Oct
16
2023
Saving $5,000 in a Year: 12 Helpful Ways

12 Ways to Save $5,000 in a Year

By | Budgeting & Goals, Family Finances, money | Comments Off on 12 Ways to Save $5,000 in a Year

Think you can save $5,000 in a year? Saving money is an important personal finance goal — but with high inflation and increasing housing costs, it can be difficult to set aside almost any money at the end of each month.

But depending on your income and monthly expenses, it may be possible to enact some changes in your lifestyle to build up your savings, whether it’s for an emergency fund, vacation, house down payment, or wedding.

Below, you’ll learn:

•   The benefits of saving $5,000 a year

•   How to save $5,000 in a year, from selling your unwanted items to cutting your energy bill.

If you’re living paycheck to paycheck or just want to be able to cover your next unexpected expense, remember that any savings goal is admirable. You can pick and choose among these tips to come up with the right figure for your budget.

Is Saving $5,000 a Year Possible?

Saving $5,000 a year may sound daunting, but it is possible for some people. To save $5,000 a year, you’ll need to set aside just under $420 a month. That’s after all your other necessary expenses, like food, transportation, housing, health care, and utilities.

If you earn a healthy salary and/or have low expenses, saving $5,000 in a year may only be a matter of reprioritizing your spending. In fact, you might even be able to save $10,000 in a year if you earn enough.

But if you’re living paycheck to paycheck, have a high cost of living, or considerable debt, you may want to set a lower goal for the first year and increase your goal over time.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Recommended: The Importance of Saving Money

Benefits of Saving $5,000 a Year

What are the advantages of saving $5,000 a year? Saving any amount of money can be beneficial, but $5,000 in your bank account can do a lot of good. Here are some of the benefits:

•   Cover emergencies. More than half of Americans cannot cover a $1,000 emergency using savings. This means they may need to rely on a high-interest credit card or personal loan for things like a car repair and unexpected vet bills. With $5,000 in savings, your family could be prepared to tackle five $1,000 emergencies every year.

•   Fund your passions. With $5,000, you may be more willing to spend money on something you really want: a family vacation, gifts for family and friends, a continuing-ed class, or even a charitable donation. By saving money for a year, paying for things you love is more attainable.

•   Save for big purchases — or even retirement. If you’re hoping to buy a car or a house down the road, saving $5,000 a year could help get you there. Even more importantly, setting aside $5K a year means you can make strategic retirement contributions outside of your normal 401(k).

•   Earn interest. If you store your $5,000 in a high-yield savings account, you’ll earn additional money just for keeping your cash safe in an FDIC-insured account. It’s a good idea to shop around for a savings account with a high APY.

Note: If you have high-interest debt, it might be a good idea to pay that down before aiming for lofty savings goals. Having a base emergency fund is wise, but beyond that, the debt could be costing you more than you’re saving.

Recommended: Easy Ways to Save Money

How to Save $5,000 in a Year: 12 Helpful Tips

Wondering how to save $5K in a year? Here are 12 tips that could help you on your savings journey:

1. Knowing Your ‘Why’

Knowing what you are saving for could give you the motivation to keep stashing away cash. Whether it’s creating an emergency fund for your family or saving for a big vacation, keeping that long-term goal in mind might make it easier to resist the temptation to spend some of your savings or give up altogether.

2. Setting Your Goals

Hitting $5,000 a year can be daunting, but if you break it up into smaller, more attainable goals, you might realize that it’s not so bad. To save $5K a year, you’d need to hit $416.66 a month.

If you receive a paycheck every two weeks, that’s 26 paychecks a year. You’d need to set aside roughly $192.31 per paycheck, which sounds more manageable than $5,000.

If your pay is variable and you can predict when you might earn more (or if you have a dependable annual bonus that always hits at the same time), you can factor such irregularities into your money saving goals and plan accordingly.

3. Creating Your Budget

How to save $5,000 in a year can be helped along by a solid budget guiding your efforts. A monthly budget is a helpful tool for visualizing how much money you make (after taxes) and how you spend that money. If your goal is to save $420 a month when you weren’t before, you can use the budget to look for ways to cut back expenses and make the savings possible.

How you create your budget is up to you. Some people swear by the 50/30/20 budget while others prefer the envelope budgeting method. Personal finance gurus may want to handle budgeting all on their own with spreadsheets or pen and paper while others might benefit from an app. Whatever method you choose, building flexibility into your budget can be helpful.

4. Tracking Your Spending

Budgets aren’t a set-it-and-forget-it resource. To stay within your budget, it’s important to monitor your purchases and spot spending habits that may be working against your savings goals. It’s OK to slip up — but learning from those mistakes can be the difference between living paycheck to paycheck and saving $5,000 a year (or more).

5. Reducing Entertainment Costs

One of the easiest costs to cut is entertainment because it’s not crucial to survival in the way that food and shelter are. This doesn’t mean you have to give up all entertainment spending; life would be very boring without it!

What it does mean is you can look for ways to reduce your entertainment spending, like:

•   Inviting friends over for a board game night instead of going to a bar

•   Saving money on streaming services and other subscriptions by canceling those you don’t use often

•   Learning to cook new recipes at home instead of ordering takeout

•   Taking advantage of group discounts on fun events like concerts or sports games.

