How to Consolidate HSA Accounts: A Comprehensive Guide

A health savings account (HSA) allows you to save money for healthcare expenses on a tax-advantaged basis. If you have multiple HSAs, it could make sense to combine them into a single account for easier financial management.

The steps to consolidate HSA accounts are fairly straightforward, though there are some tax considerations to know. Here’s an in-depth look at how to combine HSA accounts and why you might choose to do so.

Key Points

•   Consolidating multiple HSA accounts simplifies financial management and may reduce fees.

•   The process involves transferring funds to a single HSA, similar to merging bank accounts.

•   No tax penalties occur with trustee-to-trustee HSA transfers.

•   Consider provider fees, investment options, and transfer paperwork when consolidating.

•   Consolidation doesn’t affect HSA contribution limits but requires strategic planning for fund access during transfers.

Understanding HSA Consolidation


When you combine HSA accounts (which are only available to those with high-deductible health plan, or HDHP), you transfer the funds from each account into a single HSA. More specifically, you would typically open a new HSA and then arrange for the money in your existing HSAs to be moved to the new account. It’s similar to merging bank accounts if you’re combining, say, multiple high-yield savings accounts or checking accounts.

You’re not required to withdraw any money when consolidating HSAs, nor do you lose any of the tax benefits of health savings accounts by doing so. And as a refresher, HSAs offer these tax advantages:

•  Tax-deductible contributions

•  Tax-free earnings

•  Tax-free withdrawals when the money is used to pay for qualified healthcare expenses

Once you turn 65, you can use the money for anything you want, even if it’s not healthcare-related, just as you might with funds in a standard savings account. You will, however, have to pay income tax on non-medical withdrawals.

Recommended: Savings Account Calculator

Benefits of Consolidating HSA Accounts


Here are some reasons why you might want to combine multiple HSA accounts into a single entity.

•  You prefer to have fewer accounts to manage.

•  You could reduce some or all management fees by moving your HSA funds elsewhere.

•  You would like a different range of investment options for your HSA contributions.

•  You want to simplify healthcare expense tracking and year-end tax filing.

If you’ve ever struggled with managing multiple bank accounts, then you might see the advantage of combining HSAs.

Here’s one more reason to consolidate. There’s no tax penalty if you combine accounts using what’s known as a trustee-to-trustee transfer. With this arrangement, you direct the company that currently holds your HSA funds to transfer them directly to your new HSA provider.2

If you were to rollover your funds (another possible method of moving HSA money), that would mean you would take a distribution and then deposit it. This can be a taxable and reportable event if you conduct more than one check-based rollover every 12 months, which likely means they’re not a good method for consolidating multiple accounts. Also, if the funds are distributed in this way, they must be deposited in a new HSA account within 60 days of receiving the distribution. Otherwise, again, the transaction could be taxable.

Steps to Consolidate Your HSA Accounts


Combining HSA accounts is similar to completing a 401(k) rollover or combining IRA accounts. If you’ve done either of those before, you should already have an idea of what to expect.

That said, here’s how to consolidate HSA accounts in five simple steps, conducting what you may hear referred to as a trustee-to-trustee transfer. This means the funds involved never pass through your hands but move between financial institutions.

1. Review Your Current HSA Accounts


Before you can initiate a transfer, you need to know what you have. Make a list of your HSAs, including:

•  Which custodian or trustee holds them

•  Your account number

•  Your current balance

You may also want to review the fees you’re paying for each one and the returns your HSA investments are generating. That can help you decide if it makes sense to consolidate all your HSAs or just some of them.

2. Choose a Target HSA Provider


If you know which HSAs you want to consolidate, it’s time to look for a new provider. The options include banks, insurance companies, and brokerages.

As you compare HSA providers, look at:

•  Investment options, including the risk profile and historical returns

•  Fees, including investment fees such as expense ratios and separate account management fees

•  Investment minimums, if any

You may want to read reputable, verified reviews of HSA providers to learn what current or past customers do and don’t like about them. For example, a provider may offer an outstanding range of investment options but fall short when it comes to customer service.

Recommended: Does Changing Banks Impact Your Credit Score?

3. Initiate the Transfer Process


Once you’ve selected a new provider, you’ll need to open an HSA account with them. You’ll use the new account number to direct your current HSA provider on where to send the money.

Once your account is open, you can move on to the next step which is completing a transfer request form. This is one of the key steps to transfer money between banks or brokerages when moving HSA funds.

4. Complete Required Transfer Paperwork


Your new HSA provider should give you a transfer request form that you’ll fill out and send to your current custodians. Each provider’s form may vary, but typically, you’ll need to include your:

•  Name

•  Employer name, if your plan is sponsored by your employer

•  Date of birth

•  Social Security number

•  Contact information, including your address, phone number, and email address

•  Transferring custodian’s name and address

•  The account number of the HSA you’re transferring funds from

•  The account number of the HSA you’re transferring funds to

In a way, it’s similar to opening a bank account. You’re just providing a little more information.

You’ll also need to specify how much of your HSA balance you want to transfer. You can choose a full or partial amount. Finally, you’ll need to sign and date your form.

You’ll repeat this process using a form for each HSA that you want to transfer funds from. When your current providers receive the forms, they’ll cut a check to your new provider to complete the transfer.

5. Follow Up on the Transfer


How long you’ll wait for your HSAs to be consolidated will depend on the speed at which your current and new HSA providers move. It could take anywhere from two to five weeks or longer for the process to wrap up.

Your new HSA provider should send you a confirmation once the transfer is complete, but you can always reach out to ask for a status update. You’ll also need to follow up with your old custodians to make sure the account is closed and find out whether you owe any account closure fees.

Considerations Before Consolidating


Before you move ahead with consolidation, ask yourself what you hope to gain. Perhaps your goal is to save money on fees (which is also a reason some people switch their traditional bank accounts to online banking). In that case, it’s important to do your research on your new provider to make sure you’ll actually pay less in fees.

Also, consider whether you’ll be able to continue making new contributions to your HSA. If you’re consolidating accounts because you’ve retired, for example, then you can’t make any new contributions to an HSA if you’re no longer enrolled in your high-deductible health plan. So if you’re on Medicare, you will not be able to contribute to your HSA funds.

Potential Challenges in HSA Consolidation


It’s possible you could hit some snags when consolidating HSAs, so it helps to be prepared. Here are some of the main issues to watch out for:

•  Transfer fees. Your current HSA provider may charge transfer fees and/or account closure fees to finalize your consolidation. If so, it helps to know what those are beforehand and how you’re expected to pay them.

