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We live in a fast-paced world and are accustomed to immediate gratification. Just as we can get groceries delivered in minutes and order a new movie online with a few clicks, so too do we often expect our bank deposits to be available immediately.

But it doesn’t always work that way when it comes to finances. Some things do require a wait, even though it may seem like they should happen instantaneously. When money is put into a bank account, it can take a while for the deposited funds to appear and become available. Here’s a simple breakdown of how long it takes for funds to clear.

What Are Cleared Funds?

Depositing money into a bank account doesn’t always make those funds appear immediately. It can take time for the funds to clear and become available to use. This is because banks and credit unions may place a temporary hold on the deposit. When this happens, the account holder can see their “total balance” on their account and their “available balance.” The latter is the amount of the total balance minus any pending deposits. The available balance is, as the name indicates, what is available for use.

Why Banks Put a Hold on Deposits

One reason why banks don’t immediately declare deposits to be cleared funds is to help avoid issues that can arise when a deposit bounces. Having a brief waiting period helps protect customers from bank fraud and from paying unnecessary fees. If a bank were to allow a customer to spend funds from a check that ends up bouncing, the customer would then need to repay the bank the amount they deposited and probably pay an overdraft fee (even if the customer wasn’t at fault).

Some holds take longer than others. The federal government regulates the max amount of time a banking institution can hold onto the funds before they make them available to the account holder. Banks and credit unions also have their own policies regarding how long it will take for funds to become available after a deposit, which can be shorter than federal regulations. It can be helpful to review your bank’s policies for holding deposits so you can get a better idea of when cleared funds will become available. That way, you won’t accidentally overdraw your account.

How Do Cleared Funds Work?

Cleared funds appear in a bank account, such as a checking account, after the holding period ends. Usually, this holding period lasts until the next business day, but it can take longer. Weekends and holidays can slow this process down. The type of deposit made can also affect the timeline.

Here’s a specific example: If you deposit a check via an ATM that is not part of your bank’s network, you will probably have to wait a while to access the money. It may take up to five days before that check becomes available cash in your account.

Compare that to the case of electronic deposits made via the Automated Clearing House (ACH). The funds can actually clear and become available as soon as the same day. Having a paycheck deposited via direct deposit can help you access your money a lot faster than if you deposited a check at an ATM.

Breakdown of Times of Cleared Funds

All banks and credit unions have their own timeline they follow surrounding cleared funds. In addition, the federal government sets a maximum limit for how long they can make consumers wait to access their deposit.

Here’s a quick breakdown of the federally allowed wait times for different types of transactions, from wiring money to check deposits.

Type of Deposit	Timeline
Direct Deposit	Up to the second business day
Wire Transfer	Up to the second business day
Paper check (less than $200)*	Next Business Day
Cash*	Same day or next business day
U.S. Treasury check*	Next Business Day
U.S. Postal Service money order*	Next business day
State or local government check*	Next business day
Casher’s, certified, or teller’s check*	Next business day
Mobile check deposit	Up to second business day
Federal Reserve and Federal Home Loan checks*	Next business day
Any other checks or non-U.S. Postal Service money orders	Second business day
Deposits made at an ATM owned by the customer’s financial institution	Second business day
Deposits made at an ATM not owned by the customer’s financial institution	Fifth business day

*Deposited in person.

It’s worth noting that these are the maximum hold times allowed; in many cases these deposits happen much quicker. Again, it’s worth reviewing the bank’s funds availability policy. This will be listed in the account agreement given to you, the account holder, when you opened an account. You can also ask the bank for a copy of their holding policies or look online for it.

When Can You Withdrawal Cleared Funds?

Deposits often clear in segments. That is, a portion of the funds will become available in your checking account before the whole amount deposited is ready for use. In most cases, the bank has to allow the customer to access $225 from the deposit at the start of the next business day. You could either withdraw cash or write a check. Usually the rest of the deposit is available on the second business day, unless something occurs to trigger a delay.

Cleared Funds vs Available Funds

The terms “cleared funds” and “available funds” both refer to funds that are available for immediate withdrawal or use. It’s important to keep in mind that simply depositing a check doesn’t mean you can use the money right away.

•   Regarding a deposit, the $225 that must be made available by the next business day is known as your cleared or available funds. So on the next day, you can go ahead and use that amount.

