the ATM each month than your current budget (whichever type of budget you use) allows.
Balancing your checkbook on a regular basis can help you monitor your spending, and help to ensure you’re able to maintain your savings goals.
Reviewing Your Account for Errors, Fraud, or Billing Changes
Regular reviewing and tracking of your account’s expenditures can help you immediately spot any purchases or transfers of money that you don’t recognize.
You may also pick up on bank fees you are being charged that you weren’t aware of or that are new.
Or you might notice that one of your autopay bills has gone up in price. If your payments are processed automatically without your review, those increases could go unnoticed and unaddressed for months, disrupting your cash flow and possibly causing other financial issues down the line.
You don’t need to balance your checkbook if you are using and are satisfied with another method to keep tabs on your spending. For instance, if your bank offers an app that works well for you, fine. Or perhaps you are in the habit of monitoring your checking account regularly and feel comfortable with that process.
As noted above, however, there can be a lag time between when you write a check or even swipe a debit card and when the charge is actually debited. This may lead you to believe you have more money on deposit than you truly do. That may motivate you to balance your checkbook instead.
How to Balance a Checkbook in 4 Steps
Here’s an easy step-by-step approach to balancing your checkbook.
1. Recording Your Current Balance
Here’s the first step toward reconciling your checkbook register: logging your bank account balance.
• You can quickly find your checking account balance by going on your bank’s website or using its mobile app.
• If you’re using a paper checkbook register, you can then record this number in the top spot above the spaces you use to log your transactions.
• If you don’t have a register or prefer to go digital, you can create your own register on your computer or use an open source spreadsheet platform, such as Google Sheets. An online spreadsheet has the advantage of being accessible anytime from any device.
That’s it for the first step in balancing your checkbook.
2. Recording Any Pending Transactions
The next step in balancing your checkbook involves recording transactions that haven’t fully processed yet.
• Account for any pending transactions. These are transactions that you know are coming, but have not yet cleared. For example, when you deposit a check (whether at a bank, ATM, or mobile deposit), your bank might release only part of the funds immediately, placing a hold on the rest of the money until the check clears.
Similarly, when you pay for something with your debit card or a check, the transaction may take a day or two to go through.
• You can write down the date of the transaction and a brief description and, if it’s a check, the check number.
• Do the math next: Starting with the first transaction you enter, subtract the amount from your available balance, or, in the case of a deposit, add it to the balance.
• Then record the new amount on the next line of your register. You can continue doing this until all transactions are reconciled. The final number is (ta-da) your current available balance: the actual amount you have in the account to spend.
3. Continuing to Record Transactions
Next, you can log transactions as they happen or at regular intervals.
• As you continue to make transactions, you can then record them in your register or spreadsheet so you have a running tally of your debits, credits, and current balance. You’ll want to account for both checks, debit card usage, and deposits to the account.
You can do this as you go, or you can collect your receipts and record them in your checking register or spreadsheet at the end of the day or week.
Now it may be time for a little bit of cross-checking detective work:
• Once or twice a month, it’s a good idea to log on to your account and compare your bank’s total withdrawals and deposits and balances with your own records. If they match, you’re in good shape; you have a balanced checkbook.
If the numbers don’t align, you may then want to go back through your records, as well as the bank’s transaction history, to see where the discrepancy lies.
You may find that you forgot to record a transaction or you wrote down a number incorrectly, or made a simple math error. Or perhaps you forgot to account for account fees or a miscellaneous charge that was deducted.
Or you might pick up an error on the bank’s part, a change in the amount a vendor is billing you, or a potentially fraudulent charge. Generally, the quicker you pick up and address any discrepancies the better, particularly in the case of bank fraud or identity theft.
What Is a Check Register?
A check register is a compact booklet that acts as a kind of spreadsheet, helping you record transactions and tally your checking account’s balance.
These typically come when you order checks, or you can buy them at some retailers or online vendors.
Check registers can be a valuable tool in balancing your checkbook and staying on budget.
Is Knowing How to Balance a Checkbook Now Obsolete?
Knowing how to balance a checkbook may be less vital than it was in the past, but it is still an important skill for tracking incoming funds, outgoing payments, and your total amount of money on deposit.
If you don’t like the paper and pencil aspect of balancing a checkbook, you can use apps and digital tools to keep tabs on your funds.
Digitally Balancing a Checkbook
If you are the type of person who doesn’t like writing down numbers and calculating your available balance on paper, you can use digital tools to help the process along.
There are apps that promise to help you balance your checkbook, but some involve a fair amount of data entry. Your financial institution may offer tools (online and in an app) to help you check your balance, see charges, view pending transactions, and more. For many people, these can be a way to keep tabs on their account balance.