•  Processing times. There’s no set timeline for HSA transfers. You can help minimize the possibility of delays by filling out your transfer request paperwork accurately and following up with your providers to make sure your documents have been received.

•  Access limitations. Your new or current custodian may direct you to hold off on tapping into your HSA funds while the transfer is in progress. That could present a logistical challenge in the short term if you need to fill prescriptions or cover other healthcare expenses. It can be wise to ask in advance about these potential access issues so you can prepare as needed.

In a way, the process for HSA consolidation is not that different from what to expect if you switch banks. You might just be waiting a little longer for the change to be finalized.

After Consolidation: Managing Your Single HSA


Once you combine HSA accounts, it should be easier to manage your savings. Here are some tips for staying on top of your newly-consolidated health savings account.

•  Keep track of withdrawals, including what you spent the money on, the amount, and the date.

•  Track your contributions if you’re still making them so you don’t exceed the annual contribution limit. For 2024, the limits are $4,150 for self-only coverage and $8,300 for family coverage, with those 55 and older being allowed to contribute an additional $1,000. For 2025, the limits are $4,300 for individual coverage and $8,550 for family coverage, with an additional $1,000 contribution being possible for those age 55 and older.

•  Review your investments at least once a year to check their performance and the fees that you’re paying.

•  Consider talking to a financial advisor about how to make the most of your HSA for maximum tax benefits.

Recommended:Guide to Closing a Bank Account

Tax Implications of HSA Consolidation


If you’re completing a trustee-to-trustee transfer, there’s no immediate tax impact. You would, however, be subject to IRS tax rules when it’s time to make withdrawals from those accounts. Again, withdrawals for qualified medical expenses are always tax-free.

Where you can potentially owe taxes is when consolidating HSA accounts is if you choose an indirect rollover, as noted above. With an indirect rollover, your current HSA provider cuts a check to you. You then have 60 days from the date the check was issued to deposit the check into your new HSA, and you can only do this once a year.

If you don’t follow these guidelines, your funds would likely be considered a distribution, which would be taxable, with an additional penalty for those under 65 if not used for medical purposes.

The Takeaway


Consolidating HSA accounts could make sense if you’d like an easier way to keep track of your healthcare savings or if you’re looking for lower fees and better investments. Understanding what’s required can help you navigate the consolidation process with minimal hiccups.

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🛈 While SoFi does not offer Health Savings Accounts (HSAs), we do offer alternative savings vehicles such as high-yield savings accounts.

FAQ

How long does the HSA consolidation process typically take?

The HSA consolidation process can typically take a few or several weeks, but it may vary depending on how fast your current and new providers operate. You may need to do some strategic planning to make sure you don’t need to withdraw any funds for healthcare expenses while transfers are in progress.

Can I consolidate an HSA from a previous employer?

Yes, you can consolidate HSA accounts from one or more previous employers. It could make sense to do so if you’d like just one account to manage. You’d need to know which custodian holds your old HSAs so you can complete the process, including sending each of them transfer request forms.

Will consolidating my HSAs affect my contribution limits?

Transfers of HSA funds won’t affect your annual contribution limits. The amount you can contribute for 2024 maxes out at $4,150 for individual coverage and $8,300 for family coverage. For 2025, the limits rise to $4,300 and $8,550. Additionally, those 55 and over can contribute an additional $1,000 per year. HSA contribution limits are adjusted annually for inflation.


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SoFi members with direct deposit activity can earn 3.80% 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 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 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 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 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.

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.

*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.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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What Is a Smart Card?

A smart card is a plastic card, usually a credit or debit card, that’s embedded with a chip that encodes some information. The chip can serve as an additional layer of security when the card holder conducts transactions. Today, most card transactions in the U.S. utilize this technology.

Read on to learn more about how these cards work, what benefits they offer, and how they are likely to evolve in the future.

Key Points

•   Smart cards enhance security with embedded chips storing encrypted data.

•   Used in various card types (especially credit and debit), smart cards offer versatility.

•   Access to the card’s functionality may require PIN or biometric data./p>

•   Increased security through data encryption and tamper-resistance reduces smart cards’ hacking vulnerability.

•   Future developments include password replacement and additional storage capabilities.

Definition and Basic Concept

Smart cards are typically metal and plastic cards with a computer chip embedded in them. The chips contain additional information that can add a layer of security to transactions. You may also hear they referred to as chip cards or EMV cards (EMV stands for Europay, Mastercard, and Visa, the companies that pioneered the technology).

If you’re using smart cards for in-person transactions, you might insert them in a reader or tap to pay, in which case the card transmits information through wireless technology rather than directly through the physical chip.

While there are several different uses for smart cards, probably the most common use is in debit cards connected to a checking account or credit cards.

Components of a Smart Card

Most smart cards are fairly simple and straightforward. Here are some key points to know:

•   There is usually some sort of embedded or integrated circuit in the card that contains information about the card itself. For a credit or debit card, this might be account information like the account number, expiration date, and the name of the account holder.

•   Generally, smart cards are powered by an external source, usually the card reader. Smart cards usually communicate with external card readers in one of two ways. This might be through a direct physical connection, such as an EMV chip on a credit card when it’s inserted into a card reader. Another way that smart cards communicate with a card reader is wirelessly, such as via the RFID (radio frequency identification) protocol when you use contactless checkout.

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Types of Smart Cards

If you are looking to get a credit card or other form of smart card, you’ll want to be aware of the different types of smart cards. Here are three common varieties:

•   Contact smart cards: This is the most common type of smart card. A contact smart card is inserted into a card reader through a direct physical connection, such as an EMV chip on a smart credit card.

•   Contactless smart cards: Contactless smart cards are becoming more prevalent and transmit card information and other data wirelessly. A contactless smart card uses a tiny embedded antenna to send information to a nearby card reader, without direct physical contact.

•   Hybrid smart cards: Hybrid smart cards are usually cards that have both a physical chip (to use as a contact smart card), as well as the ability to function as a contactless smart card. You can use many debit cards as hybrid smart cards, since they both have an EMV chip as well as the ability to tap to pay wirelessly without a direct physical connection.

Each of these types of smart cards can be used in a variety of ways, such as credit cards, debit cards, and transit cards.

Recommended: How to Apply for a Credit Card

Key Features and Capabilities

Smart cards have a few key features and capabilities that you’ll want to be aware of.

