Dec
05
2024
What You Need to Know About Share Secured Loans

What You Need to Know About Share Secured Loans

By | Financial Independence, personal_loan, Terminology | Comments Off on What You Need to Know About Share Secured Loans

There are at least 11 different types of personal loans out there, but one you may not have heard of yet is the share secured loan.

An accessible option for those who might not qualify for a traditional unsecured personal loan, a share secured loan uses the funds in your interest-bearing savings account as collateral — which means you can pay for a big expense without wiping out your entire savings.

Here are the basics about share secured loans — how they work, the benefits, allowed uses, requirements, and more.

Key Points

•   Share secured loans use savings account funds as collateral, enabling funding of expenses without depleting savings.

•   They assist in credit building, beneficial for those with limited credit history.

•   These loans offer lower interest rates compared to unsecured loans due to reduced lender risk.

•   Eligibility requires funds in an interest-bearing savings account, which are held during the loan term.

•   While advantageous, they entail interest costs and the risk of losing savings if not repaid.

What Is a Share Secured Loan?

A share secured loan, which may also be known as a savings-secured loan, cash-secured loan, or a passbook loan, is a type of personal loan.

However, unlike many other types of personal loans, these loans are — as their name implies — secured: The bank or other lending institution uses the money in your savings account, Certificate of Deposit (CD), or money market account as collateral to lower their risk level when offering the loan. This can make qualification less onerous for the applicant.

In addition to making it easier to qualify for a loan, share secured loans also allow you to fund an expensive purchase or cost without depleting your savings. They can also help you build credit, which is particularly important if your existing credit history or credit score could use some work.

Of course, like all other loans, share secured loans do come with costs and limitations of their own, and it’s worth thinking carefully before going into any kind of debt.

Recommended: What Is a Certificate of Deposit?

How Does a Share Secured Loan Work?

In order to take out a share secured loan, you must first have money saved in an interest-bearing savings account. Your savings account balance will be used as collateral. Money invested in the stock market cannot be used as collateral for this kind of loan, since it isn’t FDIC- or NCUA-insured and is at some amount of risk.

Banks that offer share secured loans will cap the loan at some percentage of the amount of money you have in your account, usually between about 80% to 100% of those funds. They may also list a loan minimum.

When you apply for the loan, the money in your savings account will be put on hold and made inaccessible to you, and the loan funds will be issued to you as a check or directly deposited into your checking account.

You’ll then be responsible for paying the loan back in fixed monthly installments over a term that may last as long as 15 years, and which will include an interest rate of about 1% to 3% more than your savings account earns. For example, if you secured the loan with a money market account that earns 2.00% APY, your loan interest rate might be 3.00% to 5.00%. Typically, share secured loans come with lower APRs than unsecured loans, since they’re less risky for lenders.

Once the loan is paid off, you’ll regain access to the funds in your savings account, which will still have been earning interest the entire time.

Benefits of a Share Secured Loan

It may seem a bit strange to borrow money you already have, which is pretty much how a share secured loan works. But there are certain benefits to this approach if you need to pay down an expensive bill or fund a costly project up front.

Cost

Of the different types of personal loans that are available, share secured loans have some of the lowest interest rates — precisely because the bank has your money as collateral if you don’t repay the loan.

Still, even if the loan interest rate is only a few percentage points over the amount of money you earn in interest on your savings account, you’ll pay more than you would if you were able to use cash to fund your expense.

Eligibility Requirements

One of the biggest benefits to share secured loans is their relatively lenient eligibility requirements. Since they are secured, lenders consider them less risky.

If your credit score is on the low end of the range, you may not qualify for other types of personal loans, and if you do qualify, their interest rates may be high (as in the case of a payday loan or pawnshop loan). A cash-secured loan offers an accessible and relatively inexpensive alternative.

Flexible Repayment Options

With a share secured loan, you can often choose a repayment term that suits your needs and financial plans. Many lenders offer terms within the 36- to 60-month range.

Credit Building

Finally, one of the most important benefits of share secured loans is their power to help you improve or build your credit, which can help you qualify for other types of loans in the future. Credit building and credit improvement are two of the best reasons to seriously consider a share secured loan to fund an expense you might otherwise be able to pay for in cash.

Are Share Secured Loans a Bad Idea?

There are some risks to using your existing funds as collateral to go into debt. Namely, if you fail to pay back the loan, the lender can seize the funds in your savings account — and you’ll still be responsible for repaying the loan, which can have a negative effect on your credit score.

Additionally, even a low-cost loan isn’t free, and depending on the loan amount and its term, you may end up spending a significant amount of cash on interest over time.

That said, there are times when a share secured loan may make sense:

•   You’re a first-time borrower. A share secured loan offers you access to credit without requiring you to have a lengthy credit history.

•   Your credit is poor. By making consistent payments on the loan, you can rebuild and repair your credit.

•   You need help paying for an emergency expense. A share secured loan helps you cover unexpected bills without depleting your savings.

Common Uses of a Share Secured Loan

Share secured loans are used for a wide variety of reasons and share many of the common uses of a personal loan.

For example, a borrower might use a share secured loan to cover an unexpected medical bill or car repair payment. Share secured loans can also be used to cover moving expenses, home improvement costs, or even debt consolidation to pay off other forms of high-interest loans, like credit cards, which could help you get back on track financially.

Who Is a Share Secured Loan Best For?

While it’s important to consider all your options before going into any form of debt, a share secured loan might be an attractive choice for borrowers who already have a substantial amount of cash in savings but might not have the liquidity to pay for a large expense comfortably.

Additionally, if you have a poor or fair credit score, a share secured loan may help you qualify for the funding you need while also building up your credit score over time.

Qualifying for a Share Secured Loan

The good news about qualifying for a share secured loan is that so long as you have the money in your account saved up, this financial product is very accessible. Many share secured loans are available for borrowers with poor credit or even no credit history — though it’s always a good idea to shop around and compare rates and terms available from different lenders.

