IBAN vs SWIFT Code: Differences Explained

In international banking, transactions can involve IBAN codes, which indicate a specific foreign bank account number, and SWIFT codes, which identify a particular financial institution. Depending on the countries and banks involved, sometimes only one of these codes is needed to make an international transfer, and sometimes both. Knowing the difference between these codes — and how and when each is used — can be valuable when transferring funds globally.

Key Points

•   IBAN codes identify specific bank accounts in international transactions, while SWIFT codes identify specific financial institutions.

•   IBANs are up to 34 characters long and include a country code, check digits, a bank identifier, and a basic account number.

•   SWIFT codes are 8 to 11 characters long and include a bank code, country code, location code, and sometimes a branch code.

•   IBANs are used mainly in Europe and other regions, while SWIFT codes have a broader global reach.

•   Both codes may be required for international transfers, depending on the countries and banks involved.

What Is an IBAN?

An IBAN is an International Bank Account Number. This number, up to 34 digits, pinpoints a person’s individual bank account in participating countries.

Because countries operate with different currencies, regulations, and financial institutions, IBANs help standardize cross-border transactions. IBANs can play an important role in getting funds transferred into the correct checking account or savings account.

Each unique alphanumeric IBAN code contains:

•   A two-letter country code

•   Two “check digits” for error detection

•   Up to 30 alphanumeric characters that signify an individual’s bank account (a bank identifier and a basic bank account number)

Roughly 80 countries currently use IBAN numbers when conducting money transfers. The largest collection of these countries is in Europe, but many North African, South American, Caribbean, and Middle Eastern countries participate as well.

IBANs are not used in America. Instead an ABA routing number and a bank account number identify checking and savings accounts. But if you’re wiring money internationally to a country that uses IBANs, you’ll need to know that number.

(Worth noting: Canada, Australia, and New Zealand also don’t use IBANs but instead use their own systems for identifying accounts.)

Recommended: What Is an Intermediary Bank?

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Understanding SWIFT Codes

SWIFT stands for Society of Worldwide Interbank Financial Telecommunication, a messaging network through which financial institutions can communicate securely across borders. This is a popular payment network for international wire transfers, but it’s not the only network.

A SWIFT code is a globally accepted standard BIC (Bank Identifier Number) for SWIFT transfers. Essentially, a SWIFT code refers to a specific bank or financial institution during international transfers. In that way, SWIFT codes serve a similar purpose internationally as routing numbers do domestically in the United States.

SWIFT codes are much shorter than IBANs, with between eight and 11 characters. Each contains:

•   The first four digits are a bank code

•   The next two are a country code

•   The next two signify the bank’s main office location

•   If applicable, the final three digits refer to a specific branch code (these are used by large banks with multiple branches in various countries and regions)

Unlike the case with IBANs, U.S. bank customers do typically have SWIFT codes affiliated with their accounts. (Some smaller banks and credit unions may not use SWIFT codes, however.) Your bank’s code will play a role if you are sending money overseas or if you are receiving funds from abroad.

It’s also important to know that there are several countries that are currently not permitted to participate in the SWIFT payment system, such as North Korea, Belarus, and Russia.

Recommended: All You Need to Know About Wire Transfer Fees

Key Differences Between IBAN and SWIFT

The major differences between IBAN vs. SWIFT codes come down to where each is used, what information each contains, and what kinds of transactions each is used in. Here are important points to know:

Geographic Coverage

IBANs are most popular for identifying bank account numbers in the European Union and nearby countries (such as Israel and Turkey), but other countries in South America and the Caribbean have adopted these codes as well. The United States, again, does not use IBANs; instead, bank account numbers and routing numbers are used domestically.

The SWIFT system has a greater global reach. It is the most popular network for identifying banks when managing international transfers in many countries in North America, the European Union, Africa, Central and South America, as well as China and India, and more. That said, not every nation uses SWIFT codes, either because they choose not to participate or are prohibited (as noted above) from doing so.

Information Contained

SWIFT vs. IBAN codes indicate two separate pieces of banking information, as mentioned above:

•   SWIFT codes, eight to 11 characters in length, can identify a specific bank or financial institution during international money transfers.

•   IBAN codes, up to 34 characters, can identify specific bank accounts during cross-border money transfers.

Usage in Transactions

Which codes you’ll need to make an international transfer will be determined by the code systems used by the countries and financial institutions sending and receiving the money. Sometimes, you’ll only need one of these codes, but often you’ll need a SWIFT and an IBAN code for an international bank wire. (They are separate identifiers, so it’s not a matter of, say, converting IBAN to SWIFT. Each conveys important financial information.)

That said, here are some scenarios you might encounter:

•   If you’re sending money to someone in a country that doesn’t use IBAN, you’ll have to use another way to identify the bank and their checking account.

•   If someone in a foreign country wants to transfer funds to you, they will not have an IBAN code associated with your account and will need to use your bank account and routing number and your bank’s SWIFT code, if available.

