Jul
18
2025
What Diagonal Spreads Are & How They Work

What Is a Diagonal Spread and How Does It Work?

By | Growing Wealth, invest, Investing | Comments Off on What Is a Diagonal Spread and How Does It Work?

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 diagonal spread is an options trading strategy involving both a long and short position on the same stock, with different strike prices and different expiration dates. It’s a combination of a vertical spread and a calendar spread.

Using this strategy may allow the trader to realize gains early if the stock moves in a direction that’s in their favor. The trader makes two options trades simultaneously — either call options or put options — to take both a bullish and bearish position on the same underlying asset.

Key Points

•   Diagonal spreads combine long and short positions on the same stock, using different strike prices and expiration dates.

•   This strategy allows early profit if the stock moves favorably.

•   Traders may use a long put diagonal spread by buying a longer-term put and selling a shorter-term to express a bearish outlook while offsetting cost through time decay.

•   Traders may use a short put diagonal spread by selling a longer-term put and buying a shorter-term put to express a bullish outlook and potentially profit if both options expire worthless.

•   Risks include overpaying for the spread and being exposed to market volatility.

Diagonal Spreads Defined

Diagonal spreads are a two-step options trading strategy considered to be an advanced trading tactic. It’s a combination of a calendar spread and a long or short call or put spread. These positions have different expirations and different strikes which spread out diagonally, hence the name of the strategy.

A calendar spread typically involves a trader buying a contract with a longer expiration date while going short on an option with a near-term expiration date with the same strike price. But if two different strike prices are used, this is a diagonal spread.

A diagonal spread is essentially a calendar spread, also referred to as a horizontal spread or a time spread, combined with a vertical spread, because different strike prices are involved.

How Diagonal Spreads Work

A long put diagonal spread involves purchasing a put for some time in the future while selling a put in the short-term. Purchasing an option with a later expiration tends to be more expensive due to its higher time value. On the other hand, the options trader sells the nearer term option with the goal of lowering the cost of the other option. Traders usually use diagonal spreads when they have conviction about a stock’s direction while trying to manage the effects of time decay by collecting near-term premium that decays faster than the longer-term option loses value.

A diagonal bull spread becomes a valuable trade when the price of the stock increases, while a diagonal bear spread increases in value when the stock price decreases.

Diagonal spreads require an in-depth understanding of volatility and timing.

Setting Up a Diagonal Spread

When traders are bullish on a stock, they generally use call options vs. using put options when they’re bearish on a stock.

The most common way to set up a diagonal spread is to buy a back month option (i.e., with more days to expiration) that is in the money. Then, the trader sells a front month (near-term) option contract with a strike price that is out of the money in order to reduce the net cost of the trade and express a directional view.

Setting up a diagonal spread in this manner would constitute a debit spread, which may allow the trader to define their maximum risk upfront while maintaining profit potential if the trade moves in their favor. Some traders may also use credit spread structures depending on their outlook and positioning.

Maximum Loss

When a stock’s price rises, the maximum loss is equal to the premium paid when buying a call. If the stock falls, the maximum loss is the difference between the strike prices adjusted by the option premium paid or received, assuming the long leg remains in place and the short leg is not assigned early.

Maximum Profit

It can be difficult to anticipate what the maximum gain may be since traders can’t know what the back-month option will be trading at when the front-month option expires due to changing volatility expectations. In a long diagonal spread, the stock price must be near the short strike at the time the short option expires for a trade to go in the buyer’s favor — whether using calls or puts.

The max profit potential for a short diagonal call spread is typically limited to the net credit received minus commissions. If the stock price falls below the short call’s strike price, the value of the spread will be close to zero and the credit received may represent a profit.

On the other hand, the max profit scenario of a short diagonal put spread is when the stock price rises above the strike price of the sold higher strike put option, as the value of the spread nears zero and the credit received may represent a profit.

Breakeven Point

The breakeven point can’t be calculated precisely, but it can be estimated. The breakeven price at expiration for a long call is typically below the strike price of the short call. During expiration of a long call, the breakeven point is the stock price at which the premium of the short call is the net credit received for the spread.

Traders cannot predict what the breakeven stock price will be because it depends on market volatility, which can impact the price of the short call.

Diagonal Spread Examples

In one example, a trader is bullish on ABC stock, currently priced at $300. If the front month is January and the back month is February, the trader may want to purchase a $298 strike call with February expiry, which is in the money. Then the trader could sell a $302 strike call with January expiry, which would be out of the money. This would give the trader a four-point wide diagonal spread, with a potential to profit if the stock price approaches the $302 short strike by January expiration and the short call expires worthless while the long call retains value.

In another scenario, a trader is bearish on XYZ stock at a current market price of $129. To set up a diagonal spread, the trader could buy a $132 February put, which would be several dollars in the money. Next, the trader could sell a $126 January put, which would be a few dollars out of the money. This trade would be a six-point wide diagonal spread.

Types of Diagonal Spreads

There are different types of diagonal spread strategies traders can use to pursue their market outlook. Here are several diagonal spreads traders may consider:

1. Long Call Diagonal Spreads

To execute on a long call diagonal spread, traders must buy an in-the-money call option with a longer-term expiration date and then sell an out-of-the-money (OTM) call option with a nearer-term expiration date. Traders can use this advanced options strategy if they are mildly bullish on a stock in the near-term and very bullish in the longer-term. An ideal setup for a long call diagonal spread is during times of low volatility, as sharp price swings can reduce its effectiveness and may even lead to losses if the stock moves beyond both strikes.