Share Secure Loans: Alternative Loan Options

While share secured loans can be a good option for certain borrowers, there are other alternatives worth considering as well:

•   A secured credit card works in a similar way to a share secured loan. You’ll only be able to use as much cash as you put on the card, and it can help you build credit.

•   If you don’t have substantial savings built up quite yet, a credit-builder loan might work for your needs, though it’s likely to come at a higher interest rate since there’s no collateral involved.

•   A guarantor loan, on which someone cosigns with you and agrees to repay the debt if you default, may make it possible for you to qualify for better terms than you otherwise would with poor to fair credit.

Other Types of Secured Loans

Share secured loans are far from the only type of secured loans out there. Any loan that involves some form of collateral is considered a secured loan. Some of the most common forms of debt fall into this category, such as:

•   Mortgages, which utilize the home and property as collateral.

•   Auto loans, which utilize the vehicle as collateral.

•   Secured credit cards, as mentioned above, which require cash collateral.

Recommended: Using Collateral on a Personal Loan

The Takeaway: Is a Personal Loan Right for You?

Share secured loans are a secured type of personal loan that can be used for a wide variety of expenses. Share secured loans are available for low-credit borrowers, so long as they have substantial cash savings — but there are other options available, too.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Are share secured loans a bad idea?

Share secured loans are not an inherently bad idea, but they can cost the borrower more in interest than if they had paid cash for the purchase.

Why would someone take out a share secured loan?

The reasons people take out a share secured loan are much the same as reasons for taking out a personal loan: medical expenses, moving costs, home repairs and improvements, and more.

How do share secured loans work?

The borrower uses funds in their interest-bearing savings account as collateral to secure the share secured loan. If they fail to repay the loan, the lender can seize the savings account as repayment on the loan.

Photo credit: iStock/Julia_Sudnitskaya

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

SOPL-Q424-013

Read more
Dec
05
2024

Guide to Retirement Account Garnishment

By | invest, Investing, Preparing for Retirement | Comments Off on Guide to Retirement Account Garnishment

There isn’t a simple yes or no answer as to whether your retirement accounts can be garnished. The Employment Retirement Income Security Act (ERISA) protects certain retirement accounts from garnishment if you’re sued by a creditor. The Act does not extend to non-qualified accounts like IRAs. However, those accounts do enjoy certain protections in bankruptcy.

The IRS may be able to garnish or take your 401(k) funds, however, if you owe back taxes. The IRS can also dip into your IRA or any self-employed retirement accounts you own to collect on a past due tax bill. If you’re worried about being sued by a creditor or running afoul of the IRS, it’s important to know when retirement accounts may be subject to garnishment.

Key Points

•   Barring certain exceptions, ERISA protects qualified retirement plans from garnishment; however, non-qualified plans like IRAs may lack these safeguards.

•   Retirement accounts — including qualified retirement plans like 401(k)s — can be garnished for unpaid taxes or court-ordered restitution.

•   Qualified retirement accounts may also be garnished if an individual owes child support or alimony.

•   Individuals may be able to avoid garnishment for unpaid taxes by setting up a payment plan, negotiating an Offer In Compromise, or making a claim for financial hardship.

•   To prevent garnishment, timely tax payments, responding to IRS notices, and maintaining domestic support payments are essential.

What Does Garnishment Mean?

Garnishment is a legal process in which one entity takes money from another under the authority of federal or state law to satisfy a debt. Both wages and bank accounts can be subject to garnishment in connection with debt collection lawsuits. A court order may be necessary to enforce a garnishment agreement.

Federal law can limit which wages or bank account deposits are exempt from garnishment and under what conditions. For example, if you receive Social Security benefits, they may be exempt if you’re sued for unpaid credit card debt. Those benefits are not bulletproof, however. And ignoring how your funds could be imperiled could be a critical retirement mistake.

The Social Security Administration (SSA) can withhold some of your benefits if your state presents a garnishment order for unpaid alimony, child support, or restitution. The Treasury Department can also withhold some of your benefits to offset unpaid tax debts. Generally, a garnishment order cannot be lifted until the debt in question is satisfied.

Can Retirement Accounts Be Garnished?

Retirement accounts can be garnished but there are specific rules that apply in determining which accounts are subject to garnishment. This is where it’s important to understand the different types of retirement plans.

As mentioned, certain retirement accounts are protected by ERISA. They’re usually referred to as qualified retirement plans. Examples of ERISA plans include:

•   Profit-sharing plans

•   401(k) plans

•   Money purchase plans

•   Stock bonus plans

•   Employee stock ownership plans

•   Defined benefit plans, including pensions

Generally speaking, money held in ERISA plans are protected from garnishment by creditors. The amount you can protect is unlimited, so whether you’ve saved $1,000 or $1 million in an ERISA plan, it’s safely out of reach of creditors.

There is an exception made in cases where the account owner is ordered by a court to pay restitution to the victim of a crime. In that instance, a federal ruling has deemed it acceptable to allow garnishment of ERISA plans to make restitution payments.

Non-qualified plans are not covered by ERISA protections. Non-qualified plans can include deferred compensation plans and executive bonus plans, but traditional and Roth IRAs can also fall under this umbrella.

The good news is that state law can include provisions to protect IRAs from garnishment. So if you’re sued for a $20,000 credit card debt, your creditor might not be able to touch any money you’ve stashed in a traditional or Roth IRA. Federal law also protects your online IRA or other type of IRA from garnishments relating to unpaid debts if you file for bankruptcy protection.

Get a 1% IRA match on rollovers and contributions.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.1

1Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

Reasons Your 401(k) May Be Garnished

It’s not common for a 401(k) to be garnished, thanks to ERISA. But there are some scenarios where it can happen. Here are some of the reasons why a 401(k) can be garnished.

You Have a Solo 401(k)

A solo 401(k) or one-participant 401(k) is a type of 401(k) plan that’s designed for people who are self-employed or run a business and have just one employee who is their spouse. These plans are not subject to ERISA rules, so they could be vulnerable to creditors which may include garnishment for unpaid debt.