•   If you are trying to move money internationally to a country where you can’t use a SWIFT code, you’ll need to use another network to send money electronically. You might explore whether fintech options are available.

Recommended: How to Send Money to Someone Without a Bank Account

Combining IBAN and SWIFT

As mentioned, for many international transfers, you’ll need to know both the IBAN and SWIFT code involved. It really depends on which country you’re wiring money to. In some instances, you may only need one of the numbers. However, in this case, you may need to satisfy other requirements a country has established for transferring funds, as they might use other identifiers.

The Takeaway

SWIFT vs. IBAN codes are used to standardize international transfers and help ensure secure payments. SWIFT information identifies a particular bank in a country, such as in the U.S. or elsewhere, while IBAN characters point to a specific bank account in countries using the IBAN system. When sending funds from the U.S. to someone in a foreign country, you will likely need both of these codes to complete the transfer. U.S. banks typically have SWIFT codes that are used when they are receiving cross-border funds to be directed to a client’s account.

While SoFi doesn’t currently do international transfers, we do provide competitive interest rates and a host of tools to help you manage your money better.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Can a bank have multiple SWIFT codes?

It’s possible for a bank to have multiple SWIFT codes. Bigger banks with multiple branches across the globe may use three extra digits at the end of their code to identify a specific branch.

Is IBAN used in the United States?

The United States does not use IBAN codes. Instead, the U.S. uses a bank account number and routing number to identify financial institutions and the specific accounts within them. However, if you live in the U.S. and are wiring money internationally, you may need to know the recipient’s IBAN code, depending on what country they live in.

How do I find my IBAN or SWIFT code?

If you have a bank account in the U.S., you will not have an IBAN code affiliated with it. If you have a bank account outside the U.S. in a country that uses IBANs, you can typically find an IBAN code on your bank statement or on the bank’s website. If you are wiring money to someone who lives in a country using the IBAN system, you can ask for their IBAN code when discussing the details of the wire transfer.

You should also be able to find a bank’s SWIFT code on its website or on a bank statement (if you are a client). If you’re unable to locate it, you might do a quick online search or call the bank’s customer service number.

What happens if I use the wrong code for a transfer?

If you use the wrong code for a wire transfer and it cannot be completed, the money may be returned to your account. In some cases, you may be charged a fee for this. However, there is the slight possibility that the transfer could be completed and the money sent to the wrong account. That is why, if you know you used the wrong code, it’s important to contact your financial ASAP and see if you can request a cancellation or reversal of the transfer.


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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


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

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

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

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

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

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

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

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

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

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


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


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What Is a Wire Transfer? A Complete Guide to Fast Money Transfers

Wire transfers can be a convenient and safe way to send and receive money electronically, both domestically and internationally. While wire transfers serve a number of purposes, they can be especially good if you need a secure way to send cash to someone overseas or if you need to transfer a large sum, such as the down payment on a house.

Key Points

•   Wire transfers are electronic money transfers between bank accounts, particularly useful for large sums and international transactions.

•   Domestic wire transfers are typically completed within one business day, while international wire transfers may take up to five days.

•   Wire transfers generally differ from ACH transfers, P2P payments, and checks in terms of speed, fees, and convenience.

•   Wire transfers are considered secure but can be more costly, with fees ranging from $0 to $50.

•   To send a wire transfer, you’ll need the recipient’s bank details and sender’s identification, and once initiated, these transfers cannot be canceled once initiated.

Wire Transfers Explained

A wire transfer, as the name suggests, is a method of transferring money from one bank account to another electronically. Wire transfers allow you to move large sums of money both within the United States and internationally. Wire transfers are convenient, but they are not instantaneous:

•   Domestic wire transfers are typically completed within one business day.

•   International wire transfers usually take a few business days; in some cases, up to five days.

Wire transfers allow funds to flow between individuals and/or businesses, and they may be facilitated by banks or a nonbank money transfer service, such as Western Union or Wise.

It’s worth noting, however, that wire transfers can be a more expensive way to move money out of or into a bank account. Depending on whether they are domestic or international and the bank or service you use, the charge could be anywhere from $0 to $50. Another point to know: Wire transfers typically can’t be canceled, so it’s vital to double-check all details carefully when making one.

How Wire Transfers Differ From Other Payment Methods

Wire transfers aren’t the only way to send money. Other options include:

•   ACH transfers, which electronically move funds from one bank to another

•   Peer-to-peer (P2P) payment services, such as PayPal, Venmo, and Cash App

•   Traditional cash or check payments

•   Money orders and cashier’s checks

Here are some considerations regarding how wire transfers compare to the alternatives above:

•   Speed: Wire transfers are generally faster than writing a check, but P2P payments may be speedier, particularly if you pay a fee for instant transfers.

•   Convenience: While many wire transfers can be done online, you may be required to visit a bank branch or retail location in person in some cases. ACH transfers and P2P payments, however, can be done from a smartphone or computer, wherever you may be.