2. Long Put Diagonal Spreads

To execute on a long put diagonal spread, traders must buy an in-the-money put option with a longer-term expiration date and then sell an out-of-the-money put option with a nearer-term expiration date that has an out the money strike. Traders typically use long put diagonal spreads to mimic a synthetic covered put position, and to express a bearish outlook on the underlying asset.

3. Short Call Diagonal Spreads

A short call diagonal spread is when traders sell a long-term call with a lower strike price and buy a shorter-term call with a higher strike price. A trader may benefit from a short call option when the price of the underlying asset falls, thus making this a bearish strategy.

4. Short Put Diagonal Spreads

A short put diagonal spread involves selling a longer-term put with a higher strike price and buying a shorter-term put with a lower strike price. This is a bullish strategy, as the trader may benefit if the underlying asset goes up in price, making both options expire worthless and netting the seller the net credit earned at the beginning of the trade.

5. Double Diagonal Spread

A double diagonal spread is when a trader buys a longer-term straddle and sells a shorter-term strangle, a trade that may benefit from time decay and an increase in volatility. Traders setting up a double diagonal are long the middle strike calls and puts, which expire further in the future, and short out-of-the-money call and put options with sooner expiries. The ideal outcome for double diagonals is for the stock to stay between the two OTM strike prices as they approach expiration.

Risks of Diagonal Spreads

The primary risk traders have in diagonal spreads is overpaying to enter the position, which can limit profitability. The maximum risk is capped at the initial debt paid to enter the position. If traders pay too much for their diagonal spreads they may remain unprofitable.

Market volatility can be used to the trader’s advantage when using diagonal spreads, although it can also pose a risk to such trades. Depending on the level of volatility, it can substantially change the price of the option and impact the trader’s profit potential. Diagonal spreads are an advanced trading strategy so traders who are experienced in dealing with volatility may be better positioned to incorporate diagonal spreads in their investment strategy.

The Takeaway

Setting up a diagonal spread correctly is an important part of the profit potential of the strategy, otherwise traders are at risk of losing money. This advanced options trading strategy requires traders to make both long and short trades, either with calls or puts, that have different expiration dates and strike prices. Traders should know these option trades are lined up diagonally from one another in terms of expiration and strike.

SoFi’s options trading platform offers qualified investors the flexibility to pursue income generation, manage risk, and use advanced trading strategies. Investors may buy put and call options or sell covered calls and cash-secured puts to speculate on the price movements of stocks, all through a simple, intuitive interface.

With SoFi Invest® online options trading, there are no contract fees and no commissions. Plus, SoFi offers educational support — including in-app coaching resources, real-time pricing, and other tools to help you make informed decisions, based on your tolerance for risk.

Explore SoFi’s user-friendly options trading platform.

FAQ

What is a diagonal spread?

A diagonal spread is an options strategy that combines long and short positions with different strike prices and expiration dates. It blends elements of both calendar and vertical spreads.

What are the risks of diagonal spreads?

Risks include overpaying for the spread, sensitivity to volatility changes, and inaccurate market timing. These factors may reduce potential profits or increase potential losses if the trade moves against expectations, though losses are typically limited to the net debit paid to enter the position.

What is the difference between a bull call spread and a diagonal spread?

A bull call spread uses two call options with the same expiration but different strike prices. A diagonal spread also uses different strikes, but the contracts expire on different dates.

What is the difference between a calendar spread and a diagonal spread?

A calendar spread uses options with the same strike price and different expiration dates. A diagonal spread changes both the expiration date and the strike price, adding a directional element.

Photo credit: iStock/percds

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SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. 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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Jul
18
2025
Blue piggy bank with penny

9 Ways To Get Better Purchasing Habits

By | Budgeting & Goals, Financial Independence, money | Comments Off on 9 Ways To Get Better Purchasing Habits

Shopping is part of daily life and often a fun experience (glossy stores, cool new objects), but it can impact your budget in some not so wonderful ways. That’s where smart purchasing habits come into play.

If you know some clever ways to rein in overspending with tactics like comparison shopping and using coupons, you can help avoid blowing your budget. What’s more, you may be able to dodge excessive credit card debt, save regularly, and reach your financial goals.

Key Points

•   To create better buying habits, set financial goals and keep them visible.

•   Taking time to consider every purchase can help curtail impulse buying and overspending.

•   Identify shopping triggers and use a personal spending mantra to develop better buying habits.

•   Compare prices and use coupons and discounts when shopping for deals.

•   Maintain and repair items instead of replacing them.

9 Tips for Building Better Buying Habits

Here are nine tips for building better, more mindful purchase habits.

1. Having a Financial Goal in Mind

Motivation is a wonderful tool. To kick off better consumer habits, you may want to think about what your financial aim is and what you want to save money for in the first place.

This could be as small as wanting to save money for the perfect new handbag or to go to a hot new restaurant for an omakase dinner.

Or, it could be something much larger like saving for a vacation, a wedding, a home, or even for retirement somewhere down the line.

Having a financial goal might make it easier for you to sidestep an impulse purchase or spend money on something you don’t actually need.

To double-down on this habit, try writing down any and all financial goals in a notes app, diary, or even on a piece of paper. Then, stick it in your wallet or mobile phone case so it’s with you wherever you go. Tempted to tap or swipe your way to an impulse purchase? Check that note, and think twice.