Even though a solo 401(k) isn’t protected at the federal level, your assets could still be safe under state law. As mentioned, many states exempt retirement accounts from creditor garnishments. The exemption limit may vary from state to state, though some states protect 100% of retirement assets.

You Owe Child Support or Alimony

If you’re ordered to pay child support or alimony and fail to do so, the court could order you to turn over some of your 401(k) assets to make those payments. If you’re getting divorced, then your spouse may be able to claim part of those assets as part of the settlement.

They’ll generally need a Qualified Domestic Relations Order (QDRO) to do so. This document directs the plan administrator on how to divide 401(k) assets between spouses, according to the terms set by the divorce agreement.

You Owe Restitution

As mentioned, retirement accounts can be garnished in cases where you’re ordered by a court to pay restitution to someone. For example, say that you were negligent and injured someone in a car accident. The court might order you to pay restitution to the injured person.

If you don’t arrange another form of payment, the court might greenlight garnishment of your 401(k). The amount that can be garnished must reflect the amount of restitution you were ordered to pay.

Can the Government Take My 401(k) or IRA?

The federal government, specifically the IRS, can garnish your retirement accounts. So when can the IRS take your 401(k) or IRA? Simply, if you owe unpaid tax debt and have made no attempt to pay it. Garnishment and property liens are usually options of last resort, as the IRS might give you an opportunity to set up an Installment Agreement or make an Offer In Compromise to satisfy the debt.

Before the IRS can garnish your retirement accounts for unpaid taxes, it has to provide you with adequate notice. That means sending a written letter that specifies how much you owe. If you don’t respond to this notice, the IRS will send out a final notice giving you an additional opportunity to pay your taxes or schedule a hearing.

Should you still do nothing, that opens the door for the government to garnish your 401(k), IRA, and other retirement accounts. Note that the IRS can also garnish your Social Security retirement benefits but not Supplemental Security Income (SSI) benefits.

State tax agencies can seek a judgment against you for unpaid debt. While they can obtain a court order requesting payment, they cannot force you to withdraw money from a retirement account to pay. You could, however, still be subject to wage garnishments or bank account levies.

What Happens When Your Retirement Account Is Garnished?

When a retirement account is garnished, money is withdrawn and handed over to the recipient, which may be a creditor or the government. At that point, there may be nothing you can do to get that money back.

You should receive notification of the garnishment before it happens. That can give you time to make alternate arrangements to pay the debt. You could try to do that after the garnishment moves ahead, though it might be difficult to retrieve the money.

For example, if your 401(k) is garnished to pay back taxes you could contact the IRS to see if you might be able to reverse it by paying the tax debt, setting up a payment plan, or negotiating an Offer In Compromise. You could also attempt to make a claim for financial hardship which may help you to get the garnishment reversed.

Tips for Avoiding 401(k) Garnishment

Having your retirement accounts garnished can be unpleasant to say the least and it’s best avoided if possible. If you’re concerned about your 401(k) or other retirement accounts being garnished, here are some things you can do to try and prevent that from happening.

Pay Your Taxes on Time

One of the simplest ways to avoid a garnishment is to pay your federal taxes on time. If you’ve filed your return but you don’t have the money to pay what’s owed in full, you can potentially work out a payment agreement with the IRS, take out a loan, or charge it to a credit card.

You could also borrow from your 401(k) to satisfy unpaid tax debts. Using your 401(k) to pay down debt is usually not advised, since it can shrink your overall wealth and you might face tax penalties. However, you may prefer it to having the money taken from your account by the IRS.

Don’t Ignore IRS Notices

If the IRS sends you a letter requesting payment for unpaid taxes, don’t ignore it. Doing so could lead to a garnishment if the government makes additional attempts to get you to pay with no success. If you’re questioning whether the amount is accurate you may want to contact the IRS for verification or consult with a tax attorney.

Keep Up With Domestic Support Payments

When you’re ordered by a judge to pay child support or alimony, it’s important that you make those payments in a timely manner. As with back taxes, failing to pay could result in your 401(k) being garnished to satisfy the terms of the order in keeping with the divorce agreement or decree.

The Takeaway

There are certain retirement mistakes that are best avoided and having your savings garnished is one of them. Knowing when retirement accounts can be garnished can help you to preserve your assets.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Help build your nest egg with a SoFi IRA.

FAQ

Can the government legally take your 401(k)?

The federal government can garnish your 401(k) if you owe unpaid tax debts and all other attempts at collection have been unsuccessful. The IRS can also place levies against your property, including homes, vehicles, and other assets to force you to pay what’s owed.

Can a 401(k) be garnished by the IRS?

Yes, the IRS can garnish your 401(k) if you don’t pay federal taxes. Generally, the IRS will give you sufficient notice beforehand so that you have time to either pay the taxes owed or make alternate arrangements for handling your tax bill.

How do I protect my 401(k) from the IRS?

The simplest way to protect a 401(k) from the IRS is to pay your federal taxes on time and not disregard any notices or requests for payment you receive from the government. If you can’t pay in full, you might be able to set up a payment plan or an Offer In Compromise to avoid 401(k) garnishment.

Photo credit: iStock/Charday Penn

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

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.

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.

SOIN0123008

Read more
Dec
05
2024
white kitchen

Understanding the Average Cost of Kitchen Remodels

By | Home Ownership, personal_loan | No Comments

If the kitchen is the heart of the home, what does it say when yours is falling apart? Shabby fixtures, failing appliances, or a dysfunctional layout might have you daydreaming about a full gut reno — but how much does an average kitchen remodel cost? A minor kitchen update by DIY-savvy homeowners may come in around $7,000, while a major remodel can balloon to $50,000, or even $100,000+.

Before you begin your kitchen update, it helps to consider why you’re remodeling and whether it will add value to your home. We’ll help you scope out the average cost of a kitchen remodel — including cabinetry, countertops, and labor — and where you can save money without sacrificing function or design.

