Is an interest-bearing checking account worth it?

An interest-bearing account is a smart way to earn a bit of interest on your checking funds if you can easily meet account requirements. For instance, if you know you’ll be able to keep a certain amount on deposit to earn interest, then the account is worth considering.

Who has interest-bearing checking accounts?

Most financial institutions offer interest bearing checking accounts, including online banks, traditional brick and mortar banks, and credit unions.

What is the benefit of having an interest-bearing checking account?

The main benefit of an interest checking account is that account holders can grow their money while having flexibility in their daily financial transactions.

Financial Topics Archives | Page 288 of 788

Jan

2024

What Is an Interest-Bearing Checking Account?

What Is an Interest Checking Account and How Does It Work?

By Sarah Li Cain | Budgeting & Goals, Family Finances, money | Comments Off

An interest checking account is, as the name suggests, a checking account that earns interest. Typically, checking accounts haven’t offered this feature, while savings accounts did. However, there are a number of interest-bearing checking accounts now available that can help your cash on deposit grow.

Typically more flexible than savings accounts, interest checking can give you a financial boost if they’re a good fit for you. In some cases, however, they may have minimum requirements and other aspects that may not sync up with your money style.

Here’s a closer look at these interest-bearing checking accounts, so you can decide if one might be right for you. Learn more about:

• What is an interest-bearing checking account?

• How do interest-bearing checking accounts work?

• How much interest could you earn?

• What are the pros and cons of interest checking accounts?

What Is an Interest Checking Account?

Whether it’s called an interest-bearing checking account, interest checking account, or high-yield checking, this is a type of checking account where the account holder can earn interest. The interest rate may not be amazingly high: At the end of 2023, the rate averaged 0.70% APY, or annual percentage yield, which is the real rate one earns when compounding interest kicks in. (Occasionally, APYs of 3.00% or higher may pop up.) Even at the lower range, the interest accrued is better than nothing. Honestly, who doesn’t want to earn more interest?

There may, however, be a catch:

• Although the account will pay an APY, account holders may be required to pay monthly maintenance fees or maintain a certain account balance (say, $500 or more).

• In addition, you may be required to receive a certain number of or dollar amount of direct deposits per month or meet other criteria, such as relating to debit card usage.

• You might also have to pay a monthly account fee; again, it depends on the bank you choose. Recent research found that checking accounts had an average monthly fee of $10.77; where an interest account will fall can vary with the financial institution.

• One more point: In many cases, interest checking accounts earn less interest compared to savings accounts.Yes, a checking account has added flexibility that may be beneficial (say, unlimited transactions and debit-card and check-writing features), but it’s worth noting. You might consider a combined checking and savings account to get the best of both worlds.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

How Do Interest-Bearing Checking Accounts Work?

These types of accounts work in a similar way to other kinds of checking accounts. Account holders can make deposits at ATMs, online, by direct deposit, or at branch locations depending on the financial institution.

As for withdrawals, account holders can make bank transfers, withdraw cash from an ATM, write a check, use bill pay, or pay for purchases with a debit card. The only difference is that, instead of earning no money on your balance, you will accrue some interest, usually on a monthly basis.

How Are Interest Checking Accounts Different Than Other Checking Accounts?

The truth is, checking account interest rates will vary depending on the type of account and the financial institution. On average, banks offer an APY of 0.07%. There are high-yield checking accounts that could pay more, but these rates are generally still lower than what you could earn with a savings account. That said, with a little online research, you might find an interest checking APY of 3.00% or higher at this time. Those couple of extra points of interest may well be worthwhile as part of your plan to grow your wealth.

Just be sure to note the account requirements, as mentioned above. If you have to keep more money in the account that is comfortable for your budget and cash flow, you could wind up incurring late fees elsewhere in your financial life.

Here’s an example:

• Perhaps you decide to pay your credit card bill late because you didn’t want your checking account balance to dip below the minimum to earn interest.

• You opt to wait for your next paycheck to hit before you send your payment to your card issuer.

• The credit card fee for the late payment is likely more than the interest you’re earning on the money in your checking account.

So in this situation, keeping your money in an interest checking account might not be a win-win for you.

Common Account Requirements for Interest Checking Accounts

When it comes to opening an interest-bearing checking account, there may be some requirements to wrangle. Keep the following factors in mind:

• Minimum-balance and other account requirements: When you open an account, some financial institutions may require a minimum initial deposit. Current offers for interest-bearing checking range from zero dollars to $500 and occasionally significantly higher amounts as a minimum deposit. Shop around to find the right account for your needs.

Plus, as mentioned above, you may need to maintain a certain balance in order to avoid fees. There may also be other rules such as the amount of transactions you can make on your debit card.

• Fees: Some interest checking accounts may charge monthly fees, as described earlier in this article, which could eat into the interest you earn. You may have to keep a higher balance in your account to avoid fees. Other fees to consider are overdraft fees, and whether you’ll need to pay third-party network fees to access certain ATMs.

• Application requirements: Depending on the financial institution, you may be required to submit documents such as your Social Security number, proof of address, and government-issued photo ID. If you want to open a checking account with a credit union, you’ll most likely need to become a member.

Advantages and Disadvantages of Interest Checking Accounts

An interest checking account may not be the best option for you. Consider the following advantages and disadvantages before opening an account.

Advantages of Interest Checking Accounts

• You’ll earn interest Most traditional checking accounts won’t pay you any interest, but with an interest-bearing one, you’ll earn high interest. That means your money will help you earn some money while it’s sitting in the account. Typical APYs can range from 0.50% to 3.00% or higher.

• You’ll have more flexibility Checking accounts tend not to have transaction limits as you may with savings accounts or money market accounts. Plus, you can use checks and a debit card, offering you more flexibility to access your money.