2. Giving Every Purchase — Big or Small — a Little Time

Sometimes all it takes to reverse a buying decision is to just sit and think about it for a second. Is this new dress really all that great, and will it be worn more than once? Do you truly need a new mobile phone just because a flashy new model was released? Here are some tactics to try to decide whether or not to buy:

•   Try the “take a walk” method, which is to literally leave a store, go for a walk, and think about the item a bit more. This way, the initial adrenaline rush and excitement can wear off just a bit so you can clearly consider the purchase with fewer emotions attached.

Then, come back, look at the item again. If it still elicits butterflies, then it could be worth the purchase. If not, that’s great. Confidently walk away.

•   Want to take this habit to the next level? Try the 30-day rule. Just as the name implies, those looking to purchase anything nonessential must put the product back on the shelf and step away for a full 30 days. Put a note in your calendar, and if you still want the item after a month, you can then buy it (finances permitting), knowing it will bring them a little more joy.

Here’s one more trick to try when using the 30-day rule. Over the 30 days, try saving little by little to purchase the item. At the end of the month, if you decide that product is no longer needed, that cash could be put right into savings.

Recommended: Different Types of Budgeting Methods

3. Coming Up With a Personal Spending Mantra

If taking a walk isn’t an option, try a different method for forging better consumer habits. It may be time to come up with a personal spending mantra. This could be a saying like “Keep the memory, get rid of the object,” or Marie Kondo’s question, “Does this spark joy?”

You can briefly focus on your mantra before making any purchase. This can help determine if that object really deserves to take up space in your life and in your monthly budget.

4. Learning to Be a Comparative Shopper

Shopping around can be another way to improve your purchase habits. You never have to settle for the first price tag you see. Spending wisely can mean finding a better deal, often with just a quick online search.

To become a great comparative shopper, you can start small by investigating prices on everyday purchases like groceries. Try looking up a price comparison for milk between high-end grocery stores versus the neighborhood grocer vs. a discount store. Then, think about monthly expenses like the internet, cable, telephone bills, and even things like gym memberships or subscriptions.

Can you find a better price for any of these items or negotiate the price down? Could you wait for a sale to kick in? Go for it, and save along the way. That means more money stays in your savings or checking account.

5. Falling in Love With Coupons and Discount Codes Again

Another better buying habit to adopt: Take a minute when shopping to find a few coupons to use in physical stores and discount codes to use online.

Here’s how to coupon for beginners: Look online. There are a number of coupon websites such as RetailMeNot, Coupons.com, and The Krazy Coupon Lady that can help shoppers hunt down a few discounts when they need them.

There are also services like Honey, which is an extension you can add to your dashboard that will automatically scour the web for discount codes and plug them right in at checkout.

6. Maintaining the Things You Already Have

A hole in a sweater, a scratched coffee table, and a tiny crack in a dish can be enough to send some people hunting for an entirely new item to replace the old.

However, rather than tossing something just because it’s a little worn, it can be wise to learn how to give things a new life. Or, find an expert who can.

For example, rather than buying all new shoes just because the tread is a little worn down, try bringing them to the local cobbler (aka shoe repair). They may be able to replace the thread for a fraction of the price of new shoes. This same idea goes for big-ticket items too.

Consider keeping a maintenance calendar for things like a car’s oil changes, a home’s roof inspections, and more. That way, things will always stay in tip-top shape for longer, and you may, say, save money on your car or home repair costs.

7. Understanding Shopping Triggers

To create better spending habits, it can be worthwhile to take a bit of time to self-reflect and discover why you like to spend money in the first place.

•   Do you suffer from FOMO (fear of missing out), spending and buying things because friends, family, or a favorite influencer is sporting it on social media?

•   Do you shop when bored, as a way to add excitement to an otherwise dull day?

•   Do you tend to shop when you are feeling sad or stressed? Retail therapy is a common way to lift a mood, but it can have an impact on your financial standing.

It can be important to delve into why you shop. Doing so could also help you identify your overspending triggers and rein in habits that make you an impulse shopper.

8. Getting in on the Financial Buddy System

Here’s another tip for improving purchasing behavior. Everything’s better with friends — and that includes developing better spending habits. Here’s an example of the power of pairing up:

•   According to one landmark study by researchers at the University of Aberdeen, Scotland, people who work out with a friend are more likely to hit the gym more often than those who choose to work out alone.

That lesson can easily be applied to finances too. Find a trusted friend or family member who can offer advice or simply understanding and support as you cultivate better shopping habits.

Make a pact to call one another every time either of you needs a second opinion about making big purchases or when you need someone to talk you out of an impulse buy.

9. Knowing Where Money Is and Where It’s Going

A major part of creating better buying habits is understanding where your money stands and where it’s going. Don’t shy away from making a personal budget. Tracking apps (perhaps provided by your financial institution) can help in this effort too.

Monitoring your checking account will also help you get in touch with your spending habits. Some people find checking in every couple of days a good move.

These moves can reveal patterns that you might be unaware of and also help you see where you might cut back on expenses. That, in turn, can free up some funds so you feel better about splurging when the opportunity arises.

Recommended: 50/30/20 Budget Calculator

Smart Buying Habits Last a Lifetime

Establishing smart purchasing habits like these can set you up for a lifetime of living frugally but without deprivation. If you learn how to get the best possible deals on a daily basis and rein in overspending, you will likely be in a better position to reach your goals.

That might mean watching your retirement fund grow steadily, avoiding high-interest credit card debt, or knowing you’ll be able to afford the down payment on a house in a few years time.

Once you get in the groove of improving your habitual buying behavior, you may also feel less money stress and a greater sense of financial control.

