What Is a Life Insurance Death Benefit?
A death benefit is a lump sum payment beneficiaries receive when the owner of a life insurance policy dies. Here are a few other things you should know.
Read moreA death benefit is a lump sum payment beneficiaries receive when the owner of a life insurance policy dies. Here are a few other things you should know.
Read morePersonal loans can be an important financial tool. They typically allow borrowers to access funds to spend as they see fit, with few exceptions, and do so at a lower interest rate than would be charged if they used a credit card.
To be more specific, with money from a large personal loan, you could cover higher-cost expenses like a single, substantial expense or several smaller debts consolidated into one large one. For example, If you plan to purchase a used car or some land to build on in the future, you might choose to finance it with a personal loan. Or perhaps you want to eliminate your credit card debt, buy a new laptop, and pay off the bill for some dental work. Those could also be paid off with a single, more substantial personal loan.
To help you understand whether a large personal loan could be the right next step to suit your needs, read on.
A large personal loan is exactly what it sounds like — a loan for a lot of money. There is no specific figure that makes a personal loan cross over into that “large” territory. To one person, $50,000 might be a large personal loan. To another, it might be $100,000. But typically, it’s a number that’s well into the five-figures realm.
A large personal loan is a form of credit that can be used to make large purchases or consolidate other high-interest debts. Personal loans generally have lower interest rates than credit cards and are sometimes used to consolidate high-interest debt.
To start with the basics, a personal loan is defined as a set amount of money borrowed from a lending institution. Unlike a mortgage loan or auto loan, which is used for a specific purpose, funds from a personal loan can be used to pay for a variety of expenses such as medical bills, K-12 private education costs, or to consolidate multiple debts. Typically, however, you can’t use a personal loan for business expenses or higher education tuition.
💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.
Personal loans function in the same way, no matter their size because they are borrowed sums of money that are paid back with interest. This is true regardless of the amount of money borrowed.
However, there are some differences between larger personal loans and their smaller counterparts depending on the lender you choose.
Small Personal Loans | Large Personal Loans |
---|---|
Loan amounts approximately $1,000 to $5,000 | Loan amounts approximately $50,000 to $100,000 |
Including fees, may not be cost effective compared to larger loans | With good to excellent credit scores, applicants may qualify for low interest rates |
Typically have shorter repayment terms | Repayment terms are typically longer |
Average personal loan interest rates may change depending on the size of the loan.
A large personal loan may be a bad idea if you already struggle with your current debts or monthly expenses.
When considering financing, it’s important to know both the pros and cons of a personal loan. Whether a loan is a right choice for you depends on your unique financial situation. Here are some of the risks to consider:
• If you fall behind on payments, your credit score could be negatively affected.
• If you miss enough loan payments, your large personal loan may go to a collections agency. Some lenders will charge off a debt, meaning they gave up on being repaid, but you’re still legally responsible for the debt.
In the right situation, however, a large personal loan can be helpful. If you’re approved for the loan, you’ll have the funds to make a big purchase and can repay it over time. Those smaller, monthly installments mean that the burden is more manageable.
Typically, lenders have stricter requirements to qualify for a large loan than one with a smaller limit.
Generally, you need a minimum credit score of 720 to qualify for a $100,000 loan. However, it’s ideal to have a score of 750 or above. Depending on your score, your lender may offer you varying loan terms.
Checking your credit report before applying for any loan is a good idea. You will be able to find any errors or discrepancies and have an opportunity to correct them before you begin applying for a loan.
Checking your credit score counts as a soft inquiry and doesn’t negatively impact your credit score. The Fair Credit Reporting Act guarantees you access to one free credit report from each of the three major credit bureaus annually. You can find yours at AnnualCreditReport.com.
Recommended: Does Checking Your Credit Score Lower Your Rating?
One of the factors your lender will consider is your employment status. They want to see how much income you earn and if you have the resources to repay the loan. In addition, the lender wants to be assured of your job stability. It may be a good idea to avoid making any sudden career changes while you’re applying for a loan.