•   Fees: Senders often pay fees for wire transfers, while recipients may or may not need to pay a fee. Money orders and cashier’s checks also typically come with fees for the sender, and P2P payment apps usually charge for instant transfers.

•   Amounts: Wire transfers typically allow you to send the largest sum of money (upwards of $100,000), which makes them popular in real estate transactions. P2P payment apps usually have daily and weekly limits, and money orders tend to max out around $5,000.

Recommended: How to Send Money to Someone Without a Bank Account

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How Do Wire Transfers Work?

The process for completing a wire transfer is usually pretty straightforward:

•   The sender visits a financial institution or a wire transfer service location or initiates the transaction online.

•   They provide information about themself and the recipient.

•   To initiate or complete the transfer, the sender may also need to pay a fee.

•   The bank or service provider will communicate with the recipient’s institution to verify the transaction. The funds will then be deposited into the recipient’s account, where the recipient can access the money.

•   In some cases, the recipient may need to pay a fee as well.

Domestic vs. International Wire Transfers

Domestic wire transfers refer to electronic funds transfers between two financial institutions in the United States. These generally take a single business day to complete and are more affordable, with the sender often paying between $15 and $30 and the recipient paying between $0 and $15.

International wire transfers are more complex, given different countries’ regulations and currencies. Expect the fees to be higher for international wire transfers, often between $35 and $50 for the sender and $0 and $30 for the recipient. In addition, prepare for these to take a few days (even up to five) to process.

Information Needed for a Wire Transfer

To complete an outgoing wire transfer (that is, to send money to someone else via wire), you’ll need to supply some information, including:

•   The recipient’s full name and contact information (such as their address and phone number)

•   The recipient’s bank account and routing numbers (or, for international transfers, SWIFT/BIC and IBAN numbers).

As the sender, you’ll also need to provide:

•   Your name and contact information (often along with a government-issued ID or driver’s license)

•   The funds for the transfer (either physical money or your bank account information)

•   Your name and phone number

•   Any fees to cover the wire transfer service.

Recommended: ACH vs. Wire Transfers: Which Should You Use?

Advantages and Disadvantages of Wire Transfers

Wire transfers have both pros and cons to consider vs. other payment methods. The table below breaks down some of the benefits and drawbacks of using a wire transfer:

Pros

Cons

You can wire large sums of money. Wire transfers come with fees for the sender and sometimes the recipient.
Domestic wire transfers are fast, usually within one day. International wire transfers take more time, typically taking a few days.
Wire transfers allow you to send money internationally. You can’t reverse a wire transfer once it’s initiated.
Wire transfers are generally considered safe. Fraudsters have developed a number of bank scams that utilize wire transfers.

Recommended: Pros & Cons of Online and Mobile Banking

Types of Wire Transfer Services

There are two main types of wire transfer services: bank and nonbank.

Bank Wire Transfers

A traditional bank wire transfer requires that both the sender and the recipient have a bank account. The sender will need to know the recipient’s bank account information to transfer money from their own bank account to the recipient. You typically either visit a local bank branch to initiate the wire transfer or use your bank’s online platform. Some banks and credit unions may even waive fees (or offer lower fees) to members.

After initiating the wire transfer, the sender’s and the recipient’s financial institutions will communicate through an electronic system, such as SWIFT, to securely complete the transfer.

Nonbank Wire Transfer Services

You don’t have to work directly with a bank to wire money. You can also use a nonbank transfer service, such as Western Union. To complete the transfer, you may visit a service location in person, fill out a form, and physically provide the money to the wire transfer service provider. Another option that’s often available is to complete the process online, drawing funds from your bank account. The funds can then be made available for pickup in person or be sent to the recipient’s checking account or to a mobile wallet on their phone.

SWIFT and IBAN in International Transfers

International wire transfers require a little more information than domestic transfers. In addition to providing your and the recipient’s basic information (such as name and account details), you’ll typically need to know the recipient’s SWIFT and IBAN codes:

•   The SWIFT (Society for Worldwide Interbank Financial Telecommunication) code identifies the recipient’s bank. In this way, it acts like a routing number, but they are not the same. You may also see this referred to as a BIC (Bank Identifier Number).

•   The IBAN (International Bank Account Number) code identifies the recipient’s account at their bank.

The U.S. and Canada do not use IBANs. For instance, someone wiring money from another country to the U.S. would instead need to know the recipient’s bank account number and routing number. Australia and New Zealand also use different codes.

Wire Transfer Fees and Costs

Wire transfer fees vary depending on the financial institution or nonbank wire transfer service you use, but they typically range anywhere between $0 and $50. Senders almost always must pay a wire transfer fee, though some banks and credit unions don’t charge fees to send, at least domestically. Recipients sometimes have to pay a fee as well, particularly for international wire transfers.