The Takeaway
Even in an increasingly paperless world, it can still be important to balance your checkbook. Regularly balancing your checking account can give you a clear sense of not only how much money is in your bank account, but where your money goes. It typically takes four steps to balance your checkbook, or you can use digital tools. Whichever way you choose to take action, this process can help you track your spending, avoid bouncing checks, detect billing changes, and also spot errors or even fraudulent charges as soon as they happen.
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FAQ
Is balancing a checkbook still necessary?
While balancing your checkbook isn’t as common as it was before, it is still a valuable way to keep tabs on the money in your checking account, spot errors, and identify any suspicious activity. It is also a wise move if you are trying to stick with a budgeting method and avoid overdrafting your account.
How do you balance a checkbook that hasn’t been balanced before?
You can start balancing your checkbook at any time. View your balance online, and log it in your checkbook. Account for any pending transactions, and then, going forward, note deposits, withdrawals and other debits, plus any fees that are taken out of your funds.
How often should you balance your checkbook?
It can be wise to balance your checkbook in real time. That means, it can be smart to note any checks you write as you do so, and log debit card transactions as they happen so you don’t forget about them. For some people, though, this isn’t convenient, and they prefer to spend a few minutes reconciling their checkbook once or twice a week. The choice is yours.
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.
As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.
Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
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A debit card combines some of the features of an ATM card and a credit card to give you an easy way to access cash and pay for purchases. For many people, tapping, swiping, or entering their digits online has become a favorite way to conduct everyday financial transactions.
Debit cards resemble credit cards, but they don’t involve a line of credit or accruing interest charges; the money spent is deducted directly from your checking account. This (and other features) can be a benefit or a downside, depending on your particular situation.
Key Points
• A debit card allows spending from a personal bank account, offering convenience and security.
• Opening a checking account is the first step to getting and activating a debit card.
• Activation can be done online, at an ATM, or by phone after receiving the card.
• Drawbacks include daily spending limits and the fact that debit card spending doesn’t build credit.
• There can be higher liability for unauthorized transactions than with credit cards if not reported promptly.
Debit Cards Defined
A debit card is a payment card that allows you to spend money without carrying cash.
When you use a debit card, the funds are your own, so there’s nothing to pay back later.
Most debit cards look just like credit cards. They typically feature an account number on the front, along with the cardholder’s name and the expiration date.
There will likely also be a smart chip on the front, along with a logo in the lower right-hand corner that tells you which payment network the card is connected to (such as Visa, Mastercard, or Discover). On the back you’ll likely see a place to sign, as well as a three-digit security code (CCV).
But there are some major differences between debit cards and credit cards.
When someone uses a credit card the money is borrowed. Credit card holders receive a bill every month for what they owe, and the balance must be paid in full or they can be charged interest.
When you use a debit card to get cash or make a purchase, the money comes directly from an account you have with a bank or some other type of financial institution, typically a checking account. The funds are your own, so there’s nothing to pay back later.
How a Debit Card Works
Now that you know what a debit card is, here’s how a debit card typically works:
• You tap, swipe, or insert the card at a terminal and enter your PIN (personal identification number) in many cases. The PIN adds a level of security to the transaction.
• The information is communication (the amount of your purchase) and your bank verifies that the funds are available in your checking account. The transaction is approved in that case, or it will be denied if you don’t have enough funds available.
• In a similar way, a debit card can allow you to deduct funds from an ATM.
Worth noting: Debit cards may have spending limits capping the amount you can use in a single day, even if you have more than that amount on deposit. Check with your financial institution to learn what may apply.
Features of a Debit Card
Debit cards have many features that make them an asset to managing your financial life:
• Safer than carrying cash
• More convenient that using checks, plus no fee for ordering checks
• Quick and easy way to make purchases or access cash
• Accepted for purchases by many vendors
• Does not charge interest since it draws directly from your bank account
• Typically don’t charge fees
• May offer cash back rewards
• May have daily spending limits
How Do You Get a Debit Card?
If you don’t already have one, you may wonder how people get debit cards. These are the steps to getting a debit card:
1. Open a checking account: Checking accounts (whether at a bank, credit union, or online financial institution) typically come with a debit card at no cost that can be used to get cash at ATMs or to make purchases.
A brick and mortar bank may be able to issue customers a new debit card right away. With an online institution, it might take a few days for the card to come by mail. Card holders also receive a personal identification number (PIN), which is a security code they’ll use with their account.
2. Activate the card: Typically, you can activate a new debit card at the financial institution’s website, at one of its ATMs, or by calling a designated phone number and answering or keying in some basic identifying information.
3. Start using your card. You should be ready to start tapping, swiping and entering your card’s digits online to make purchases.
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Where Can You Use a Debit Card?