Watch Out for Lifestyle Creep

Another way to embrace better purchasing habits is to be on the lookout for what is known as lifestyle creep. This happens when, as you earn more, your expenses rise, so building wealth is a challenge.

For example, if you change jobs and get a nice salary bump, you might decide to swap your current car lease for a pricier luxury car. After all, you deserve it, right? And you might book a trip to celebrate your new position as well. Moves like these can quickly eat up your raise and then some.

Celebrating within reason is of course part of life (and a good one, at that). However, doing so extravagantly and on an ongoing basis can wind up preventing you from reaching your financial goals.

The Takeaway

By focusing on improving your purchasing patterns, you can likely save more money. This can mean applying the 30-day rule, using coupons, and having a buddy to help you rein in overspending. It can also be wise to bank with a financial institution that not only helps your cash grow but also offers tools to help you track your spending and save smarter.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What are smart buying habits?

Smart shopping habits can include budgeting, comparison shopping, avoiding impulse buys, couponing, and putting a pause on spending.

How do you change your buying habits?

Changing your buying habits can involve recognizing your shopping patterns and triggers (such as impulse buying when bored or trying to keep up with friends) and then adopting new behaviors. This might mean comparison shopping, buddying up with a friend who is also trying to save, and unsubscribing from retailer emails that can lead to overspending.

What are buying habits?

Buying habits refers to the way a person purchases, such as whether they have a budget or usually shop online or in-store. It might also include whether they make a list or tend to make impulse purchases and if they use discounts and coupon codes or not.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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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 the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, 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 the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit 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, Wise, 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 Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Jul
18
2025
Guide to Building Credit With No Credit History

Guide to Building Credit With No Credit History

By | Credit, credit card, Financial Independence | Comments Off on Guide to Building Credit With No Credit History

Credit is often regarded as a Catch-22: You have to have credit to access credit products, particularly borrowing opportunities that are more competitive. For example, a positive credit history can help you access consumer loans at a lower interest rate and other benefits. But without an existing credit history, it might be hard to get approved for these opportunities.

However, everyone starts out without any credit history. Building a credit profile doesn’t happen overnight, but learning how to build credit when you have none can help you get as efficiently as possible.

Key Points

•   Individuals can build credit by becoming an authorized user on a family member or friend’s credit card, provided they use their credit responsibly.

•   Secured credit cards can help establish credit when used responsibly and payments are made on time.

•   Rent and utility payments can be reported to credit bureaus to positively impact credit scores.

•   Retail credit cards offer a more easily accessible avenue for those starting to build their credit vs. typical credit cards.

•   Credit-builder loans can be useful tools for establishing a credit history and building scores.

What Is Established Credit?

Establishing credit means that you have a history of past and currently active credit accounts with which you borrowed money from an entity or financial institution to purchase goods or services.

Lenders and creditors review your established credit to decide whether to extend you new credit. It’s also evaluated by employers, utility companies, and landlords to help them decide whether to accept your application or offer you service.

Recommended: Does Applying for a Credit Card Hurt Your Credit Score?

5 Tips to Build Credit With No Credit History

It is possible to build credit even with no credit history. If you have no credit, build credit using one or more of the following strategies.

1. Become an Authorized User

One way to build credit with no credit is to ask a family member or friend who has good credit to add you as an authorized user on their credit card account. Some lenders report card activity to the credit bureaus for both the primary cardholder and any authorized users on the card, so the primary cardholder’s good credit behavior could reflect positively on your credit.

As an authorized user, you aren’t liable to repay the debt on the card. However, the reported data can still reflect on your credit history.

2. Get a Secured Credit Card

Getting a credit card for the first time can be challenging if you immediately apply for an unsecured card that isn’t tied to collateral. A secured card can be easier to obtain when building credit from no credit — just make sure the card issuer reports the account’s activity to the credit bureaus.

Secured cards typically require you to make a small initial deposit into a separate bank fund. The card issuer then gives you a credit card usually with a credit limit that matches your deposit amount. As you use the card and make prompt payments, you can build credit. Once you achieve at least a fair credit score, you may be able to get upgraded to an unsecured credit card.

3. Report Your Rent and Utility Payments to Credit Bureaus

To support your progress in building credit with no credit, you can have your on-time rent payments, cell phone payments, and everyday utility bills reported to the credit bureaus.

Third-party services, like Piñata and Rental Kharma, for example, can give you momentum to develop your credit history using your rental payment track record. Similarly, the credit bureau Experian® empowers consumers to establish their credit profile by reporting phone and utility bill payments via Experian Boost.

4. Apply for a Retail Card

Credit cards that you can only use at a specific merchant, like a gas card or department store card, are typically easier for consumers with no credit history to get approved for. Plus, retail cards’ lower credit limit and restricted use makes them a good option if you’re looking to build credit.

Recommended: When Are Credit Card Payments Due?

5. Take Out a Credit-Builder Loan

A credit-builder loan is an installment loan that’s typically for a small amount, like a few hundred dollars. The lender puts this amount into a separate savings account on your behalf, and you’ll make payments to repay that loan.

During this process, the lender will report your account activity to the credit bureaus. And once the loan’s term ends, you’ll get the money that accumulated from your regular payments.

How Long Does It Take to Build Credit for a Beginner?

Establishing your credit can usually take about six months, and it typically takes at least six months to develop a credit score. Once your credit account is active and there’s borrowing and repayment activity on the account, your lender or card issuer will report the new account and its activity to the credit bureaus.

As you build your credit, you may find you will be rewarded with more perks. For instance, if your score is in the higher ranges, you may qualify for a credit card with a rewards program or find that you are offered the most favorable mortgage rates.