Key Points

•   Kitchen remodel costs range from $7,000 to $50,000+, influenced by kitchen size, materials, and labor.

•   Cabinets are the most expensive part, costing $100-$1,200 per linear foot.

•   Spending 6%-10% of a home’s value on a remodel is recommended for a good ROI.

•   Customization and material quality significantly impact costs; granite and marble are durable options.

•   Financing options include personal loans, which may offer lower interest rates than credit cards.

Factors Affecting Kitchen Remodel Costs

Before you start a kitchen remodel, it’s important to consider what you want to get out of it and what your return on investment (ROI) might be. You’ll also want to understand what factors can impact your costs so you know just how far your kitchen remodeling budget can go. Here are some factors to keep in mind:

Size of the Kitchen

The more square footage you’re remodeling, the more expensive the project tends to be. After all, you’re not only buying more materials (think cabinets, flooring, or tile), you’re also paying more in labor costs to have everything installed.

Scope of the Remodel

Generally speaking, the more extensive the work, the higher the price tag. For example, knocking down walls will set you back anywhere from $1,000 to $10,000. Want to relocate your sink? Expect to pay between $500 to $1,000. Compare that to the cost of smaller jobs, like replacing cabinet pulls (around $300) or adding new kitchen lighting ($100-$200 per fixture).

You may be interested in this story on the difference between a renovation vs. remodel.

Quality of Materials and Finishes

The average kitchen remodel cost can vary a lot depending on a few key items: cabinetry, countertops, and appliances. And the quality and type of materials of those items can have a significant impact on how much you’ll pay.

Take, for example, the cost of countertops, which is determined by the material. Typical materials include granite, marble, quartz, stainless steel, and butcher block wood. Granite, stainless steel, and butcher block are good budget options, ranging from $850 to $6,750 depending on the size of your kitchen. Marble and quartz command $1,500-$10,000.

Level of Customization

The more complex the design — and the more customized features you include — the more you’re likely to pay for a kitchen remodel. Consider cabinetry, which typically eats up 25% of a kitchen budget. There are three types of kitchen cabinet construction, each priced per linear foot:

•   Stock cabinets, the least expensive, run $100-$300 per linear foot.

•   Semi-custom are $100-$650 per linear foot.

•   Custom will set you back $500-$1,200 per linear foot.

Custom cabinets are made to order, based on your kitchen’s precise measurements, and are made of solid wood. Stock are ready-made and mostly constructed of engineered wood, and semi-custom are a hybrid of stock and custom.

Installation and Labor Costs

Labor is a major cost that can be hard to predict. But count on spending 20%-35% of your budget on contractors and installers. Your price will depend on where you live, how large your space is, and the features being installed.

Regional Variations in Kitchen Remodel Costs

Bargain hunters should be aware that some factors influencing budget are not within their control — like where in the U.S. you live. Homeowners on the West Coast generally pay more for materials and labor than in the South. Prices also tend to run higher in and around major cities. There are several reasons for this, including the cost of shipping materials to your area, local permits and fees, and your cost of living.

Notice how the overall costs vary by region, according to 2024 data from the home services website Angi.

Region Average Cost of Kitchen Remodel
Mountain Prairie $6,000-$37,400
Midwest $10,300-$34,300
Northeast $10,800-$40,400
Southeast $12,000-$32,200
Southwest $12,350-$33,950
Rocky Mountains $12,700-$39,600
Mideast $13,600-$37,650
Northwest $25,600-$61,100

Budgeting for Your Remodel

Deciding what your new-and-improved kitchen will look like is important, but so is figuring out how to pay for it. Here are some strategies to keep in mind:

Set a Realistic Budget Based on Your Goals

Money.com recommends spending between 10% and 15% of the value of your home on a kitchen remodel to get the best ROI. A major reno for a $400,000 home, then, would cost between $40,000 and $60,000.

Look for Ways to Save

In a full-scale kitchen remodel, new kitchen cabinets are typically the biggest expense, accounting for up to 40% percent of the project budget. If your cabinets are in good shape and fulfill your storage needs, refacing them can slash your bill. Refacing can mean either stripping and repainting or staining existing doors, adding stick-on veneers, or replacing the doors while preserving the cabinet shelves. Add new hardware for a more modern look.

You may also be able to trim some costs by doing simple things yourself: picking up items instead of paying for delivery, painting walls instead of paying contractors for the labor, or replacing your own backsplash.

Understand the Potential Return on Investment

The truth is you probably won’t recoup the total cost of a kitchen remodel in a home sale. According to Remodeling Magazine’s 2024 Cost vs. Value Report, the national average ROI for a minor remodel with mid-range materials is 96%. A major remodel with upscale materials, on the other hand, yields just a 38% ROI.

Clearly, the best bang for your buck will be less costly but visually impactful minor updates: replacing cabinets fronts, countertops, faucets, and lights, plus painting and perhaps new flooring. But if you want to change the layout or add all new appliances, you’re looking at five figures. More on that in a minute.

Consider a Loan to Help Cover Costs

It can be tempting to throw all your kitchen purchases on a credit card, but keep in mind that high-interest rates can inflate your renovation costs. These days, many homeowners are turning to a flexible personal loan to fund home renovations and remodels.

With home improvement loans, you receive a lump sum payment to cover your kitchen remodel cost. You can pay back the loan over a term of your choosing in equal monthly installments. The interest rate is determined by your credit history and credit score, but is typically lower than credit card interest.

Our Home Improvement Cost Calculator can give you an idea of how much you’ll need to borrow.

Maximize Value and ROI in Your Kitchen Remodels

Want to get the most bang for kitchen remodel buck? Here are a few places to start:

•   Choose durable, timeless design elements. Trends come and go, so to get the most mileage out of your remodel, stick with upgrades that can stand the test of time (and appeal to future buyers). If your budget allows, select a durable, classic countertop material like granite or marble, and opt for a neutral color palette and go-with-anything fixtures and handles.