•   Data storage: Smart cards can hold a small amount of data. In a smart credit card, that means the card itself can contain account information such as the account number, cardholder name, and the card expiration date. Having this information stored internally can help make smart cards more secure than credit or debit cards that do not have this information. Smart cards can also allow users to access sensitive information with a PIN or biometric data.

•   Processing power: Many smart cards contain small microprocessors inside the card itself. These microprocessors allow the card to process data directly without a remote connection.

Security Measures in Smart Cards

One of the most common uses for smart cards is to provide a more secure way of transmitting data. Credit cards, for example, used to store account information such as the credit card number on a magnetic strip. That left sensitive financial information potentially vulnerable to thieves or hackers using a magnetic field or electronic interference. Smart cards help mitigate that risk and increase security.

The data stored in a smart card is typically encrypted, which makes it more difficult for hackers to access those personal details. Additionally, the data stored on most smart cards can’t be easily changed or updated. This tamper-resistant feature of smart cards makes it a great use for sensitive information such as checking account or debit card information. When available, using a PIN or biometric data can help to increase security even more.

Recommended: How to Deposit a Check in 5 Steps

Future of Smart Card Technology

Smart cards are commonly used in many facets of society. Beyond smart credit and debit cards, smart cards are used as hotel key cards, transit cards, and access badges for secure areas.

While nobody knows exactly how smart card technology will evolve in the future, here are a few possibilities for what the future of smart cards might include:

•   Passwords: Smart cards may evolve to replace passwords in some instances, either instead of or in conjunction with a user’s PIN or biometric data (such as facial recognition).

•   Data storage: Smart cards may be used for blockchain or health data storage in the future.

•   Size or format: Currently, most smart cards are similar in size to credit cards or a driver’s license, but we may see other sizes or formats in the future.

•   Increased personalization and protection: The data and processing power in a smart card can drive a higher level of personalization, making it more difficult for unauthorized use of smart cards.

The Takeaway

Smart cards are physical cards that also have chips embedded in them, typically storing encrypted information in the card itself. Smart cards are commonly used today as credit and debit cards, and they may have an EMV chip, wireless “tap to pay” technology, or both. Smart cards are generally considered to be more secure than cards with information stored in another way (such as on a magnetic strip), which is one reason why they are becoming more common.

If you’re looking for a bank that takes security seriously, 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 3.80% APY on SoFi Checking and Savings.

FAQ

How does a smart card enhance security compared to traditional cards?

A smart card can contain sensitive banking information that’s encrypted and is stored on the chip’s embedded card. This can allow it to enhance security compared to a traditional card that stores account information only on a magnetic strip. The vast majority of debit and credit cards today use either the EMV chip or support wireless technology such as tap to pay or offer both types of functionality.

Can smart cards be used for multiple purposes?

Yes, it is common for smart cards to be used for multiple purposes. For example, many transit systems allow you to use a smart credit or debit card as your transit card as well. This means that you don’t need to carry a separate transit card with you as you access public transportation.

Are smart cards vulnerable to hacking or data theft?

There are very few things in the world that are completely invulnerable to hacking or data theft. However, smart cards are generally thought to be more secure than cards that store information in other ways, such as on a magnetic strip. This is one of the reasons that many merchants have moved away from having you swipe a credit card at the point of sale and instead have you insert the EMV chip or tap to pay.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 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 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 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 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.

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.

*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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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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Cheap Winter Activities for Those on a Budget

If you think cold-weather activities tend to be expensive (ski trips to the Rockies or snowboarding locally), consider all the fun free things to do in winter. Whether you’re looking for a solo pastime or an outing with friends and family, there are plenty of ways to enjoy winter without spending a dime.

Here’s a look at no- or low-cost places to go and activities to try in the winter.

Key Points

•   Enjoy free outdoor activities like sledding, snow tubing, and winter nature walks to stay active without spending much.

•   Participate in community events such as winter festivals and holiday concerts for affordable entertainment.

•   Engage in indoor activities like movie marathons, DIY crafts, and cooking to save money during cold weather.

•   Opt for budget-friendly winter sports like cross-country skiing and snowshoeing instead of pricier options.

•   Explore affordable date ideas such as visiting museums, cooking together, or playing board games indoors.

Outdoor Winter Activities That Won’t Break the Bank

If you’re trying not to dip into your checking account while having some fun this winter, you’ll have plenty of options. Consider these ideas:

Sledding and Snow Tubing

Sledding is a free fun activity that the whole family can enjoy. Just bundle up with waterproof, well-insulated outerwear, and find an appropriate slope. You will need a sled, and they come in all shapes and sizes. Not seeing one stashed in your basement? A simple plastic disc or oblong sled might cost around $10 to $20 dollars, while a more fancy toboggan or wooden sled might cost hundreds of dollars.

Many ski resorts and local operations offer tubing, which involves riding down a slope on a rubber tire-shaped inflatable. If you can find a snowy hillside and bring your own ride, you could have a free activity. Otherwise, sessions are usually two hours long, and the cost can often be $25 for children. Some resorts impose a height limit of around 42″ or a minimum age typically around five. The cost for adults or teenagers range from $30 to $50. Group rates are often accommodated.

Winter Nature Walks and Photography

Of all the cheap things to do in winter, the simplicity of a winter’s walk on fresh snow is hard to beat. It’s an opportunity to see the landscape in a special, seasonal way. Photographers can take stunning photos, particularly if you can find wildlife, like birds, against the snowy backdrop. That’s a low-cost hobby that’s ideal for winter days.

For those who live in small cities or major metropolitan areas, snowy streetscapes can be equally picture-worthy.

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Indoor Budget-Friendly Winter Fun

If getting outside has been nixed by a heavy storm or bitterly cold temperatures, try some indoor activities to entertain yourself while sticking to the budget you made.

DIY Crafts

Search online for winter crafts, and you’ll likely find no end of ideas that adults and children can try. Many options include holiday ideas to brighten the home or give as gifts. For instance, you may find ideas for holiday wreaths and frosted luminaria or handmade greeting cards.

If you’re more ambitious, set up an area in the home for refurbishing an old piece of furniture. An old painted chest of drawers can look amazing if stripped to show the beautiful wood underneath. Add varnish and new hardware, and you could have a gorgeous new piece to show off. (Or you might turn flipping furniture into a side hustle.)

Another idea for cheap winter activities: Perhaps it’s a good time to get a room painted or take on a bathroom remodel.