6. Becoming Energy-Conscious

You can save money on your utility bills by adjusting your thermostat: Keeping it a little warmer in the summer and a little cooler in the winter can reduce electricity and natural gas usage. Taking shorter showers and running the laundry only when you have a full load are easy ways to shrink your electric and water bills.

The less you’re spending on utilities, the more you can afford to save. Every little bit helps.

7. Shopping Around for Better Deals

Buying in bulk is a great way to save on groceries and household supplies, and using coupons at the grocery store can make those savings even better. Beyond the grocery store, you can find other great deals to cut costs. For instance, you might be able to lower your car insurance premium by raising your deductible or simply switching to a different insurance provider. Bundling your car and homeowners or renters insurance can also deliver savings.

8. Getting a Side Hustle

Cutting costs can only go so far toward your savings goal if your biweekly paycheck just doesn’t have any wiggle room. If you have the time and energy, you can earn extra income with a side hustle.

You might be able to use your existing skills for a side hustle. Musicians can teach lessons online, coders could build websites for clients on the weekend, or you could even start a wedding photography business if you’re good with a camera.

But you don’t need special skills to start a side hustle. You might be able to land a side gig walking dogs, delivering food, or fulfilling online grocery orders.

9. Telling Friends and Family

Speaking with friends and family about your savings goals is important. Doing so can set the right expectations with them. If they know you’re serious about saving, they may be more likely to suggest staying in for a game night or skipping Christmas and birthday gift exchanges.

10. Selling Items That You No Longer Use

Online marketplaces like Amazon, eBay, Craigslist, and Facebook Marketplace make it easy to sell items you no longer want. Some items to consider offloading are clothing, jewelry, kitchenware, electronics and video games, and furniture.

Recommended: 37 Places to Sell Your Stuff

11. Opening a Separate Bank Account

Seeing the money you’ve saved in your online bank account every time you open your app may entice you to spend it. If you’re struggling with that temptation, it might be wise to open a separate savings account in which to store your savings each month.

Plus, if you find a bank account with a higher interest rate, you’ll grow your savings even faster. Typically, online banks offer better rates than traditional banks, since they don’t have the overhead of brick-and-mortar locations. They can then pass the savings on to their clients.

12. Rewarding Your Success and Milestones

Saving money can be hard work. If you’re sacrificing too much along the way, you might lose your motivation and give up altogether. It’s OK to celebrate your success and milestones with a special night out or a relatively big purchase on something you really want — every now and then. Everything in moderation, as the saying goes.

The Takeaway

With the right income and discipline, saving $5,000 in a year is possible. To be successful, it’s a good idea to define your goals, build a budget, cut unnecessary expenses, and even look for alternative sources of income. Having a high-interest bank account with automatic savings features can also be useful.

3 Money Tips

1.    Signing up for your paycheck to be directly deposited in an online bank account is a great way to help you pay your bills on time. After all, if your check is being deposited like clockwork, you can schedule bill payments ahead of time.

2.    When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.

3.    If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

FAQ

Is saving $5,000 a year good?

Saving $5,000 a year can be a good amount to have on reserve. With $5K in savings, you’ll be more prepared to tackle emergencies without needing to rely on a credit card or personal loan.

Is $5,000 a lot to save in a year?

Saving $5,000 can be a lot, depending on your income. When setting an annual savings goal, it’s important to consider how much money you make, your current debt, and your monthly expenses. Remember, any money saved is an admirable thing.

What happens if I don’t reach saving $5,000 in a year?

If you don’t reach your $5K savings goal, don’t sweat it. You can always try again next year, and you’ll still have saved some money which is definitely better than nothing in the bank.

Does the envelope method help for saving $5,000 a year?

Some savers like using the envelope method (dividing their income up into envelopes labeled with their purpose) for their savings goals. There are several budgeting methods and resources available; often, success is just a matter of finding the right method and resource for you.

Photo credit: iStock/Dmitriy Sidor

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.

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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SOBK0822018

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Oct
16
2023
11 Ways to Save Money on Your Internet Bill

11 Ways to Reduce Your Internet Bill

By | Budgeting & Goals, Family Finances, money | Comments Off on 11 Ways to Reduce Your Internet Bill

Wondering how to lower your internet bill? With families paying roughly $64 every month for high-speed internet services, it can be a significant drain on the monthly budget. But the internet, like a phone plan, has become just as necessary for everyday life as other major utilities, especially with remote working and learning environments.

To help, here are 11 great tips for cutting back costs without getting rid of the internet altogether. In this post, you’ll learn how to save money on internet with tactics like:

•   Negotiating your rate

•   Buying your own equipment

•   Setting up auto pay

•   Downgrading your plan.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


How Much Does the Average Household Spend on Internet

The average household spends $64 a month on internet services, according to a recent Parks Associate Survey. But internet prices can vary significantly depending on the speed you require, what other services you have it bundled with, what promotional offers you qualify for, and the way the internet is delivered to your home.

Broadband (cable or fiber) is the high-speed internet connection many of us have come to depend on, but some homes utilize dial-up, cable, or even satellite internet connections. These come at varying price points. Understanding what you have and what your options are in your neighborhood can help you find the best deal.

