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Strategic Overview: What Is a Cash-Secured Put?

Strategic Overview: What Is a Cash-Secured Put?


Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.

A cash-secured put is an options strategy where a seller writes (sells) a put option while setting aside enough cash to buy the stock if assigned.

This strategy is suitable for investors with a neutral-to-bullish outlook, believing a stock may drop in price over the short term but increase in the long term. Some investors use cash-secured puts to buy a stock at a lower price, while others use the strategy to generate income from the option premium.

The Details of Selling a Cash-Secured Put

A put option gives the buyer the right to sell a stock at a specific price (the strike price) by a certain date. The seller takes on the obligation to buy the stock at that price if the option is exercised.

In a cash-secured put strategy, the seller collects a premium when the option is sold and sets aside enough cash to buy the stock if assigned. This approach is typically used to generate income or to acquire shares of a stock at a lower price. For a cash-secured put, sellers choose a put that is at- or out-of-the-money, such as one with a lower strike price than the current stock price.

Selling cash-secured puts is a moderately bullish options trading strategy that involves selling a put option with the expectation that it will either expire worthless or the underlying security temporarily drops in price, providing an opportunity for the seller to purchase the security at the lower price. In many cases, the seller hopes the stock will dip just enough for the option to be exercised, allowing them to buy the stock at a lower cost.

Recommended: The Meaning of a Bullish Market

What to Consider With Cash-Secured Puts

Cash-secured puts are geared towards sellers who want to purchase the underlying stock at a lower, predetermined price if the option is exercised. Sellers earn a premium immediately when they sell the cash-secured put. This strategy is typically used by sellers aiming to acquire a stock at a lower price if assigned, while also collecting a premium if the option expires.

If the market price of the security is lower than the strike price at the exercise date, the seller is obligated to purchase the security at the strike price — which, in the case of a cash-secured put, enables the seller to acquire the desired stock at a lower price. This happens only if the put buyer chooses to exercise the option early, which is uncommon but possible. There is a small risk of early assignment, which could require the seller to purchase the stock before the expiration date if the price drops significantly below the strike price. While uncommon, the put buyer can choose to exercise the option early, which would require the seller to purchase the stock before the expiration date.

If the market price of the security is higher than the strike price at the exercise date, the put option typically expires worthless, and the investor retains the premium. In this case, the seller has earned the premium amount and profited from the trade, as they say in options terminology. There is a rare but possible risk of early assignment, usually if the stock price falls sharply, which could require the investor to buy shares sooner than expected.

Sellers are required to have enough cash in their trading account to cover the full purchase amount. This cash amount must be kept in their brokerage account for the duration of time they hold the put, which is why it’s called a cash-secured put.

Some sellers write puts primarily to collect the options premium without intending to purchase the underlying stock. In these cases, they may write a naked put, which does not require holding cash to cover the purchase of the security, but does require sufficient margin in the account to meet potential obligations.

The seller would hope that the put expires without obligating them to buy, and they could pocket the premium amount. Cash-secured puts, again, are geared towards investors who actually want to purchase the underlying security on or before the exercise date at the price they chose when selling the put.

Cash-secured puts have both potential benefits and risks, and investors should evaluate whether this strategy aligns with their financial goals and risk tolerance.

Finally, user-friendly options trading is here.*

Trade options with SoFi Invest on an easy-to-use, intuitively designed online platform.

Pros & Cons of Cash-Secured Puts

Options strategies require the investor to be aware of multiple issues and cash-secured puts are no different.

What Are the Pros of Cash-Secured Puts?

Cash-secured puts offer potential income and the opportunity to buy stock at a lower price, but the strategy comes with some trade-offs. Sellers typically hope the stock dips just enough for the option to be exercised. However, if the price drops too far, the potential losses may outweigh the benefit of buying at a discount.

•   The seller earns income from the initial premium paid, but may still incur losses if the underlying security’s price declines significantly.

•   If the stock price is below the strike price at expiration, the seller will be assigned shares at the strike price, generally at a lower price than when the trade was initiated.

Note that if the stock price drops below the strike price and the shares are assigned, the investor will still pay the strike price for the shares. Be sure to think about what determines the stock price of the underlying security.