•   Optimize layout and functionality. The kitchen isn’t just a natural gathering spot — it’s also a place for work. Whether it’s prepping meals or cleaning up afterward, a functional space is key. As your remodeling vision starts to take shape, be sure above all it enhances the workflow and offers you plenty of countertop and storage space.

•   Select energy-efficient appliances and fixtures. Sure, energy-efficient appliances and lighting use less energy and can lower utility bills. But they also have the added bonus of attracting potential eco-conscious buyers.

Choosing the Right Kitchen Remodeling Contractor

When you’re starting the home remodel process, it’s important to find a contractor you can trust. That means doing your research, speaking with and getting quotes from multiple contractors, and reaching out to their previous clients for referrals. You’ll also want to check licenses and certifications.

It’s also a good idea to request detailed project proposals and cost estimates to avoid any surprises. And when entertaining bids, remember that an experienced, in-demand contractor will likely charge more than less capable competitors, but will almost certainly be worth it.

Popular Kitchen Remodel Ideas

The Internet can be your best friend if you want to spruce up your kitchen but have no idea what to tackle first. As you’re browsing, keep an eye out for projects that will improve the functionality of the space and increase the value of your home.

Updating cabinets and countertops, for instance, can give your space a whole new look and provide more room for meal prep. Both upgrades also tend to deliver a high ROI.

Adding more functional storage solutions can make cooking more enjoyable and also make your home more attractive to potential buyers down the line. Similarly, adding or improving the lighting in your kitchen — or freshening up the fixtures — can also breathe new life into your space.

The Takeaway

The average kitchen remodel cost can vary widely from $7,000 to $50,000 or more, though you can get a fair return on your investment by spending between 6% and 10% of your home’s value. Your cost will depend on a number of factors such as kitchen size and whether you choose bargain, mid-range, or high-end materials and appliances. The major kitchen remodel cost drivers are cabinets, countertops, appliances, and labor. The good news is that the ROI for a smart, mid-range remodel is 96%.

When you’re ready to take the next step, there are various ways to finance the remodel, including a personal loan. Your credit history and credit score will help determine your interest rate, but it will likely be lower than the interest you’d pay on a credit card.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What is a realistic budget for a kitchen remodel?

When setting your budget for a kitchen remodel, a good rule of thumb is to plan to spend between 6% and 10% of your home’s value.

Is $10,000 enough for a kitchen remodel?

On average, a kitchen remodel can cost as little as $7,000 or as much as $50,000 or more. With a budget of $10,000, you’ll likely have enough to cover a cosmetic refresh or even a more substantial upgrade for a small kitchen.

Is $30,000 enough for a kitchen remodel?

Depending on the size of your kitchen and the work you want to do, a budget of $30,000 should easily cover a mid-range remodel.

What is the most expensive part of a kitchen remodel?

Generally speaking, the most expensive line item in a kitchen remodel is the cabinets. Stock cabinets are the least-expensive option, typically running around $100-$300 per linear foot. Custom cabinets are the most-expensive option and cost around $500-$1,200 per linear foot.

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.

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.

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.

SOPL-Q424-058

Read more
Dec
05
2024
11 Ways to Make Money Online Without Selling Anything

11 Ways to Make Money Online Without Selling Anything

By | Life & Career, money | Comments Off on 11 Ways to Make Money Online Without Selling Anything

When you think about making money online, chances are, you visualize selling something, whether it’s beaded necklaces you make, electronics you don’t use anymore, or a cool product you cooked up. But there are many ways to make money without offering a product, which can eliminate a lot of barriers to entry, along with the hassles of order fulfillment and shipping.

It’s not a cinch, but if you have a clever idea or some expertise, you can make money online, say, by building an app, creating a membership website, or developing a following on social media. There’s inspiration ahead.

Key Points

•   Various online income opportunities exist that do not require selling products, minimizing barriers to entry and logistical hassles associated with traditional selling.

•   Starting a dropshipping business allows individuals to earn money by acting as a middleman between suppliers and customers without holding inventory.

•   Creating a YouTube channel can lead to monetization through ads once a sufficient subscriber base is established, focusing on engaging content in a specific niche.

•   Freelancing offers many ways to leverage skills such as writing or design, enabling individuals to work remotely and access various job platforms to find clients.

•   Building a membership website can generate income by offering exclusive content to subscribers, fostering a community, and utilizing specialized web-building software for management.

Is It Possible to Make Money Online Without Selling a Product?

Fortunately, there are many ways to make passive income online without manufacturing and selling a product in the traditional sense. If you dread the idea of renting a warehouse or packing up and shipping items, this will be good news.

For example, many influencers on YouTube make money simply by providing informational videos that people find valuable. Once they have a following, they make money through YouTube ads that run on their channel.

Beyond YouTube, there are plenty of other ideas for how to make money with a website without selling anything. You might translate your tech knowledge and experience into building an app, or you could create a blog based on your favorite hobby that resonates with a particular audience.

11 Ways You Can Make Money Without Selling Anything

Ready to dig into some specifics? From dropshipping to streaming, the following are 11 ways people make money online without actually manufacturing or selling products.

1. Start Dropshipping

Dropshipping is one way to make money with a website without selling anything. Dropshippers sell products to customers, but they do not own or stock them. For the dropship business model, a customer places an order, and the dropshipper forwards the order to the supplier for a fee. The supplier then takes care of the shipping.

In essence, the dropshipper is the middle man. You don’t need to buy any items or manufacture anything yourself. And it can help you bring in some cash: One recent Ziprecuriter survey found that dropshippers earn almost $20 an hour.

Recommended: 11 Benefits of Having a Side Hustle

2. Launch a YouTube Channel

A YouTube channel can be lucrative once you have 1,000 subscribers. At that point, YouTubers can monetize their channel by accepting ads. How do you get 1,000 subscribers? By providing content that people want to see.

That could be showing off your cake decorating skills, your super cute Pomeranian puppy, or your ability to do your own taxes quickly and correctly. Choose a niche where you have expertise and create compelling content on that topic. Use clever headlines that will draw people to your channel, plus keywords to optimize them for YouTube searches and help you gain traction. Keep viewers engaged by producing a series of videos on a topic so that they continue to tune in.