Your debt-to-income ratio (DTI) is a number that compares the total amount of debt you owe per month to your monthly earnings. You can find yours by taking your total recurring monthly debt and dividing it by your gross monthly income. Your recurring debt includes your mortgage, student loans, and other loans, and your gross income is everything you earn before taxes or other withholding.
Lenders use this number to help them predict a borrower’s ability to repay current and future debt. In general, lenders look for a DTI under 36%, but borrowers with a higher DTI may be approved if they are well qualified in other areas.
Getting approved for a personal loan is a multi-step process. Different lenders may have different processes, but typical steps are as follows.
Some lenders may offer loan prequalification. This allows you to see, based on a soft credit check, potential interest rates for your personal loan and terms you might qualify for. It can be a good way to compare your lending options and find the best offer.
Applying for a loan requires several documents. Before completing your personal loan application, collect all the paperwork you need.
Approaching this step proactively will help you streamline your application process, saving you time. It will also make it easier for your lender to review your eligibility and creditworthiness.
Personal loans usually require similar documents, no matter the lender, though. A few you should include are:
• Proof of identity such as a driver’s license or passport.
• Proof of current address such as a current lease agreement, utility bill, or proof of insurance.
• Verification of stable income and employment such as W-2s, bank statements, paystubs, or tax returns.
Once you submit all the necessary paperwork, the last thing to do is wait. Approval times vary between lenders and may be quick or lengthy depending on how complicated the application is. Some approvals happen within a day, while others may take up to 10 days.
After your lender approves your large personal loan, you’ll receive it in the form of a lump sum. Lenders may deduct any fees, such as origination fees, before disbursing the loan proceeds. A personal loan calculator can help you estimate your loan payments.
💡 Quick Tip: Just as there are no free lunches, there are no guaranteed loans. So beware lenders who advertise them. If they are legitimate, they need to know your creditworthiness before offering you a loan.
Regular installment payments begin once your large personal loan is approved and you receive the funds. The loan agreement will state the loan terms, interest rate, and what each payment will be, in addition to other details about the loan.
While it might not be impossible, borrowing a large loan with bad credit won’t be easy. Lenders tend to favor low-risk borrowers who are more likely to repay their loans on time and in full. A strong credit history provides some assurance that a borrower will do that. But poor credit or no credit at all may look to lenders like a likelihood to default.
Lenders willing to loan to borrowers with bad credit typically require different data to evaluate their application, however. For example, they might ask the borrower to show a history of utility payments or information from their bank account. Lenders may also limit borrowing amounts and charge higher interest rates to applicants with bad credit.
Additionally, borrowers with poor credit can improve their chances by opting for a secured personal loan, one for which they pledge collateral to guarantee the loan. This may work well for someone who struggles with credit but has assets and sufficient income to make loan payments. If the borrower defaults on the loan, the lender has the right to seize the asset pledged as collateral.
After some research, you might decide a personal loan isn’t right for you. Or, you may struggle to get the level of financing you want. In that case, there are alternatives to a personal loan. For example, you could consider these choices if you have equity in your home or other real estate:
• Cash-out refinancing: A cash-out refinance allows you to replace your existing mortgage with a new, larger loan. After the original mortgage is paid off, you can use the difference as you like. This option works best if you have a significant amount of equity built up in your home and have a high credit score.
• Home equity loan: Like a cash-out refinance, a home equity loan depends on your built-up home equity. However, it is a second, additional, mortgage, rather than one new mortgage. By borrowing against your equity, the loan has collateral behind it, making it a secured loan.
• Home equity line of credit (HELOC): Like a home equity loan, you use your home equity to access a HELOC. It acts as a line of credit you can tap into when you need it, and you only pay interest when you borrow. This works best for a homeowner who needs smaller amounts of money over a longer-term, rather than just one lump sum.
A large personal loan is one that is typically in the range of more than $50,000. It can allow you to pay off debts or make significant purchases. However, it may require a high credit score, a solid employment history, and other factors to qualify, and it can bring its own set of pros and cons as well.
Finding the right large personal loan for your financial needs and situation may take some time, but comparing lenders is a good way to get started. Not every lender offers large personal loans. If you are looking for a sizable loan, consider SoFi Personal Loans, which range from $5,000 to $100,000 for eligible applicants.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
About the author
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Small cap stocks are stocks in smaller companies, typically those worth between $250 million and $2 billion. Small cap stocks often have high growth potential, which makes them a potentially attractive investment. However, while investors may see higher returns with these stocks, they may also mean higher volatility and risk levels.