•   If the price ends up increasing instead of decreasing, the put will expire worthless and the seller the premium and the cash set aside for the stock purchase.

•   If a seller expects a short-term dip in stock price followed by long-term appreciation, cash-secured puts may offer a way to buy the stock below market value.

•   If assigned, the seller’s long-term gains from holding the stock could be significant, even though the option premium itself is capped.

Recommended: Learn About the Greeks in Options Trading

What Are the Cons of Cash-Secured Puts?

While cash-secured puts can offer strategic advantages, they also come with potential risks and trade-offs that sellers should consider carefully.

•   The security might drop below the strike price and, in extreme cases, could even fall to $0. Although rare, corporate bankruptcies do occur. In this case, the investor would still be obligated to purchase the security at the higher strike price, and would then hold a worthless security. However, even if the security plummets, the investor would still earn the premium amount, and their losses would be less than if they’d simply purchased the security instead of selling the put option.

•   When entering the trade, the investor must be prepared to accept the strike price no matter what happens in the market before the exercise date.

◦   Maximum loss = (strike price – $0) x 100, minus any premium received

◦   Maximum gain = premium amount

◦   This assumes the seller is assigned and the stock becomes worthless. This is unlikely but possible (e.g.,if the company goes bankrupt)

•   A cash-secured put allows the investor to wait for a dip in the security’s price. If the stock price does not drop to the strike price before expiration, the put option expires worthless, and the investor does not acquire the stock. At that point, they will decide whether to buy at the current market price or pursue a different trade.

If a seller knows they want to purchase the security they may want to consider other investing strategies or simply purchase the security at the current market price instead of using the cash-secured put strategy.

•   The seller must hold enough cash to cover the cost of the security for the duration of the trade. This means they can’t invest that cash into other trades.

•   From a short-term perspective, the potential losses from a cash-secured put option trade are high and the potential gains from the put option itself are low.

Tips for Employing a Cash-Secured Put Strategy

There are several ways to refine a cash-secured put strategy based on market conditions and individual goals.

•   If a seller is bullish on a security, they should choose an out-of-the-money put option with a strike price below the current market price of the stock.

•   When a seller sets a strike price that is far out-of-the-money, they receive a lower premium and the option is less likely to be exercised.

•   Sellers who are very bullish on a security in the short term should choose other investing strategies. Cash secured-put options are best if the investor has a neutral to slightly bullish view of the security.

•   It’s best to sell cash-secured put options when implied volatility of a security is high, because this results in higher option premiums. One way to find securities with high implied volatility is to look for stocks that have recently declined. Some price drops may be short-term, but it’s important for sellers to research whether a stock is more likely to bounce back before using this strategy.

•   Due to the risk of a security’s price dropping more than the investor expects in the short term, it’s best to only sell put options for companies that the investor has researched.

•   Investors generally sell puts with 30-90 day time frames, though some investors choose to sell weekly put options.

The Takeaway

Cash-secured puts are one possible way to generate income while an investor waits for a stock to drop to their desired entry price. Selling cash-secured puts is a moderately bullish options trading strategy that involves selling a put option with the hope that it either expires, or the underlying security temporarily drops in price and lets the investor purchase the security at the lower price.

Although this strategy is not without risk, it can allow the investor to generate short-term income on the sale of the put, set the price (strike price) at which they will buy the stock if assigned, and enter a stock position at a lower price than when the trade is initiated.

Investors who are ready to try their hand at options trading despite the risks involved, might consider checking out SoFi’s options trading platform offered through SoFi Securities, LLC. The platform’s user-friendly design allows investors to buy put and call options through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.

Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors. Currently, investors can not sell options on SoFi Active Invest®.

Explore SoFi’s user-friendly options trading platform.

🛈 While investors are not able to sell options, including secured puts, on SoFi’s options trading platform at this time, they can buy call and put options to try to benefit from stock movements or manage risk.

Photo credit: iStock/Vanessa Nunes

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SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
For a full listing of the fees associated with Sofi Invest please view our fee schedule.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Common Health Insurance Terms & Definitions

Common Health Insurance Terms & Definitions

When shopping for a new health insurance policy — or when your employer introduces a new health plan — you might wonder what certain health insurance terms mean.