Recommended: How to Organize Your Bills

11 Money-Saving Internet Tips

With internet prices accounting for a notable portion of your monthly budget, you may be wondering how to cut internet costs — without sacrificing quality. To help you do that, here are 11 money-saving tips for decreasing your internet bill:

1. Shopping Around

Depending on where you live, you may have a handful of internet providers to choose among. If you’re not happy with the cost of your current internet bill, you can research what competitors are charging. They may offer low promotional deals for the first six months, year, or even two years. Often the deal is a lower rate, but sometimes it involves a prepaid gift card or other bonus.

It’s a good idea to read the fine print, as the price may go up when the promotional period ends. There may also be one-time fees to start up the service that could counterbalance any savings. Still, if you find a good offer, it could be an option if you want to find out how to lower your internet bill.

Recommended: Automate Your Finances

2. Negotiating for a Better Rate

If you spot a better offer from another company, you don’t have to jump ship. It may be worth your while to call customer service for your current provider and negotiate your rate down. Letting them know that you’ve found a better deal elsewhere but appreciate their service can go a long way. To retain you as a customer, they may be willing to offer you a discount.

If the conversation with the customer service rep feels like a dead end, you may want to end the call and try your luck with another rep. You can also ask to speak with a manager.

Not comfortable haggling over the phone — or just don’t have time to spend on hold? You might be able to find a third-party service to negotiate your rate for you. Services like Trim, BillFixers, and BillCutterz will call and negotiate on your behalf, but they’ll take a cut of any savings they earn you.

Recommended: 10 Tips for Spending Your Money Wisely

3. Checking Your Internet Speed

Your internet contract should spell out a certain speed that you’re meant to receive. Higher-tier plans offer faster speeds (and cost more). But internet service providers (ISPs) may not be delivering that speed to you at all times; in fact, research shows that 79% of us aren’t getting the speed we pay for.

You can test your internet speed with a third-party test site like speedtest.net, though many ISPs have their own proprietary speed tests. If you discover that you’re not getting anything close to the speed your contract stipulates, you may want to call customer service to demand a discount or faster speeds. Some providers may even offer a bill credit for the time you paid for higher speeds but didn’t receive them.

Recommended: Paying Bills Without a Job

4. Downgrading Your Plan

In some cases, you may be paying for faster speeds than you really need. If you regularly stream 4K videos and rely on Zoom meetings all day for your job, paying for fast internet is likely worth the cost. But if all you use the internet for is checking email, scrolling through Facebook, and occasionally streaming Spotify, you might be fine with slower internet service.

Similarly, individuals who live alone or with one other person are less likely to need internet services as fast as a larger household with multiple users accessing the internet at the same time.

Some ISPs offer “economy tiers” as slow as 3 mbps, though they may not always advertise these. If that sounds too slow for you, there may be a middle ground between the bottom and top tiers. Calling customer service to discuss options could be a good move if you’re ready to downgrade.

Recommended: How to Save Money on Streaming Services

5. Bundling with Another Service

Many ISPs offer discounts when you bundle your internet service with a phone plan or cable TV package. While this technically lowers your internet bill, it could add on new or higher costs for other services, so proceed with caution.

If you want cable TV or have it through another provider, it doesn’t hurt to see how much a bundle can save you. But if you won’t use cable TV, it likely isn’t the right move for you.

6. Using Auto Pay

Often, you can get a monthly discount on your internet bill by opting in to auto pay, sometimes as much as $5 or $10 a month. To avoid overdraft fees, however, it’s important that you ensure there’s enough money in your checking account before the auto pay processes each month.

Recommended: How Bill Pay Works

7. Reviewing Your Bill

Many ISPs offer a temporary promotional discount when you switch to their service, but your costs could go up afterward. That’s one of the reasons why it’s a good idea to review your bill every month, even if it’s on automatic bill payment. Doing so will alert you to changes in your bill total, whether it’s from the end of a promotional period or other unexpected charges.

If you have questions about your bill, it’s wise to call customer service as soon as possible. The longer you wait, the more months you’ll pay a higher rate.

8. Buying Your Own Equipment

ISPs usually charge you a monthly rental fee to use their modem and router. Before 2019, consumers might have also paid a fee to use their own equipment instead. Either way, consumers typically paid an extra fee.

But in 2019, Congress passed the Television View Protection Act, which prohibits internet providers from charging you a fee to use your own equipment. You’ll pay an upfront cost for such equipment, but over time, it could save you a lot of money on your internet bill.

Recommended: 15 Creative Ways to Save Money

9. Paying with a Cash Back Credit Card

Not every ISP allows you to pay your bill with a credit card. But if you have a cash back credit card that offers rewards with every swipe, you may want to find an internet provider that does permit it.

For example, if your card offers 3% cash back and your monthly internet bill is $64, that’s nearly $2 in savings every month. It’s not a huge savings, but every bit can help in today’s inflationary times.

10. Researching Low-Income Subsidies

In May 2022, President Biden announced the Affordable Connectivity Program, which offers up to a $30 discount toward internet services for qualifying low-income families. If you’re struggling with your internet bill, it can be a good idea to see if you qualify.