What Credit Score Should You Start With?

A starting credit score doesn’t start at zero. The baseline, or lowest FICO® score you can have, is actually 300. If you are building credit from no credit, however, you simply wouldn’t have a credit profile to your name, meaning you’d have no credit score as opposed to a low credit score.

Recommended: How to Avoid Interest on a Credit Card

Tips for Using a Credit Score to Your Advantage Once You Have It

Once you’ve gone through the necessary motions to build credit, here’s how you can make the most of it:

•   Shop around before opening new credit accounts. Lenders and credit card issuers are competing for your business. Compare product features, interest rates, fees, and terms before moving forward with a new loan or credit card to ensure you get the most competitive option available to you.

•   Apply for credit cards with better rewards. Once you’ve established your credit and are confident that you can borrow responsibly, consider applying for a credit card that offers a rewards program. For example, look into cards that offer cash back, points, or miles so you get a little something back from purchases you’d already make.

•   Maintain responsible borrowing habits. After you’ve put in so much work to build your credit score, you don’t want to wreck it. So follow responsible borrowing habits, like not borrowing more than you can afford to pay back based on your monthly expenses and income.

•   Be aware of the factors affecting credit scores. Understand how paying off debt affects your credit score, as well as how your credit utilization, credit age, credit mix, and new accounts influence your score. By knowing what makes up your credit score, you’ll better know how to continue building it.

The Takeaway

There are many ways to build your credit when you have no credit history, such as getting a retail card, becoming an authorized user on a relative or close friend’s account, or having rent payments reported to the credit bureaus. However, all of these strategies can take several months to get your credit record established. Once you have a credit score going, you can access other credit products, like rewards credit cards.

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

How fast can you build credit with no credit?

Generally, if you’re starting with no credit, it can take about six months to build your credit. The exact timeline depends on the credit scoring model that’s used and your lender’s timeframe for reporting new accounts to the credit bureaus.

What is the easiest way to establish a credit history?

One of the easiest ways to establish a credit history is by asking to become an authorized user on a family member or close friend’s credit card account. This approach bypasses having to personally submit your own credit card application. Instead, you’ll piggyback on the primary account holder’s positive borrowing and repayment practices to build your credit record.

What is my credit score if I have no credit?

If your credit profile is nonexistent — meaning you’ve never opened a credit-based account under your name — you won’t have a credit score at all. Having a credit score of 0 is actually a myth; instead of a number, you’re simply considered credit invisible.

How long does it take to build credit from 0 to 700?

The time it takes for consumers who are new to establishing their credit to reach a credit score of 700 varies. However, generally, if you have no credit you could potentially reach a 700 credit score after six months of a reported payment history.

Photo credit: iStock/fizkes

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.

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 .

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Jul
18
2025
When Should You Pay In Cash?

When Should You Pay in Cash?

By | Budgeting & Goals, Financial Independence, money | Comments Off on When Should You Pay in Cash?

Many people don’t carry cash these days, preferring to make a purchase by tapping or swiping a debit card or credit card. However, there are times it can actually pay to dip into your wallet and break out the bills. Using cash can be more secure and less costly, among other benefits.

Here, you’ll learn when it can be better to buy with cash and when plastic is preferable.

Key Points

•   Using cash can help avoid fees, credit card interest, and overspending.

•   Cash payments may offer discounts at small businesses.

•   Paying in cash can reduce data security risks and identity theft, but losing the cash or having it stolen are considerations.

•   Cash can help keep advertisers from targeting you vs. using a credit card.

•   Cash can be better for small purchases under $10.

The Benefits of Cash

Here are some of the pros of using cash:

You May Get a Discount

You may be rewarded for paying cash, like paying a lower price at the gas station or when you get take-out at a restaurant.

Many businesses pay a fee for accepting credit and debit cards, so they may be willing to charge you less if you’ll pay in cash. If you frequently fill up your tank, saving even 10 to 20 cents per gallon can add up to significant savings over time.

It Can Help You Avoid Overspending

When you tap or swipe your credit or debit card, you don’t physically see your money leaving your account. Since there’s no sense of immediacy or consequence, it can be easy to spend more than you originally intended. That can lead to debt and overdraft or NSF charges.

If, on the other hand, you leave home with only the amount of money you need for the day in cash, your spending is likely to be more mindful. That could mean you may have a better chance of sticking to your budget and avoiding overspending.

There Are Fewer Security Risks

Yes, someone could rob you when you are carrying cash. However, there is less risk of identity theft or your information getting stolen when you pay with cash vs. a debit or credit card.

You Can Avoid Fees

Cash is a one-shot deal — the purchase you made won’t end up costing you a penny more. With credit and debit, however, you can end up paying additional charges down the line, from late fees to interest payments on debt.

Recommended: How to Avoid Overdraft Fees

Increase your savings
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*Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.30% APY as of 12/23/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 3/30/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.

Times When You Should Pay in Cash

Your Tab is $10 or Less

It can be a good idea to carry cash for small purchases. Many retailers have a minimum amount of money you must spend in order to use debit or credit. If your purchase is under, you’ll have to throw in extra things (you probably don’t need) to meet the minimum.

When Shopping at a Small or Local Business

Small businesses often offer discounts for cash payments, since it helps them save on bank fees. This can be an easy way to support your local businesses and save a few dollars at the same time.

You Want to Keep Advertisers at Bay

You may have noticed that after you buy something with a credit or debit card, you often get hit with ads and offers for similar products. That’s because retailers can track their customers’ spending and share their information with a third party, who can then target them with ads.