In this guide, you’ll discover health insurance terminology for beginners and anyone who’s ever been confused about a policy, so you can make informed decisions.

Key Points

•   Accident-only policies cover only injuries from accidents, not illnesses.

•   Benefits refer to the health services covered by insurance plans.

•   A claim is an itemized bill submitted to the insurance company for payment.

•   Coinsurance is the percentage of costs the insured pays after the deductible.

•   The out-of-pocket maximum sets the limit on annual healthcare expenses.

Top Health Insurance Terms to Know

Discover the health insurance definitions that can help you better utilize health insurance for you and your family.

Accident-Only Policies

These policies pay only in cases that were due to an accident or injury.

Benefits

These are the health care services covered by the insurance plan for an individual. Your health benefits might also be called a “benefits package.”

Claim

An itemized bill that shows all of the services and procedures that were provided to the member.

Coinsurance

This refers to the percentage of the medical charge you must pay out of your own pocket after meeting your deductible. The rest will be paid by your health insurance company. For instance, if you have a 15% coinsurance plan, you would pay 15% of each medical bill (after paying the full deductible), and the insurer would cover the rest.

Contract

In most cases, this means the insurance policy, which is a contract between the insurance company and the policyholder.

Copayment

The amount you pay out of pocket when you receive medical care or a prescription drug. A copayment is typically paid in person at the doctor’s office.

Deductible

This refers to the amount you must pay out of pocket before your insurance starts paying some of your health care expenses. The deductible resets at the beginning of the year or when you enroll in a new health insurance plan.

If your deductible is $2,000, your health insurance plan won’t cover any services until you have paid $2,000 out of pocket for the year. Someone with a high deductible and lots of medical costs could consider getting help in the form of medical loans, which are personal loans for medical and dental procedures.

Recommended: Your Guide to Insurance

Disability Benefits

If you are unable to work because of an illness or injury, the insurance company pays for lost wages. You’ll receive a portion of your income until you are able to return to work. Each policy defines what constitutes a “disability,” so you’ll need to meet those requirements and submit medical paperwork before receiving payment.

Health Insurance

Health insurance terminology 101: This is a contract that requires your health insurer to pay some or all of your health care costs in exchange for a premium.

Health Maintenance Organization (HMO)

An HMO is a health plan that provides health care services to members through a network of doctors, hospitals, and other health care providers.

HMOs are popular alternatives to traditional health care plans because they usually have lower-cost premiums while still offering a variety of services.

Health Savings Account (HSA)

This is pretax money you set aside to pay for qualified medical expenses. You and your employer may contribute.

One benefit of an HSA is that funds roll over if you don’t spend them by the end of the year.

Recommended: How Do I Start a Health Savings Account?

Indemnity Plan

Sometimes referred to as a fee-for-service plan, an indemnity plan allows you to go to any physician or provider you want, but requires that you pay for the services yourself and file claims in order to get reimbursed.

Mandated Benefits

This refers to the health care benefits that state or federal law say must be included in health care plans. Mandated health insurance benefit laws may require plans to cover substance abuse treatment or maternity services; cover treatment by providers like chiropractors, acupuncturists, and midwives; or include dependents and domestic partners.

Out-of-Pocket Maximum

This is when you seek out services from providers who aren’t in your HMO’s or PPO’s network. Usually, HMOs will only pay for care received within its network. If you’re in a PPO plan, you will have to pay more to receive services outside the PPO’s network.

Out-of-Network Services

This is when you seek out services from providers who aren’t in your HMO’s or PPO’s network. Usually, HMOs will only pay for care received within its network. If you’re in a PPO plan, you will have to pay more to receive services outside the PPO’s network.

Preexisting Condition

This health insurance term refers to a medical problem or illness you had before applying for health care coverage. If you have a preexisting condition, it’s a good idea to shop around and educate yourself when choosing an individual health plan.

Preferred Provider

This refers to a provider who has a contract with your health plan to provide services to you at a discount. If you have a favorite doctor, you might want to see if they are a preferred provider or “in network” for any new insurance plan.

When you’re looking to find a new physician, choosing a “preferred provider” found via the plan’s website will help keep medical costs down.

Your health insurance or plan may have preferred providers who are also “participating” providers. Participating providers can also have a contract in place with your health insurer, but you may have to pay more.