Movie Marathons

Need more free things to do in winter? Movie marathons are great when people are happy to be in from the cold. Take your pick from series like Star Wars, Marvel, Fast and Furious, Pirates of the Caribbean, Harry Potter, James Bond, or you might stick with any favorites on Netflix. Retro movie nights (Hitchcock, anyone?) are also a fun way to spend time indoors. The hardest part of movie marathons can be simply deciding what to watch amid the plethora of options.

Movies are a way for friends and families to get off their phones and come together. Plus, popcorn is a cheap snack option.

Recommended: How to Save on Utility Bills

Free Destination Community Winter Events

Most people can find cheap places to go in the winter close to home, what with all the winter festivals, holiday concerts, art and craft shows, and New Year’s Eve celebrations happening. Or if you’re a bit more adventurous and willing to do a bit of frugal travel, check out these unique winter festivals in various parts of the United States, which are among those recommended by Vrbo:

Polar Fest, Detroit Lakes, Minnesota

This event features a Polar Plunge, a jump into the icy waters of Detroit Lake, followed by a pancake breakfast, kids’ games, and activities. Don’t worry, you don’t have to plunge to enjoy the pancakes. There’s also an ice fishing derby, a motorcycle race on ice, a 5K fun run, a professional snowmobile race, and a curling competition.

Cedarburg Winter Festival, Cedarburg, Wisconsin, February

In Cedarburg, Wisconsin, there are various cooking contests and events. Notably, there’s a sled-pulling contest for dog-owners with a willing Alaskan Malamute. You can watch a grand parade, a costumed bed-race on ice, and an ice-carving contest.

Saranac Lake Winter Carnival, Saranac Lake, New York, February

In terms of cheap places to go in the winter, Saranac Lake, New York, hosts an annual winter festival with an expert ice sculptor crafting a stunning ice castle. At night, colorful lights inside the castle create a breathtaking scene. The event also showcases a fun run, a downhill ski race, and a scavenger hunt over 10 days of festivities.

Recommended: Emergency Fund Calculator: How Much Should I Save?

Budget-Friendly Winter Sports and Fitness

There are plenty of ways to bundle up and get some exercise in winter, whether that means ice-skating at your local rink or learning how to snowboard. Some sports are more expensive than others. For example, if you love skiing, cross-country skiing tends to be more budget-friendly than downhill skiing. And snowshoeing or otherwise walking in the snow with the right footwear can cost way less than a lift ticket, too.

Gear is often the biggest concern and expense for sports and fitness pastimes, and winter is no exception. Here are some tips for winter sports and fitness clothing and equipment that won’t deplete your bank account.

•   Don’t buy equipment until you know you are committed to the sport; rent instead. Ski and snowboarding equipment can be easily rented at the slope.

•   Buy second-hand clothing and equipment, especially for children who can grow so quickly. Check out consignment shops, REI’s online used section, Poshmark, eBay, The Hoarding Marmot, and Geartrade.

•   If you are currently job hunting, a seasonal gig at a resort or fitness center will give you access to the facilities for a budget price.

Affordable Winter Date Ideas

Winter can be a time to cozy up on date night. Here are a few ideas to try over the winter months that won’t blow your budgeting efforts.

Take a Hike

Winter is a wonderful time to get out and hike, particularly after a fresh snowfall. Just wear the right gear and maybe round it out with a hot toddy or hot chocolate.

Play a Board Game or Start a Jigsaw Puzzle

It may be old-school, but fun hours can be spent playing a board game or doing a jigsaw puzzle. Accompany the game with a bottle of wine and some tasty appetizers.

Visit a Bookshop

Stroll the aisles together, sharing old favorites and discovering new titles. Bonus: Many bookshops serve coffee and snacks as well as host author readings. You might also shop for gifts for friends and family while there.

Visit a Museum or Planetarium

Feed your soul with beauty and challenging imagery. Most big cities have free museums or specific dates on which you can view art with no admission fee required. Are you lucky enough to have a planetarium near you? For date night, visit and contemplate the universe together. (If you are starstruck by this outing, try an app like the free StarView Lite, which puts a planetarium in your pocket. All you need to do is point it at the sky, and it’ll identify the stars, satellites, and more above your head.)

Cook a Meal Together

It sounds simple, but one of the most tried and true winter date ideas is to simply cook together. Recipes abound online, and if you skip the pricier steak or seafood options, you can save a bundle. Maybe French onion soup and some crusty bread would be good, or try a pot of chili and enjoy the leftovers together later in the week.

Get Fit Indoors

Challenge yourselves physically together. Indoor activities can be a great option when days are cold and short. Rock climbing is a great example if you have an indoor wall near you. Otherwise, yoga, strength training, or dance classes can be a fun date idea.

Recommended: Ideas for Making Money From Home

The Takeaway

Winter activities don’t have to cost a bundle. Skip the European ski trip, and instead find fun options close to home, like local ice skating, cooking together for date night, visiting a museum, or crafting side by side.
Stash the money you save in a high-yield bank account to help it grow faster.

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 3.80% APY on SoFi Checking and Savings.

FAQ

How can I find free winter activities in my area?

Check your local parks department website for free and cheap winter activities. Search online for local media that advertises events. Your local library will likely also have information on local activities also. Another path: Check social media for ideas. There are often accounts sharing no-charge local events.

What are some cheap winter activities for kids?

If you live in an area where snow falls, it can provide a wonderful playground once kids are bundled up. They can build snowmen, go sledding, or go ice skating. Also, many town recreation centers, museums, and art schools offer affordable activities and lessons during winter break, knowing that kids can be out of school and in need of entertainment.

How can I budget better during the winter time?

Budgeting in the wintertime is no different than budgeting at any other time of year. Set a spending budget for your expenses in all categories, and stick to it. Be frugal at the holidays with gift giving. Perhaps the whole family will be willing to abide by a spending cap to help avoid credit card debt. And just because it’s cold out doesn’t mean you need to entertain yourself with pricey movies, shows, and meals out. Cooking something new at home, streaming classic movies, and catching up on reading are all cheap ways to get through the cold season.

Photo credit: iStock/4maksym


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 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 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 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 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.

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.

*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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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APR vs. APY: What’s the Difference?

Annual percentage rate (APR) and annual percentage yield (APY) are finance terms that describe how interest accrues, but they don’t mean the same thing. APR represents the yearly borrowing cost of loans or lines of credit, while APY measures how much interest you could earn from savings or investments.