Typical wire transfer fees are as follows:

•   Outgoing domestic wire transfers: $0 to $30

•   Incoming domestic wire transfers: $0 to $15

•   Outgoing international wire transfers: $35 to $50

•   Incoming international wire transfers: $0 to $30

The Takeaway

Wire transfers can be an effective way to electronically transfer money between individuals and/or businesses, both domestically and internationally. While you’ll often pay a fee to initiate a wire transfer (and sometimes to receive one), this payment method has several advantages, such as its speed and the ability to send large sums of money.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

How long does a wire transfer take?

Domestic wire transfers typically process within 24 hours; if you time it right, the transfer may even complete in the same day. International wire transfers take a little longer, usually between one and five business days, depending on the country to which you’re wiring money.

Are wire transfers safe?

Wire transfers are typically considered to be a safe way to send money, as long as you know the recipient and have their correct information. However, many fraudsters use wire transfers in a number of common bank scams. To avoid this risk, never wire money to a person you don’t know, and educate yourself on common fraud tactics.

Can I cancel a wire transfer?

You cannot cancel a wire transfer once you have initiated it. Thus, you should always make sure all the information is correct before initiating a wire transfer.


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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


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

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

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

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

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

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

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

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

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

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


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


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.

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Credit Card Statement Balance vs Current Balance

A credit card statement balance reflects your transactions (and the amount owed) during a billing cycle, while your current balance reveals your real-time activity and how much you may owe at a given moment.

When you buy with credit, it’s like taking out a short-term loan to make a purchase. If you’re putting charges on your credit card throughout the month, the value of that loan — your “current balance” — fluctuates. When your billing cycle ends and the amount due is tallied, that equals your statement balance.

Learn more about how these two numbers can differ, along with a few tips for paying down your credit cards.

Statement Balance vs Current Balance

Each credit card issuer may have a slightly different method of presenting and even calculating the numbers on your monthly statement, whether you get a hard copy or check it online or in your card’s app. Still, you will likely see one number called the statement balance and another called the current balance.

•   The statement balance means all transactions during a designated period, called a billing cycle. If a billing cycle covers one month and starts on the 15th of each month, this statement balance will include all of the activity on an account between, say, January 15 and February 15, in addition to any previously unpaid balances. Until the close of the next billing cycle, the statement balance will remain unchanged.

•   ‘Your current balance means the running total of all transactions on your account. It changes every time you swipe your card to pick up Chinese takeout or return a T-shirt that didn’t fit right.

To understand the interplay between the statement balance vs. the current balance, consider this example:

•   ‘On February 15, the statement balance is $1,000, meaning that the total charges between January 15 and February 15 add up to $1,000.

•   ‘Two days later, you make a $50 charge to the card. Your current balance will reflect $1,050 while the statement balance remains the same.

In this case, the current balance is higher than the statement balance. The reverse can also be true, and the current balance can potentially reflect a smaller number than the statement balance.

Recommended: Personal Loan vs Credit Cards

What to Know About Paying Off Your Credit Card

As each billing cycle closes, you will be provided with a statement balance. You will also likely be provided with a due date. At the time you make a payment, you may decide to pay off the statement balance, the current balance, the minimum payment, or some other amount of your choosing.

Paying the Statement Balance

If you regularly pay your statement balance in full, by its due date, you likely won’t be subject to any interest charges. Most credit card companies charge interest only on any amount of the statement balance that is not paid off in full.

The period between your statement date and the due date is called the grace period. During this period, you may not accumulate interest on any balances. It’s worth mentioning that not every credit card has a grace period. It’s also possible to lose a grace period by missing payments or making them late. If you have any questions about whether your card has a grace period, contact your credit card company.

Paying the Current Balance

If you’re using your credit card regularly, it is possible that you will use your card during the grace period. This will increase your current balance. At the time you make your payment, you will likely have the option to pay the full current balance.

If you have a grace period, paying the current balance is not necessary in order to avoid interest payments. But paying your current balance in full by the due date can have other benefits. For example, this move could improve your credit utilization ratio, which is factored into credit scores.

Paying the Minimum Monthly Payment

Next, you can pay just the minimum monthly payment. Generally, this is the lowest possible amount that you can pay each month while remaining in good standing with your credit card company — it is also the most expensive. Typically, the minimum payment will be an amount that covers the interest accrued during the billing cycle and some of the principal balance.

Making only the minimum payments is a slow and expensive way to pay down credit card debt. To understand how much you’re paying in interest, you can use a credit card interest calculator. Although minimum monthly payments are not a fast way to get rid of credit card debt, making them is important. Otherwise, you risk being dinged with late fees.

Missing or making a payment late can also have a negative impact on your credit score.So, if the minimum payment is all you can swing right now, it’s okay. Just try to avoid additional charges on your card.

Making a Payment of Your Choice

Your last option is to make payments that are larger than the minimum monthly payment but are not equal to the statement balance or the current balance. That’s okay, too. You’ll potentially be charged interest on remaining balances, but you’re likely getting closer to paying them off. Keep working on getting those balances lowered.