For investors considering adding small cap stocks to their portfolios, it’s essential to understand how these stocks work and the advantages and disadvantages that come with this type of investment.
With a market cap between $250 million and $2 billion, small cap companies are usually moderately young companies. Small cap stocks typically have some growth potential, but they may not have a longstanding market history. Therefore, these stocks are considered to be riskier than mid-cap stocks or large cap stocks.
💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.
Market capitalization, or market cap, is a measure of an individual company’s value. The market cap represents the value of total outstanding shares. Investors can use this value to compare similar companies as well as consider future growth predictions.
To calculate a company’s market cap, multiply the total number of outstanding shares by the current share price. For example, let’s say a company has 15 million outstanding shares at a share price of $25 per share. Using this calculation, the company’s market cap would be $375 million.
Due to share price fluctuations, the market cap fluctuates over time. To find the number of outstanding shares, investors can review the “capital stock” numbers on a company’s balance sheet. This information is updated during the quarterly filings with the Securities and Exchange Commission (SEC).
Small cap stocks may be a good investment as part of a diversified portfolio, but there are risks. The market cap of a company can give investors an idea of the risk and reward of purchasing individual stocks. Purchasing small cap stocks may be riskier than buying stocks of larger companies because the companies are often still in growth mode. In addition, small cap companies often have fewer resources than large-cap companies, and may have less access to liquidity.
Due to these factors, any market dip can negatively impact small cap stocks. Conversely, smaller companies often have higher upside potential, and small cap growth stocks may deliver higher returns than their peers. Still, investors who choose these investments may have to weather market volatility along the way to growth.
There are several benefits to allocating some of your portfolio into small cap stocks.
When comparing large cap stocks to small cap stocks, small cap stocks tend to have a higher growth potential over the long-term. For much of the stock market’s history, small cap stocks had higher returns than large-cap stocks, and other asset classes.
This growth potential makes small cap stocks an attractive investment choice for investors. They tend to perform particularly well after recessions, during economic expansion.
Analysts usually spend less time analyzing small cap stocks, so they get less attention from investors which can lead to lower demand — and lower prices. Therefore, investors may be able to leverage the inefficiencies of the market for potentially better returns.
Specific regulations may not allow financial institutions such as hedge funds and mutual funds to heavily invest in small cap stocks. Therefore, it’s unlikely that large investments from financial institutions will artificially increase the stock price.
While small cap stocks have their benefits, there are also several drawbacks that investors should consider.
Investing in small cap stocks tends to have significant risk for investors. Since they’re often younger companies, small cap companies do not always have a time-tested business model. If the company’s management can not make appropriate adjustments to the business model, it may yield poor financial or operational results.
Also, because small cap companies may lack the resources such as capital or access to financing that larger companies have, they may struggle to expand the business or fill in cash flow gaps, especially if the economy hits hard times.
Due to the limited availability of research and analysis done on small cap stocks, investors may have to spend a significant amount of time researching each investment option.
Small cap stocks tend to have less liquidity than large cap company stocks. Since there are fewer shares available, investors may not be able to purchase the stock. Conversely, investors may not be able to sell their shares at a reasonable price. The liquidity of small cap stocks adds to the risk of investing in this type of stock.
Investors can purchase small cap stocks through a brokerage firm or an individual investment account. Since there’s often less public information available about small cap stocks, investors must do their own due diligence in researching companies to understand their potential risks and returns.
Investors who don’t have the time or expertise to determine which individual small cap stocks to buy can invest in small cap companies by purchasing mutual funds or exchange-traded funds (ETFs) that track a broader range of small cap indexes. Some funds may also have unique characteristics within them, such as growth- or value-oriented stocks.
Buying mutual funds and ETFs allow investors to pool funds with other investors to sell and buy buckets of market securities. This type of investing aims to mitigate risks by diversifying investments. Instead of investing in a single company, fund investors are purchasing shares in dozens or hundreds of companies. Investing in mutual funds and ETFs is more of a passive investment strategy that doesn’t require investors to make trades actively.