Understanding the difference between APR vs. APY can help you make more informed decisions about your money.

Key Points

•  APR is the annual cost of borrowing, including interest and fees.

•  APY measures interest earned on savings, considering compounding.

•  APR applies to loans and credit cards; APY to savings and some investments.

•  Compounding frequency influences APY, with more frequent compounding yielding higher returns.

•  Understanding APR and APY aids in informing financial decisions on borrowing and saving.

Understanding APR (Annual Percentage Rate)


APR, in simple terms, is the cost you pay to borrow money over time, or per year. When you apply for a loan, credit card, or line of credit, the APR is an important consideration. The APR on a loan is expressed as a percentage.

Definition and Components


The Consumer Financial Protection Bureau (CFPB) defines APR as “a measure of the interest rate plus the additional fees charged with the loan.” A higher APR means a more expensive loan.

In relation to APR, an interest rate is the cost you pay to the lender to borrow on a loan or line of credit. It’s also expressed as a percentage.

APR is an annualized rate, meaning it measures the cost of borrowing yearly based on two factors:

•  Your interest rate

•  Fees

When thinking about APRs, you may wonder what a good interest rate on a loan is. The short answer is it’s probably the lowest rate you can get, based on your credit score and other qualifications. That rate will also vary depending on economic and global forces (for example, rates were slashed during the COVID pandemic to stimulate borrowing).

Fees included in APR can vary by loan type and lender. A personal loan, for instance, may have an origination fee while a mortgage loan may include discount points, which are fees you pay to buy down your interest rate. If there are no fees involved, there’s no difference between the APR vs. interest rate.

How APR Is Calculated


APR is calculated using a set formula, which looks like this:

APR = [((Interest charges + fees) ÷ Loan principal amount) ÷ Number of days in loan term x 365] x 100

You may also see it simplified this way:

APR = (Periodic interest rate x 365) x 100

In the second formula, the periodic interest rate represents the sum of the interest and fees divided by the loan amount, which is then divided by the number of days in the loan term.

Here’s an example of how to calculate APR for a $10,000 loan, assuming a 12% interest rate, a 2% origination fee, and a four-year term.

•  First, calculate simple interest on the loan by multiplying the loan principal by the interest rate by the loan term: $10,000 x 0.12 x 4 = $4,800

•  Next, calculate the origination fee ($10,000 x 0.02), and add it to the interest charges: $4,800 + $200 = $5,000

•  Divide this sum by the principal: $5,000 / $10,000 = 0.5

•  Divide the result by the number of days in the loan term, then multiply by 365: 0.5 / 1,460 x 365 = 0.125

•  Multiply the result by 100 to get the APR: 0.125 x 100 = 12.5%

That’s quite a bit of work, but you can do it if you have all the numbers. If you’d like to make calculating APR easier, you can use an online calculator instead.

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Understanding APY (Annual Percentage Yield)


To understand APY vs. APR, you have to shift your perspective from borrowing money to saving it. APY measures how much interest you can earn on your money when you deposit it in a savings account or other vehicle, rather than what you pay to a lender.

Definition and Purpose


The CFPB defines APY as a measurement of “the total amount of interest paid on an account based on the interest rate and the frequency of compounding.”

When you’re saving money, the APY tells you how much your money may grow. The higher the APY, the more interest you could earn on your savings over time.

Calculation Method for APY


If you’re wondering how to calculate APY, you’ll use a formula that’s different from the one for APR. Here’s how it works.

APY = 100 [(1 + Interest/Principal)(365/Days in term) − 1]

You may also see this simplified as in a formula with r representing the nominal rate offered by the institution, while n is how often the interest compounds:

APY = (1 + r/n)ⁿ – 1

The frequency of compounding matters for APY calculations. Compounding happens when you earn interest on your interest and it gets added to the principal, which can help accelerate your money making you money. Say, for example, you deposit $10,000 into a CD with a 5% interest rate. The CD has a 12-month term.

If interest compounds…

•  Annually, the APY would be 5.00% and you’d end up with $10,500 at the end of the CD term.

•  Monthly, your APY works out to 5.116% and you’d have $10,511.62 when the CD matures.

•  Daily, the APY is 5.127% and your savings would grow to $10,512.67.

Is there a huge difference in the numbers? Not really. But these examples show how a frequency shift can affect your money’s growth potential. When you are talking about money that is on deposit for years or decades, the frequency of compounding interest on savings accounts can have a more significant impact.

If you don’t have time to do the math yourself, you can use an APY calculator to run the numbers.

Key Differences Between APR and APY


The APR vs. APY difference comes down to how they’re calculated, how they’re used, and what they tell you. Here’s a side-by-side comparison of the two that can make the differences clearer.

APR APY
Measures the cost you pay to borrow money Measures the interest you could earn when you save or invest money
Associated with loans, credit cards, and lines of credit Associated with savings accounts, CD accounts, and some checking accounts and investments
Does not factor in compound interest Does factor in compound interest
When paying an APR, a lower number is better When earning an APY, a higher number is better

When APR Is Used


Broadly speaking, you’ll run into APR any time you plan to borrow money. Here are some examples of products that can have an APR.

Loan Products


Loans allow you to borrow money, usually in a lump sum, and pay it back with interest and fees. Some of the loans that will have an APR include:

•  Mortgage loans, including home equity loans or reverse mortgages

•  Auto loans

•  Personal loans

•  Small business loans

•  Student loans

•  Personal and business lines of credit

One thing to note is that loan APRs may be fixed or variable. A fixed-rate APR means your loan rate won’t change. Variable APR loans, on the other hand, have rates that are attached to an underlying benchmark or index and will vary along with its fluctuations.

If the benchmark rate increases or decreases, your loan APR can also shift. That means your loan rate (and consequently your monthly payment) can change over time. An example of how benchmark rates can fluctuate over time: The highest Fed fund rate was 20% in March 1980 and the lowest was 0.00 to 0.25% from December 2008 to December of 2015 and again during phases of the Covid pandemic.

Credit Cards


Credit cards typically have an APR, and some cards have more than one. For example, your card agreement might specify a:

•  Purchase APR, which applies to purchases you charge to your card

•  Balance transfer APR, if your card accepts balance transfers

•  Cash advance APR, if your card allows you to withdraw cash from your credit limit

•  Penalty APR, which may apply if you violate the terms of your card agreement

If your card has multiple APRs for different transaction types, they might all be different. For example, your purchase APR might be 19.99% while your cash advance APR could be 29.99%.