3. Write a Blog or Podcast

Have ideas, intel, and opinions you’d like to share? Why not start a blog, which is similar to starting a YouTube channel. The cost of running a blog can be minimal, and it can be an exciting way to share your passions in life. You can create content on a niche topic that people are curious about and that you love. It could be travel, DIY advice, fashion, fitness, or finance.

If you are good, you can build a following. Once your following is big enough, companies will pay you to promote their products or services on your blog through ads and links. Brands may even sponsor you to write about them or invite you to write blogs for their own sites.

4. Create a Membership Website

If you find demand for your content, you could build a website for subscribers only and charge for the membership. The idea is to build a community of like-minded people who want to share knowledge and access exclusive content. A paid membership could offer videos, webinars, other educational products, and the ability to interact with other members.

Membership web-builder software can help you build a site and wrangle your followers, or you could use a third party to do it for you. The software allows you to register new members; process monthly dues, donations, and event payments; update member profiles; send emails to members about upcoming events, and send invites. A simple website builder will run from $10 to $20 per month and help you get your site up and running and hopefully growing.

Recommended: 25 Tax Deductions for Freelancers

5. Try Freelance Work

Some skills can be transferred to freelance gigs in a digital environment. For example, writers, teachers, designers, and coders can all learn how to make money from home. There are marketplaces for freelancers, such as Fiverr and Upwork, and you can establish a website of your own to pull in work.

There are also many job boards for freelancers, such as Flexjobs.com. Freelancers need to build a portfolio of work, which may require taking on lower-paying jobs at first as you work your way up.

Recommended: 15 Low-Cost Side Hustles

6. Become a Writer

Being a writer is an aspiration for many people, and there happens to be a huge market for website content. Many companies want to create informative blogs with SEO-optimized articles that will drive traffic to their websites. If you have expertise and knowledge in a niche area, you could write engaging articles for companies in that niche. Companies want ghostwriters, but there are also opportunities for bylined articles. Look for writing jobs on job boards like Flexjobs.com and Upwork.

7. Be a Product Tester

This is a fun one: You can make money online without selling by being a product tester. Brands often need people to try out their products to see how they rate with consumers. In return for their time and feedback, product testers may receive payment in the form of cash, merchandise, and gift cards.

Popular products for testing include toys, food, electronics, beauty products, household products, baby products, clothes, and websites. These gigs may pay about $25 an hour and can sometimes feel like playtime, making it potentially a good way to earn extra income.

You might also take surveys and provide feedback on marketing ideas online, as well. Sign up with a market research firm like iSay by Ipsos, Opinion Outpost, and Branded Surveys to get started.

8. Accept Micropayments

Looking for more ways to make money online without selling stuff? Say you write a blog that benefits a community. For example, you might be someone on the autism spectrum and blog about your experiences for a supportive audience. You can use a free app like “Buy Me a Coffee” to accept micropayments on your blog; this allows people who want to show their appreciation to send you a bit of money. Readers click on a widget on your blog to donate a few dollars to your site which you can then add to your bank account.

9. Set Donation Requests

One step up from accepting micropayments is to request donations directly. An example is Wikipedia, which intermittently asks its visitors to donate to fund the site’s research. Another example is virtual tip jars that appear on websites. Basically, it’s a way to monetize a website. You can collect feedback from engaged users at the same time to better understand what visitors would like to see on your site.

10. Create an App

Even if you are not a coder or app developer, you might have a great idea for an app that would make people’s lives simpler, better, or just more fun. Once you have an idea, a market that you’re targeting, and a brand concept, you can hire an app creator to do the coding for you. Once you have the app, add it to the App Store or Google Play. Start with a free app, and if it is a success, you can offer add-ons or premium features for a fee.

Recommended: How to Pay for Coding Bootcamps

11. Monetize a Twitch Channel

Chances are, you’ve heard of Twitch, the streaming platform that has expanded from gaming to a variety of content types, such as sports and entertainment. Still, gaming is its heartbeat, and Twitch streamers can monetize their love for the platform by sharing their gameplay with fans and subscribers who can hear and watch them live.

Streamers can gain a sizable following by providing consistent entertainment, and they can then sell products and Twitch ads. They can also land brand sponsorships, obtain fan donations, and sell subscriptions. Of course, not everyone will be a success at this, but those with the right skills and personality can thrive. For those who gain a following, earnings can be from a few hundred dollars a month to considerably higher.

How Making Money Online Can Help You on Your Financial Journey

You might not become a billionaire by choosing an online gig, but you can certainly supplement your day job or help with your college expenses and see your checking account grow. Making money online is flexible, and you can leverage your expertise and your niche. Start small and see where it leads. If you find something you enjoy that earns you money, it could be a way to realize your financial goals.

Recommended: How to Earn Residual Income

The Takeaway

How to make money online without selling anything comes down to creative thinking and a will to experiment. It’s actually a very accessible marketplace for anyone; you can avoid the typical startup costs en route to making a profit. Plus, you can work from home and tap your particular skills, whether that means creating fitness videos or developing an app.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Is it hard to make money online?

How to make money online without selling products is not difficult as long as you pick the right niche. It helps to choose an activity where you have an interest and skills. You also need to be creative if you want to scale. Some tenacity and determination will help when you experience a lull or want to get to the next level and grow organically.

What is a great way to learn skills to make money?

There are so many online and offline resources where you can learn skills. If you are interested in programming, you can learn coding languages online. If you are interested in marketing, you can take a course and get certified in Google Analytics and Google Ads. YouTube and webinars can help you train up; just do your research and make sure the so-called expert has solid credentials.

Do donation requests work?

Donation requests work if people value what you are doing. There are quite a few scams out there, and people are becoming more wary. However, if you can establish a following and provide content of value, you’re onto something. The trick is to engage people by connecting them to a community that means something to them.