This can be annoying, and also lead to more spending if you’re enticed by an offer. Using cash makes it much harder for businesses to collect and share your information.

Times When You Shouldn’t Pay With Cash

Next, learn about the times when you should keep your wallet shut and find another, non-cash way to pay.

Buying a House

While not an everyday occurrence, some people may have the option to plunk down cash they’ve stashed in their savings account to buy a property.

While buying a home with cash vs. getting a mortgage may get you the house, it may not be the most prudent move in the long run, especially if it wipes out all of your savings.

A mortgage has tax benefits and timely payments can help you build good credit. Also, there could be better uses for all that cash, like investing in the stock market or elsewhere.

Business Expenses

If you own your own business, have a side gig, or do freelance work, it can be better to use credit (or even a check) to pay for business-related purchases. You’ll likely want a paper trail so you can deduct these expenses on your tax return.

Another potential perk of using credit is that it may offer some purchase protection in event something you buy for your business that breaks or gets stolen soon after you purchase it.

Paying Service Providers

You may think a service provider, whether it’s an electrician or an auto mechanic did a good job, but only time will tell. Using credit can offer you some protection in the event that you experience problems with a service after you’ve already paid for it.

Renting a Car

Often your credit card will provide insurance on car rentals (which can help you save on renting a car), but only if you use that form of payment, as opposed to debit or cash. Using credit for the car rental can help you avoid paying for something you don’t need to purchase.

You’re Looking to Build Credit

If you need to build your credit score, one way to accomplish that is to use your credit card on a regular basis and show that you’re responsible by paying what you owe each month, consistently and on time.

When Buying Electronics

Using your credit card instead of cash for electronics can be a big advantage if your credit card offers extended warranties as a cardmember benefit. This allows you to get peace of mind without having to pony up for the store’s warranty. And, you can simply pay off the balance as soon as the bill comes.

You’re Looking to Track Your Spending

If you’re looking to see where your money is going so you can track your spending and set up a monthly budget, it can be easier if you pay with credit or debit.

Your financial institution may even offer you a pie chart of your spending from your bank account, broken down into categories. Seeing everything in black and white can help you become better at budgeting.

Alternatives to Using Cash

Paying in cash has its pros and cons. If you decide that you want to pay with something other than cash, here are some alternatives.

Cash vs Credit Cards

A credit card can be a good alternative to cash if you are able to pay it off in full every month, and you do. If managed well, credit cards (even secured credit cards) can help you build credit to buy a home or another large purchase in the future.

Cash vs Debit Cards

A debit card can be a good substitute for cash, as long as you know there’s money in the bank. By using a debit card, you’re not incurring any new high-interest debt. As long as you are not incurring any overdraft fees or withdrawing money from ATMs that charge high fees, debit cards can be a simple way to make purchases.

Cash vs Financing or Loans

It can sometimes be better to pay for a major purchase, like a car or a home, with a loan rather than cash if the interest rate is lower than what you could likely earn by investing that money.

However, you’ll also want to keep in mind that there is risk involved in investing in the stock market, so there is always a chance that you could lose money.

Recommended: Leasing vs. Buying a Car: What’s Right for You?

The Takeaway

While there’s a movement toward a cashless society, paying in cash can help you garner discounts at local businesses, stick to your budget, avoid paying overdraft and interest fees, protect against identity theft, and keep advertisers from targeting you.

If you’re looking for a safe place to keep your cash when not spending it, where it can earn some interest and grow, take a closer look at your banking partner.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

When should you pay with cash?

Cash can be a good option when paying for a small purchase (say, under $10 or $20) or when paying at a small retailer who may add a fee for credit card purchases. Cash can also help you be more mindful about spending and can be good when trying to rein in discretionary expenses.

Is it better to pay in cash?

It can be better to pay in cash if it can help you avoid high interest (which can accrue if you carry a credit card balance) or get a discount on a purchase (say, at a small retailer that offers a discount for cash). However, a person could earn rewards when using a credit card or could enjoy cash advantages when getting a mortgage vs. paying for a property with cash.

Is it smart to keep money in cash?

It can be smart to keep a small sum of money in cash for unexpected and/or pressing expenses, such as tipping a service person for a repair. But cash is usually safest in a financial institution, where it can’t get lost or stolen and in most cases is insured up to the limits of the Federal Deposit Insurance Corporation or National Credit Union Administration.

Photo credit: iStock/towfiqu ahamed

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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 every 31 calendar days.

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 the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, 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 the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit 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, Wise, 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 Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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 .

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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q325-075

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Jul
17
2025

How to Get Your Money Back From Unauthorized Transactions

By | Building Your Career, Financial Independence, Financial Topics, Life Stages, Tools & Calculators | Comments Off on How to Get Your Money Back From Unauthorized Transactions

Finding an unfamiliar purchase or withdrawal on your checking account statement or online activity can be alarming. While it could be a legitimate transaction you simply forgot about, it could also be a sign that your account has been compromised.

Either way, there’s no reason to panic: Banks typically reimburse customers for unauthorized transactions. That means if someone steals money from your bank account, you can generally get it back.

The hitch is that you need to act fairly quickly. The window for resolving disputes for debit cards and bank accounts is generally shorter than it is than resolving disputes for credit cards.
Here’s a closer look at what counts as an unauthorized banking transaction, what to do if someone steals money from your bank account, and how to protect yourself in the future

Key Points

  • Contact the bank immediately upon noticing unauthorized transactions to report the issue and minimize liability.
  • File a formal dispute, including account details and the date of the unauthorized transaction.
  • Change account passwords and PINs to prevent further unauthorized access.
  • Review all recent transactions for additional suspicious activity and report it.
  • Place a freeze or lock on the account or establish alerts to prevent additional unauthorized use.