•   However, the rest of your deposit may not yet be available. If you try to draw against it, you are risking overdraft and charges. The full amount of the deposit may take up to a few more days to become ready for use.

Reasons Why Deposits May Be Delayed Until They Become Cleared Funds

There are a few different reasons why deposits can be delayed on their path to becoming cleared funds. Let’s examine some of these.

Deposits Over $5,000

When it comes to large deposits (excluding cash or electronic payments), the bank is typically required to make the first $5,525 of the deposit available by the second business day and the remainder available on the seventh business day, or later.

Recommended: Where to Cash a Check Without Paying a Fee

Brand New Customer Accounts

Newer customer accounts (less than 30 days old) can experience deposit delays up to nine days. Although with official checks and electronic payments, partial funds can be available the next day. (If you are in this situation and in a rush to make a payment, you can look into other ways to send money to another’s bank account, such as P2P apps. These can draw upon other available funds.)

Post-Dated or Fraudulent Checks

If a bank has reason to suspect a deposit is suspicious (such as if a check appears to be fraudulent), then it may hold the funds for longer than normal. A couple of examples of what might cause this kind of hold:

•   A check is post-dated, meaning it’s been filled out to show a date that is in the future.

•   A check is more than 60 days old.

The Takeaway

Cleared funds are the funds that become available once a deposit to a bank account clears. That means the money is ready for use. The timeline for funds clearing depends on several factors, such as where, when, and how the deposit was made and how large the amount is. Some funds may clear right away, while others can take a few days. However, federal laws are in place regarding how long a bank can wait to clear funds. By understanding this process, you can likely manage your financial life a little better and avoid situations that involve overdrafts or bounced checks.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is the difference between a cleared balance and an available balance?

A cleared balance (or cleared funds) and an available balance are the same thing — it’s the amount of money in your account that is available for immediate withdrawal or use.

How long does it take to get money cleared?

Some deposits clear as soon as the same day, but most generally clear the next business day. In some cases, though, a deposit can take as long as nine days to clear. Check with your bank to know their timelines.

Can you reverse a cleared check?

Once a check has cleared, there is little that can be done to reverse the transaction. If, however, a cleared check is to be found fraudulent, it may be possible for a bank to intervene.

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

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

*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.

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Those looking to save on the price of higher education may decide to pursue community college as a path forward. What is a community college?

Community colleges are public colleges designed to make the cost of attending college more affordable for local students. While community colleges don’t offer four-year degrees, they have two-year degree programs and classes that can transfer to other colleges where students can obtain a four-year degree.

Keep reading for more insight into what a community college is and how these schools work, as well as how they compare to four year universities.

What Are Community Colleges?

Community colleges are colleges designed to serve the local community. Students live off campus (often at home with their families if they are young) and can pursue an Associate of Arts (AA) or Associate of Science (AS) degree, which typically only take two years to complete. Students have the option of taking courses that can transfer credits to a four year university so they can pursue a Bachelor of Science (BS) or Bachelor of Arts (BA) degree.

Community colleges may also have vocational and technical programs for those looking to pursue careers that don’t require a four-year degree, but that do require technical knowledge. If you’re considering trade school vs community college, review factors such as the programs offered, time to complete programs, and any other opportunities (such as professional development opportunities) available at the schools.

How Do Community Colleges Work?

Community colleges provide a flexible learning opportunity that can help students reach a variety of goals. While some students attend community college with a goal to transfer after earning some lower division credits, some attend with the goal of earning an Associates degree.

Other students aim to earn technical certificates (similar or the same as what technical schools offer) and some simply attend because they love learning and want to pick up a new language, take a film history course, or brush up on a favorite subject. Students can choose to take one class or can enroll full-time.

Do They Accept Everyone?

Community colleges generally accept all students. For example, in California community colleges don’t have any testing requirements and students don’t need to have a certain GPA to be accepted. A high school diploma isn’t required either, but for students that want to apply for federal financial aid, usually a GED or high school diploma is required.

Why Are They Cheaper?

Community colleges are funded by the government in order to offer an affordable education for students. The average cost of attending community college for a year is $3,800, but in many states students who meet certain eligibility requirements can qualify for free tuition. Not to mention, there is generally no on-campus housing option for community college students and many choose to save money by living with a family member such as a parent.

What Kinds of Degrees Are Available?