Recommended: Credit Card Closing Date vs Due Date

Your Credit Utilization Ratio

The balance you currently carry on your credit card can impact your credit utilization ratio. Credit utilization measures how much of your available credit you’re using at any given time.

This figure is one of a handful of measures that are used to determine your credit score — and it has a big impact. Credit utilization can make up 30% of your overall score, according to FICO® Score.

Not every credit card reports account balances to the consumer credit bureaus in the same way or on the same day. Also, the reported number is not necessarily the statement balance. It could be the current balance on your card, pulled at any time throughout the billing cycle. Again, it may be worth checking with your credit card issuer to find out more. If your issuer reports current balances instead of statement balances, asking them which day of the month they report on could be helpful.

Sometimes, the lower your credit card utilization is, the better your credit score. While you may feel in more control to know which day of the month that your credit balance is reported to the credit bureaus, it may be an even better move for your general financial health to practice maintaining low credit utilization all or most of the time.

If you are worried about your credit utilization rate being too high during any point throughout the month, you can make an additional payment. You don’t have to wait until your billing cycle due date to reduce the current balance on your card.

According to Experian®, one of the credit reporting agencies, keeping your current balance below 30% of your total credit limit is ideal. For example, if you have two credit cards, each with a $5,000 limit, you have a total credit limit of $10,000. To keep your utilization below 30%, you’ll want to maintain a combined balance of less than $3,000.

Some financial experts recommend that keeping one’s credit utilization closer to 10% or less is an even better move.

Recommended: Personal Loan Calculator

3 Tips for Managing Your Credit Card Balance

If you’re struggling to juggle multiple credit cards and make all of your payments, here are some tips that may help.

1. Organizing Your Debt

A great first step to getting a handle on your debt is to organize it. Try listing each source of debt, along with the monthly payments, interest rates, and due dates. It may be helpful to keep this list readily available and updated.

Another option is to use software that aggregates all of your finances, such as your credit card balances and payments, bank balances, and other monthly bills. Your bank may offer financial insights tools as well, which can be a great place to start with this endeavor.

When it comes to managing your credit card debt, keep in mind that staying on top of your due dates and making all of your minimum payments on time is one of the best ways to stay on track.

You can also ask your credit card providers to change your due dates so that they’re all due on the same day. Pick something easy to remember, such as the first or 15th of the month.

2. Making All Minimum Payments, But Picking One Card to Focus On

While you’re making at least the minimum payments on all your cards, pick one to focus on first. There are two versions of this debt repayment plan:

•   ‘With the debt avalanche method, you attack the card with the highest interest rate first.

•   ‘With the debt snowball method, you go after the card with the lowest balance.

The former strategy makes the most sense from a mathematical standpoint, but the latter may give you a better psychological boost.

If and when you can, apply extra payments to the card’s balance that you’re hoping to eliminate. Once you’ve paid off one card, you can move to the next. Ultimately, you’re trying to get to a place where you’re paying off your balance in full each month.

3. Cutting Up Your Cards

Whether you do this literally or not, a moratorium on your credit card spending can be a great strategy. If you are consistently running a balance that you cannot pay off in full, you may want to consider ways to avoid adding on more debt.

A word of warning: Don’t be tempted to cancel all your cards. This can negatively affect your credit score. However, if you feel you really have too many credit cards to manage — say, more than three or four — cancel the newest credit card first. This will ensure your credit history length is unaffected.

In addition to these steps, there are other options for dealing with credit card debt, such as debt consolidation, which can involve taking out a personal loan (typically, at a lower rate than your credit card interest rate), working with a certified credit counselor, and/or negotiating with your creditors to see if you can pay less than your full balance.

The Takeaway

Your credit card statement balance is the sum of all your charges and refunds during a billing cycle (usually a month), plus any previous remaining balance. It changes monthly with each statement. Your current balance is updated almost immediately every time you make a purchase. It is the sum of all charges to date during a billing cycle, any previous remaining balance, and any charges during the grace period. Whenever you can, pay off the full statement balance to avoid interest charges.

Trying to pay off credit card debt? Taking out a personal loan can consolidate all of your credit card balances.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.


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

FAQ

Should I pay my statement balance or current balance?</h3>

It can be wise to always aim to pay off your statement balance every month by the due date to avoid pricey interest charges. While not necessary, paying off the current balance can help lower your credit utilization ratio, which can in turn help build your credit score.

Why do I have a statement balance when I already paid?

Your statement balance reflects all the charges you have made, any interest and fees, and credits that occurred during a single billing cycle. Once that statement balance has been captured, it likely won’t be updated until the next billing cycle. Your credit card’s balance may well change, however, during this period as you use your card.

What happens if you don’t pay the full statement balance?

If you don’t pay your total statement balance before the end of what’s known as your grace period (the days between the end of your billing cycle and your payment’s due date), both your current balance and any new purchases that you make will start to accrue interest right away.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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

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

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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


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

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How To Lower Credit Card Debt Without Ruining Your Credit

While paying off your credit cards often helps improve your credit, this isn’t always the case. Depending on the strategy you use to wipe away your debt, you could (inadvertently) do some damage to your scores. This could make it harder to get a mortgage, car loan, or even a rental agreement in the future. Here’s what you need to know to pay down your credit obligations while protecting your credit.