💡 Quick Tip: Are self directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).
Even though small cap mutual funds and ETFs provide diversification within a specific asset class, investors can further reduce their risk exposure by expanding portfolio diversification into a broader mix of assets.
Depending on market conditions, different types of stocks may perform differently. The concept can apply to stocks of companies that vary in sizes. Depending on what the market is doing, small, medium, and large companies may either beat the market returns or underperform.
When diversifying a portfolio, investors may start by determining their investment goals, risk tolerance, and time horizon. Then, by assessing these factors, they can decide an appropriate asset allocation to determine the portfolio’s percentage that may include stocks. A typical example is a portfolio composed of 60% stocks and 40% bonds.
Investors use the same factors (time horizon, goals, and risk tolerance) to decide the mix of stocks that will go into the portfolio’s stock percentage portion. Then, as market fluctuations happen, allocations of the portfolio will perform inversely.
For instance, as small cap stocks are rising, mid cap stocks may fall. In this case, small cap stock prices’ upward movement can offset the decrease in mid cap stock prices, thus mitigating losses.
Small cap stocks are shares of companies with market caps ranging from $250 million to $2 billion. Although small cap stocks have the potential for long-term growth, they tend to come with more risk. With this in mind, building a diversified portfolio with a broader range of investments can help minimize your risk exposure.
But, attempting to build an entire portfolio from scratch and keep it balanced can be time-consuming and a risky venture if you’re an average investor. Instead, many investors choose to get small cap exposure by purchasing mutual funds and exchange-traded funds (ETFs), which mimic the returns of indices that track stocks meeting certain criteria.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
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SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
The Free Application for Federal Student Aid, or FAFSA®, is a form students should fill out each school year to apply for college grants, work-study programs, federal student loans, and certain state-based aid.
Typically, the FAFSA becomes available on October 1 for the following academic year. The 2025-2026 academic year was an exception. Due to form revisions and adjustments to how student aid is calculated, the application wasn’t available until December 31, 2024. The three-month delay had a domino effect, pushing out deadlines for college admissions and financial aid offers.
For the 2025-2026 school year, the FAFSA will be released in phases. Some students will get access on October 1, 2025, with the remainder able to apply on or before December 1.
Try not to let the staggered rollout throw you off your game. If you fail to complete the form or miss the FAFSA deadline, you may not receive financial aid that could help you pay for college. In fact, you should aim to fill out your FAFSA as early as possible, since there is a limited amount of aid available.
Read on for updated federal, state, and institutional FAFSA deadlines to know.
The FAFSA is the online form that you must fill out to apply for financial aid from the federal government, state governments, and most colleges and universities. The form requires students and their parents to submit information about household income and assets. That information is used to calculate financial need and determine how much aid will be made available.
If you are a dependent student, you will need to submit your parents’, as well as your own, financial information. If you are considered independent, you are not required to submit your parents’ financial information.
If you are already in school, remember that the FAFSA must be filled out every year, even if your income and tax information haven’t changed.
Federal financial aid includes student loans, grants, scholarships, and work-study jobs. In general, federal and state aid requires that students:
• demonstrate financial need. Though there is some non-need based aid, such as unsubsidized student loans.
• be a U.S. citizen or an eligible noncitizen.
• be enrolled in a qualifying degree or certificate program at their college or career school.
For further details, take a look at the basic eligibility requirements on the Student Aid website .
Generally, it makes sense to submit the FAFSA promptly after the application release. Some aid is awarded on a first-come, first-served basis, so submitting it early can improve your chances of receiving financial help for college.
May 1 is traditionally National College Decision Day, when applicants must inform the colleges they applied to whether they’ll be attending. Make sure you understand the deadlines for the colleges you applied to — they may be different.
You must file the FAFSA no later than June 30 for the school year you are requesting aid for. For the academic year 2025-26, you must file by June 30, 2026, at the very latest.
This FAFSA deadline comes after you’ve already attended and, likely, paid for school. You generally don’t want to wait this long. However, if you do, you can often receive grants and loans retroactively to cover what you’ve already paid for the spring and fall semester. In some cases, you may be able to apply the funds to pay for summer courses.