Disadvantages of Interest Checking Accounts

• You may have to meet certain requirements Though there are some interest checking accounts that don’t have minimum balance requirements or monthly fees, some do. That means you could be on the hook for a monthly fee if you can’t meet account requirements. In some cases, these fees could negate the amount you earn in interest.

• You may not get a high interest rate The interest you earn on a checking account tends to be lower compared to ones you earn from a high-yield savings account or money market account. But there are definitely exceptions to the rule: Some banks have offered as much as 3.00% APY or higher on interest checking accounts, so it can truly pay to shop around and see if you can snag one of those deals.

Where Can I Get an Interest Checking Account?

You can open an interest checking account at most financial institutions, including traditional and online banks, as well as credit unions. As mentioned before, you may be required to become a member of the credit union you want to open a checking account with.

When shopping around, look beyond interest rates. Other equally important factors to consider are:

• Account features (access to your funds, for instance; when the interest accrues)

• Account-holder benefits (are there other perks to being an account-holder, such as a sign-up bonus?)

• ATM, overdraft, and other fees

• Minimum opening deposit and account balance requirements to earn interest.

Is It Worth It to Get an Interest Checking Account?

Thinking carefully about your financial situation and goals should help you determine whether it’s worth getting an interest bearing checking account.

• For those who want to keep a decent amount of money in a checking account to ensure bills and daily transactions are taken care of, it might be worth considering. Why not earn a bit of interest if you can find an account that doesn’t charge fees?

• However, if you’re interested in having a stash of cash available for short-term or medium-term savings goals — as in, you’re not planning on making frequent withdrawals — then a high-yield savings or a checking and savings account might be the better choice.

• If your goal is to save for long-term goals like retirement or a college fund for your child, then an investment account could be the way to go.

Recommended: How to Avoid ATM Fees

The Takeaway

An interest-bearing checking account may be a good fit if you’re looking for an account for daily transactions that can grow your money a bit. It’s important to check the fine print to see if there are any minimum balance requirements and what the fees are. Comparing the potential interest to be earned with any fees that may be charged is a vital step before applying for an interest checking account.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.30% APY on SoFi Checking and Savings.

Photo credit: iStock/FG Trade

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 4.30% 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 4.30% 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 4.30% 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 10/8/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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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Jan

2024

Loan Modification vs Loan Refinancing: The Differences and Similarities

By Janet Schaaf | Debt Payoff, Financial Independence, Home Ownership, personal_loan | Comments Off

Both a loan modification and a loan refinance can lower your monthly payments and help you save money. However, they are not the same thing. Depending on your circumstances, one strategy will make more sense than the other.

If you’re behind on your mortgage payments due to a financial hardship, for example, you might seek out a loan modification. A modification alters the terms of your current loan and can help you avoid default or foreclosure.

If, on the other hand, you’re up to date on your loan payments and looking to save money, you might opt to refinance. This involves taking out a new loan (ideally with better rates and terms) and using it to pay off your existing loan.

Here’s a closer look at loan modification vs. refinance, how each lending option works, and when to choose one or the other.

What Is a Loan Modification?

A loan modification changes the terms of a loan to make the monthly payments more affordable. It’s a strategy that most commonly comes into play with mortgages. A home loan modification is a change in the way the home mortgage loan is structured, primarily to provide some financial relief for struggling homeowners.

Unlike refinancing a mortgage, which pays off the current home loan and replaces it with a new one, a loan modification changes the terms and conditions of the current home loan. These changes might include:

• A new repayment timetable. A loan modification may extend the term of the loan, allowing the borrower to have more time to pay off the loan.

• A lower interest rate. Loan modifications may allow borrowers to lower the interest rates on an existing loan. A lower interest rate can reduce a borrower’s monthly payment.

• Switching from an adjustable rate to a fixed rate. If you currently have an adjustable-rate loan, a loan modification might allow you to change it to a fixed-rate loan. A fixed-rate loan may be easier to manage, since it offers consistent monthly payments over the life of the loan.

A loan modification can be hard to qualify for, as lenders are under no obligation to change the terms and conditions of a loan, even if the borrower is behind on payments. A lender will typically request documents to show financial hardship, such as hardship letters, bank statements, tax returns, and proof of income.

While loan modifications are most common for secured loans, like home mortgages, it’s also possible to get student loan modifications and even personal loan modifications.

💡 Quick Tip: A low-interest personal loan can consolidate your debts, lower your monthly payments, and help you get out of debt sooner.

What Is Refinancing a Loan?

A loan refinance doesn’t just restructure the terms of an existing loan — it replaces the current loan with a new loan that typically has a different interest rate, a longer or shorter term, or both. You’ll need to apply for a new loan, typically with a new lender. Once approved, you use the new loan to pay off the old loan. Moving forward, you only make payments on the new loan.

Refinancing a loan can make sense if you can:

• Qualify for a lower interest rate. The classic reason to refi any type of loan is to lower your interest rate. With home loans, however, you’ll want to consider fees and closing costs involved in a mortgage refinance, since they can eat into any savings you might get with the lower rate.

• Extend the repayment terms. Having a longer period of time to pay off a loan generally lowers the monthly payment and can relieve a borrower’s financial stress. Just keep in mind that extending the term of a loan generally increases the amount of interest you pay, increasing the total cost of the loan.

• Shorten the loan repayment time. While refinancing a loan to a shorter repayment term may increase the monthly loan payments, it can reduce the overall cost of the loan by allowing you to pay off the debt faster. This can result in a significant cost savings.

Recommended: What Are Personal Loans Used For?

Refinance vs Loan Modification: Pros and Cons

Loan refinance is typically something a borrower chooses to do, whereas loan modification is generally something a borrower needs to do, often as a last resort.

Here’s a look at the pros and cons of each option.