Preferred Provider Organization (PPO)

PPO plans provide more flexibility than HMOs when choosing a doctor or hospital. They also feature a provider network, but have fewer restrictions on seeing out-of-network providers.

PPO insurance will pay if you see a provider out of the network, though it may be at a lower rate.

PPO plans usually cost more than HMO plans.

Premium

This is the amount paid to the insurance company to obtain or maintain an insurance policy. Usually it’s a monthly fee.

Provider Network

This is a list of all the doctors, specialists, hospitals, and other providers who agree to provide medical care to the members of an HMO or PPO.

Waiting Period

This is the time an employer may make employees wait before they are eligible for coverage under the company’s insurance plan.

The Takeaway

Do you know your HMO from your PPO and HSA? Have you looked closely at copays, deductibles, and out-of-pocket maximums? Knowing health insurance terms can help you make an informed decision when looking at health insurance policies.

When the unexpected happens, it’s good to know you have a plan to protect your loved ones and your finances. SoFi has teamed up with some of the best insurance companies in the industry to provide members with fast, easy, and reliable insurance.

Find affordable auto, life, homeowners, and renters insurance with SoFi Protect.


Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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

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Mortgage & Homeowners Insurance Definitions

Mortgage & Homeowners Insurance Definitions

Whether you’re buying a home or shopping for new insurance coverage, it helps to understand basic homeowners insurance terms before you choose a policy.

The jargon used by real estate agents, lenders, and insurance professionals can be mystifying. It doesn’t help that terms for various types of homeowners insurance coverage often sound interchangeable but aren’t. Or that different lenders may have different requirements for the kinds of insurance coverage a borrower must have. Or that homeowners may require various types of coverage, and limits, based on their individual circumstances.

Need some clarity? Consider this homeowners insurance glossary a go-to resource.

Key Points

•   Homeowners insurance covers home structure, personal property, and liability, distinguishing it from mortgage and renters insurance.

•   Blanket insurance covers multiple properties under one policy, while flood insurance addresses water damage from natural sources.

•   Hazard insurance covers specific perils like fire or theft, requiring separate policies for other hazards.

•   Title insurance protects against ownership disputes, ensuring a clear property title.

•   Rental property insurance covers repairs, tenant injuries, and lost income, essential for landlords.

Blanket Insurance

Blanket insurance enables a property owner to cover multiple pieces of property with one policy. For example, a landlord who has many rental units might take out a blanket policy to insure them all.

A homeowners insurance policy also may be referred to as blanket insurance coverage because it offers more than one type of protection. (A standard policy may combine dwelling, personal property, and liability coverage, for example.)

Recommended: How Much Homeowners Insurance Do You Need?

Flood Insurance

A standard homeowners policy typically offers some coverage for unexpected water damage due to a plumbing malfunction or broken water pipe. But most standard homeowners policies do not cover damage caused by an overflowing body of water, like a creek, bay, or river. That kind of protection usually requires a separate flood insurance policy.

Some property owners may be required to carry flood insurance, especially if they live in a high-risk area.

Hazard Insurance

When you hear the term “hazard insurance,” it’s typically referring to the portion of a homeowners policy that kicks in when someone suffers a loss caused by certain hazards or “perils,” such as fire, hail, theft, a falling tree, or a broken pipe.

Not every hazard is covered by a standard policy, however. Homeowners usually need separate insurance to cover damage caused by a flood, earthquake, or sinkhole.

Recommended: Hazard Insurance vs. Homeowners Insurance

Homeowners Insurance

A typical homeowners policy covers the physical structure of an insured home and other structures on the property, personal belongings in the home, and additional living expenses if the owner can’t stay in the home after damage. (However, it is usually necessary to purchase separate insurance to cover costs related to an earthquake, flood, or sinkhole.)

A policy also provides liability coverage, which can protect you, as the homeowner, if you’re legally responsible for another person’s injury or property damage when it occurs on your property or from your activities. For example, if someone is injured because you neglected to fix your front porch step, liability insurance may help pay for that person’s medical bills. The liability portion of your policy also may provide protection if your pet bites a person or another animal, whether the bite occurs in your own yard or somewhere else.