A debit card can be used to make withdrawals at an ATM, to make in-person or online purchases, and to make automatic payments for recurring bills.
Each type of transaction works a bit differently. Here are tips for using your debit card.
At the ATM
One of the great conveniences a debit card has to offer is that it can be used to get cash (or make a deposit, transfer funds, or just view your account balance) just about anywhere there’s an ATM.
You just push your debit card into the slot, and enter your PIN to get access to your account. Once you finish and retrieve your receipt and debit card, it’s a good idea to double check that the machine has returned to its welcome screen before turning it over to the next user.
If you use an ATM that’s not in your bank’s network, you could end up paying a non-network fee to your bank and an ATM surcharge to the ATM’s owner. If you’re overseas, you might also be charged a foreign transaction fee.
If you’re a big-time ATM user, you might be able to avoid ATM fees by scouting out in-network ATM locations in your area or where you are going to be traveling ahead of time. Or you might open an account at a financial institution that doesn’t charge fees and/or reimburses certain fees.
In-Person Purchases
The process for using a debit card to purchase goods or services can be a little different from one merchant to the next.
Typically a customer will be asked to swipe, insert, or tap their debit card themselves at a card reader on the counter, then may be prompted to authorize the purchase, either by entering their PIN or by signing as they would with a credit card.
Either way, the money to pay for the purchase comes out of the card holder’s account, though the transactions are processed somewhat differently.
The transaction method also may affect any points or other rewards a card holder is hoping to earn on a purchase. Some programs reward PIN purchases only, some reward signature purchases only, and some reward both.
A retailer also may allow customers making a PIN transaction to ask for cash back on top of the total amount of their purchase, so they don’t have to make a separate trip to an ATM. However, you may be charged a small fee for this convenience.
Online Purchases
You usually can use a debit card online, even if you do not see “debit card” listed as a payment method when you want to buy something online. But if there’s a credit network logo on the front of your debit card, you should be able to use your card for the transaction.
When a merchant’s website asks for a payment method, debit card users can choose “credit card,” then enter their debit card account number, expiration date, and three-digit security code (CCV) to have the purchase processed as a signature transaction. (A PIN transaction won’t be a payment option online.)
Automatic Payments
A debit card also can be used to make automatic payments on monthly bills, such as student loans, car loans, subscriptions and memberships, and utility bills.
To set up automatic debit payments, the card holder provides the company with a debit card account number, expiration date, and CCV, and authorizes future electronic withdrawals. The payment can be the same amount every month, or, if the amount is likely to vary a bit from month to month (as utility bills generally do), the card holder can specify a range.
With automatic debit payments, card holders give businesses permission to take payments from their account, which is different from arranging with the bank to make authorized recurring payments. In both cases, however, it can be important to track those payments and be sure the transactions are accurate.
Is There a Difference Between a Debit Card and an ATM Card?
There are differences between a debit card and an ATM card to note:
• A debit card can be used to make withdrawals at an ATM, but it also can be used to make purchases and to pay bills.
• An ATM card can be used only to get funds from a checking or savings account at an ATM machine.
Is it Better to Use a Credit Card or Debit Card?
As with most financial tools, it’s up to each individual to decide what works best for them. Here are some ways to evaluate the pros and cons of using a debit card vs. a credit card.
Budgeting
Using a debit card for a majority of transactions may make it easier to stick to your budget, because you can spend only what you have in your account. You aren’t borrowing money as you would with a credit card, so you may find yourself paying more attention to every purchase and whether you can really afford it.
With a credit card, it can be tempting to pay now and worry about the bill later. If you’re super disciplined about paying off your entire credit card balance every month, that might work for you.
But if, like many Americans, you’re likely to carry forward a balance on your credit card (or cards) every month, the debt could eventually grow out of control with interest.
Convenience
Both debit and credit cards are easy to use, but there are a few ways in which debit cards may have an edge when it comes to convenience.
• It’s easier and cheaper to get quick cash with a debit card. You can get a cash advance with a credit card, but you may have to pay a hefty fee and a higher interest rate on the advance. And with a cash advance you could be charged interest starting on the day you receive the money — there’s no grace period as there is when you make a purchase with a credit card.
• You may be able to get a physical cash advance when making a purchase. That benefit usually isn’t available with a credit card.
• It’s generally easier to get a debit card than a credit card. Most financial institutions will automatically give customers a debit card when they open an account. Getting a credit card can be harder, especially if you’re under 18, don’t have any verifiable income, have a poor (or no) history with credit, or lack the typically required identification documents. The requirements are tougher for credit cards because lenders want to be sure their borrowers are capable of repaying their debts.
Penalty Fees
No matter what kind of card you use — debit or credit — you could face a penalty fee if you spend more money than you currently have available.