Loan Modification		Refinancing
Pros	Cons	Pros	Cons
Avoid loan default and foreclosure	Could negatively impact credit	May be able to lower interest rate	You’ll need solid credit and income
Lower your monthly payment	Cash out is not an option	May be able to shorten or lengthen your loan term	Closing costs may lower overall savings
Avoid closing costs	Lenders not required to grant modification	May be able to turn home equity into cash	You could reset the clock on your loan

Benefits of Loan Modification

While a loan modification is rarely a borrower’s first choice, it comes with some advantages. Here are a few to consider.

• Avoid default and foreclosure. Getting a loan modification can help you avoid defaulting on your mortgage and potentially losing your home as a result of missing mortgage payments.

• Change the loan’s terms. It may be possible to increase the length of your loan, which would lower your monthly payment. Or, if the original interest rate was variable, you might be able to switch to a fixed rate, which could result in savings over the life of the loan.

• Avoid closing costs. Unlike a loan refinance, a loan modification allows you to keep the same loan. This helps you avoid having to pay closing costs (or other fees) that come with getting a new loan.

Drawbacks of Loan Modification

Since loan modification is generally an effort to prevent foreclosure on the borrower’s home, there are some drawbacks to be aware of.

• It could have a negative effect on your credit. A loan modification on a credit report is typically a negative entry and could lower your credit score. However, having a foreclosure — or even missed payments — can be more detrimental to a person’s overall creditworthiness.

• Tapping home equity for cash is not an option. Unlike refinancing, a loan modification cannot be used to tap home equity for an extra lump sum of cash (called a cash-out refi). If your monthly payments are lower after modification, though, you may have more funds to pay other expenses each month.

• There is a hardship requirement. It’s typically necessary to prove financial hardship to qualify for loan modification. Lenders may want to see that your extenuating financial circumstances are involuntary and that you’ve made an effort to address them, or have a plan to do so, before considering loan modification.

Recommended: Guide to Mortgage Relief Programs

Benefits of Refinancing a Loan

For borrowers with a strong financial foundation, refinancing a mortgage or other type of loan comes with a number of benefits. Here are some to consider.

• You may be able to get a lower interest rate. If your credit and income is strong, you may be able to qualify for an interest rate that is lower than your current loan, which could mean a savings over the life of the loan.

• You may be able to shorten or extend the term of the loan. A shorter loan term can mean higher monthly payments but is likely to result in an overall savings. A longer loan term generally means lower monthly payments, but may increase your costs.

• You may be able to pull cash out of your home. If you opt for a cash-out refinance, you can turn some of your equity in your home into cash that you can use however you want. With this type of refinance, the new loan is for a greater amount than what is owed, the old loan is paid off, and the excess cash can be used for things like home renovations or credit card consolidation.

💡 Quick Tip: If you’ve got high-interest credit card debt, a personal loan is one way to get control of it. But you’ll want to make sure the loan’s interest rate is much lower than the credit cards’ rates — and that you can make the monthly payments.

Drawbacks of Refinancing a Loan

Refinancing a loan also comes with some disadvantages. Here are some to keep in mind.

• You’ll need strong credit and income. Lenders who offer refinancing typically want to see that you are in a solid financial position before they issue you a new loan. If your situation has improved since you originally financed, you could qualify for better rates and terms.

• Closing costs can be steep. When refinancing a mortgage, you typically need to pay closing costs. Before choosing a mortgage refi, you’ll want to look closely at any closing costs a lender charges, and whether those costs are paid in cash or rolled into the new mortgage loan. Consider how quickly you’ll be able to recoup those costs to determine if the refinance is worth it.

• You could set yourself back on loan payoff. When you refinance a loan, you can choose a new loan term. If you’re already five years into a 30-year mortgage and you refinance for a new 30-year loan, for example, you’ll be in debt five years longer than you originally planned. And if you don’t get a lower interest rate, extending your term can increase your costs.

Is It Better to Refinance or Get a Loan Modification?

It all depends on your situation. If you have solid credit and are current on your loan payments, you’ll likely want to choose refinancing over loan modification. To qualify for a refinance, you’ll need to have a loan in good standing and prove that you make enough money to absorb the new payments.

If you’re behind on your loan payments and trying to avoid negative consequences (like loan default or foreclosure on your home), your best option is likely going to be loan modification. Provided the lender is willing, you may be able to change the rate or terms of your loan to make repayment more manageable. This may be more agreeable to a lender than having to take expensive legal action against you.

Alternatives to Refinancing and Loan Modification

If you’re having trouble making your mortgage payments or just looking for a way to save money on a debt, here are some other options to consider besides refinancing and loan modification.

Mortgage Forbearance

For borrowers facing short-term financial challenges, a mortgage forbearance may be an option to consider.

Lenders may grant a term of forbearance — typically three to six months, with the possibility of extending the term — during which the borrower doesn’t make loan payments or makes reduced payments. During that time, the lender also agrees not to pursue foreclosure.

As with a loan modification, proof of hardship is typically required. A lender’s definition of hardship may include divorce, job loss, natural disasters, costs associated with medical emergencies, and more.

During a period of forbearance, interest will continue to accrue, and the borrower will still be responsible for expenses such as homeowners insurance and property taxes.

At the end of the forbearance period, the borrower may have to repay any missed payments in addition to accrued interest. Some lenders may work with the borrower to set up a repayment plan rather than requiring one lump repayment.

Mortgage Recasting

With a mortgage recast, you make a lump sum payment toward the principal balance of the loan. The lender will then recast, or re-amortize, your remaining loan repayment schedule. Since the principal amount is smaller after the lump-sum payment is made, each monthly payment for the remaining life of the loan will be smaller, even though your interest rate and term remain the same.

Making Extra Principal Payments

With any type of loan, you may be able to lower your borrowing costs by occasionally (or regularly) making extra payments towards principal. This can help you pay back what you borrowed ahead of schedule and reduce your costs.