What are community colleges for and what do community colleges offer? As noted previously, community colleges are designed to help students afford the cost of attending college locally. They offer AA and AS degrees, as well as technical and vocational programs. Attending a community college can also make it possible to transfer credits to a four year university so that the student can spend less time and money at a more expensive school.

Pros and Cons of Attending Community College

Before attending community college, there are some advantages and disadvantages worth keeping in mind.

Pros

Pros of community college include affordability, flexibility, and the opportunity to live at home while attending school.

More Affordable

On average, the annual community college tuition is $3,570 versus $9,970 for attending an in-state and public four-year college. Attending a public college out of state or a private college can cost even more.

Can Live at Home

Because community colleges are designed to serve local students, it’s usually possible to live at home with family while attending community college which helps keep education costs down.

Easier Acceptance

Community colleges don’t require a certain high school GPA or test scores in order to be accepted.

Flexible Course Scheduling

Community colleges may have flexible course schedules that allow students to work while attending classes. Some programs may also offer online or hybrid class models.

Cons

There are also some disadvantages, worth considering before attending a community college.

Credits Don’t Always Transfer

Certain course credits only transfer to select colleges which can make the transfer process confusing. Some community college students end up taking courses they don’t end up getting credit for when they transfer. It can help to work closely with your advisor to ensure the courses you complete at community college will transfer to the universities you are interested in transferring to.

Instructors May Not Be Full-Time

Some community college instructors teach at multiple colleges, which could make them less accessible when it comes to office hours.

Less Social or Extracurricular Opportunity

Community colleges have less of an emphasis on social life and activities since students commute and don’t live on campus. Many students also juggle work, parenthood, and other commitments outside of attending community college which leaves little time for socializing.

The table below outlines a recap of the pros and cons of attending a community college.

Pros	Cons
•   More affordable •   Can live at home •   Easier acceptance	•   Credits don’t always transfer •   Instructors aren’t full-time •   Less Social or Extracurricular Opportunity

Differences Between Community Colleges and Universities

When evaluating community colleges vs. universities, major differences include degree types available, cost, time commitment to complete a degree, and the application process.

Community Colleges	Universities
•   Lower cost •   AA and AS degrees •   Vocational and technical training •   Smaller class sizes •   May offer guaranteed acceptance •   Can’t obtain a four year degree	•   More expensive tuition •   BA and BS degrees •   On campus housing and meal plans available •   Competitive application process •   Specific admittance requirements •   Better athletic and extracurricular opportunities

What Are the Job Prospects for Community College Graduates?

Attending community college can lead to many different job opportunities in the business and labor sectors. From automotive technology to culinary arts to childcare to marketing to sales — the list goes on.

Additionally, community college graduates can continue their education if they are interested in a career path that requires a Bachelor’s degree or more.

How to Pay for Community College

Even though community college is one of the more affordable higher education options available to students, some may still need help affording the cost of tuition, fees, and books, which can cost thousands of dollars a year. Here’s a few options students can pursue for paying for community college.

FAFSA

Each year, students can fill out the free Federal Application for Federal Student Aid (FAFSA®) to find out what types of federal grants, scholarships, and federal student loans they qualify for. After seeing what grants they qualify for, students can better determine how much they actually need to spend and if they’ll need to borrow money to afford the costs of attending community college.

Grants

Speaking of grants, this is a form of gift aid that students don’t need to pay back. This is why it’s so important to fill out the FAFSA each year to see what grants are available.

Scholarships

Scholarships are another form of gift aid that students don’t have to worry about paying back. Each school’s financial aid office can help students learn more about what scholarships they have available, but students can also apply for scholarships with external organizations. There are a variety of online databases and scholarship search tools that students can use to learn more about scholarship opportunities.

Federal Student Loans

Federal student loans come from the U.S. Department of Education and as a result tend to have better interest rates and protections (like deferment and access to forgiveness programs) than private student loans for undergraduates offer. When students complete the FAFSA, they’ll learn more about which types of federal loans they qualify for and how much they qualify for.

Private Student Loans

Private student loans come from financial institutions like banks, credit unions, and loan lenders. These loans tend to cost more and how each lender handles repayment and fees, and the rates they charge can vary greatly. Generally, it’s best to exhaust federal student loan options before applying for private ones.

One important thing to know before applying for private student loans is that lenders will evaluate the applicants credit score and history, as well as their income are taken into account. The better someone’s credit history is, the better interest rates and loan terms they can qualify for. This is why many young students find it beneficial to add a cosigner to their private student loan application.