Credit card companies may offer low introductory APRs to entice you to open an account. For example, you might be offered a 0% APR on purchases and balance transfers for the first 12 months or a somewhat longer period.

Introductory offers can save money on interest, but it’s important to know when the promotional rate expires, which charges it applies to, and what the regular APR will be. Also, keep in mind that credit card APRs are most often variable and your credit card company can change your rate at any time as long as they give you proper notice first.

When APY Is Used


When you shift from talking about borrowing money to saving money, the key metric will be APY instead of APR. Here are some examples of when you’d need to know the APY you’re earning.

Savings Accounts


Savings accounts are designed to hold money that you don’t plan to spend right away. Banks and credit unions can offer different types of savings accounts, including:

•  Traditional savings accounts

•  High-yield savings accounts

•  Money market savings accounts

•  Certificate of deposit, or CD, accounts

Each of these types of savings accounts can earn interest, though it’s up to banks to determine what APY to offer.

Except for most CDs (which are likely fixed-rate), savings account rates are subject to change. So the APY you earn on day one after opening your account may be higher or lower than the APY you earn on day 100 or 1,000. With CDs, your APY is usually locked in for a set period until the CD matures.

Investment Products


While investments typically offer potential profit through dividend payments and/or capital gains, there are a few cases where you might see APYs mentioned:

•  Annuities are insurance contracts that you purchase for a premium and receive payments from later on. These investment vehicles are designed to provide you with supplemental income in retirement. Fixed annuities can offer what is called either a payout rate or APY rate, which is likely similar to what you’d get with a CD, allowing for predictable growth.

•  Brokered CDs work like regular bank CDs, with a twist. You buy them through a brokerage, and they can offer potentially higher rates of return. For example, a 12-month bank CD might have a 4.50% APY while a 12-month brokered CD might offer 5.25% instead. That’s typically because they reflect a more competitive market, with the broker having invested a larger sum in CDs that earns a higher APY, which they then pass along to those who buy smaller increments.

•  Cash management accounts are another option. These are checking accounts offered at brokerages that can earn interest like a savings account. Some cash management accounts offer an APY that’s comparable with the top high-yield savings account rates.

Impact on Financial Decisions


Knowing the difference between APR vs. APY can help you build your financial literacy and make smarter choices with your money.

For example, say that you’re planning to buy a new car. You have $20,000 in a high-yield savings account that’s earning a 4.50% APY compounded monthly. You’re thinking about buying a car for $20,000 and you’ve been preapproved for a three-year car loan at 7%.

You’re debating whether to finance the whole amount, use half of your savings for a down payment and finance the rest, or use all your savings to buy the car outright. Here, it would help to know:

•  How much interest you’d pay on the loan in each scenario

•  How much interest you’d earn on your savings in each scenario

For example, take a look at how these scenarios could play out:

1.   Say you use all your savings to buy a car. You won’t pay any interest since you won’t have a car loan. However, you won’t earn any interest either since your savings balance is $0.

2.   What if you go half and half? Assuming you take the full three years to pay off the loan, you’d pay around $1,116 in interest. If you don’t add anything to the $10,000 you have left in savings and you maintain the same 4.50% APY over the three years, by calculating savings account interest, you’d see that you’d earn about $1,442. By doing the math of $1,445 minus $1,116, you’d come out $329 richer.

3.   If you keep your savings in the bank and finance the whole amount (in reality, you’d likely need to make a down payment, however), you’d pay $2,232 in interest on the loan and earn $2,885 on your savings. So you would net $653.

These examples assume you don’t refinance your car loan at any point or add anything to savings, and that your savings APY stays the same. But they offer insight into how APR and APY affect you financially.

Recommended: How to Write a Check

The Takeaway


The difference between APY vs. APR is important since they express two different financial rates. An annual percentage yield, or APY, reflects the interest you can earn on savings and other funds, while the annual percentage rate, or APR, communicates what it will cost you to borrow money.

If you’re looking for a home for your savings where your money can grow, 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 3.80% APY on SoFi Checking and Savings.

FAQs

Which is typically higher, APR or APY?

APR tends to be higher if you’re comparing loans or credit card rates to savings account rates. As of late 2024, it’s common to find credit cards with APRs in the 20% or higher range but high-yield savings account APYs are typically in the 4.00% to 5.00% range.

Why do banks use APY for savings accounts and APR for loans?

Banks use APY for savings accounts and APR for loans because they measure two different things. When you open a savings account, the bank pays interest to you. The APY tells you how much you could earn per year, with compounding taken into effect. When you get a loan or line of credit, you pay interest to the bank. The APR tells you how much the bank charges for you to borrow, with fees included.

How does compound interest affect APY?

Compounding affects APY based on frequency. The more often interest accrues and gets added to the principal (say, weekly vs. monthly), the more interest you can earn over time, and the higher the APY will be. Using an online calculator can give you an idea of how much interest you could earn from a savings account.


Photo credit: iStock/shih-wei

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 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 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 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 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.

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.

*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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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What Is Deposit Insurance?

Deposit insurance is a guarantee by the federal government that the money in a bank customer’s account is insured up to a specific amount. Deposit insurance is typically provided to bank customers by the Federal Deposit Insurance Corporation (FDIC), an independent federal agency that works to make sure deposits are safe in the event of bank failures. Currently, up to $250,000 per depositor, per account ownership category, per insured bank is covered as long as the money is in an FDIC-insured financial institution. The National Credit Union Administration, or NCUA, covers money held in credit unions in a similar manner.

Most, but not all, banks offer this kind of safety net. Read on to learn more about how deposit insurance works, plus ways to make sure your money is protected.

Key Points

•   Deposit insurance guarantees bank customers’ money up to a specific amount by the federal government.

•   In the United States, the FDIC provides this insurance for banks, covering up to $250,000 per depositor per account ownership category at participating banks.

•   Deposit insurance protects funds in the very rare event of a bank failure.

•   The FDIC’s role is to maintain stability and confidence in the U.S. financial system.

•   Since the FDIC’s inception, no depositor has lost any FDIC-insured money.

Definition and Purpose of Deposit Insurance

Deposit insurance protects the money customers have in deposit accounts in FDIC-insured banks in case there is a bank failure. What is the FDIC specifically and what does it do? The agency was created in 1933 after the Great Depression, when thousands of banks failed. The purpose of the FDIC is to protect bank customers and maintain stability and confidence in the U.S. financial system. Since its creation, no depositor has lost any FDIC-insured money.