Individual states and colleges have different financial aid deadlines — which may be much earlier than the federal deadline. Here’s a look at two other key FAFSA deadlines to know.
While students have until the end of the school year to file the FAFSA, individual schools may have earlier deadlines. That means you need to get your FAFSA application in by the school’s date to be considered for the college’s own institutional aid. So if you are applying to several colleges, you may want to check each school’s FAFSA deadline and complete the FAFSA by the earliest one.
While filling out your FAFSA, you can include every school you’re considering, even if you haven’t been accepted to college yet.
States often have their own FAFSA deadlines. You can get information about state deadlines at
Studentaid.gov . Some states have strict cutoffs, while others are just best-practice suggestions — so you’ll want to check carefully. States may have limited funds to offer as well.
Typically, the FAFSA becomes available on October 1, almost a full year in advance of the year that aid is awarded. For the 2025-26 academic year, the FAFSA opened a few months later than usual. However, the federal government gives you until June 30 of the year you are attending school to apply for aid.
It’s generally recommended that students fill out the FAFSA as soon as possible after it’s released for the next school year’s aid to avoid missing out on available funds. Plus, as noted above, there are often earlier school and state deadlines you’ll need to meet.
So what happens after you hit “submit” on your FAFSA? Here’s a look at next steps:
• Wait for your Student Aid Report (SAR) . If you submitted your FAFSA online, the U.S. Department of Education will process it within three to five days. If you submit a paper form, it will take seven to 10 days to process. The SAR summarizes the information you provided on your FAFSA form. You can find your SAR by logging in to fafsa.gov using your FSA ID and selecting the “View SAR” option on the My FAFSA page.
• Review your SAR. Check to make sure all of the information is complete and accurate. If you see any missing or inaccurate information, you’ll want to complete or correct your FAFSA form as soon as possible. The SAR will give you some basic information about your eligibility for federal student aid. However, the school(s) you listed on the FAFSA form will use your information to determine your actual eligibility for federal — and possibly non-federal — financial aid.
• Wait for acceptance. Most college decisions come out in the spring, often March or early April. If you applied to a college early action or early decision, you can expect an earlier decision notification, often around December. Typically, students receive a financial aid award letter along with their acceptance notification. This letter contains important information about the cost of attendance and your financial aid options. However, due to the FAFSA delays, you may be waiting longer on your financial aid offer.
Receiving financial aid can be a great relief when it comes to paying for higher education. Your financial aid award letter will include the annual total cost of attendance and a list of financial aid options. Your financial aid package may be a mix of gift aid (which doesn’t have to be repaid), loans (which you have to repay with interest), and federal work-study (which helps students get part-time jobs to earn money for college).
If, after accounting for gift aid and work-study, you still need money to pay for school, federal student loans might be your next consideration. As an undergraduate student, you may have the following loan options:
• Direct Subsidized Loans Students with financial need can qualify for subsidized loans. With this type of federal loan, the government covers the interest that accrues while you’re in school, for six months after you graduate, and during periods of deferment.
• Direct Unsubsidized Loans Undergraduates can take out direct unsubsidized loans regardless of financial need. With these loans, you’re responsible for all interest that accrues when you are in school, after you graduate, and during periods of deferment.
• Parent PLUS Loans These loans allow parents of undergraduate students to borrow up to the total cost of attendance, minus any financial aid received. They carry higher interest rates and higher loan origination fees than Direct Subsidized and Unsubsidized Loans.
If financial aid, including federal loans, isn’t enough to cover school costs, students can also apply for private student loans, which are available through banks, credit unions, and online lenders.
Private loan limits vary by lender, but students can often get up to the total cost of attendance, which gives you more borrowing power than you have with the federal government. Each lender sets its own interest rate and you can often choose to go with a fixed or variable rate. Unlike federal loans, qualification is not need-based. However, you will need to undergo a credit check and students often need a cosigner.
Keep in mind that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that come with federal student loans.
💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.
Completing the FAFSA application allows you to apply for federal aid (including scholarships, grants, work-study, and federal student loans). The FAFSA form is generally released on October 1 of the year before the award year and closes on June 30 of the school year you are applying for.