Before you prepay any type of loan, however, you’ll want to make sure the lender does not charge a prepayment penalty, since that might wipe out any savings. You’ll also want to make sure that the lender applies any extra payments you make directly towards principal (and not towards future monthly payments).

The Takeaway

Loan modification vs loan refinancing…which one wins?

It depends on your financial situation. If you’re dealing with financial challenges and at risk of home foreclosure, you may want to look into a loan modification, which could be easier to qualify for than loan refinancing.

If you’re interested in getting a lower interest rate or lowering your monthly debt payment, refinancing likely makes more sense. A refinance may also make sense if you’re looking to tap your home equity to access extra cash. With a cash-out refi, you replace your current mortgage with a new, larger loan and receive the excess amount in cash.

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 are the disadvantages of loan modification?

A loan modification typically comes with a hardship requirement. A lender may ask to see proof that your financial circumstances are involuntary and that you’ve made an effort to address them before considering loan modification.

A loan modification can also have a temporary negative effect on your credit.

Is a loan modification bad for your credit?

A lender may report a loan modification to the credit bureaus as a type of settlement or adjustment to the loan’s terms, which could negatively impact on your credit. However, the effect will likely be less (and shorter in duration) than the impact a series of late or missed payments or a foreclosure on your home would have.

Photo credit: iStock/AlexSecret

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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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Jan

2024

Should Married Couples Have Joint Bank Accounts?

By Janet Siroto | Budgeting & Goals, Family Finances, money | No Comments

Whether to have a joint bank account when married is a personal decision, but most couples do merge finances, according to research at the Kellogg School of Management at Northwestern University. Between 52% and 65% of couples surveyed do so, while 10% to 15% maintain completely separate bank accounts. The remainder have a hybrid approach, sharing some accounts and keeping others separate.

If you’re wondering whether to merge bank accounts when married, it can be a wise move to consider the pros and cons of joint and separate scenarios and then make your decision. In this article, you’ll delve into the upsides and downsides, so you’re ready to make an informed decision about what suits your finances and your relationship best.

What Is a Joint Bank Account?

First, consider this definition of a joint bank account: It’s similar to a standard account, but it has more than one owner. With a joint account, the account holders each fully share access to the account. Each of you will get a debit card, checkbook, and the other typical benefits that come with a checking account.

In this way, a joint bank account brings transparency to a marriage, which may make some people cheer and others cringe. Everything’s out in the open, including debits (those pricey clothes sneaking into your closet? Check), deposits, and your in-real-time account balance.

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.30% APY, with no minimum balance required.

Why Have a Joint Bank Account in Marriage?

A joint account in marriage can offer a simplified approach to your personal finances, and it can symbolize trust. But, as with most things in life, there are pros and cons to this kind of banking relationship. Take a closer look.

Pros and Cons of a Joint Bank Account in Marriage

Whether a joint bank account in marriage is right for you can depend on a variety of factors. Are you starting out on equal financial footing? Are you comfortable revealing your spending habits? Would a shared account come in handy when setting financial goals? Consider the following points:

Pros	Cons
Clarity: An easy, instant read on how much, as a couple, you’ve spent and how much you’ve saved. Less time needed to communicate about finances.	Total transparency: Spending habits become completely visible, which can become ammo in money arguments.
Teamwork: Two sets of eyes on the account. You’re both contributing to your shared financial life and health.	Loss of autonomy: You may feel as if you’ve lost your sense of independence, both financially and personally. Also, potential resentment if partners enter with unequal assets.
Convenience: Easier management of monthly payments such as mortgage and insurance. You may save on fees, too.	Vulnerability: Generally, each of you has the right to withdraw the funds and even close the account.
Legal streamlining: Shared access in case of emergency or death; avoidance of court proceedings.	Legal complications: More challenging division of assets if you divorce.

As you can see, a joint account in marriage offers convenience and a sense of more complete coupledom. You are truly partners in finance. It can make managing your money and shared goals easier.

However, along with this, your finances become an open book. Some expenses that you might have kept private — from pricey personal-training sessions to a surprise gift for your spouse — become totally visible to your partner.

There are also legal implications: If your sweetie brings significant debt to the marriage, your money is now mixed in as an asset should a collector come calling. Also (and we hate to mention the d-word), if you were to split, untangling whose money is whose may be a major endeavor.

Consider these factors and your comfort level. Depending on your and your spouse’s personalities, comfort levels, and financial situations, a joint account might be the right move for you.

Why Have Separate Bank Accounts in Marriage?

Some couples choose not to merge their bank accounts, or not do so completely. Maybe you check your bank-account balance obsessively, while your partner is more of an “Oops, am I overdrawn?” kind of person. If you have different money styles, separate accounts could be a great peace-keeper, so you don’t argue over money. Take a closer look at the upsides and downsides here.

Pros and Cons of Separate Bank Accounts in Marriage

Here’s a closer look at the pros and cons of separate bank accounts in marriage.

Pros	Cons
Autonomy: Ability to individually manage your money, which may suit your personalities and accommodate different financial styles.	Isolation: You may not feel as connected as a couple when your accounts aren’t merged.
Privacy: No one else sees your spending habits and bank balance.	Communication: More conversation about your financial habits and goals will be required.
Protection: Your assets may be safe if your spouse confronts debt collection and available in the event of a death.	Complexity: Potentially more time and energy needed to pay monthly expenses like rent, groceries, and utilities.
Ease: Depending on the state you live in, simplified division of assets if you divorce.	Separation: Contributing toward shared money goals could be harder.

Marriage is a major life transition, often with lots of adjustments and, yes, compromises required. Having separate bank accounts when you are wed can give you a sense of independence, control, and privacy over your finances.