There are no federal or state laws that require the purchase of a homeowners policy, but if you have a mortgage, you can expect your lender to require proof that you carry this type of insurance.

Homeowners insurance is not the same thing as mortgage insurance. Homeowners insurance mainly protects the homeowner when something unexpected occurs; mortgage insurance is designed to protect the lender if a borrower can’t make mortgage payments.

Homeowners insurance is also quite different from the protection offered by a home warranty. A home warranty is a service contract that generally covers the cost of repairing or replacing some appliances and major home systems when they malfunction, but home warranties are not required by lenders.

Mortgage Insurance

Mortgage insurance protects lenders against the possibility that a borrower might fail to make the payments on a home loan.

When a homebuyer appears to have a higher risk of defaulting, mortgage insurance can serve as a backup to reassure the lender that if the borrower fails to make the mortgage payments, the loan still will be paid. The lender doesn’t pay for this insurance — the borrower does.

Not everyone has to get mortgage insurance. But if you have a conventional loan and your down payment is less than 20% of the purchase price, you’ll probably be required to get private mortgage insurance, commonly called PMI — at least until you have 20% of the principal balance paid off.

The rules are a bit different for those who have a loan backed by the Federal Housing Administration (FHA) or Department of Agriculture (USDA). With an FHA loan, borrowers are required to pay a qualified mortgage insurance premium each month no matter how much they put down. USDA loans have a similar requirement, but the cost is referred to as a “guarantee fee.”

Renovation Insurance

Homeowners who are planning to make major renovations or repairs to a property may want to check with their insurance company to see what their homeowners policy covers.

Depending on the size of the project, they may decide it makes sense to add “dwelling under renovation,” “dwelling under construction,” or “builder’s risk” insurance to fill any coverage gaps. It can help with costs if the homeowner or someone else is hurt during a renovation, for example, or if the home or a nearby property is damaged.

If professionals will be doing the renovation, it’s also a good idea to ask for proof of their insurance coverage and to make a copy just in case there are problems. Contractors and subcontractors should have liability, property, and worker’s compensation insurance.

If the home will be unoccupied for an extended period while the work is being done, owners may want to consider adding vacant dwelling insurance during that time. (Vacant dwelling coverage also might offer protection for those who have moved into a new home but haven’t yet sold their old home.)

Recommended: How to Track Home Improvement Costs — and Why You Should

Rental Property and Home-Sharing Insurance

Owners who are renting a home to someone else may want to look at the pros and cons of purchasing rental property insurance vs. a standard homeowners insurance policy. Besides covering repairs if the home or other structures on the property are damaged, rental property insurance may cover the owner if a tenant is injured and makes a claim. An owner also might be able to receive reimbursement for lost income if the property is deemed uninhabitable due to a covered loss.

What about insurance for short-term rentals like Airbnb? Business use of a house is usually not included in homeowners insurance coverage. Home-sharing insurance may provide liability coverage but not damage to the home or coverage of personal belongings. You may need an add-on to your homeowner’s insurance.

Renters Insurance

If you’re a renter, renters insurance will cover your possessions if something is stolen or damaged. And it may help with certain costs if someone is injured in the rental home, or help pay for accommodations if the home is damaged and you have to move out temporarily.

Though renters insurance is mostly meant to protect a tenant who is leasing a property, it also can have benefits for the landlord. This is why some landlords require tenants to have renters insurance when they sign a lease. For the landlord, renters insurance can help take care of some of the things a homeowners policy or landlord policy doesn’t, including damage from a renter’s pet.

Title Insurance

When you buy title insurance, the title company searches for any ownership issues that might cause legal problems after you close on the property. It will look for any liens that might remain on the property, for example, or clerical problems that weren’t caught and fixed in the past.

If there aren’t any problems (or the problems are remedied), the title company will insure your claim to the property’s title. And if something does come up later — let’s say there’s a lawsuit because the title search missed something — the policy should cover the costs of resolving the problem.

There are two types of title insurance: Lenders title insurance protects the mortgage company from incurring any costs in a title dispute. Owner’s title insurance protects the homeowner. The mortgage company likely will require that you purchase lenders’ title insurance. Owner’s title insurance is optional, but once you buy it, the coverage lasts as long as you own your home.