11. Reducing Usage

Some internet plans have monthly data caps. Once you reach these caps, your ISP may charge you extra for usage (or slow down your speeds significantly).

If your bill regularly has fees for exceeding your data cap, you might want to switch to a provider with unlimited data (this may cost more as a monthly fee) or focus on reducing internet usage at home.

Recommended: How to Financially Downsize

The Takeaway

Knowing how to lower your internet bill without sacrificing quality is important. If you’re willing to do some research and make some phone calls to customer service, you might be surprised by how much money you can save — and use elsewhere in your monthly budget.

3 Money Tips

1.    Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

2.    If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

3.    When you feel the urge to buy something that isn’t in your budget, try the 30-day rule. Make a note of the item in your calendar for 30 days into the future. When the date rolls around, there’s a good chance the “gotta have it” feeling will have subsided.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

FAQ

How much is a good amount to spend on the internet?

The average household spends $64 monthly on broadband internet services. You may be able to spend less for slower internet or by bundling with another service; often, you can also find promotional deals, too. Ultimately, you’ll know if you’re spending a fair amount on the internet by comparing rates from other services and asking your friends and neighbors what they’re paying.

How can you lower your internet bill?

Wondering how to decrease your internet bill? You can try several tactics, including switching providers, negotiating for a better rate, using your own equipment, setting up auto pay, and even looking for low-income plans. Using a combination of strategies may help you get the best internet deal possible.

How much will your budget improve when you save money on your internet bill?

How much your budget improves when you save money on your internet bill depends on how much you’re able to reduce your internet bill by. For example, many people save $5 or $10 by setting up auto pay on their internet bill; this means they have between $60 and $120 extra a year to use elsewhere. Others earn cash back by using a rewards credit card to pay the bill; the earnings might be as little as 1% cash back, but every cent saved helps.

Photo credit: iStock/urbazon

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.

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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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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Oct
16
2023

Who Regulates My Bank?

By | Family Finances, Life & Career, money | Comments Off on Who Regulates My Bank?

If you’re curious about how banks are regulated and your money is protected, it’s important to understand that multiple agencies help keep America’s financial institutions safe and compliant with the law. Some of the key regulatory agencies you may hear about are the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC), although there are others involved as well.

This topic has been in the spotlight recently. You may have read the headlines and wondered who those agencies were and how they knew when to spring into action to help ensure that customers’ finances didn’t suffer.

Here, you can learn more about how bank regulation works, including:

•   What is the history of bank regulation?

•   What exactly do bank regulators do?

•   Who regulates banks?

What Do Bank Regulators Do?

Now that you have read about a few of the critical moments in U.S. banking regulation history, you may be interested to get a little more insight into what bank regulation accomplished during the ups and downs of America’s economy.

Here are some of the key points to know about what bank regulators do and how they can provide a sense of financial security:

•   Review the financial health of banks and step in as they deem necessary

•   Regulate foreign banks that are in business in the United States

•   Examine banks to make sure their practices are safe, sound, and fair

•   Intervene if banks are failing and ensure that depositors are protected up to the limits of insurance (and sometimes beyond, as mentioned above).

Recommended: Guide to Opening a Bank Account as a Non-US Citizen

Who Regulates Banks?

The next aspect to delve into is who has the responsibility of regulating banks and can intervene when they deem necessary. Here are the three key players when it comes to oversight of commercial banks:

Office of the Comptroller of the Currency

The Office of the Comptroller of the Currency (OCC) is an independent bureau within the U.S. Department of the Treasury. Its role is to charter, regulate, and supervise America’s national banks and federal savings associations.

In addition, the OCC oversees federal branches and agencies of foreign banks doing business on U.S. soil.

The OCC describes its mission as:

•   Ensuring that these institutions conduct business in a safe and sound manner

•   Determining that there is equitable access to financial services and customers are treated fairly

•   Making certain that the banks it oversees are complying with all applicable laws and regulations.

The Federal Reserve

The Federal Reserve, or the Fed, is responsible for regulating a different set of entities: some state chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations.

The Federal Reserve is America’s central bank, and has a broad jurisdiction as it works to promote the health of the U.S. economy and the stability of the financial system. Among its key functions are:

•   Conducting on-site and off-site examinations of banks to make sure they are operating in accordance with applicable laws.

•   Making sure that banks have enough capital available to withstand economic fluctuations. This can involve reviewing balance sheets, projections, and other financial materials.

•   Possibly reviewing “resolution plans,” which detail how a financial organization would resolve a situation in which it was in financial trouble or failed.

Recommended: Federal Reserve Interest Rates Explained

The Federal Deposit Insurance Corporation

As mentioned above, the FDIC plays a role in insuring its member banks so that, in the rare event of a bank failure, depositors are covered for $250,000 per account holder, per ownership category, per insured institution.

However, the FDIC does more than this. It also supervises state-chartered banks that are members of the Federal Reserve. It this capacity, it oversees more than 3,500 banks, and does the following:

•   Checks for safe and sound operations

•   Examines institutions to be sure they are complying with consumer protection regulations and laws.