What Not to Do: Ignoring Credit Card Debt

When it comes to credit card debt, the consequences of avoidance and procrastination are steep, both to your financial well-being and to your credit scores. Here’s a look at the potential fallout.

•   Interest charges will pile up: Generally, the longer you avoid paying down your debt, the more interest will accrue. The average interest rate on credit cards as of September 2024 is 27.64%. This means that even if your debt isn’t growing through new purchases, interest alone can make your balance balloon over time.

•   Late fees and credit damage: Credit card issuers usually charge fees if you don’t make the minimum payment by the due date. After 30 days of no payment, your issuer will likely report the missed payment to the credit bureaus, which can do significant damage to your credit scores. Maintaining a balance also keeps your credit utilization (how much of your available credit you’re using) high. Credit utilization plays a large role in your credit rating. As your balance grows, your credit score will generally decline.

•   Debt collection and legal consequences: Ignoring credit card debt for too long could lead to the debt being sold to a collection agency, who can be aggressive in pursuing repayment. In extreme cases, your creditors might sue you, potentially leading to wage garnishment or seizure of personal assets.

What You Should Consider: Paying off Credit Card Debt Using a Planned Approach

If you have a significant amount of credit card debt, it may be tempting to bury your head in the sand. But you’ll be far better off coming up with a clear, actionable plan to start whittling down what you owe. The following steps can help you feel more in control over your debt, as well as your overall financial situation.

•   Assess your debt. A good place to start is to list out all of your credit card balances, along with their interest rates and minimum payments. This will give you a full picture of what you owe.

•   Create a basic budget. You don’t have to come up with a detailed line-item spending plan. Simply go through your last few months of financial statements and assess what’s coming in and going out, on average, each month. Then comb through your discretionary (unnecessary) monthly spending and look for places where you can cut back. Any money you free up can go toward credit card payments. 

•   Pick a debt payoff strategy. Here’s a look at two popular approaches that can help you gradually pay down your balances.

•   Avalanche method: Here, you make extra payments on the credit card with the highest interest rate first, while making minimum payments on the others. Once the highest-rate card is paid off, you funnel those extra funds toward the card with the next-highest rate, and so on. This strategy minimizes the amount of interest you’ll pay over time.

•   Snowball method: With this method, you put extra payments toward the card with the smallest balance first, while making minimum payments on the others. When that card is cleared, you focus on paying off the next-smallest balance, and so on. This gives you quick wins and a psychological boost, which can help you stay motivated. 

•   Take advantage of windfalls: If you get a bonus, tax refund, or any extra income, consider applying it toward your credit card debt. This can help you reduce your balance faster and lower the total amount of interest you’ll pay.

•   Automate your payments: It’s a good idea to set up automatic payments for at least the minimum payment due each month. You may be able to pay more, but having this set up in advance helps you avoid missed payments, which can harm your credit score, as well as late fees.

•   Keep paid-off accounts open. As you pay off your cards, you may think it’s a good idea to close those accounts — but not so fast. When you close a credit card, you lose that account’s available credit limit. That means any balances remaining on other credit cards will then account for a higher percentage of your total available credit. This increases your credit utilization, which can hurt credit scores.

Negotiating and Settling Credit Card Debt

If you’ve been struggling to make payments on your credit cards, there’s a good chance your credit score has been negatively affected. Before the debt is sent to collections, you may be able to negotiate with the credit card company.

Like any business, the primary goal of a credit card company is to make a profit. When it becomes apparent that a cardholder is unable to pay their bills, companies are sometimes willing to find an arrangement that will enable the customer to make payments based on their situation. Here’s a look at some options a credit company may be able to offer.

•   Workout agreement: With this arrangement, the credit card company may agree to lower your interest rate or temporarily waive interest altogether. They may also be willing to take additional steps to make it easier for you to repay your debt, such as waiving past late fees or lowering your minimum payment. 

•   Debt settlement: In a debt settlement, the credit card company agrees to accept less than the full amount you owe, forgive the rest, and close the account. While this might seem appealing, a debt settlement can negatively affect your credit scores and stay on your credit reports for seven years. As a result, it’s generally considered a last-resort option for those facing severe financial difficulties.

•   Hardship agreement: Some card issuers offer a hardship or forbearance program for borrowers who are experiencing a temporary financial setback, such as a job loss, illness, or injury. Under these programs, the company may agree to lower your interest rate, even temporarily suspend payments. However, your credit can be negatively affected, since the issuer may report negative information to the credit bureaus during the forbearance period.

What Is the Statute of Limitations on Credit Card Debt?

The statute of limitations governs how long a creditor or collection agency can sue you for nonpayment of a debt. The statute of limitations on credit card debt varies from state to state, but is typically between three and six years. Once the statute of limitations has passed, debt collectors can’t win a court order for repayment.