Photo credit: iStock/Eva-Katalin

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

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

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

SOBNK-Q424-059

Read more
Dec
05
2024
15 Signs of a Cheap Person

15 Signs of a Cheap Person

By | Budgeting & Goals, Family Finances, money | Comments Off on 15 Signs of a Cheap Person

There’s a difference between being cheap and being frugal. Penny-pinching, or being a cheap person, can be painful for friends and family and also for you. It can stir up feelings of deprivation and insecurity; possibly even dishonesty. Whether you take a pocketful of “free” peppermints from a cafe or stiff your waitress, the consequences can add up, impacting your well-being across the board, from finances to relationships. On the flip side, being frugal means having a levelheaded attitude about money. Frugal people are usually respected and appreciated.

Need more cheap identifiers? Read on to learn 15 signs you are cheap.

Key Points

•   Being cheap can involve feelings of deprivation and insecurity, while being frugal can indicate being wise with money management.

•   Extreme stinginess, prioritizing personal gain over others’ losses, often harms relationships.

•   Forgetting to pay one’s share during group outings signals cheapness, as can thoughtless regifting and purchasing low-quality items.

•   Hoarding free condiments and office supplies and tipping badly can typify cheap behavior.

•   If you are cheap, it may be wise to rethink your budget and your behavior for a better relationship with money.

What Does It Mean to Be Cheap?

A person who is cheap is extremely stingy with their money and time, all in the name of having perhaps a few more dollars in their checking account. For instance:

•   Are you so tight-fisted that instead of paying postage, you mail things from the office, so your employer foots the bill?

•   Do you (over)help yourself to “free” food but refuse to buy a snack or drink at a movie theater?

•   Are you stingy with your time, never volunteering for a good cause or putting in extra hours when your work team is in a crunch?

•   If the kids’ menu is for ages 12 and under, do you lie about how old your children are so they can partake for less?

If, in these and other ways, you think your personal profit is more important than everyone else’s losses, then yes, it’s safe to say you are being cheap.

How Does Being Cheap Differ from Being Frugal?

Those who are cheap want, at all costs, to keep cash in their own wallets and bank accounts. Frugal people, on the other hand, think calmly and clearly about how to spend mindfully.

A cheap person might go out to dinner with friends and “forget” to bring their money to chip in. A frugal person might suggest the group goes to a mid-priced restaurant (not one with pricey cocktails), and make other careful choices. Then, at the end of the month, they may have enough money for something meaningful, such as a soup kitchen donation or a lavish Mother’s Day experience for Mom and Grandma.

A frugal person tries not to waste money on frivolous purchases but also has a sense of generosity. Guess who’s likely to be more fun to be around?

15 Signs You Are Being a Cheap Person

A few examples of being cheap were mentioned above. Here, dig into signs of being a cheap person in more detail. Watch for these red flags in the game of life. No one wants to be bad with money, but taking scrimping and saving too far can also be an issue.

1. Letting DIY Turn into BIY (Break It Yourself)

Unless you’re an expert, taking the DIY route on repairs can be a sign you are cheap. These fixes are often bad and flimsy, leaving you with leakier pipes or unsafe wiring. Reputable professionals may charge a lot but will stand by their work.

For example, if you go the cheap way and try to fix a car problem by watching a YouTube video before taking a road trip, you could find yourself paying dearly for it. If the vehicle winds up breaking down, it will throw a wrench in your plans and cost you time and money as you get towed, pay for repairs, and have to Uber around while waiting for your car to be road-ready again. So hiring a pro can mean less money to stash in your savings account but actually be more economical in the long run.

2. Sneaking Refreshments Into Movies

Some people do bring their own snacks due to health reasons. But if you have to sneak something in under cover, it’s probably dishonest. Do you feel guilty spending $7 on a small pack of candy? Yes, it’s cheaper elsewhere, but going to the movies is a little splurge, and the treats are part of the fun. It’s also partly how the theaters stay in business.

While many movie theaters allow patrons to enter with their own beverages, that doesn’t mean you should bring all your friends and not spend a penny on refreshments.

Recommended: Why Do People Feel Guilty After Spending Money?

3. Hoarding at Home

Many people hoard because they don’t want to part with things that might be valuable. But how many samples of shampoos and makeup, t-shirts, skeins of yarn (in case you take up knitting), Christmas ornaments, and reusable water bottles can you keep? Letting go can be freeing and it feels even better if you donate items to charities that will sell them and give them a second life.

4. Stockpiling Free Condiments

It’s cheap behavior to squirrel bagfuls of little ketchup packets away in your cabinet. Will you ever use them? The same holds true for sugar, soy sauce, and salt and pepper packets. Snagging them for free and hoarding them can be a sign you are being cheap.

5. Reusing Paper Goods

Some people save paper cups that still look pretty clean and recycle soiled paper towels for another chore. But that’s a cheap way of living that likely doesn’t save you much. Better to buy recycled paper products to help save energy, water, and trees. Get dishwasher-safe, reusable party plates; they are sturdy enough to hold large pizza slices and the like.

6. Doing Only Free Activities

Free activities are wonderful and a part of a smart, frugal lifestyle. But cheap people take this to extremes and only want to go somewhere if it doesn’t cost money. This limits their plans accordingly. For instance, if you only go to the beach after 5 pm, when there are no entrance fees, you will never experience a classic sunny day. Plus, there probably aren’t any lifeguards on duty.

In life, balance is best. There’s no sense being miserly vs. having fun and staying safe. Paying the fee to visit, say, a beach or a majestic national park could provide a view worth a million bucks and a lifetime of great memories.

Recommended: Ways to Be a Frugal Traveler

7. Being Nosy about Other People’s Money

Cheap people tend to dwell on what other people spend, gossiping about or criticizing their purchases, such as a designer handbag or resort vacation. But maybe the buyer is a frugal person who has a solid money mindset and saved for a year to afford those nice things. Frugal does not mean cheap, and judging others’ spending can say more about your own financial habits than theirs.