The funds you have in an FDIC-insured bank, whether it’s in a savings account or a checking account, are insured up to $250,000 per depositor, per account ownership category, per bank. In the very rare event that your bank fails, your money will be covered up to the insured amount.

In the case of bank failure, the FDIC historically pays customers within a few days up to the insured limit. This typically happens in one of two ways: The FDIC provides the customer with the insured amount in a new account at another insured bank, or they send the customer a check for the insured amount.

Get up to $300 when you bank with SoFi.

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Up to 3.80% APY on savings balances.

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How Deposit Insurance Works

Deposit insurance works by protecting customers’ money in the event their bank fails. If a bank shuts down, the FDIC reimburses depositors’ money through the Deposit Insurance Fund (DIF). The DIF is backed by the U.S. government and funded by a type of insurance premium that banks pay plus interest earned on Treasury notes bought by the FDIC.

While most banks in the U.S., including online banks, are insured by the FDIC, not all of them are. Banks must apply for FDIC coverage. When you visit your bank, look for FDIC signs or ask a bank representative if the institution is FDIC-insured.

(Credit unions insure their money separately through the National Credit Union Administration, or NCUA vs. the FDIC.)

Account Coverage

When it comes to how much money banks insure, the amount is typically up to $250,000 per depositor, per account ownership category, per bank, though some banks may offer options for receiving additional coverage through special programs they’ve created.

Account ownership categories include:

•   Single accounts, such as a checking account or savings account that’s yours alone

•   Joint accounts, like an account you have with a spouse or another person

•   Certain types of retirement accounts you have at a bank, including an individual retirement account (IRA)

•   Trust accounts

•   Corporation, partnership, or unincorporated association accounts

In practical terms, what this means is that if you have two single accounts at the same bank, such as a checking account and a savings account, you’ll be insured for up to $250,000 of the combined balance of the two accounts. So you’ll want to make sure that both accounts don’t add up to more than $250,000. Anything over that amount would not be insured.

However, if an individual has a single account and a joint account at the same bank, or a single account and an IRA, they will be insured for up to $250,000 for the single account plus another $250,000 for the joint or IRA account because the accounts fall into different account ownership categories.

And if you have two single accounts but each one is at a different FDIC-insured bank, they will each be covered for up to $250,000. That’s because they’re at two separate institutions. In addition, some banks offer programs in which they will allocate deposited funds that total more than $250,000 per depositor among insured partner banks. This can allow the customer to have FDIC coverage in excess of the usual limits while one bank manages their money.

You can use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) to calculate your specific account coverage.

As a bank customer, you don’t have to do anything to get FDIC coverage. As long as your account is in an FDIC-insured bank, your money, up to the limit per account ownership type, is automatically covered. It can add to your sense of financial security to know you have liquid assets protected in this way.

History of Deposit Insurance

Deposit insurance dates back to the Great Depression, when approximately 9,000 banks across the U.S. failed between 1930 and 1933. The Depression caused widespread panic, and many people rushed to the bank to withdraw their funds. Banks couldn’t handle all the withdrawal requests, and many were forced to shut down. Many bank customers lost their money.

Because of that, President Franklin Roosevelt signed the Banking Act of 1933 into law, which created the FDIC to protect bank depositors. In January 1934, the agency began operating, insuring $2,500 per depositor. Five months later, the FDIC-insured amount was doubled to $5,000, and the FDIC became a permanent part of the U.S. financial system by law in 1935.

Fifteen years later, the FDIC insurance coverage was raised to $10,000 per depositor, and at that point it fully protected 99% of all deposit accounts in FDIC-insured banks. In 1969, the coverage was raised to $20,000, and in1974, amid high inflation and rising interest rates, it was increased to $40,000.

In 1980, President Jimmy Carter signed the Depository Institutions Deregulation and Monetary Control Act into law, raising the FDIC-insured limit to $100,000. Over the next 14 years, during the Savings and Loan Crisis, approximately 1,300 savings and loans failed, along with more than 1,600 banks. The FDIC covered the bank losses.

When the financial crisis known as the Great Recession hit in 2008, dozens of U.S. banks failed. But no insured bank depositors lost their money. (In the ensuing seven years, hundreds failed.) Two years later, in 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, permanently increasing the FDIC insurance limit to $250,000.

Recommended: APY Interest Calculator

Deposit Insurance Around the World

According to the Center for Global Development, 80% of high-income countries currently have deposit insurance in place, and the number of lower-come countries with deposit insurance has more than tripled. Here’s an overview of deposit insurance in the U.S. and the European Union.

United States (FDIC)

In the U.S, deposit insurance is handled by the FDIC, which was created as an independent federal agency in 1933, after the Great Depression. The FDIC works to make sure deposits are safe in the event of bank failures. Up to $250,000 per depositor, per account ownership category, per bank is insured as long as the money is in an FDIC-insured bank.

The other purpose of the FDIC is to help maintain stability and public confidence in the U.S. financial system. Since its inception, no depositor has lost a penny of FDIC-insured money.

European Union

In the European Union (EU), deposit insurance is known as national deposit guarantee schemes (DGS), and they protect the savings of EU depositors whose banks fail. Deposits are guaranteed up to €100,000. DGS are also designed to help prevent mass withdrawals in the event a bank fails and to promote financial stability.

In 2015, a proposal was introduced by the European Commission to set up one European deposit insurance scheme (EDIS) that would build upon the national DGS system in EU countries. Meant to strengthen and unify coverage, the EDIS would be a single European fund to insure up to €100,000 per depositor, per bank in case of bank failure. However, as of late 2024, the EDIS was still being debated by EU members.

Benefits of Deposit Insurance

Deposit insurance has a number of advantages for bank customers. These benefits include:

Insuring Deposits

Deposit insurance can provide peace of mind to depositors at FDIC-insured banks because up to $250,000 per depositor, per bank, per account ownership category is protected if the bank fails. Since the agency was created, no depositor has lost money in an FDIC-insured account.

Protecting Different Types of Deposit Products

FDIC protects various types of deposits at insured banks, such as:

•   Checking and savings accounts

•   Money market deposit accounts (MMDAs)

•   Certificates of deposit (CDs)

•   Prepaid cards, as long as certain conditions are met

Covering Various Account Ownership Categories

Deposit insurance pertains to different types of account ownership categories, including:

•   Single accounts, such as a checking account or savings account

•   Joint accounts

•   Certain types of retirement accounts a customer has at a bank, including IRAs

•   Trust accounts

•   Corporation, partnership, or unincorporated association accounts

Depositors are covered up to $250,000 per account ownership category, per FDIC-insured bank.