The Takeaway

Attending community college can lead students down many different paths, including transfering to a university that offers BA and BS degrees. Community college is typically a more affordable education option for students (unless they qualify for a full-ride scholarship to a four-year university) looking to pursue higher education.

That being said, some students may find they need to take out loans to afford the cost of community college. This is where private student loans can step in.

With SoFi Private Student Loans, borrowers can apply online with a cosigner in just a few minutes. While SoFi’s loans aren’t available to community college students, they may be an option for those transferring to a four-year university. There are no fees and graduates can enjoy a six month grace period before they have to start the repayment process.

Private student loans from SoFi have no fees, offer flexible repayment plans, and an easy online application.

FAQ

How are community colleges and regular colleges different?

Community colleges offer a variety of technical and vocational programs, as well as two year Associate degree programs. Regular colleges offer four-year Bachelor’s degrees, as well as graduate school degrees.

What purpose do community colleges serve?

Community colleges make achieving a post-high school education more accessible and affordable to students. Students can live at home with their families while attending a local community college so they can save money on housing while accessing affordable tuition.

Why are community colleges so much cheaper than 4-year universities?

Community colleges are funded by the government to help make pursuing a college education or vocational training more affordable. Community colleges also lack some of the expensive bells and whistles that large universities come with, like on-campus housing and dining halls.

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Pursuing a four-year degree can lead to a lot of great career opportunities, but there are also many lucrative career opportunities that require a more technical education that a university can’t provide. To pursue certain careers, it may be necessary to attend a technical school.

What are technical schools? In short, technical schools are postsecondary institutions that teach students specialized skills designed to prepare them for a specific profession or trade.

Continue reading for more insight into what technical school is and what the advantages and disadvantages of this education option are.

What Is Technical School?

As briefly mentioned, a technical schools meaning is a school that provides students with education and training in a practical and specialized trade or profession. Technical schools don’t lead to bachelor’s degrees like a university and instead result in earning diplomas or certificates that generally take less than two years to qualify for.

Technical schools are a good fit for students who know what career path they want to pursue, because when a student attends a technical school they choose a specific program designed to prepare them for a certain career. Students who attend technical school don’t take general education classes, which means they are not required to learn more about different disciplines before they choose where to focus their efforts.

Technical school courses include instruction and studying course materials, but also provide hands-on training that helps students build the skills they need to pursue their chosen career. Often, students who attend technical schools are connected to internship opportunities that help them gain real world work experience.

How Is Technical School Different From Trade School?

Trade schools typically focus on more hands-on careers that require having either a certain amount of on-the-job supervised hours in order to pursue a career or a certification of some sort. Trade schools offer hands-on education and prepare students for labor-focused jobs like working as an electrician or carpenter and similar to technical schools, trade school costs are generally less than university degrees.

Technical schools have more classroom lectures and simulated job training and can lead to more creative career paths like floral design, graphic design, and cosmetology, as well as more labor-focused jobs. A recap of the comparison between trade school and technical school is in the below table.

Trade School	Technical School
•   Hands-on education and training •   Prepares students for labor-focused jobs •   Helps students achieve certificates or supervised working hours	•   Classroom education and simulated job training •   Prepares students for labor-focused jobs and creative careers •   Can earn diplomas and certificates

How Is Technical School Different From Vocational Training?

A vocational school is generally the same thing as a technical school and people often use these names interchangeably. Some four-year universities offer vocational degree programs, such as becoming a paralegal, but some vocational programs like cosmetology can only be found at technical or vocational schools.

How Is Technical School Different From Community College?

Community colleges focus more on general education, but also offer technical training, whereas technical schools don’t teach general education at all.

Community College	Technical School
•   Students can pursue a general education •   Credits can transfer to four year universities •   Can prepare students for technical careers or to pursue further academic education	•   Only offers technical coursework •   Credits don’t transfer to universities •   Prepares students for technical careers

How Is Technical School Different From University?

Universities and technical schools are very different. They offer different degree programs, costs, time commitments and more. The table below provides an overview on the differences.

University	Technical School
•   Can pursue a bachelor’s, master’s, or doctorate degree •   On-campus dorm •   Intramural sports •   Clubs and student activities •   Four-year degrees	•   Technical focus •   Less classroom learning •   Hands-on training •   Shorter programs

How Does Technical School Work?