Keeping your accounts apart can also make sense if one of you entered marriage with, say, child support or with debt to clear up. That spouse can be solely responsible for paying that. And if one person significantly out-earns the other, they can do what they want with some of their moolah rather than pooling it. The fact that separate accounts may protect you in the event of a split is also worth noting.

That said, if you do choose to keep your dollars and cents in separate bank accounts once you’re hitched, know that communication will be key. Having regular check-ins will help you stay aware of how well each of you is managing your spending and progress toward financial goals.

Recommended: How to Make a Budget in 5 Steps

Recap: Joint Bank Account vs Separate Bank Accounts

Should married couples have joint bank accounts? Figuring out your financial life is a big decision, but remember, there’s no right or wrong answer.

When it comes to whether to have a joint bank account or keep your cash separated, it’s all about what works for the two of you. Here’s a recap of the key features of each.

Joint Bank Account	Separate Bank Account
Equal access for both partners	Division of accounts, which can be beneficial if one partner has debt or out-earns the other
Transparency of all transactions for both of you	Privacy in terms of how each of you spends and saves
Ability to retrieve funds in emergencies	Protection of your assets in case of divorce
Connectedness since your assets are pooled	Autonomy because you still control your money

Still not sure whether a joint or separate account is best for you and your spouse? Consider a hybrid approach.

Both of you can keep your separate accounts while contributing to a joint account to handle common expenses such as monthly bills and future financial goals. It’s not uncommon for a single person to have multiple bank accounts, so why not try it as a couple?

If you decide to go down this route, you may want to make sure you’re clear about what the account is used for. Since you and your partner will be juggling multiple accounts and financial priorities, you may have to figure out a system for keeping in touch and on top of your money. Regular check-ins that are scheduled on both your calendars (with reminders switched on) can be a good tactic.

Recommended: How to Automate Your Finances

The Takeaway

There are good reasons for joining together your finances — and there are good reasons for keeping them apart. What’s right for you depends on a number of factors, including how much transparency you want, whether one of you has more payments or debt than the other, and whether one of you comes to the union with a lot more money than the other.

Whether you decide to keep your accounts separate, combine them, or take a hybrid approach, finding the right banking partner is an important step. Investigate your options for joint accounts, including those offered by SoFi.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.30% APY on SoFi Checking and Savings.

FAQ

Is it normal for married couples to have joint bank accounts?

The majority of couples do have joint bank accounts, but a significant number also have a hybrid approach (a shared account as well separate ones). About 10% to 15% keep their money completely separate.

Are joint bank accounts the secret to a happy marriage?

While finances are a significant player in how couples get along, there is no one secret to a happy marriage. For some couples, the simplicity and transparency of a joint account work really well. For others, the relationship is happier with separate finances.

What percentage of married couples have joint bank accounts?

Research indicates that 52% to 65% of married couples choose to have joint bank accounts. Another segment will have both a joint bank account as well as separate bank accounts.

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Jan

2024

What is a Roth 401(k)?

By Pam O’Brien | Growing Wealth, invest, Investing, Life & Career, Preparing for Retirement | Comments Off

A Roth 401(k) is a type of retirement plan that may be offered by your employer. You contribute money from your paychecks directly to a Roth 401(k) to help save for retirement.

A Roth 401(k) is somewhat similar to a traditional 401(k), but the potential tax benefits are different.

Here’s what you need to know about a Roth 401(k) to help answer the question of what is a Roth 401(k)?, and to decide if it may be the right type of retirement account for you.

Roth 401(k) Definition

What is a Roth 401(k)? The plan combines some of the features of a traditional 401(k) and a Roth IRA.

Like a traditional 401(k), a Roth 401(k) is an employer-sponsored retirement account. Your employer may offer to match some of your Roth 401(k) contributions.

Like a Roth IRA, contributions to a Roth 401(k) are made using after-tax dollars, which means income tax is paid upfront on the money you contribute.

💡 Quick Tip: Before opening an investment account, know your investment objectives, time horizon, and risk tolerance. These fundamentals will help keep your strategy on track and with the aim of meeting your goals.

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.

How a Roth 401(k) Works

Contributions to a Roth 401(k) are typically made directly and automatically from your paycheck. Your employer may match your Roth 401(k) contributions up to a certain amount or percentage, depending on the employer and the plan.

Your contributions to a Roth 401(k) are taxed at the time you contribute them, and you pay income taxes on them. In general, your money grows in the account tax-free and withdrawals in retirement are also tax-free, as long as the account has been open at least five years.

Differences Between a Roth 401(k) and a Traditional 401(k)

While a Roth 401(k) shares some similarities to a traditional 401(k), there are some differences between the two plans that you should be aware of. Here is how a Roth 401(k) differs from a traditional 401(k):

• Contributions to a Roth 401(k) are made with after-tax dollars and you pay taxes on them upfront. With a traditional 401(k), your contributions are made with pre-tax dollars, and you pay taxes on them later.

• With a Roth 401(k), your take-home pay is a little less because you’re paying taxes on your contributions now. That typically lowers your tax bill for the year. With a traditional 401(k), your contributions are taken before taxes.

• Your money generally grows tax-free in a Roth 401(k). And in retirement, you withdraw it tax-free, as long as the account is at least five years old and you are at least 59 ½. With a traditional 401(k), you pay taxes on your withdrawals in retirement at your ordinary income tax rate.

• You can start withdrawing your Roth 401(k) money at age 59 ½ without penalty or taxes. However, you must have had the account for at least five years. With a traditional 401(k), you can withdraw your money at age 59 ½. There is no 5-year rule for a traditional 401(k).

Roth 401(k) Contribution Limits

A Roth 401(k) and a traditional 401(k) share the same contribution limits. Both plans allow for the same catch-up contributions for those 50 and older.

Here are the contribution limits for each type of plan.