Title insurance is not included in a homeowners insurance policy.

Umbrella Insurance

A separate liability insurance policy, umbrella insurance goes beyond the liability coverage provided by a standard homeowners or auto insurance policy.

It’s designed to expand your protection if a claim or lawsuit is filed against you, and it only kicks in if you exceed the liability coverage limit you have with your homeowner’s insurance policy.

If you own rental property, employ a housekeeper or gardener, have a trampoline or pool — or if you have substantial assets you wish to protect — you may want to talk to your insurance company about the added risk and whether umbrella insurance is right for you.

The Takeaway

When you’re buying a home or shopping for a new homeowners insurance policy, there’s a lot to manage. Understanding homeowners insurance terms is key in protecting this major investment. Shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium.

If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi and Lemonade offer homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.

Find affordable homeowners insurance options with SoFi Protect.


Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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.

SOPRO-Q225-013

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ATM Withdrawal Limits: What You Need to Know

ATMs can be a quick, easy solution when you need a fast cash infusion, but banks typically impose a limit on how much money you can withdraw in one day. If you are planning to withdraw a certain amount of cash, it can be wise to know whether you’ll actually be able to get the money you need from the nearest ATM. The typical amount is between $500 and $1,000.

Here, you’ll learn how much money you can likely withdraw from an ATM and how to get around these ATM maximum limits.

Key Points

•   ATM withdrawal limits are set by banks to manage cash availability and enhance security for consumers against potential fraud.

•   Daily withdrawal limits can vary widely, typically ranging from $300 to $5,000, depending on the bank and account type.

•   Premium checking accounts often have higher ATM withdrawal limits compared to standard accounts, reflecting the banking history of the customer.

•   To access more cash than the ATM limit allows, individuals can consider methods such as cash back at stores, withdrawals from savings accounts, or visiting a bank teller.

•   Understanding specific bank policies and planning ahead can help individuals navigate ATM withdrawal limits more effectively.

🛈 SoFi members interested in ATM withdrawal limits can review these details.

What Is an ATM Withdrawal Limit?

An ATM withdrawal limit sets a maximum amount of cash you can withdraw per day from these machines. The limits vary widely, from several hundred to several thousand dollars. Often, those with premium checking accounts may have higher limits than those with standard accounts.

The kind of ATM you’re using (in-network or out-of-network) can make a difference, too, with in-network often having higher limits.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

Why Do Banks Have ATM Withdrawal Limits?

While ATM withdrawal limits can be frustrating, they exist for two important reasons:

•   Cash availability: Banks want to make sure there is enough money available for all ATM users. But ATMs can only hold so much cash, and banks only have so much cash on hand at any one given time. Say you go to an ATM on the Friday before a long holiday weekend to get some spending money and find that there is no cash left. This doesn’t happen often, but it’s a possibility. Capping the amount of money that can be withdrawn at an ATM helps ensure that customers can’t clean out ATMs or drain the bank’s cash reserves.

•   Security: ATM withdrawal limits also protect consumers. If someone were to get hold of your debit card and PIN number, the ATM withdrawal maximum would prevent that fraudster from immediately draining your entire checking or savings account.

How Much Can I Withdraw From an ATM per Day?

The answer depends on the specific bank’s rules around withdrawals, with some capping at $300 and others going as high as $5,000 a day. A limit of somewhere between $500 and $1,000 is common.

In some cases, a withdrawal limit depends on a specific customer’s banking history or account type. A new customer with a basic checking account may have a lower withdrawal limit than an established customer with a premium checking account. If you have a student or a second chance account, your max ATM withdrawal might be lower than if you had a standard checking account.

Whether you are withdrawing from checking vs. savings can also make a difference. In some cases, how savings accounts work is to have a higher cap on how much you can withdraw at any one time. In others, you will find that you can pull more cash from an ATM using your checking account.

One thing to be aware of: You may be limited to how many withdrawal transactions you can make per month from your savings account. Check your financial institution’s policies for specifics.

You may also find that how much you can withdraw will depend on the type of ATM you are using. For example, you may be able to withdraw more from an in-network machine than an independent one at a gas station.