The way that technical school works is students choose a specific program to pursue and then complete the required coursework to finish the program or earn a certificate that enables them to work in the career of their choice. Technical school involves hands-on instruction so students can learn valuable technical skills.

Getting Into Technical School

Generally, students need to have a high school diploma, state-issued GED, or to have passed a state-authorized equivalency exam in order to qualify for technical school, but students don’t have to compete for acceptance like they would at a four-year university.

Cost of Technical School

The cost of technical school can vary quite a bit based on factors including the school, its location, the program type and the length of the program.

What Can You Study in Technical School

A few examples of career paths technical school can lead to include:

•  Computer technology

•  Healthcare support

•  HVAC technology

•  Electrical installation and maintenance

•  Welding or plumbing

•  Hospitality/hotel and restaurant management

•  Culinary arts

•  Cosmetology

•  Floral design

•  Auto mechanics

•  Graphic design

•  Visual arts

•  Office administration

•  HVAC technology

•  Carpentry or construction

Pros and Cons of Attending Technical School

Now let’s look at some advantages and disadvantages associated with attending technical schools.

Pros	Cons
•   Only requires a one to two year commitment •   Some programs only last a few weeks •   Hands-on training for students who have chosen a career path	•   Limited program and course offerings •   Funnels into specific career paths which could feel limiting •   Academic credits don’t transfer to four-year universities

Technical High Schools

There are also technical high schools that prepare high school students for technical career paths while providing them with a more traditional high school education at the same time.

Financing Technical School

Students who are having trouble affording the cost of technical school or who want to save some money can pursue these options for helping them finance their education.

FAFSA

Filling out the Free Application for Federal Student Aid (FAFSA®) each year while attending school, will allow technical school students to learn if they qualify for any grants, scholarships, or federal student loans. Check in with the financial aid office at your technical school if you have any questions about whether or not they participate in the federal aid program.

Grants

Grants are a form of financial aid that students don’t have to pay back. Essentially, a grant gives students free money to pay for their school tuition, fees, and supplies.

Scholarships

Scholarships are another form of gift aid that students don’t have to pay back. It can be a good idea to apply for scholarships to help lower the cost of attending vocational school.

Private Student Loans

Students who don’t qualify for enough gift aid or federal student loans to cover the costs of attending vocational school can apply for a private student loan through a private lender such as a credit union, bank, or loan lender. Unlike federal student loans, private lenders will often evaluate an applicant’s credit score and history, among other factors, when making lending decisions.

Recommended: A Guide to Private Student Loans

Usually, private student loans come with higher interest rates and less perks than federal student loans, so they are generally considered an option after federal options and other funding sources have been exhausted.

Employer Sponsorship

If someone’s employer would benefit from the skills they would gain by attending technical school, then their employer may be willing to pay for them to attend technical school by offering tuition reimbursement or some other form of financial aid. It can’t hurt for employed students to see what support programs their employer has in place.

Job Prospects for Technical School Graduates

Because different technical schools focus on different training programs, students need to choose one that has a program that aligns with their goals. For example, students who want to attend technical school may be doing so to pursue a career as an auto mechanic, electrician, hair stylist, or chef.

Is Technical School Right for You?

There’s no one right path to take after high school or when deciding to switch careers, but some may find that attending technical school can help them pursue the career of their choice.
Consider your career goals and the requirements for pursuing that career path. If that career path would benefit or require the training offered by a technical school, then it may benefit the student to explore attending a technical school. In some cases, another education option may help them reach that goal more effectively and efficiently than technical school.

The Takeaway

Attending technical school can be a great option for those who want to pursue a career that requires a specialized skill set, yet which doesn’t require a college degree. Technical school takes less time than pursuing a four-year degree and can lead to many great career opportunities.

Some students may find they can’t afford to pay cash for technical school and need to borrow money in order to finance their education. This is where private student loans could help.

SoFi’s private student loans aren’t available to technical school students, but may be worth considering for students transferring to a university. With SoFi private student loans, it’s easy to apply online and borrowers don’t have to worry about expensive fees. After graduation, they can enjoy a six month grace period to give them time to start their career before having to pay back their student loans.

It takes just a few minutes to find out if you pre-qualify for a no fee SoFi private student loan.

FAQ:

How are technical schools and trade schools different?