A Brief History of Bank Regulation

America’s banking history has taken some twists and turns, as regulation has gone in and out of favor. Here are some key points in U.S. banking to consider:

•   In 1791, the First Bank of the United States was created, but its charter was not renewed in 1811. The reason? While the bank provided some stability to the new nation’s economy, people worried that it put too much financial control in the hands of the federal government.

•   State banks began to flourish and funded the War of 1812, but, with a large amount of credit being extended, the federal government stepped in again, chartering the Second Bank of the United States in 1816.

•   There were again worries that the federal government had too much power over the nation’s purse strings. In 1836, the Second Bank was dissolved.

•   An era of free banking emerged, without federal oversight or, in many cases, the need to have an official charter to do business. The federal government tried to rein this in with the National Banking Act of 1863; the OCC was formed to charter banks and ensure that they backed their notes with U.S. government securities.

•   The next few decades were a bit of a bumpy ride, with bank panics, such as the Panic of 1907, occurring. The Federal Reserve was created in 1913 to help bring order to the economy.

•   With the debilitating Great Depression, which began in 1929, new regulations were needed. The FDIC was formed in 1933 to help shore up the faltering economy.

•   More recently, after a period of deregulation, the government responded to the financial crisis of 2007 and the subsequent Great Recession. It passed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, designed to improve accountability and financial transparency in America’s financial system.

•   In 2021, President Biden signed an executive order that charged federal regulators with improving their oversight of bank mergers, as part of a larger effort to increase competition in the country’s economy.

•   An example of financial regulation in action occurred in mid-March 2023, when the federal government stepped in as two banks faltered. The government even took the step of guaranteeing deposits over the typical FDIC insurance maximum of $250,000 per depositor, per ownership category, per insured institution.

Recommended: How Much Money Do Banks Insure?

Who Regulates Credit Unions?

Not everyone, however, keeps their accounts at a bank. There are other financial institutions, such as credit unions.

If you have an account (or multiple accounts) at a credit union, the institution that holds your money will be regulated at either the state or federal level. The National Credit Union Administration (NCUA) has oversight of federal credit unions. State-chartered credit unions are regulated by their state.

Also, credit union accounts can be insured by NCUA vs. FDIC. It’s NCUA that provides $250,000 coverage per depositor, per ownership category, per insured institution.

Who Regulates Savings and Loan Associations?

As of 2023, there are 624 savings and loan associations (sometimes called “thrifts”) operating in the U.S. While these financial institutions used to be federally regulated by the Office of Thrift Supervision (OTS), that bureau ceased to operate in 2010.

Now, savings and loans are regulated by the Fed and the OCC. These organizations are tasked with ensuring the thrifts are following the applicable laws and operating safely and soundly.

How Do I Know Who Regulates My Bank?

If you are curious about how your own bank is regulated, you can try the following, which will narrow down the field somewhat. The OCC, which regulates national banks and savings associations, has a “Who Regulates My Bank?” website.

If you don’t get the answer you are seeking there, you can call the OCC Customer Assistance Group at 800-613-6743 for further assistance.

The Takeaway

Banking regulation helps keep our financial institutions safe and sound and compliant with the appropriate laws. It also helps protect our economic stability and consumers’ deposits.

Several agencies are involved in banking regulation, such as the Fed, FDIC, OCC, and NCUA. While they rarely need to take action such as overseeing a bank closure, it can be wise to know who they are and how they function. This can help you feel more secure, knowing that they are there, backing you up; transparency in financial matters is important.

If you’re looking for a home for your funds, SoFi can be the reliable, transparent banking partner you seek. When you open an online bank account with SoFi, you pay no account fees and earn a competitive annual percentage yield (APY), which can help your money grow faster. Plus, you have tools at your disposal to help increase your savings, such as Vaults and Roundups. And, with our Checking and Savings, you’ll spend and save in one convenient place and be able to track your money with our easy-to-navigate app.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

FAQ

How do I know which agency regulates my bank?

The agency that regulates your bank will likely depend on the kind of bank that holds your money: The Office of the Comptroller of the Currency (OCC) oversees national banks and federal savings associations; the Federal Reserve (the Fed) regulates some state-chartered banks, certain nonbank financial institutions, bank and financial holding companies, and foreign banking organizations; and the Federal Deposit Insurance Corporation (FDIC) supervises state-chartered banks that are members of the Federal Reserve.

Does the FDIC regulate banks?

The FDIC regulates state-chartered banks that are members of the Federal Reserve. In addition, an array of banks are insured by the FDIC. This means that clients’ accounts are insured for $250,000 per depositor, per ownership category, per insured institution.

What level of government regulates banks?

Banks are typically regulated by the federal government, with the Office of the Comptroller of the Currency (OCC), the Federal Reserve (the Fed), and the Federal Deposit Insurance Corporation (FDIC) overseeing many banks. State-chartered banks may also be regulated by their state’s agency.

Photo credit: iStock/ismagilov
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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. 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.

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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Oct
16
2023

Guide to Adding a Beneficiary to a Bank Account

By | Family Finances, Life & Career, money, Money & Life | Comments Off on Guide to Adding a Beneficiary to a Bank Account

Adding a beneficiary to a bank account is similar to naming a beneficiary to a life insurance policy or retirement account. A bank account beneficiary is entitled to receive the assets in the account when you pass away.