8. Always Snagging Leftovers

It’s one thing to take home the restaurant meal you couldn’t finish but another to make off with the leftover shrimp at a friend’s party. If the host invites you to take some food, great. But don’t push it. You are a guest, after all.

It’s also a classic cheap move to take back anything you brought that wasn’t entirely devoured. If you brought two bottles of wine and only one was opened, the other one stays put, as a gift to your host for welcoming guests.

9. Saving Almost Spoiled Food

Many people look for ways to save money on food. But safety comes first. No matter how expensive that deli meat was, if it’s past the date that tells you it’s safe to consume, throw it out. If yogurt or cheese grows a layer of mold, out it goes. Only an ultracheap person would cling to it, eat it, and risk their health.

If you’re not sure how long food stays safe in the fridge, open a tab and search. There are many sites that share the full details.

10. Regifting Thoughtlessly

It’s okay to pass along (with honesty) a gift you cannot use or that doesn’t suit your needs, such as a pound of rocky road fudge when you’re avoiding sugar or a sweater that’s not your color. But it’s hurtful to wrap up something you have around, like an extra college sweatshirt or a set of mugs, and pass them off to a friend or relative as a new gift. That can be just plain cheap.

11. Buying Cheap Quality

If you buy cheaply made clothing, it will likely fray, fade, and fall apart way before good quality items do. Same with ultra low-priced bedding and towels. Likewise, if you invest in a good pair of shoes, they will stand up to new heels, soles, and repeated polishing. A cheap pair won’t go the distance.

Keep in mind that the same holds true with household purchases: Cookware with a rock-bottom price tag is likely to disappoint you, and the same may hold true with furnishings. Read reviews before you buy, and snag a good-quality item that’s a little pricier but more reliable.

Recommended: Guide to Practicing Financial Self-Care

12. Depriving Others While You Amass Money

Another sign you are cheap can be that you are totally focused on your own wealth management and never help others. Maybe a miser could make a payment to help a cousin or niece with a heavy student loan debt. That kind of money magic fills the heart of the giver and the recipient. Being selfishly cheap just leaves you with a heart tightened like a fist.

Recommended: Common Money Fights

13. Haggling Over Every Transaction

Bargaining nonstop can make everyone uncomfortable, except the cheap person who’s negotiating. The salesperson, other customers, and especially the cheap person’s friends and family who are present may want to vanish.

There are times and places where haggling is appropriate and can improve your financial life. Overstepping those boundaries can be a sign you are cheap.

14. Helping Yourself to Office Supplies

It’s one thing to take a pad personalized with your name or a paperweight that was a gift from the boss. But it’s another to stock your home office or a kid’s back-to-school list from the office supply closet. Just don’t. It’s veering into stealing.

Same goes for taking condiments and coffee supplies from the staff break room or raiding the bathroom for toilet paper so you don’t have to buy any.

Recommended: 17 Ways to Make Financial Freedom a Reality

15. Being a Bad Tipper

This may be the most obvious and most common sign of being cheap: looking for any reason to reduce the gratuity after a meal, from too few sugar packets on the table to the entree arriving too quickly or too slowly. Waiters and waitresses often manage many tables and make a low hourly wage. They count on tips to bring up their earnings.

If the food and/or service is awful, it makes sense that the tip would reflect that. But for a typical meal with perhaps a tiny glitch, not leaving a tip can be a giveaway that someone is a miser.

Tips to Avoid Being Cheap

Try to remember this advice next time you feel your inner cheap tendencies emerging.

•   Give yourself a fun budget: Find a little breathing room in your budget for things that bring you pleasure even if they are not great bargains. Maybe a fancy coffee on Friday mornings, to end the work week on a high note, can be a nice self-reward.

•   Shift your focus from cash. Consider rewards that have no set price attached to them. That means enjoying a movie plus popcorn with your best friend. Or the smile on your mother’s face when you bring her flowers.

•   Set up a separate bank account for generosity. Put a certain amount of money in every week, even just $50 or $10 can make a difference. Then, at the end of the month, do something kind for someone.

•   If you are dining out or getting coffee, build extra bucks into your budget ahead of time for the tip.

•   Look for positive ways to be frugal. Perhaps you could try couponing, selling unwanted items, or signing up for a bank account that offers a cash bonus when you become a customer.

•   Instead of clinging to your money, think about how hard behind-the-scenes people work. The staffers who put out the free hotel breakfast buffet, the shampoo girl at the salon: Appreciating their work with a tip goes a long way to make both you and them feel better.

The Takeaway

Knowing the difference between being cheap and being frugal is an important life lesson. The former leans toward miserly (stockpiling office supplies at home and leaving little or no tips) and is unpleasant to be around. The frugal person however usually spends mindfully and can afford to be generous in meaningful ways.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Are there benefits to being a cheap?

A true cheap person may be able to reach financial goals, which is a benefit. But they might be so focused on saving that they cannot enjoy life. They are likely so busy not spending that they don’t know how to give back, chip in, be honest, and have fun with loved ones.

Is being cheap a personality trait?

Being cheap can be a personality trait, but it need not be a permanent one. It could be a habit developed because you grew up poor and wished for more money or possessions or it can stem from other insecurities. It’s possible to change this behavior if you become more aware of it and are motivated to be less stingy.

How do you deal with cheap people?

If you value the person and your relationship with them, do your best not to argue with them. That is unlikely to get them to spend more freely. Set expectations on get-togethers early; if something sounds too pricey for them, make another, less expensive plan. Avoid those situations that are likely to provide a forum for their cheap tendencies.

Photo credit: iStock/Morsa Images

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

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

SOBK-Q424-062

Read more

CATEGORIES

  • All
  • No categories
Close modal

See what SoFi can do for you and your finances.

Select a product below and get your rate in just minutes.

Student Loan
Refinancing

Personal
Loans

Online
Investments

Other

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

©2024 Social Finance, LLC All rights reserved.
TLS 1.2 Encrypted
Equal Housing Lender