What’s a technical school and how does it differ from a trade school? The main difference between trade schools and technical schools, is that technical schools offer more classroom and instructional education, whereas trade schools do more hands-on training (although technical schools offer this type of training as well, just not as much).

How is college different from a technical school?

At a college, it’s possible to pursue a bachelor’s degree, which usually takes four years to complete, whereas technical school helps students work towards certificates that take two years or less to pursue. Students who attend college usually focus on more academic disciplines, whereas technical school teaches specialized skills.

What can you study at a technical school?

It’s possible to study many different subjects at technical schools and the subjects each school teaches can vary. For example, students can enroll in programs focused on computer technology, healthcare support, HVAC technology, electrical installation and maintenance, and plumbing.

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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.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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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A depository institution is a financial institution into which consumers can deposit funds and where they will be safely held. Banks and credit unions are typical examples of these institutions.

Learning about how these institutions work and their pros and cons can build your financial literacy.

What Is a Depository Institution?

A depository institution is a place or entity — such as a bank — that allows consumers and businesses to deposit money, securities, and/or other types of assets. There, the deposit is kept safely and may earn interest.

To share a bit more detail, depository institutions are financial institutions that:

•   Engage in banking activities

•   Are recognized as a bank by either the bank supervisory or monetary authorities of the country it is incorporated in

•   Receive substantial deposits as a part of their regular course of business

•   Can accept demand deposits

In the U.S., all federally insured offices of the following are considered to be depository institutions:

•   Commercial banks

•   Mutual and stock savings banks

•   Savings or building and loan associations

•   Cooperative banks

•   Credit unions

•   International banking facilities of domestic depository institutions

How Do Depository Institutions Work?

A depository can receive funds from consumers and businesses via such means as:

•   Cash

•   Direct deposit

•   Teller or ATM deposits

•   Checks

•   Electronic transfers

The depository institution holds these funds, and they are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per depositor, per ownership category, per insured financial institution. If the institution is a credit union, funds will be similarly protected by the National Credit Union Administration, or NCUA vs. FDIC.

Funds are accessible on demand (aka demand deposits rather than time deposits), and the depository institution is required to keep a certain amount of cash in its vault to ensure it has funds available for clients.

Customers are able to earn interest on different types of deposits. The depository institution also earns interest; it’s one of the ways financial institutions make money. It does so by lending money on deposit to their customers in the form of different types of loans. (For instance, some of the money on deposit might earn the account holder 2% interest, while the bank then uses the funds for a mortgage that charges 6.00% interest. There’s a good profit margin there for the depository institution.)

Recommended: What Is a Community Development Financial Institution?

Types of Depository Institutions

To better understand the purpose depository institutions serve, let’s look at some examples.

Credit Unions

Credit unions may offer many of the same services as banks, but they are owned by account holders, who are also sometimes called members. These institutions are not nonprofits. The profits that the credit union earns are paid to members in the form of dividends or are reinvested into the credit union. To put it another way, the depositors are partial owners of the credit union. You often need to live in a certain area or work at a certain profession to keep your money at a credit union.

Commercial Banks

Commercial banks are what many of us visualize when we hear the term “bank,” whether we are thinking of a major bank with hundreds of brick-and-mortar branches or an online-only entity. They are usually owned by private investors and are for-profit organizations.

Commercial banks tend to offer the most diverse services of all depository institutions, from personal banking to global banking services such as foreign exchange-related services, money management, and investment banking. The offerings may depend on how large the institution is and which customer segments it serves (say, consumers and different types of businesses).

Savings Institutions

Savings institutions are the banks that serve local communities and loan institutions. Local residents deposit their money in these institutions, and in return, they can access credit cards, consumer loans, mortgages, and small business loans.

It’s possible to set up a savings institution as a corporation or as a financial cooperative. The latter makes it possible for depositors to have an ownership share in the saving institution.

Recommended: What Is an Intermediary Bank?

Depository Institutions vs Repositories

Repositories and depositories are two different things despite the fact that their names sound almost the same. Here’s some of the key differences.

•   Depositories hold cash and other assets, but repositories hold abstract things such as intellectual knowledge, files, and data.

•   Depositories are usually credit unions, banks, and savings institutions, while repositories are typically libraries, data-storage facilities, and information-based websites.

Depository Institutions vs Non-Depositories

Unlike depository institutions, non-depository institutions don’t accept demand deposits. These are some of the differences between these two types of institutions:

•   Depository institutions accept deposits and store them for safekeeping. Non-depository institutions, on the other hand, provide financial services but can’t accept demand deposits for safekeeping.