Should you name a beneficiary to your bank accounts? Maybe, if you’d like to ensure that the money goes to a specific person, group of persons, or entity after you die.

There are, however, some bank account beneficiary rules to keep in mind when deciding how to handle your accounts. Here, you’ll learn more about:

•  What a bank account beneficiary is

•  What privileges a beneficiary has

•  The pros and cons of naming a beneficiary to a bank account.

What Is a Beneficiary on a Bank Account?

A bank account beneficiary is an individual or entity who’s entitled to inherit assets once the account owner passes away. Generally, the beneficiary to a bank account can be anyone you choose to name, including:

•  A spouse

•  Adult children

•  Siblings or other relatives

•  Trusts

•  Charitable organizations.

It may be possible to name a minor as the beneficiary to a bank account if your financial institution allows it. However, you might be better off appointing someone to act as a custodian for them and naming that person as the beneficiary, since leaving assets to children can get tricky from a legal perspective.

You could also set up an account in their name if you want to establish an account for a minor. The minimum age to open a bank account alone is typically 18 or 19, depending on which state you live in. However, parents can open youth savings accounts or teen checking accounts on behalf of minor children.

All beneficiaries to the account have an equal share. So, if you have five adult children and you name each of them as beneficiaries to your bank account, it would be a five-way split when it’s time to divide the assets. Each person would receive 20%.

Bank Account Beneficiary Rules

If you’re interested in naming one or more beneficiaries to your bank accounts, it’s helpful to understand a little more about how it works. Your bank can offer more information on adding beneficiaries or removing them, if necessary. In the meantime, here are a few key things to know.

Is a Beneficiary Required?

You’re not required to name a beneficiary to a bank account. However, if you’re opening a new bank account, the bank might ask you if you’d like to name one or more beneficiaries.

Is there an advantage to naming a bank account beneficiary? There are a couple, actually.

•  Naming a beneficiary ensures that the person you choose will inherit the assets in your account after you’re gone.

•  Bank accounts that have a beneficiary are not subject to probate. Probate is a legal process in which a deceased person’s assets are inventoried, outstanding debts are paid, and remaining assets are distributed to their heirs. It can be costly and time-consuming, but accounts with named beneficiaries are exempt from the process.

Can Beneficiaries Interact With Your Account?

You might be wondering what control, if any, a beneficiary might have over your account. For example, when can a beneficiary withdraw money from a bank account?

The simple answer is that a beneficiary can’t do anything with the account until you pass away. Unless you add them as a joint owner, they wouldn’t be able to make withdrawals or get information about the account.

Once you pass away, however, the money becomes theirs. At that point, they could do whatever they like with it since they technically own it. Keep in mind that naming a beneficiary wouldn’t prevent a government withdrawal from your account if your balance is offset for unpaid debts.

Recommended: What Is Private Banking?

Does Marriage Affect Beneficiary Rules?

Whether marriage impacts bank account beneficiary rules can depend on how the account is owned and what state law dictates.

If you and your spouse are both listed as joint account owners, for instance, then the beneficiary you name would likely need to wait until both of you pass away to collect any money. An account that’s owned solely by you could be passed on to your beneficiary without any of the money going to your spouse.

However, your spouse may be able to contest the beneficiary designation with the probate court. You may also need your spouse’s consent to leave assets in a bank account to someone other than them after your death.

If you get divorced and your spouse was the beneficiary to your bank account, you’d likely want to update that designation. Otherwise, they’d still be entitled to any money from the account after you’re gone.

Are There Any Downsides to Having a Beneficiary?

Naming a beneficiary to a bank account has its upsides, but there are some potential drawbacks to keep in mind as well.

•  The beneficiary can do what they want with the money once they inherit it. If you’d like to have a say in how they manage those funds after you’re gone, you might be better off leaving the money in a trust instead. With a trust, you can specify exactly how and when your heirs can access their inheritance.

•  Beneficiary designations can also get tricky if you change your mind later. You may need to close the account and open a new one to remove a beneficiary, depending on your bank’s policy.

•  Naming beneficiaries can also be problematic if it causes infighting among your heirs. For example, you might name your daughter the beneficiary to your checking account but not your son. That could lead to squabbles between them and even legal disputes if your son challenges the beneficiary designation after your death.

Do All Banks Allow Beneficiaries?

Do bank accounts have beneficiaries automatically? Usually, the answer is no. But most banks allow you to name a beneficiary to bank accounts. Credit unions can allow them too. You can check with your bank to see if naming one or more beneficiaries is an option.

If your bank does allow beneficiaries, it’s a good idea to familiarize yourself with the rules. For example, the bank might restrict who you can name and the number of beneficiaries allowed. Or it might have certain guidelines for changing or removing beneficiaries later.

Can you open a bank account for someone else if your bank doesn’t allow beneficiaries? You might be able to, depending on the bank’s rules. For example, you could set up a joint account for yourself and someone else or open an account for a minor child. Either one could allow you to bypass beneficiary designation rules.

Payable-on-Death Accounts vs. Bank Account Beneficiaries

When you open a new bank account you may be able to designate it as a payable on death (POD) account. Payable on death means that when you pass away, the money in the account is payable to the beneficiary or beneficiaries that you named at the account opening.