	Roth 401(k)	Traditional 401(k)
2023 Contribution Limit	$22,500	$22,500
2023 Contribution Limit for individuals 50 and older	$30,000	$30,000
2024 Contribution Limit	$23,000	$23,000
2024 Contribution Limit for individuals 50 and older	$30,500	$30,500
2023 Contribution Limit on employer and employee contributions combined	$66,000 ($73,500 for individuals 50 and older)	$66,000 ($73,500 for individuals 50 and older)
2024 Contribution Limit on employer and employee contributions combined	$69,000 ($76,500 for individuals 50 and older)	$69,000 ($76,500 for individuals 50 and older)

Roth 401(k) Withdrawal Rules

When it comes to withdrawal rules, a Roth 401(k) is subject to the 5-year rule. Under this rule, an individual can start taking tax-free and penalty-free withdrawals from a Roth 401(k) at age 59 ½ only once they’ve had the account for at least five years.

This means that if you open a Roth 401(k) at age 56, you can’t take tax- or penalty-free withdrawals of your earnings at age 59 ½ the way you can with a traditional 401(k). Instead, you’d have to wait until age 61, when your Roth 401(k) is five years old.

Early Withdrawal Rules

It’s possible to take early withdrawals — meaning withdrawals taken before age 59 ½ or from an account that’s less than five years old — from a Roth 401(k), but it’s complicated. Early withdrawals are subject to taxes and a 10% penalty.

However, you may not owe taxes and penalties on the entire amount. Here’s how it typically works: You can withdraw as much as you’ve contributed to a Roth 401(k) without paying taxes or penalties because your contributions were made with after-tax dollars. In other words, you’ve already paid taxes on them. Any earnings you withdraw, though, are subject to taxes and penalties, and you’ll owe tax proportional to your earnings.

For example, if you have $150,000 in a Roth 401(k) and $130,000 of that amount is contributions and $20,000 is earnings, those $20,0000 in earnings are taxable gains, and they represent 13.3% of the account. Therefore, if you took an early withdrawal of $30,000, you would owe taxes on 13.3% of the amount to account for the gains, which is $3,990.

💡 Quick Tip: How much does it cost to set up an IRA? Often there are no fees to open an IRA, but you typically pay investment costs for the securities in your portfolio.

Roth 401(k) RMDs

Previously, individuals with a Roth 401(k) had to take required minimum distributions (RMDs) starting at age 73. However, in 2024, as a stipulation of the SECURE 2.0 Act, RMDs will be eliminated for Roth accounts in employer retirement plans.

By comparison, traditional 401(k)s still require you to take RMDs starting at age 73.

Pros and Cons of a Roth 401(k)

A Roth 401(k) has advantages, but there are drawbacks to the plan as well. Here are some pros and cons to consider:

Pros

You can make tax-free withdrawals in retirement with a Roth 401(k).
This can be an advantage if you expect to be in a higher tax bracket when you retire, since you’ll pay taxes on your Roth 401(k) contributions upfront when you’re in a lower tax bracket. Your money grows tax-free in the account.

Your current taxable income is reduced when you have a Roth 401(k).
Because Roth 401(k) contributions are made after taxes, your paycheck will typically be reduced. That lowers your tax bill for the year.

There are no longer RMDs for a Roth 401(k).
Because of the SECURE 2.0 Act, required minimum distributions will no longer be required for Roth 401(k)s as of 2024. With a traditional 401(k), you must take RMDs starting at age 73.

Early withdrawals of contributions in a Roth 401(k) are not taxed.
Because you’ve already paid taxes on your contributions, you can withdraw those contributions early without paying a penalty or taxes. However, if you withdraw earnings before age 59 ½, you will be subject to taxes on them.

Cons

Your Roth 401(k) account must be open for at least five years for penalty-free withdrawals.
Otherwise you may be subject to taxes and a 10% penalty on any earnings you withdraw if the account is less than five years old. This is something to consider if you are an older investor.

A Roth 401(k) will reduce your paycheck now.
Your take home pay will be smaller because you pay taxes on your contributions to a Roth 401(k) upfront. This could be problematic if you have many financial obligations or you’re struggling to pay your bills.

Is a Roth 401(k) Right for You?

If you expect to be in a higher tax bracket when you retire, a Roth 401(k) may be right for you. It might make sense to pay taxes on the account now, while you are making less money and in a lower tax bracket.

However, if you expect to be in a lower tax bracket in retirement, a traditional 401(k) might be a better choice since you’ll pay the taxes on withdrawals in retirement.

Your age can play a role as well. A Roth 401(k) might make sense for a younger investor, since they are likely to be earning less now than they may be later in their careers. That’s something to keep in mind as you choose a retirement plan to help reach your future financial goals.

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).

FAQ

How is a Roth 401(k) taken out of a paycheck?

Contributions to a Roth 401(k) are automatically deducted from your paycheck. Because contributions are made with after-tax dollars, meaning you pay taxes on them upfront, your paycheck will be lower.

What is the 5-year rule for a Roth 401(k)?

According to the 5-year rule for a Roth 401(k), the account must have been open for at least five years in order for an investor to take withdrawals of their Roth 401(k) earnings at age 59 ½ without being subject to taxes and a 10% penalty.

What happens to a Roth 401(k) when you quit?

When you quit a job, you can either keep your Roth 401(k) with your former employer, transfer it to a new Roth 401(k) with your new employer, or roll it over into a Roth IRA.

There are some factors to consider when choosing which option to take. For instance, if you leave the plan with your former employer, you can no longer contribute to it. If you are able to transfer your Roth 401(k) to a plan offered by your new employer, your money will be folded into the new plan and you will choose from the investment options offered by that plan. If you roll over your Roth 401(k) into a Roth IRA, you will be in charge of choosing and making investments with your money.

Do I need to report a Roth 401(k) on my taxes?