•   Depository institutions are FDIC- or NCUA-insured, while non-depository institutions can be SEC-insured or have another type of insurance.

•   Credit unions and banks are commonly depository institutions. Non-depository institutions are often brokerage firms and insurance companies.

Pros of Depository Institutions

Depository institutions have a few benefits to note:

•   Money is safe and FDIC- or NCUA-insured

•   Accounts can earn interest on time deposits such as certificates of deposit (CDs) and possibly other deposits

•   Helps keep the economy healthy by allowing depository institution to lend out deposits and earn interest

•   Reduced risk of assets being lost or stolen

Cons of Depository Institutions

There are a few downsides to depository institutions. Consider these points:

•   Limited growth potential of deposited funds compared to investments, money market accounts, and CDs

•   Banks, credit unions, and savings institutions may charge fees for holding funds

•   Minimum account balance may be required

Tips for Choosing a Depository Institution

When it comes time to choose a depository institution, it can help to keep the following things in mind when comparing different options.

•   Type. Carefully consider if a credit union, saving institution, or commercial bank is the right fit. Some commercial banks have brick-and-mortar locations, while others offer all of their services online. Online banks usually pay higher interest rates on savings and charge fewer and/or lower fees, since they don’t have the overhead associated with operating branch locations. Credit unions also tend to offer higher interest rates and lower fees as they are not-for-profit as commercial banks are.

•   Features. Look for a depository institution that offers perks and services that suit your needs. Special features may include high interest rates, early access to direct-deposit paychecks, cash back deals, fee-free ATMs, and free access to credit scores.

•   Fees. Shop around to see which depository institution has the lowest and/or fewest fees, such as account maintenance fees and overdraft fees. As noted above, credit unions tend to charge lower and/or fewer fees than commercial banks, as do online banks.

•   Convenience. If you like to bank locally and know your bank tellers and officers, choosing an institution that has branches in your neighborhood is a wise move. If you prefer the seamlessness of banking 24/7 by app, however, you might opt to open an online savings account.

Recommended: What Is an Online Savings Account?

The Takeaway

Commercial banks, credit unions, and savings institutions are all examples of depository institutions. Depository institutions can be places to safely store funds that can then easily be accessed. Funds will typically be insured by either the FDIC or NCUA up to their usual limits of $250,000 per depositor, per ownership category, per insured institution.

Looking for a bank to deposit your money in that pays a great APY?

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is the difference between a bank and a depository?

There is no difference between a bank and a depository. A bank is a type of depository institution. Credit unions and saving institutions can also be depositories.

What are the types of depository institutions?

There are three main types of depository institutions. Commercial banks, credit unions, and savings institutions are all types of depository institutions.

Are commercial banks depositories?

Yes, commercial banks are one kind of depository institution where consumers can securely stash their money.

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Photo credit: iStock/Mikhail Bogdanov

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

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

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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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Because check writing is a less popular form of payment these days, it’s easy to get confused about how the whole process works. When someone writes a paper check, there may be a carbon copy attached to the back of each check. These are known as duplicate checks.

But what exactly are duplicate checks? How do you use them? And when do you need them? Keep reading for more insight.

What Are Duplicate Checks?

Duplicate checks are a type of checkbook you can get from your bank that makes it easier to keep track of the checks you write. Behind each check is a thin sheet of paper that records what you write. This check is known as a carbon copy or “duplicate”.

When you write on a check to fill it out, your writing transfers over to the duplicate check. In this way, the duplicate that is created can act as a record of the payment made, including the check number, how much was spent, the day the check was written, and to whom the check was given.

The same information found on the duplicate check can also be found by logging into your account online, but it can be helpful to have duplicate checks on hand for quick reference.

How Do Duplicate Checks Work?

A duplicate check is attached to the back of a normal check in the form of a thin piece of paper. This acts as a carbon copy of the original check. All duplicate checks have the same check number printed on them as the original. The pressure from the check writer’s pen transfers what is written on the original check to the duplicate check.

Once you are done writing a check, you only pull the original check out of your checkbook and leave the duplicate check in the checkbook so you can reference it when and if you need to. (The original check goes to the person or business you are paying). All of the information included in the payee, amount, date, and memo sections transfers over. The one area of the original check that doesn’t copy over is the signature. This is to protect you, the account holder, from identity theft in the event someone steals your checkbook. Basically, a duplicate check mirrors the information and can help you verify the check you just wrote. You can see all the details right there, on the carbon copy.