It’s possible to add a beneficiary to a bank account after the fact. That may be as simple as filling out a form or logging onto online banking and adding the beneficiary’s information to an existing account. The money in the account would still be payable on death to the beneficiary once you pass away.

Whether your bank specifically refers to your account as payable on death or not, the beneficiary rules are the same. Anyone who’s named to inherit the assets in the account would not be able to touch them until after you’ve died.

Recommended: How Many Bank Accounts Should I Have?

The Takeaway

Adding a beneficiary to a bank account could make transferring money to loved ones easier, especially if you’d like them to be able to sidestep probate or just feel financially secure during a trying time. If you’re not sure whether you can add a beneficiary to a bank account or not, you can ask your bank for more details.

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 4.20% APY on SoFi Checking and Savings.

FAQ

Can a beneficiary take over a bank account?

A beneficiary is entitled to inherit a bank account when the original account owner passes away. Someone who is listed as a beneficiary, but not a joint owner, would not be able to take over the account or access it during the owner’s lifetime.

What happens when you add a beneficiary to your bank account?

When you add a beneficiary to your bank account, you’re telling the bank that you’d like the money in the account to go to that person (or persons) when you pass away. The beneficiary would be able to inherit the account from you after your death.

Who gets the money in your bank account after your death?

If you name one or more beneficiaries to a bank account, then those beneficiaries would be entitled to get the money in your account when you pass away. On the other hand, if you don’t name a beneficiary, then your bank account can get included in your estate. It would then be distributed to your heirs, according to the terms of your will or state inheritance law if you die intestate (without a will).

Photo credit: iStock/g-stockstudio
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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. 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.

This article is not intended to be legal advice. Please consult an attorney for advice.

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Oct
16
2023
Who Qualifies for FAFSA? Find Out if You Do

Who Qualifies for FAFSA? Find Out if You Do

By | Going to College, Student Loans, student_loan | Comments Off on Who Qualifies for FAFSA? Find Out if You Do

Students who are enrolled at least half-time at an eligible school, are a U.S. citizen or eligible non-citizen, and meet other requirements can receive financial aid through the Free Application for Federal Student Aid (FAFSA®).

According to Education Data Initiative, the average cost for undergraduate students attending a four-year private nonprofit institution is $38,768 in tuition and fees per year. For students attending in-state public four year institutions, the average is $9,678 in tuition alone. Living on campus bumps these numbers up to $55,840 and $26,027 per year, respectively.

If you can’t afford to pay for this cost out-of pocket, understanding the FAFSA requirements can help you possibly fund this worthwhile expense.

What Is FAFSA?

The FAFSA is the official application form to request financial aid for higher education from the U.S. government. It determines whether undergraduate and graduate students are eligible to receive federal grants, work-study, and federal student loans. Federal aid can only be used toward qualifying college expenses.

It’s also often used by states and schools to see if you’re eligible for its student aid programs. Some private entities might also use it to determine your eligibility for their own financial aid programs.

Recommended: What Costs Does a Student Loan Cover?

How FAFSA Works

Students must complete the FAFSA before each college year. Applications must be received by the June 30 deadline. However, you can begin submitting your FAFSA for the following school year starting on October 1, and states and colleges often have earlier deadlines for state- and school-sponsored aid.

Some federal aid is granted on a first-come, first-served basis. Many of the aid programs are based on need, though some — like Direct Unsubsidized Student Loans and Direct PLUS Loans — are not.

To start, you’ll have to create a Federal Student Aid (FSA) ID online. If you’re a dependent student, one of your parents also needs to create their own FSA ID. While filling out the FAFSA, you may need to reference or submit supporting documentation, such as your Social Security number, bank account statements and tax return details, and possibly a parent’s financial paperwork, too.

After submitting the FAFSA, you’ll receive a Student Aid Report (SAR), which is an overview of the information you included on your FAFSA. Once your FAFSA is processed, you’ll receive a financial aid offer from your school. It will outline the types of federal student aid you’re eligible for, the amounts, and instructions on how to accept the award offer.

After you’ve selected the financial aid options you want to accept, the funds will be sent directly to your school. Then, your school will apply the funds to your unpaid account balance.

The FAFSA may also be used to apply for financial aid for summer classes.

FAFSA Requirements

FAFSA qualifications include academic and financial criteria. Although some federal aid programs, like the federal Pell Grant, require you to demonstrate financial need, you might still qualify for other federal aid options if you meet the remaining FAFSA eligibility requirements.

Education Requirements

The level of education you’ve completed must meet the minimum requirements to qualify for a college or career school program. This includes a high school diploma or General Education Development certificate from a state-approved school or setting.

Citizenship or Residency and Social Security Number

Another of the FAFSA eligibility requirements is that students must be a U.S. citizen or U.S. National with an active Social Security number.

Eligible non-citizen students might still be eligible for federal aid if they have:

•   A permanent resident Green Card (Form 1-551, I-151, or I-551C)

•   An arrival-departure record (I-94)

•   A T-VISA

•   Battered Immigrant Status

Be Enrolled or Accepted

Students must also be enrolled as a regular student at a degree- or certificate-granting school. To meet FAFSA qualifications for a Direct student loan, you must be enrolled at least half-time.