Because your contributions to a Roth 401(k) are made with after tax dollars and aren’t considered tax deductible, you generally don’t need to report them on your taxes. And when you take qualified distributions from a Roth 401(k) they are not considered taxable income and do not need to be reported on your taxes. However, it’s best to consult with a tax professional about your particular situation.

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.

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.

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SOIN0124007

Jan

2024

The SAVE Plan: What Student Loan Borrowers Need to Know

By Nancy Bilyeau | Student Loans, student_loan | Comments Off

Editor's Note: On July 18, a federal appeals court blocked continued implementation of the SAVE Plan. Current plan enrollees will be placed into interest-free forbearance while the case moves through the courts. We will update this page as more information becomes available.

In the wake of the Supreme Court’s decision to block the White House program for federal student loan forgiveness, President Joe Biden announced the Saving on a Valuable Education (SAVE) program, a new income-driven plan for federal loan repayment. Monthly payments on loans will be lowered, based on discretionary income.

On Jan. 12, 2024, the White House announced that beginning in February, borrowers enrolled in SAVE who took out less than $12,000 in loans and have been in repayment for 10 years will get their remaining student debt canceled immediately. In July, however, two courts issued injunctions against the plan, putting the forgiveness part on hold. We will update this page with new information as it becomes available.

Here’s what borrowers need to know about the SAVE Plan and who qualifies. As of January 2024, 6.9 million federal student loan borrowers were already enrolled in the plan.

Overview of the SAVE Plan

President Biden said he had created a new repayment plan, “so no one with an undergraduate loan has to pay more than 5 percent of their discretionary income.” It is part of his effort to make student loan debt more manageable especially for low-income borrowers, and it replaces the REPAYE program.

The SAVE Plan is the most affordable repayment plan for federal student loans yet, according to the Department of Education. Borrowers who are single and make less than $32,800 a year won’t have to make any payments at all. (If you are a family of four and make less than $67,500 annually, you also won’t have to make payments.)

For federal borrowers who are required to make payments (this depends on your income and family size) and have only undergraduate school loans, the monthly payments will be cut in half — from 10% of discretionary income to 5%, beginning in the summer of 2024. How long people will have to make payments depends on the size of their loan balance.

• If their original undergraduate loan balance is $12,000 or less, they will need to make payments for 10 years – and after that, any remaining balance will be forgiven.

• If their original undergraduate loan balance is more than $12,000, their payment period is capped at 20 years (the term goes up one year for every $1,000 above $12,000) — and any remaining balance will be forgiven.

For federal borrowers who have both undergraduate and graduate loans, their monthly payments will be a weighted average of 5% and 10% of their discretionary income. How long they will need to make payments is pending government guidance.

And for federal borrowers who have graduate school loans, their monthly payments will be 10% of their discretionary income. Also, under the SAVE Plan, those who originally took out $12,000 or less in loans are eligible for forgiveness after at least 10 years of monthly payments.

How to Enroll in the SAVE Plan

Borrowers who are already enrolled in the REPAYE program will be automatically enrolled in the SAVE Plan. During the transition, the DOE says it will use the two plan names, SAVE and REPAYE, interchangeably.

Those who are not currently in the REPAYE program can apply now, and they will be switched to SAVE automatically.

💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

How SAVE Is Better Than REPAYE

The SAVE Plan replaces the Revised Pay As You Earn Repayment Plan (REPAYE). It is an improvement on it in several ways:

• The SAVE Plan allows for low-income borrowers to make no payments at all.

• The SAVE Plan requires low-balance borrowers ($12,000 or less) to make payments for only 10 years.

• The SAVE Plan requires borrowers with only undergraduate debt to pay 5% (instead of 10%) of their discretionary income.

Additionally, if the required payment based on your income does not cover all of the interest that accrues every month, the uncovered amount will not be added to your balance. In other words, your balance will not grow if you are making your payments.

Who Will Owe $0 in Monthly Federal Loan Payments Under SAVE?

Whether you will owe monthly federal loan payments under the SAVE Plan depends on two factors: your income^* and your family size. Your payment will be zero if your income is at or under 225% of the Federal Poverty Level (FPL)^**.

To find out if you will be one of the estimated million borrowers who still won’t have monthly payments to make after the federal payment pause ends, look up your family size in the table below. If your income^* is equal to or below the corresponding “2023 Income Level Protected From Payment Under SAVE,”^** your monthly federal student loan payment will be $0.

^*Normally, the government uses adjusted gross income figures, but the DOE did not specify this in its factsheet .

^**Usually the government uses the prior year’s FPL and your prior year’s income, but the DOE used 2023 figures in its factsheet.

2023 Income Levels Protected From Payment Under SAVE by Family Size
Family Size	2023 Incomes at Federal Poverty Level (FPL)	2023 Income Level Protected From Payment Under SAVE (FPL x 225%)
For individuals	$14,580	$32,805
For a family of 2	$19,720	$44,370
For a family of 3	$24,860	$55,935
For a family of 4	$30,000	$67,500
For a family of 5	$35,140	$79,065
For a family of 6	$40,280	$90,630
For a family of 7	$45,420	$92,195
For a family of 8	$50,560	$113,760
For a family of 9+	Add $5,140 for each extra person	$125,325+

💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

How Much Your Monthly Federal Loan Payments Could Be Under SAVE

To calculate how much your monthly federal payments could be starting in October 2023 under SAVE, look up your family size in the table above and see the corresponding protected income level^**. Subtract that dollar amount from your estimated 2023 income^* and multiply it by 10%. Then take that figure and divide it by 12 to get your monthly payment amount.

(2023 Income^* – 2023 Protected Income Level^**) x 10% ÷ 12 = Monthly Federal Loan Payment Under SAVE

^*Normally, the government uses adjusted gross income figures, but the DOE did not specify this in its factsheet.