What Constitutes an Unauthorized Transaction

An unauthorized transaction occurs when someone makes a payment or transfers money from your bank account without your permission.[1] This could happen to your account for various reasons, including someone stealing your debit card, a hacker or fraudster using your stolen account information, or even a simple error or mistake.

However, it’s important to distinguish between unauthorized transactions and transactions you may simply disagree with. Some examples of charges you may find questionable or irksome but that don’t qualify as unauthorized transactions include:

  • You forgot you signed up for a free trial that turned into a paid subscription.
  • A family member made a purchase without telling you.
  • You don’t recognize a legitimate transaction because the merchant bills under a different name than they do business with.
  • You purchased something and were unhappy with the service or product.

These cases, while potentially frustrating, are generally not considered unauthorized by banks. Instead, they may fall under billing disputes or customer service issues.

Steps to Take If You Suspect an Unauthorized Transaction

If you believe a transaction in your banking history truly is unauthorized, you’ll want to act quickly. Federal law provides strong consumer protections, but they often come with strict timelines. Waiting too long can limit your options and your potential for a full refund.[2]

Here are the steps that can help you make a complete recovery:

1. Contact Your Bank or Credit Union Immediately

It’s wise to notify your bank or credit union as soon as you notice a potentially fraudulent transaction. You can do this by calling the customer service number found on the back of your debit card, listed on your statement, or published on the bank’s website or in its app. You’ll likely need to provide your account information, the date and amount of the transaction[3], and why you believe it was unauthorized.

Many financial institutions also allow you to report fraud through their online banking or mobile app platforms. To start your dispute, you typically need to select the transaction from your recent transaction list, then select “Report an issue,” and answer questions about the charge.

🛈 If you’re a SoFi member, you can report unauthorized transactions or a debit card loss from within the SoFi app or website or by calling SoFi Customer Support at 1-855-456-7634.

2. File a Formal Dispute/Follow-Up in Writing

Once you’ve contacted your bank, you may be asked to submit a written statement to back up your claim and include any supporting documents (such as screenshots or receipts).

Even if your bank doesn’t request you to file a formal dispute, it can be a good idea to follow up your phone call with a written or emailed letter.[4] You’ll want to be sure to include:

  • Your account number
  • The date and time when you noticed your account was compromised
  • When you reported the unauthorized transaction

Once you’ve notified your institution about an unauthorized transaction, it generally has 10 business days to investigate the issue. The countdown begins from the time you give verbal notice of the issue, even if you were required to follow-up with written confirmation.

If the transaction involved a merchant, you may also want to contact the merchant and dispute the purchase. The merchant could potentially refund your money more quickly than the bank can.

Recommended: How to Cancel a Pending Transaction

3. Change Your Account Passwords and PINs

If someone has gained unauthorized access to your bank account, there’s a good chance they may have your login credentials or debit card information. To protect yourself from further bank account fraud:

  • Change your account password: To stop hackers, it is important to create complex, unique login credentials for your online banking accounts.
  • Enable multi-factor authentication (MFA): If you haven’t already, now is a good time to set up MFA on your account. This second layer of protection can involve being texted a code or providing biometric information, such as facial recognition, for greater security.[5]
  • Update your PIN: If the fraud involved an ATM or debit transaction, you’ll want to create a new (and hard to guess) debit card PIN, or personal identification number.

4. Review Recent Transactions Carefully

After identifying one suspicious charge, it’s crucial to scan through recent transactions for other red flags. Be on the lookout for charges from unfamiliar locations and businesses, duplicate transactions, and small transactions you didn’t authorize (fraudsters often start with small “test” charges, or micro-payments, before moving on to larger amounts[6]).

You’ll want to report any additional suspicious activity you find during this review.

5. Consider Placing a Freeze or Lock on Your Account/Card

To prevent further unauthorized use, you may want to place a temporary lock or freeze on your debit card or account.

Many banks offer:

  • Instant card locks via mobile app: You may be able to lock your debit or credit card by logging into your banking app. This typically involves tapping the Menu, then “Manage debit/credit card,” selecting the card you wish to lock, and tapping “Lock.” You can also usually lock your card through online banking or over the phone.
  • Bank account freezes: With an account is frozen, you can still monitor your account and receive deposits (including your paycheck), but no one — not even you — can take or transfer money out of the account until the freeze is lifted. This means that any automatic payments you have set up through your checking account won’t go through, so you’ll need to pay these bills in a different way until the freeze comes off.

Will Your Bank Refund Unauthorized Transactions?

Yes — in most cases, your bank is required by law to reimburse you for unauthorized electronic transactions, provided you report them within a specific time frame. In the case of debit card loss or theft, however, you may have some liability.

Timeline for Reporting Suspicious Activity

Under federal law, you have protections that help limit what you have to pay if your ATM or debit card is lost or stolen, or you notice any unauthorized charges on your bank statement. Here’s how it breaks down:

  • For debit/ATM card loss: If you report a lost/stolen debit card or PIN to your bank or credit union within two days of noticing it, your liability will be limited to no more than $50 in charges. If you report the loss after two business days, however, you could be responsible for up to $500 in unauthorized transactions. If you wait more than 60 days to report the loss, you may be responsible for all the money taken from your ATM/debit card account.
  • For unauthorized bank account transactions: If an unauthorized electronic fund transfer (EFT) appears on your statement, but your card or PIN has not been lost or stolen, you will not be liable for the debit if you report it within 60 days after your account statement is sent to you. If you report it after the 60-day window, on the other hand, you could be on the hook for the full transaction amount.