Here’s a chart showing the range of withdrawal limits for some popular banks:

Bank

Daily ATM Withdrawal Limit

Ally $1,000
Bank of America Varies; typically up to $1,500
Capital One Varies; typically $200 to $5,000
Chase Varies; typically $500 to $3,000
Citi Typically $1,500
PNC Varies; often $500 and up

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Up to 2-day-early paycheck.

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How to Work Around ATM Withdrawal Limits

If you need more cash than an ATM will allow you to withdraw, there are a few workarounds that can help as you manage your money.

Ask for Cash Back While Shopping

In some stores (like grocery stores), it’s possible to ask for cash back at checkout when making a purchase. While cash back may count toward your debit card’s daily purchase limit, it typically doesn’t count toward a daily ATM withdrawal limit.

The store will likely also have a cash back limit that applies on a per-purchase basis. That could mean you’ll need to make multiple purchases to withdraw the full amount of cash needed.

Withdraw From Savings

If you have both a checking account and savings account, you can withdraw money from a savings account when using an ATM. This can help avoid the daily checking account withdrawal limit.

There may, however, still be some limitations on ATM savings withdrawals, and this may vary with the kind of savings account you have.

Withdraw at the Window

If you bank at a brick-and-mortar location and the branch is open when you need more money, head inside. You can withdraw the amount you need by seeing a teller.

Contact Your Bank to Increase Your Limit

You may be able to negotiate a higher ATM withdrawal limit simply by contacting your bank’s customer service department and asking for a boost.

Recommended: ATM Cards vs Debit Cards: What’s the Difference?

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The Takeaway

ATM withdrawal limits are there for your protection as well as the bank’s, but that doesn’t mean they aren’t inconvenient at times.

If you regularly need cash, you may want to find out your bank’s daily ATM withdrawal limits and plan ahead. Or, you can work around the maximums in place and get cash from other sources. By using a bit of smart strategy, you can make sure you have the cash you need on hand.

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.

🛈 SoFi members interested in ATM withdrawal limits can review these details.

FAQ

Can you withdraw $1,000 at an ATM?

The amount you can withdraw will vary based on a number of factors, including your account type (standard or premium) and the type of ATM you are using (in-network or out-of-network).

Which ATM lets you withdraw the most money?

You may find you can withdraw more cash at an in-network than out-of-network ATM.

What is the maximum amount I can withdraw from an ATM at one time?

The amount you can withdraw from an ATM may range from $300 to $5,000 a day, depending on the financial institution and your particular account. Somewhere between $500 and $1,000 is typical.


About the author

Jacqueline DeMarco

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.


Photo credit: iStock/RgStudio

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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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


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

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Are Credit Card Rewards Taxable? Guide to Paying Taxes on Rewards

In some cases, the IRS (Internal Revenue Service) does consider credit card rewards taxable income and in some cases, they don’t tax earned rewards. Confused? Don’t worry: Read on to learn when credit card rewards are taxable income and when they aren’t.

What Are Credit Card Rewards?

To better understand how credit card rewards are taxed, it can help to know what credit card rewards are. When a consumer uses a credit card they may earn different credit card rewards, such as points, cash back, and airline miles.

Depending on their redemption value, these rewards can be worth up to hundreds if not thousands of dollars. Your cardholder agreement should outline the credit card rules for how to earn rewards using a specific credit card, as well as how to redeem them.

How the IRS Treats Credit Card Rewards

In some cases, credit card rewards are taxable; in other cases, no. Take a closer look at which types of rewards and in which scenarios credit card rewards are counted as taxable income by the IRS.

Rewards Treated as Rebates on Spending

Luckily, cash back rewards and other rewards like miles or points aren’t considered taxable income when earned by making purchases. The IRS considers these types of rewards as rebates, discounts, or bonuses rather than income.

The trick is that the cardholder has to spend a certain amount to earn a reward in order for the IRS to not classify the rewards as income. For example, if a new credit card offers $200 in cash back when the cardholder spends $2,000 within the first six months of opening their account, that $200 would not be considered taxable income.

Rewards Considered as Income

Certain rewards are considered income. The way to identify which rewards are taxable income is by looking at how they’re earned.