^**Usually the government uses the prior year’s FPL and your prior year’s income, but the DOE used 2023 figures in its factsheet.

When Will the SAVE Plan Take Effect?

The SAVE Plan will replace REPAYE by the time payments were due in October 2023. Originally, the full impact of SAVE was supposed to happen in July 2024, but President Biden announced in January that starting in February, borrowers enrolled in SAVE who took out less than $12,000 in loans and have been in repayment for 10 years will get their remaining student debt canceled immediately.

The other elements of SAVE are not expected to take effect until July 1, 2024. This means that borrowers who are eligible to have their payments cut to 5% of their discretionary income won’t see the reduction until this summer.

But the DOE is increasing the amount of income that is protected from payments, so that single borrowers who make up to $32,800 will not have to make payments and borrowers in a family of four making less than $67,500 also won’t have payments due.

Also, starting in October 2023, an important change was made in the amount of interest paid through SAVE. If you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month. This means that the SAVE Plan prevents your balance from growing due to unpaid interest.

Who Is Eligible for the SAVE Plan?

The SAVE Plan is available to federal student borrowers with Direct student loans. This includes:

• Direct Subsidized Loans

• Direct Unsubsidized Loans

• Direct PLUS Loans made to graduate or professional students

• Direct Consolidation Loans that did not repay any PLUS loans made to parents

Additionally, you are eligible for the SAVE Plan if you consolidated a loan from the Federal Family Education Loan (FFEL) Program, including Subsidized and Unsubsidized Federal Stafford Loans, FFEL Plus Loans for graduate or professional study, FFEL Consolidated Loans that did not repay parents’ PLUS loans, and Federal Perkins Loans.

The SAVE Plan is not available for private student loans or Parent PLUS loans. Also, borrowers must be in good standing with their student loan payments. Borrowers in default who provide income information that shows they would have had a $0 payment at the time of default will be automatically moved to good standing, allowing them to access the SAVE plan.

Other Programs

In addition to the SAVE program, President Biden announced that the DOE is instituting a 12-month “on-ramp” to repayment, running from October 1, 2023 to September 30, 2024, so that financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.

Moreover, the Public Service Loan Forgiveness Program exists to help professionals working in public service who are struggling to repay federal student loans.

The Takeaway

Though the new SAVE Plan for federal student loan borrowers won’t take full effect until July 2024, some benefits will be implemented by February. Namely, the SAVE Plan will give borrowers who originally borrowed $12,000 or less forgiveness after as few as 10 years. Also, low-income borrowers may be exempt from making payments, while loan balances will not grow for borrowers making payments even if their required payment amount doesn’t cover all of the interest that accrues every month.

In July 2024, eligible federal borrowers with only undergraduate debt will see their monthly payments cut at least in half.

This article will be updated as the DOE releases more information about SAVE. To find more details yourself, this StudentAid page is a good place to start.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

Photo credit: iStock/Pekic

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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

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

SOSL0124007

What Is an Interest Checking Account and How Does It Work?

What Is an Interest Checking Account?

How Do Interest-Bearing Checking Accounts Work?

How Are Interest Checking Accounts Different Than Other Checking Accounts?

Common Account Requirements for Interest Checking Accounts

Get up to $300 when you bank with SoFi.

Advantages and Disadvantages of Interest Checking Accounts

Advantages of Interest Checking Accounts

Disadvantages of Interest Checking Accounts

Where Can I Get an Interest Checking Account?

Is It Worth It to Get an Interest Checking Account?

The Takeaway

Loan Modification vs Loan Refinancing: The Differences and Similarities

What Is a Loan Modification?

What Is Refinancing a Loan?

Refinance vs Loan Modification: Pros and Cons

Benefits of Loan Modification

Drawbacks of Loan Modification

Benefits of Refinancing a Loan

Drawbacks of Refinancing a Loan

Is It Better to Refinance or Get a Loan Modification?

Alternatives to Refinancing and Loan Modification

Mortgage Forbearance

Mortgage Recasting

Making Extra Principal Payments

The Takeaway

FAQ

What are the disadvantages of loan modification?

Is a loan modification bad for your credit?

Should Married Couples Have Joint Bank Accounts?

What Is a Joint Bank Account?

Why Have a Joint Bank Account in Marriage?

Pros and Cons of a Joint Bank Account in Marriage

Why Have Separate Bank Accounts in Marriage?

Pros and Cons of Separate Bank Accounts in Marriage

Recap: Joint Bank Account vs Separate Bank Accounts

The Takeaway

FAQ

Is it normal for married couples to have joint bank accounts?

Are joint bank accounts the secret to a happy marriage?

What percentage of married couples have joint bank accounts?

What is a Roth 401(k)?

Roth 401(k) Definition

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

How a Roth 401(k) Works

Differences Between a Roth 401(k) and a Traditional 401(k)

Roth 401(k) Contribution Limits

Roth 401(k) Withdrawal Rules

Early Withdrawal Rules

Roth 401(k) RMDs

Pros and Cons of a Roth 401(k)

Pros

Cons

Is a Roth 401(k) Right for You?

FAQ

How is a Roth 401(k) taken out of a paycheck?

What is the 5-year rule for a Roth 401(k)?

What happens to a Roth 401(k) when you quit?

Do I need to report a Roth 401(k) on my taxes?

The SAVE Plan: What Student Loan Borrowers Need to Know

Overview of the SAVE Plan

How to Enroll in the SAVE Plan

How SAVE Is Better Than REPAYE

Who Will Owe $0 in Monthly Federal Loan Payments Under SAVE?

How Much Your Monthly Federal Loan Payments Could Be Under SAVE

When Will the SAVE Plan Take Effect?

Who Is Eligible for the SAVE Plan?

Other Programs

The Takeaway

CATEGORIES

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