With a debit card, you may incur an overdraft fee if you spend more than you have in your account (when making a signature purchase, for example, or when using autopay).
With a credit card, you could face an over-limit fee (if you push your balance over your credit limit), a late-payment fee if you fail to make your minimum monthly payment, or a returned payment fee if for some reason your payment isn’t accepted.)
Rewards
Credit cards can be more likely to offer extra perks than debit cards, such as cash back rewards or points that can be used for travel, though some debits do offer points and rewards.
Spending Limits
One of the things that can make a debit card really useful is that it’s difficult to spend more than you have. But that also can be a drawback if you need to make an expensive purchase. Even if you have a hefty amount of money in your account, you may encounter a daily spending limit when using a debit card.
Those daily limits are meant to protect account holders by limiting the amount fraudsters could spend with a stolen debit card. But if you aren’t aware you have a limit or don’t know what the limit is, you could get an unpleasant surprise when making a major purchase. Don’t know what a debit card’s limit is? Ask your bank.
If you find out you have a debit limit and feel it’s too low, you may be able to request an increase.
Of course, credit cards have spending limits, too, in the form of available credit. Those who go over their credit limit could have their card declined or they might have to pay a fee. Credit card users can check their monthly statement online or in person, or call customer service to see where they stand.
Building Credit
This may seem like a bit of irony, but even though consumers may be trying to be financially responsible by using a debit card whenever they can, they won’t be directly building their credit score.
Lenders often use credit scores to determine if a person qualifies for a loan or credit card, or a better interest rate when borrowing money. It reflects an individual’s past credit history and shows how well they’ve handled credit in the past.
When someone uses a debit card to pay for goods and services, the money is coming from their own account, so it doesn’t impact their borrowing record. If you use a debit card to stay out of debt and to make car or student loan payments on time, though, it might indirectly help your credit standing.
Safety
A debit card is linked to your bank account, so if a thief gets hold of your physical card or just your card number, any money they take is yours — not the bank’s, as would be the case with a stolen credit card.
And that could cause a lot of problems if you don’t notice and report the problem swiftly, according to the Federal Trade Commission (FTC).
Debit card use is protected by the Electronic Fund Transfer Act (EFTA), which gives consumers the right to challenge fraudulent charges. But card holders have to act with some speed to get full federal protection.
And those protections aren’t quite as substantial as the federal law that covers credit card theft, the Fair Credit Billing Act (FCBA).
If your debit card is lost or stolen, you could have zero liability if you report it before any unauthorized charges occurred. If you report a lost or stolen card within two business days, your loss may be limited to $50. But if you wait more than 60 calendar days after you receive your statement to make a report, you could lose all the money a thief drains from any account linked to your debit card.
That may sound scary, but if your debit card is backed by a credit card network (like Visa or Mastercard), you likely have the same “zero liability” protections credit card users have.
If you don’t have a debit card or prefer not a use one, here are some options:
• Cash. It’s still a form of payment that’s accepted at many retail locations.
• A check. For paying bills or making purchases (typically from smaller vendors), you may be able to write a check.
• Prepaid cards (also called prepaid debit cards in some cases). Available at various retail stores, these cards hold the amount of cash you put on them. Some are meant for one-time use; others can be reloaded with additional funds through an app, direct deposit, money transfer, or with cash at a store that offers this service.
Prepaid cards usually work at any ATM or retail location that accepts the card’s payment network. However, there are pros and cons of prepaid debit cards. They tend to come with more fees and fewer protections than traditional debit cards.
The Takeaway
Debit cards are typically offered along with a checking account. You can use a debit card to quickly get cash, either from an ATM or by using the cash back function offered by many merchants. You can also use your debit card to purchase goods and services and even use it for autopay. Because you are using the cash you have on deposit, you don’t accrue any interest fees, but you are likely not building your credit either. These cards can be a convenient aspect of your daily financial life.
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.
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FAQ
Are there debit card fees?
Typically, debit card use does not incur fees. However, if you use it at a non-network ATM to withdraw cash, you could be hit with a fee. Also, if you overdraft your account when swiping, that could incur charges. Lastly, the checking account that it’s connected to may or may not be fee-free.
What do the numbers on a debit card mean?
The numbers on a debit card are similar to the numbers on a credit card: They identify the issuer involved and uniquely capture your account number.
Are debit cards safe?
Debit cards are typically safe, but they can be stolen or lost, which could allow someone to make unauthorized transactions. Plus, the hackers of the world are usually trying to steal people’s information. That said, using a PIN helps protect transactions, and if you report the loss or theft of your debit card within two business days, your liability should be capped at $50. Some cards offer zero-liability protection.
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.
As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.
Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/. 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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