Maintain Satisfactory Academic Performance

Returning students who are applying for federal financial aid must maintain Satisfactory Academic Progress (SAP).

Each school determines its own SAP criteria, which includes minimum GPA, minimum passing grades for courses, number of required course credits or hours, and the timeline it deems necessary to advance toward a degree or certificate.

Age and Dependency Status

Your dependency status determines whose information you’ll need to include on your FAFSA. Dependent students are required to provide their parents’ financial information on their FAFSA while independent students might not need to.

Generally, you’re considered an independent student if at least one of the following applies to you:

•   For the school year you’re applying for aid, you’ll be 24 years old by January 1.

•   You’re married or separated (but not divorced).

•   You’re a graduate-level student.

•   You have children and provide more than half of their support.

•   You have other dependents in your household whom you provide more than half of their support.

•   You’re in the U.S. armed forces and on active duty (non-training).

•   You’re a U.S. armed forces veteran.

•   Since turning age 13, your parents were deceased, you were in foster care or a ward or dependent of the court.

•   You’re an emancipated minor or are in a legal guardianship.

•   You’re an unaccompanied homeless or self-supporting youth at risk of homelessness.

Income Limits

A common misconception is that students or their parents must earn below a certain income to meet FAFSA eligibility requirements. However, there is not a FAFSA income limit for student applicants and their families.

Required Documents to Submit FAFSA

Although you won’t need to submit copies of additional documents with your FAFSA, you’ll need to refer to certain documents to complete your application. It may also be helpful to keep these documents on file in case your school requests to see them.

Social Security Number

You’ll need your Social Security number to include on your FAFSA form. If you’re a dependent, the form also asks for your parents’ Social Security number. If they don’t have one, enter all zeros without dashes.

W-2s and Untaxed Income Records

A main FAFSA requirement to successfully complete the application is reporting your income, and your parents’ income, if applicable. Make sure to reference all W-2s and untaxed income documentation, like interest income, child support, or other noneducation benefits.

If you are a dependent student, you’ll need to provide information from both yours and your parent’s W-2.

Tax Returns

You’ll need to reference your most current tax return information as well as your parents’ tax returns if you’re a dependent student. If you’ve already filed your tax return for the year, you might be eligible to use the IRS Data Retrieval Tool to transfer your tax information into the FAFSA.

Asset Records

You’ll also need to include your and your parents’ deposit account balances, like checking and savings, on your FAFSA. Similarly, investments, like stocks, bonds, and real estate that isn’t your primary home, must be included on your FAFSA form.

Alternatives to Federal Aid

Outside of the FAFSA application, there are other avenues to secure funds to pay for your higher education.

Savings

Consider tapping into existing savings, if your financial aid award comes up short. Doing so might help you avoid taking on more student loan debt.

There are certain accounts such as 529 savings plans that are designed to help parents and families save for their child’s education.

Grants

Research non-federal grants from your state, school, nonprofit, or other private organization. These funds don’t need to be repaid.

Scholarships

Scholarships are another aid source that doesn’t need to be repaid after leaving school. Find state-, school-, or private-sponsored scholarships to find more cash. There are online databases such as Scholarships.com that aggregate information on available scholarships. Take a look to review eligibility criteria and application requirements.

Part-Time Work

If you can manage balancing schoolwork with a part-time job, earning an income while enrolled in school can help you pay your way through your education.

Private Student Loans

Private student loans are available through private lenders, like banks, credit unions, and online institutions. These loans come with varying terms and interest rates, and can help cover the gap between your cost of attendance and existing financial aid.

When comparing private student loans and federal student loans, know that private lenders aren’t required to offer the same benefits or protections as federal student loans. As a result, private student loans are generally considered an option only after other sources of financing have been exhausted.

The Takeaway

Regardless of your or your family’s income, it’s generally worth submitting an application if you meet the FAFSA requirements. Since it’s a free application, there’s nothing to lose and much to gain if you’re eligible for aid, including scholarships and grants that don’t need to be repaid.

If you still need financial aid after submitting your FAFSA and searching for scholarships, consider a SoFi private student loan. It’s a zero fee loan option that offers competitive rates for qualifying borrowers.

Get pre-qualified in just a few minutes.

FAQ

How much or little income do you need to qualify for aid through FAFSA?

There are no income requirements for FAFSA applicants. Instead, a variety of factors determine whether a student is eligible for federal aid, including the school’s cost of attendance, the student’s year in school, their dependency status, family size, and more.

What is the maximum amount of money FAFSA gives?

The maximum amount of aid you can receive through the FAFSA depends on which federal aid programs you qualify for. Different programs have varying limits.

For example, the maximum Pell Grant award changes annually; for the 2024-25 award year the limit is $7,395. Direct Loans also have their own annual and aggregate borrowing limits.

How does parent income affect FAFSA aid?

Parent income that’s reported on a student’s FAFSA is used to calculate the applicant’s Expected Family Contribution (EFC). The EFC is a number on an index that helps schools determine your financial need if you attend its school. It also identifies your eligibility for certain financial aid programs like the Pell Grant or Direct Subsidized Loans.

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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.

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.

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