Even if your credit card debt is past the statute of limitations, however, it doesn’t magically disappear. Unpaid debts can remain on your credit report for up to seven to 10 years from the date of your last payment. That negative mark can lower your credit scores, making it hard to qualify for new credit cards and loans with attractive rates and terms in the future. 

Say Goodbye to Credit Card Debt with a Personal Loan

Consolidating credit card debt with a personal loan (often referred to as a debt consolidation loan) can be an effective way to lower your debt and simplify repayment.

To do this, you essentially take out an unsecured personal loan, ideally with a lower interest rate than you’re paying on your cards, then use it to pay off your balances. Moving forward, you only have one payment (on your new loan). An online personal loan calculator can show you exactly how much interest you could save by paying off your existing credit card (or cards) with a personal loan.

Initially, debt consolidation can negatively impact your credit score. This is because the lender will do a hard pull on your credit, which can decrease your score by a few points. However, this decline is temporary. Making consistent, on-time payments on your personal loan can help boost your credit profile over time. Payment history makes up 35% of your overall FICO® credit score.

If, on the other hand, you make any of your loan payments late, or miss a payment entirely, credit consolidation can end up having a damaging impact on your credit.

Recommended: FICO Score vs Credit Score 

The Takeaway

Credit card debt can be a major financial burden, but it doesn’t have to ruin your credit or your financial future. By avoiding the temptation to ignore your debt and adopting a planned approach, you can gradually reduce what you owe. Whether you choose to use a paydown strategy (like avalanche or snowball), negotiate with creditors, or explore a consolidation loan, there are various strategies to help you regain control of your finances while protecting — and ultimately building — your credit.

Ready for a personal loan to pay off credit card debt? With low fixed interest rates on loans of $5K to $100K, a SoFi Personal Loan for credit card debt could substantially decrease your monthly bills.

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


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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.

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 .

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Saving $10,000 a Year: 9 Great Ways

How to Save $10,000 in a Year

While saving $10,000 in a year may sound like an ambitious goal, it’s often feasible through careful planning and disciplined spending — even if you’re not a high earner.

Whether you’re saving for an emergency fund, a down payment on a home, or just building financial security, these practical tips can help you put aside $10,000 in 12 months (and possibly even sooner).

Key Points

•  A successful savings plan typically begins with determining the difference between how much money you need and have available to save each month.

•  Saving $10,000 in 12 months may require eliminating unnecessary expenses and reducing necessary ones.

•  Sometimes it’s possible for savers to boost income through side hustles, selling unused items, or asking for a raise.

•  Automating savings through recurring transfers and taking advantage of high-yield savings accounts can help you steadily increase funds.

•  Individuals can take advantage of windfalls like tax refunds or bonuses to boost savings.

Is Saving $10,000 a Year Possible?

Saving $10,000 in a year is generally possible if you have steady earnings. How challenging it will be, however, will depend on your income and monthly expenses. To reach this goal, you need to save approximately $833 per month or about $192 per week. While that may still seem like a lot, there are numerous ways to adjust your spending, increase your income, and build savings over time without drastically affecting your lifestyle.

8 Ways to Save $10k in a Year

There are many practical ways to start saving money, but to reach the $10,000 mark, you’ll likely need to adopt several strategies simultaneously. Here are eight effective methods to help you reach your goal.

1. Assess Your Cash Flow

To come up with a plan to save $10,000 in a year, you’ll need to assess how much money is currently flowing in and out of your bank account each month. To do this, you’ll need to gather the last several months of bank statements, then tally up your average monthly income and average monthly spending. Simply subtract the second number from the first.

If you discover that your monthly earnings exceed your monthly spending by at least $833.33, you’re in great shape. Simply transfer that amount to savings each month and you’ll accumulate $10,000 a year.

If you find that there is less — or very little — wiggle room between what’s coming and going out of your account on a monthly basis, you’ll need to make some tweaks in your spending and, if possible, your earnings (in other words, keep reading).

2. Reduce Unnecessary Expenses

One of the quickest ways to boost your savings is by eliminating or reducing unnecessary expenses. These are often small, daily costs that add up over time without you realizing it. Some areas to target:

•  Eating out: If you regularly buy lunch or dine out for dinner, consider preparing more meals at home. You can save hundreds of dollars monthly by cutting down on restaurant visits and takeout.

•  Subscriptions: Review your monthly subscriptions, such as streaming services, magazines, or gym memberships, and cancel those you rarely or never use.

•  Coffee and snacks: A daily coffee shop visit may seem harmless, but it can cost over $100 a month. Consider brewing coffee at home and keeping grab-and-go breakfast items on hand to reduce the temptation to spend.

Any funds you free up can then be redirected towards your $10,000 savings goal.