The 2025–26 FAFSA will be released to a limited number of students on October 1, 2025. All students should have access on or before December 31, 2025. That application will close on June 30, 2026. However, individual colleges and states have their own deadlines which are typically earlier than the federal FAFSA deadline. Try to submit your form as soon as possible, since some aid is awarded on a first-come, first-served basis.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
About the author
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOIS0124019
No one wants to deposit a check that is fake or that bounces. That can trigger fees, not to mention frustration. Verifying a check can help protect you in this situation.
Perhaps you have received a check from someone you don’t know well, or the check appears odd, or you are simply aware of the fake check scams out there and prefer to be cautious with your bank deposits.
To help you avoid counterfeit checks, learn how to verify a check here. This can help cut down on the likelihood that you will be involved with fraudulent activity or simply a check that bounces.
Check verification is a process in which the payee, or recipient of a check, confirms that the check is valid and good. In other words, you are making sure that the check can be cashed, that it is not fraudulent, and that it will not bounce and trigger fees.
At a time when there’s a significant amount of fraudulent activity and fees, this can be a valuable process, saving you time, energy, and cash.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
If you’re curious about how to validate a check, know this: Banks must process check funds quickly, sometimes as fast as two days by law. The bank may say that a check has cleared and the funds are available for use, but this doesn’t necessarily mean that the check is valid.
It can take a few weeks to identify a fake check in some cases, and by that time it might be too late. You, the recipient, may have thought the funds were available and tried to use them.
To determine if a bank check or cashier’s check (vs. an electronic or e-check) is valid, consumers may have to do more than just a physical inspection of the check.
Here are a few ways to identify if a check is fake or valid.
• Ensure a legitimate bank issues the check. Although a valid bank might issue some fake checks, a sure giveaway of a fake check is that a fake bank name is on it. To locate an FDIC insured bank in the US, consumers can use the FDIC BankFind Suite.
• Call the bank the check is from. Look up the bank’s phone number on its website instead of using the phone number listed on the check. The number on the check might be a part of the scam, so it’s essential to call the official direct line to confirm the check’s validity. The bank might need the check number, issuance date, and amount to confirm if the check is real.
• Complete an ABA routing number lookup. Developed by the American Bankers Association in 1910, the ABA routing number identifies the financial institution responsible for the payment. To make sure a check is valid, use a routing number lookup system for verification.
• Take into consideration the origin of the check. If the check came from an unknown source, it’s wise to be skeptical of the payment. Scammers usually communicate via email or text message, which may contain grammatical errors.
• Confirm the address the check was mailed from. If a check has a postmarked address that doesn’t match the issuing bank, it may denote a fake check. Be extra wary of any check that is sent from overseas.
• Look for watermarks, security threads, or other security features printed on the check. If a scammer copies any of these features, the quality is often questionable.
• Compare the check amount to the request. If the check amount is greater than the expected amount, this is a sign of a hoax the scammer may use to get the check receiver to wire funds back to them when the check is deposited.
If you receive a considerable number of checks on a regular basis (say, you run your own business), you might want to look into check verification services that help with this process.
If you hire one of these services, they can help you figure out if the check is likely to be good. They can reveal if the check comes from someone with a record of trying to pass off bad checks. They cannot confirm that a check is written against an account with sufficient funds, but they can help you avoid depositing a check from someone with a suspicious history.
No account or overdraft fees. No minimum balance.
Up to 3.80% APY on savings balances.
Up to 2-day-early paycheck.
Up to $3M of additional
FDIC insurance.
Wondering how to know if a check is fake? There may be some telltale signs that a check is bogus. Learn what to look for.
Legitimate checks will have one or more edges that are rough or perforated. If a check feels smooth all the way around, it could be fake.
An authentic check is printed on thick, matte paper, not flimsy stock. Thin paper can indicate a fake check.
Check numbers appear in two places on legit checks: both the upper right-hand corner and on what’s known as the MICR, or the magnetic ink character recognition line at the bottom.
If the numbers don’t appear in both places and match, you could be holding a bogus check.