Are Duplicate Checks Legal?

Yes, duplicate checks are legal and simply serve as a record of a check that the account holder already wrote. Where legal issues arise is if someone were to steal a checkbook and try to cash it or use the information on the check to commit bank fraud.

Where Can I Get Duplicate Checks?

If you have a checkbook, you may already have duplicate checks on hand. If not, you can order this style of checkbook from the bank or credit union where you have a checking account. It can also be possible to order duplicate checks from select reputable online check printers who may charge less than a bank does for checks.

Single vs Duplicate Checks: What’s the Difference?

Single checks are the type of check you typically receive in a standard checkbook. The checkbook contains a series of individual checks that are ready to be written out and used for payment. Duplicate checks come in a special checkbook that is pre-assembled with carbon paper and two copies of every check.

Pros of Duplicate Checks

Once you understand the principle of a duplicate check, you may wonder if these are right for you. Here are a few advantages of using duplicate checks.

Safer than Carrying Cash

While someone can easily steal cash out of a wallet, checks are not as simple to steal. This is especially true if you take steps to manage your checkbook well and keep it in a secure place.

Ease of Use

You don’t have to do anything to create the duplicate check thanks to the carbon copy function. No writing the check number, date, payee, and amount in your check register (unless, of course, you want to do so).

Convenience

The whole point of a duplicate check is to make staying organized and tracking former check payments easier. While most check information is available through online bank accounts, having a paper copy can act as a helpful backup.

Checks Can Be Canceled If Stolen

If you have reason to suspect a check was stolen, you can stop payment on the check before it is cashed. Again, that’s a big advantage over cash; once bills are stolen, they are gone.

Cons of Duplicate Checks

Of course, there are also some disadvantages associated with duplicate checks worth keeping in mind.

Security and Privacy Risk

Because duplicate checks have important information on them about your bank and your spending habits, it’s important not to lose a check and minimize the possibility of your checkbook getting stolen.

Cost More Than Regular Checks

Some banks or check providers charge more for duplicate checks than they do for single checks.

Not all Check Printers Provide Them

Not all check vendors can create duplicate checks, so they may not be available from the company where you normally order checks.

Checks Usage Is on the Decline

Checks (including travelers checks) are becoming a less popular form of payment as people shift to online payments, electronic checks, and other options. In many cases, it may not be worth the fuss of ordering and managing a checkbook for the occasional payment.

Alternatives to Duplicate Checks

If you want to keep good records of checks you have written but don’t want to hold onto duplicate checks, you have a few options.

•   Log into your account online. Most banks and credit unions give customers an online bank account where you can access information about your transaction history, including the information one would find on a duplicate check. A warning: This is not a reliable way to keep track of every check ever written as banks eventually stop sharing old transactions. But it is possible to download these statements and save them electronically.

•   Make a digital copy. You can take a picture of or scan each check you write and store them digitally.

•   Use a check register. To keep all information about written checks in one place, it’s possible to use a check register. These registers can be on paper or can be digital; they capture the check number, payee, when a check was written and for how much. This process can make it easy to balance, say, your high-yield checking account by copying down check-payment information and subtracting the amounts from your balance.

The Takeaway

What is a duplicate check? In short, a duplicate check is a carbon copy of a regular check. Though it can’t be used to make a payment, a duplicate check makes record-keeping easier. When you write a check, the attached duplicate check creates an automatic copy of the check that you can easily reference. While checks aren’t as widely used as they once were, a duplicate check system can be a bonus for those who like writing checks, as it can make it easier to keep tabs on your checking account.

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

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

What is a single check?

A single check is the type of check you get in a standard checkbook. The book contains a series of numbered individual checks that you can write out and use a payment.

What is the difference between a single and duplicate check?

Single checks are the kind of check you receive in a standard checkbook. Duplicate checks come in a special checkbook that is pre-assembled with carbon paper and two copies of every check. This makes it easier to keep track of all the checks you’ve written.

Can you cash a duplicate check?

No. A duplicate check is simply a copy of a check you’ve written that stays in your checkbook and cannot be cashed. Only the original check can be cashed.

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Photo credit: iStock/FG Trade

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

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

*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.

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