Recommended: 5 Easy Ways to Save Money

3. Trim Fixed Expenses

While fixed expenses seem like just that — fixed — that’s not always the case. While you may not be able to lower your rent, you may be able to whittle down some of your other recurring monthly bills. Some ideas:

•  Shop around for a better deal on your home and auto insurance.

•  Look for a cheaper cell phone plan.

•  Eliminate your landline.

•  Downgrade your television package to a less expensive streaming option.

•  Make small tweaks to your home temperature to reduce utility bills.

•  Prioritize paying down high-interest credit card debt.

•  Consider refinancing your mortgage, auto loan, or student loans if you can qualify for a lower rate.

4. Boost Income

Cutting costs is important, but increasing your income can supercharge your ability to save. By boosting your income, you’ll have more cash flow to funnel into your savings. Here are a few ways to bring in extra cash:

•  Start a side hustle: Consider taking on a part-time gig, freelancing, or using a skill like photography, writing, or tutoring to earn extra money.

•  Sell items you no longer need. If you have items sitting around your home that you don’t need, you may be able to turn them into cash by posting them online (consider sites like eBay and Facebook Marketplace) or hosting a garage sale.

•  Ask for a raise: If you’ve been at your job for a while and have demonstrated value, consider negotiating for a raise. Even a small pay bump can add up over the course of a year.

5. Switch to a High-Yield Account

As you divert more money to savings, you’ll want to send it to an account that helps your money grow. As of September 2024, the national average savings account yield was 0.46% annual percentage yield (APY), according to the FDIC. Fortunately, high-yield savings accounts (particularly those offered by online banks) tend to offer far higher APYs, so it’s worth shopping around. While interest alone won’t get you to $10,000, it can give your savings a nice boost over the year.

6. Automate Saving

Having a portion of your paycheck automatically go into savings (a tactic known as “paying yourself first”) is one of the simplest and most effective ways to build savings consistently. One way to do this is by setting up a recurring transfer from your checking account to your savings account for a set amount on the same day each month (ideally right after you get paid). If you get paid via direct deposit, another option is to ask your employer to make a split deposit — with some of each paycheck going directly into savings, and the rest into checking.

Either method ensures that you’re regularly contributing to your savings without having to think about it, making it easier to stay on track.

7. Try a No-Spend Challenge

Once you get going, you might want to challenge yourself to save even more with a no-spend challenge. To do this, you simply commit to not spend money on anything other than essential needs (e.g., groceries, bills) for a set period — typically a week or a month. This can bump up your savings in a short period of time. It can also serve as a spending reset — you may discover you can live on a lot less than you previously thought.

8. Take Advantage of Windfalls

If you receive a lump sum of cash — such as tax refund, work bonus, or cash gift — consider putting all (or some) of it directly into your savings account. By directing windfalls toward savings, you can make substantial progress toward your $10,000 goal.

Benefits of Saving $10,000 a Year

Saving $10,000 in a year comes with numerous benefits. Here are some to keep in mind as you work towards your $10k savings goal.

•  Financial security: Having a robust savings cushion protects you from unexpected expenses, such as medical bills or car repairs, reducing the need for credit card debt or loans.

•  Peace of mind: Knowing you have a significant amount set aside can reduce stress and anxiety related to money and offer more financial freedom.

•  Achieving short-term financial goals: Whether you’re saving for a vacation, new car, or down payment on a home, having $10,000 gives you the flexibility to reach these milestones.

•  Opportunities for investment: Once you’ve saved $10,000, you might consider investing a portion of it to grow your wealth further through stocks, real estate, or retirement accounts.

The Takeaway

Saving $10,000 in a year is an ambitious yet, often, attainable goal. Depending on your situation, you may be able to achieve it just by making small, strategic changes to your everyday spending and saving habits. These might include cutting unnecessary expenses, automating your savings, boosting income, earning more interest on your money, and leveraging windfalls.

However you do it, saving $10k in a year can give you a sense of accomplishment and put you in a better position to handle life’s financial challenges and opportunities.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Is saving $10,000 a year good?

Yes, saving $10,000 a year is a solid financial goal. It provides a significant cushion for unexpected expenses and can also help you work towards financial goals, like paying off credit card debt, buying a home, and saving for retirement. Saving $10,000 also offers peace of mind by improving your financial stability and security.

Is $10,000 a lot to save in a year?

For many people, saving $10,000 in a year is a substantial amount. It equates to roughly $833 per month or about $192 per week. For some, that’s a modest target, while for others, it may require budgeting, cutting unnecessary expenses, and potentially increasing income. Regardless of the circumstances, saving this amount can help you meet your short- and long-term financial goals.

How much do you need to earn to be able to save $10K a year?

How much you have to earn to save $10K a year will depend on your expenses. A common rule of thumb is to save at least 10% to 20% of your income. Based on this formula, you’d need to earn $50,000 to $100,000 to comfortably save $10,000. That said, people earning less may still be able to save this amount with disciplined budgeting, cutting unnecessary expenses, and/or finding ways to supplement their regular income.


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

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

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

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

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

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

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

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

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

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

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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