As mentioned above, the MICR line contains important information. If the printing there looks raised or shiny, the check could be fake. You could also run a damp finger over the printing. If it smears, sorry: The check is likely fake.
Checks should have the bank address printed right on it. You can compare this to the official bank address and make sure they match up. Also, a PO box as the bank address can be a red flag that the check is not authentic.
💡 Quick Tip: While checks can get lost in the mail – or even stolen, there is no chance of that happening with a direct deposit. Also, if it’s your paycheck, you won’t have to worry about your or your employer’s info ending up in the wrong hands.
As you work to verify a check, it’s important to remember one thing: When you verify funds, that is not a guarantee that the money will be available when you go to cash the check. The funds may be available at that moment, but you cannot put a hold on the cash nor reserve it. When you actually deposit the check, it could bounce.
Unless the check is an authentic certified check or cashier’s check, there is still the possibility that it might not clear.
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Although criminals are coming up with new bank fraud ploys all the time, there are a few current common scams to be aware of.
In this scam, the scammer contacts a check recipient and says that they won the lottery or are entitled to an inheritance, usually from another country. The scammer says they will send a cashier’s check with the proceeds, but the recipient must pay the fees and taxes. So, they are instructed to deposit the funds and wire money to the scammer for taxes and fees.
Some scammers may visit an online auction site or classified listing site and bid on an item; pay in advance for a service; or rent an apartment. The scammer will then send a cashier’s check, usually for more than the price agreed upon. Once you bring this to their attention, they will request the recipient to deposit the check and then send the extra funds back to them before you find out the check was fake.
With secret shopper scams, scammers pretend to have a job opportunity that allows employees to work from home. The scammer may send a check as a starting bonus and request the employee pay the activation fee. The hope is that the scammer receives the funds from the activation fee before the fake check bounces.
Another way secret shopper scammers take advantage of people is by hiring someone and stating their first assignment is to review retailers that sell gift cards. In this case, the shopper may get a check with instructions to deposit it into their account and then wire the funds to a third party. Unfortunately, once the funds are wired to someone else, the third party vanishes.
Scammers sometimes try to hire personal assistants online. Once the scammer hires someone, the scammer may send a check and tell the new employer to use the money to purchase gift cards, supplies, or equipment for the client. After the scammer receives the gift card PIN, they can use the funds right away. This will leave the personal assistant without the money when the bank determines the check is counterfeit.
If you have wired funds to a scammer, reach out to the company transferring the money as soon as possible, reporting the fraud, and filing a complaint.
Two commonly used money transfer companies are Western Union™ and MoneyGram®, and both have departments dedicated to fraud awareness. If you think you may have been scammed, you can report suspected fraud to the money issuer by phone.
• Western Union Fraud Hotline at 1-800-448-1492.
• MoneyGram Customer Care Center at 1-800-926-9400.
Both companies also have online forms that can be used to report suspected fraud. You can request a transfer reversal and, while it’s unlikely they will do this, it’s essential to ask at least.
If you used a money order to pay the scammer, reach out to the money order issuing company. Ask if you can request a stop payment or if they can track the money order and stop the delivery of the money.
If you sent the money order by US mail, try reaching out to the U.S. Postal Inspection Service® or another service carrier you used.
In the event, the scammer requested gift cards, contact the gift card issuing company immediately and explain that the company’s gift cards were used in a scam. If you contact them quickly, they might be able to refund the money. Remember, gift cards are not a form of payment, they are a gift. So, it’s a red flag if someone is trying to pay you using gift cards.
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While you can’t prevent fraudsters from attempting to steal your money, you can take steps to keep your money safe by using a secure bank account.
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.
There are several ways to verify if a check is valid, including confirming the bank information, checking the routing number, and inspecting the paper and ink.
There are ways to validate a check online in certain situations. For businesses that receive a significant number of electronic checks, or e-checks, online verification can be a tool that helps reduce the risk of depositing checks that will bounce.
A check verification system is typically a business that verifies a bank account status in real time to determine if a check is drawn on a valid account. There are also systems consumers can use to verify a check, such as confirming the ABA number and inspecting the ink and the paper.
Photo credit: iStock/andresr
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