Credit vs Debit Unauthorized Transaction Liability

Credit cards generally offer broader liability protections than debit cards.

Under the Fair Credit Billing Act, your liability for unauthorized credit card transactions is limited to $50 if you report the suspicious charge within 60 days.[7] However, the major credit card issuers generally offer zero liability for unauthorized purchases if you report them within 30 days, and some issuers offer zero liability with no time limit.

Debit cards work differently, since the money you spend is immediately debited from your checking account. As mentioned above, your liability depends on how quickly you report the lost or stolen card. If you report it within two business days, your maximum loss will be $50. If you wait more than two business days but less than 60 days, your max loss will be $500. After 60 days, your liability is unlimited.

Recommended: Debit Card Fraud: How It Works and How To Prevent It

While no one is immune to fraud, you can significantly reduce your risk by following some smart financial habits:

  • Avoid isolated ATMs: Criminals will sometimes set up skimming devices (plastic overlays that fit onto the slot and can capture your PIN and other card information) at ATMs that are located in dimly lit, out-the-way places. Try to choose ATMs located inside a bank branch, where there are security cameras. If an ATM looks as if it may have been tampered with, trust your gut, and avoid it.
  • Be alert to fake emails and texts: If you receive a text or an email notifying you of a problem with an account, you’ll want to avoid clicking on any links. They may take you to a legitimate-looking site that asks you to enter your private information, which is then sent directly to scammers. The link could also download malware such as viruses, ransomware, and spyware onto your device.[8]
  • Beef up your personal security: Using strong, unique passwords for each account (and an unusual PIN for your debit card) is key. But those measures aren’t always enough. It’s also wise to set up MFA authentication and biometrics (fingerprint or facial ID) to further safeguard your accounts.
  • Monitor your accounts: Since time can be critical when reporting —- and stopping — unauthorized transactions, it’s important to regularly review your bank statements or online banking transactions. It’s also a good idea to set up mobile banking alerts for large or international transactions, so you are aware of any suspicious transactions right away.
  • Use digital wallets whenever possible: Digital wallets, like Apple Pay or Google Pay, have multilayered security features. This typically includes tokenization, which encodes your debit and credit card details, so the numbers are never shared with a merchant. Some wallets also use biometric data to confirm it’s really you making the transaction.

Recommended: Passive Income Ideas

The Takeaway

Unauthorized transactions can be unsettling, but you’re not powerless. You can typically recoup your losses if you act quickly.
If you notice something suspicious, immediately contact your bank, file a dispute, and take steps to secure your information. There are also things you can do to prevent future incidents, like avoiding ATMs that could be tampered with, monitoring your accounts, and using a digital wallet.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Can I get my money back if someone used my debit card?

Yes, you can usually get your money back if someone used your debit card without permission, especially if you report it quickly, though you may have some liability. Typically, if you report the unauthorized debit card use within two business days, your liability is limited to $50. If you wait more than two business days but less than 60 days, your max loss will be $500. After 60 days, you could be on the hook for the full amount.

Can banks reverse unauthorized transactions?

Yes, banks are generally required to refund unauthorized transactions if you report them in a timely manner. However, it’s important to act quickly. If you report an unauthorized electronic fund transfer (EFT) later than 60 days after receiving the statement that lists the charge, you may be liable for the full amount.

Can my bank find out who used my card?

Yes, banks can sometimes identify who used a card, especially in cases of fraud. Banks often work with law enforcement to gather data, including transaction details, location data (if available), IP addresses (for online transactions), and surveillance footage, when investigating unauthorized transactions. However, it’s not always possible to pinpoint the exact identity of the card user.

How do I get a refund for an unauthorized payment?

To get a refund for an unauthorized payment, you’ll want to contact your bank immediately through their fraud or customer service line. Banks typically require you to report the issue within 60 days of the statement date showing the transaction. They may ask you to fill out a dispute form or provide written confirmation. The bank will then investigate and determine whether to refund the payment based on the findings.

Is there a time limit on when I can report unauthorized transactions?

Yes. Under federal law, you must report any unauthorized bank account transactions within 60 days of the statement date that includes the unauthorized charge to avoid any liability. Delays in reporting could increase your financial responsibility, potentially up to the full amount. So it’s crucial to monitor your account regularly and report any suspicious activity as soon as possible.

Article Sources
  1. Consumer Financial Protection Bureau. How do I get my money back after I discover an unauthorized transaction or money missing from my bank account?.
  2. CT.gov. Unauthorized Withdrawal from Your Bank Account.
  3. Federal Trade Commission. Dispute Letter for ATM/Debit Card Transactions.
  4. Federal Trade Commission. Lost or Stolen Credit, ATM, and Debit Cards.
  5. Cybersecurity & Infrastructure Security Agency. Multifactor Authentication.
  6. Office of the Comptroller of the Currency. Credit Card and Debit Card Fraud.
  7. FDIC. What You Need to Know About Credit and Debit Card Billing Issues.
  8. FBI. Spoofing and Phishing .

About the author

Julia Califano

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

photo credit: iStock/Yurii Karvatskyi
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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 every 31 calendar days.

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 the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, 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 the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit 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, Wise, 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 Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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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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.

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