As mentioned previously, if someone spends money to earn rewards, those rewards won’t be taxed. If, however, someone is given a $150 gift card simply for signing up or referring a friend for a new credit card, that $150 is viewed as taxable income — because they didn’t spend any money to earn it.

When Are Credit Card Rewards Taxed?

Again, credit card rewards that aren’t earned through spending (such as some introductory bonuses) can count as income that the IRS will expect the cardholder to pay income taxes on. Some scenarios in which credit card rewards may get taxed include:

•   If you received a sign-up bonus simply for opening a credit card or account

•   If you earn a reward for referring a friend

When Your Credit Card Rewards Are Taxable

As briefly mentioned above, any monetary rewards that a cardholder didn’t earn through spending can be considered taxable income.

Let’s look at how this can work with two different credit card bonus offers. If a cardholder is offered $100 if they spend $1,500 in the first three months of having their account open and they spend enough to earn that bonus, that reward won’t count as taxable income. On the other hand, if a cardholder is offered a $100 gift card simply for opening their new account, they will need to pay income tax on the $100.

When Your Credit Card Rewards Are Not Taxable

As briefly mentioned above, credit card rewards aren’t considered taxable income if someone spends money to earn them. When a cardholder acquires the rewards (cash back, travel miles, etc.) through purchases, then those rewards are classified as a rebate or a bonus, not taxable income.

For instance, this may include:

•   Sign-up bonuses that require meeting a spending threshold

•   Rewards earned from credit card spending

•   Miles earned through travel

Are Business Credit Card Rewards Taxable?

It doesn’t matter if the rewards are earned with a personal credit card or a business credit card — the same rules surrounding income taxes apply.

Where business credit cards can affect taxes is when it comes time to take tax deductions. For example, if someone bought $2,000 worth of equipment for their business and earned $40 in cash back rewards doing so, they can only deduct $1,960 on their taxes. In other words, they can only deduct the net cost of business expenses, which cash back reduces.

How to Know If You Owe Taxes on Credit Card Rewards

It can be hard to keep track of how much taxes are owed on credit card rewards. If someone earns a bonus without having to meet a spending requirement, the credit card company might send the cardholder an IRS Form 1099: either a Form 1099-INT or Form 1099-MISC specifying the amount of income they earned.

Whether or not you receive this form, however, you’ll need to report the bonus on your income taxes. To make doing this easier, it can be helpful to keep track of any bonuses not earned through spending. That way, if the credit card issuer doesn’t send a Form 1099-INT or Form 1099-MISC, you can still complete your taxes properly.

Reviewing old statements to look for statement credits in the form of cash back or other types of rewards can be helpful.

Recommended: How to Pay Taxes With a Credit Card

Avoiding Taxes on Your Credit Card Rewards: What to Know

To avoid taxes on credit card rewards, all the cardholder has to do is not seek out credit cards that offer bonuses for simply signing up for the credit card. If the rewards are earned through spending, they won’t run into any taxes, thus allowing them to pay less tax.

The Takeaway

In general, taxes only apply to rewards that don’t require any spending to earn. If you’ll owe taxes on your rewards, the credit card issuer typically will send a Form 1099-INT or Form 1099-MISC specifying the amount of income you’ve earned and will need to report.

Being smart about credit cards and their usage is about more than just rewards, however.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Are credit card cash back rewards taxable?

Only credit card rewards that cardholders receive without having to spend money to earn them in any way are considered taxable income. If a cardholder earns cash back for spending money using their credit card, it won’t count as taxable income.

Are loyalty points taxable?

If someone spends money to earn loyalty points (such as purchasing airline tickets), they won’t have to pay taxes on those points. If, however, they received the points simply for signing up for a credit card, that would count as taxable income that they’ll need to report.

Are credit card rewards reported to the IRS?

In some cases, yes, credit card rewards are reported to the IRS. When this happens, the credit card company might send the cardholder a Form 1099-INT or Form 1099-MISC specifying the amount of income they earned that they’ll need to report.

Do you have to pay taxes on credit card rewards?

Cardholders need to pay income taxes on credit card rewards they didn’t need to spend money to earn. If they had to spend money to earn a reward, such as cash back, that won’t count as taxable income.


About the author

Jacqueline DeMarco

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.



Photo credit: iStock/Grayscale Studio

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.


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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