Automatic Protection

There’s no need to enroll in or pay for FDIC protection. As long as you deposit money in an FDIC-insured bank, your funds are automatically protected up to the limit.

Helping to Maintain Stability and Confidence in the Financial System

By protecting depositors’ money in case of a bank failure, deposit insurance helps instill confidence in the financial system and maintain the system’s stability.

Recommended: Money Management Tips

Limitations and Criticisms

For all its benefits, deposit insurance has come under criticism. And it does have limitations. Here are some of the main critiques.

May Encourage Banks to Take On Excessive Risk

Some critics believe that deposit insurance may encourage banks to take more risks since they know the FDIC will protect insured deposits and help bail out failing banks.

Coverage Is Not Enough

For many individuals, the $250,000 FDIC-insured limit may be enough (and, as noted above, some banks offer programs for enhanced coverage). But for businesses, especially those that use banks for payroll and other purposes, the limit may be too low.

Protection Does Not Extend to Certain Assets

There are a number of assets that deposit insurance does not cover. These include stocks; bonds; mutual funds; annuities; life insurance policies; cryptocurrency; and U.S. Treasury bonds, bills, and notes.

Uninsured Deposits

Deposits of more than $250,000 may be held by individuals and businesses. This could leave the account holder vulnerable in the very rare instance of a bank failure since insurance typically covers up to $250,000. (That said, some financial institutions may offer programs to protect more than that amount.)

In addition, not all banks are FDIC-insured. Individuals who have deposits in uninsured banks are at risk of losing their money if their bank fails. If your bank is not FDIC-insured, you may want to consider closing your bank account and switching to a financial institution that can give your money FDIC protection.

Finally, some depositors have more than $250,000 in two of the same account ownership category types. Their combined balance in a checking and a savings account might exceed the limit, for instance. They may not be aware of this, or perhaps they just haven’t gotten around to transferring money between banks to stay under the limit.

Other depositors may have combined bank accounts after getting married, for instance, and their new balance may exceed the limit.

If you have more than the insured limit in your bank account, there are ways to maximize FDIC insurance that you can explore.

How to Check If Your Deposits Are Insured

As mentioned, although the FDIC insures deposits in most banks, not all banks are protected. How can you tell if your bank is? If you use an online bank, the institution’s website should contain information about its FDIC coverage. If you use a brick-and-mortar bank, the next time you visit your local branch, check for a sign that says “FDIC-insured.” Each FDIC-insured financial institution is required to display official signs.

In the near future, it should be even easier to spot FDIC signage. In 2025, banks will be required to display the FDIC official digital sign on certain automated teller machines and to display it near the name of the bank on all bank websites and mobile applications.

Another way to find out if your deposits are insured is to use the FDIC BankFind tool.

Common Misconceptions About Deposit Insurance

There are a number of myths about deposit insurance. Here are some common misconceptions to be aware of.

•   Misconception: Every bank is FDIC-insured.
Fact: Most banks in the U.S. are FDIC-insured, but not every bank is. Look for FDIC signs at your bank’s branch or call the institution and ask them. You can also use the FDIC BankFind tool mentioned above.

•   Misconception: A bank customer has to apply for deposit insurance.
Fact: Customers do not need to apply for or buy FDIC insurance. The coverage is automatic for deposit accounts at FDIC-insured banks up to $250,000 per depositor, per account ownership category, per bank.

•   Misconception: Each deposit account a customer has is fully FDIC-insured.
Fact: The $250,000 limit applies per depositor, per account ownership category, per bank. So if you have two accounts in the same account ownership category type, such as a single checking account and a single savings account, you would be insured for up to $250,000 of the combined balance of each account.

•   Misconception: Every financial product offered by a bank is insured by the FDIC.
Fact: Deposit insurance only covers certain deposit accounts at an FDIC-insured bank. This includes checking and savings accounts, certain retirement accounts like IRAs containing deposit accounts, CDs, and money market deposit accounts. Investment products that are not deposit products, such as mutual funds, stocks, bonds, and annuities, are not FDIC-insured.

The Future of Deposit Insurance

Deposit insurance has changed numerous times throughout its history, and it’s possible it could change again. The FDIC has recently proposed certain reforms. In a May 2023 report, the agency outlined three options for deposit insurance reform.

The first is to leave the framework of the system as it is, but possibly raise the $250,000 limit. The second is to offer unlimited insurance to all bank depositors. And the third option is to provide targeted insurance with different limits for different account types. So, for instance, business accounts might get substantially higher insurance limits than other types of accounts.

The FDIC said that of these three options, targeted coverage “best meets the objectives of deposit insurance of financial stability and depositor protection relative to its costs.” However, action by Congress would be required to move forward.

The Takeaway

The Federal Deposit Insurance Corporation (FDIC) provides insurance that can help protect bank depositors in the very rare event of a bank failure. Its programs also help maintain stability and confidence in the U.S. financial system. As long as your bank is FDIC-insured, you are covered for up to $250,000 per depositor, per account ownership category. Deposit insurance applies to checking and savings accounts and CDs, among other deposit accounts. FDIC coverage is automatic — you don’t have to apply for or purchase it.

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 3.80% APY on SoFi Checking and Savings.

FAQ

What is the FDIC insurance limit per depositor, per insured bank?

The FDIC insurance limit per depositor per insured bank is $250,000 per account ownership category type. Account ownership categories include single accounts; joint accounts; trust accounts; and corporation, partnership, or unincorporated association accounts.

Does deposit insurance cover investment products like stocks and bonds?

Deposit insurance does not cover investment products like stocks and bonds. It also does not cover mutual funds, life insurance, or annuities. Deposit insurance only covers certain bank deposit products such as CDs and money market deposit accounts, certain retirement accounts like IRAs, and checking and savings accounts.

How quickly can I access my insured deposits if a bank fails?

If a bank fails, the FDIC has historically paid customers their insured deposits within a few days. Typically, the FDIC will either provide the customer with the insured amount in a new account at another insured bank, or they’ll send the customer a check for the insured amount.


Photo credit: iStock/ovenimo

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 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 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 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 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.

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.

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/.
*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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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

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

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