Thrift Savings Plans (TSPs) are retirement plans for federal employees and members of the uniformed services. They offer the same kinds of benefits and tax advantages that private employers can offer their employees through a 401(k).
Like 401(k)s, TSPs allow savers to take out loans from their own savings. Borrowing against your retirement can be risky business, so it’s important to understand the ins and outs of TSP loans before you make a decision.
What Are Thrift Savings Plan Loans?
A TSP loan allows federal workers and uniformed service members to borrow from their retirement savings. They must pay interest on the loan; however, that interest is paid back into their own retirement account. In 2024, interest rates are 4.50%, typically lower than the rate private employees pay on 401(k) loans.
Before you can borrow from your account the following must be true:
• You have at least $1,000 of your own contributions invested in the account.
• You must be currently employed as a federal civilian worker or member of the uniformed services.
• You are actively being paid, as loan repayments are deducted from your paycheck.
• You have not repaid a TSP loan in full within the last 30 days.
How Do Thrift Savings Plan Loans Work?
There are two types of TSP loans. General purpose loans may be used for any purpose, require no documentation, and have repayment terms of 12 to 60 months.
Primary residence loans can only be used to buy or build a primary residence. They must be repaid in 61 to 180 months, and they require documentation to qualify. You cannot use primary residence loans to refinance or prepay an existing mortgage, add on to or renovate your existing home, buy another person’s share in your home, or buy land only.
As you weigh whether or not it’s a good idea to borrow from your retirement savings, consider these pros and cons.
Pros of a TSP Loan
Chief among the advantages of borrowing from a TSP are the relatively low interest rates compared to most other loans.
What’s more, you can get access to funds pretty quickly and repayment is simple, coming from payroll deductions. Also you don’t need to submit to a credit check to qualify for the loan.
Cons of a TSP Loan
Despite the benefits, borrowing from a TSP is often considered a last resort due to certain disadvantages.
First and foremost, when you borrow from your retirement you are removing money from your account that would otherwise benefit from tax-advantaged compounding growth.
If you leave your job with an unpaid loan, you will have 90 days to repay it. Fail to meet this deadline and the entire loan may be reported as income, and you’ll have to pay income taxes on it.
In addition, TSP loans are not reported to the credit reporting bureaus, so they don’t help you build credit.
Does a Thrift Savings Plan Loan Affect Your Credit?
TSP loans are not reported to the three major credit reporting bureaus — TransUnion, Equifax, and Experian — so they do not affect your credit score.
How Long Does a Thrift Savings Plan Loan Take to Get?
Applying for a TSP is a relatively simple process. You can fill out an application online on the TSP website . There is a $50 processing fee for general purpose loans and a $100 fee for primary residence loans. Borrowers who are married will need spousal approval before taking out a loan.
Once the application is approved, borrowers typically receive the loan amount via direct deposit or check within three business days.
How Much Can You Borrow From a Thrift Savings Plan?
The minimum you have to borrow with a TSP loan is $1,000. Rules for determining your maximum are rather complicated. You’ll be limited to the smallest among the following:
• Your own contributions and their earnings in your TSP.
• $50,000 minus your largest loan during the last 12 months, if any.
• 50% of your own contributions and their earnings, or $10,000, whichever is greater, minus your outstanding loan balances.
According to these rules, $50,000 is the most you can borrow, and you may be limited to as little as $1,000.
Should You Take Out a Thrift Savings Plan Loan?
Because a TSP loan can have a lasting effect on your retirement savings, you’ll want to be sure to exhaust all other loan options before deciding to apply for one. If you are experiencing financial hardship or poor credit has made it hard for you to qualify for another type of loan, a TSP may be worth exploring.
Thrift Savings Plan Loan Alternatives
Before choosing a TSP loan, take the time to research other alternatives.
Credit Card
Credit cards typically carry very high interest rates. The average interest rate as of August 2024 is 27.62%. That said, if you use a credit card to make a purchase and pay off your debt on time and in full at the end of the billing cycle, you will not have to pay interest on your debt.
Credit cards only get expensive when you carry a balance from month to month, in which case you’ll owe interest. What’s more, the amount of interest you owe will compound. In order to carry a balance, you must make minimum payments or risk late penalties or defaulting on your debt.
Passbook loans allow you to borrow money at low interest rates, using the money you have saved in deposit accounts as collateral. That money must remain in your account over the life of the loan. And if you default on the loan, the bank can use your savings to recoup their losses.
Signature Loan
Unlike passbook loans, signature loans do not require that you put up any items of value as collateral. Also known as “good faith loans,” signature loans require only that you provide your lender with your income, credit history, and your signature. Signature loans are considered to be a type of unsecured personal loan.
Personal Loan
A personal loan can be acquired from a bank, credit union, or online lender. They are typically unsecured loans that don’t require collateral, though some banks offer secured personal loans that may come with lower interest rates.
Loan amounts can range from a few hundred dollars to $100,000. These amounts are repaid with interest in regular installments.
Personal loans place few restrictions on how loan funds can be spent. Common uses for personal loans range from consolidating debt to remodeling a kitchen.
The Takeaway
For borrowers in a financial pinch, TSP loans can provide a low-interest option to secure funding. However, they can also have a permanent negative impact on retirement savings, so it makes sense for borrowers to explore other options as well.
SoFi offers low fixed interest rates on personal loans of $5,000 to $100,000 and no-fee options.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
What does TSP loan stand for?
TSP stands for Thrift Savings Plan, a retirement account the federal government offers to its civilian employees and members of the uniformed services.
What is a TSP loan?
A TSP loan allows Thrift Savings Plan holders to borrow from their retirement account. Loans are repaid automatically through payroll deductions, and interest payments are made back to the account.
How long does it take to get a TSP loan?
Once processed, the proceeds of your TSP loan will generally be disbursed within three business days.
Photo credit: iStock/SDI Productions SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
A debt validation letter is a document — typically from a collections company — that shares the recorded details of an outstanding debt. This letter contains the amount you owe, the name of the original creditor, the date by which you’re required to pay the collections company, and the instructions for how to dispute it. It should also advise you that, if you plan to dispute the debt, the dispute must be filed within 30 days.
Obtaining a debt validation letter is an important step toward disputing a fraudulent debt or repaying a legitimate one. Read on to learn more about how a debt validation letter works and what to do if you receive one.
Defining a Debt Validation Letter
If a debt collector contacts you by phone, you should ask them to contact you in writing instead. That way, you will have an easy-to-reference document in hand, and you may be able to protect yourself from too frequent debt collection calls as well as from scammers.
Once you make your request, the collections agency is required to send you a debt validation letter, which lists the following information:
• Debt collections agency’s information
• Original creditor’s information (for example, a credit card company)
• Account number associated with the debt
• Amount owed
• Information about how to file a dispute, including a tear-off form to make taking the next step easier
Once you have a debt validation letter, you can take a closer look to ensure you recognize the original debt. Then you can make a plan to repay it if it’s legitimate — or begin the dispute process if you have any doubts.
Purpose and Legal Basis
No matter what type of debt they’re seeking repayment for, collections agencies are legally required to offer debt validation letters. These ensure they’re seeking remuneration for legitimate debts only.
There are laws governing how often a debt collections agency can contact you. According to the Debt Collection Rule, which is part of the Fair Debt Collection Practices Act, it’s a violation of the law for debt collectors to call you more than seven times within a seven-day period or within seven days after getting you on the phone about a specific debt.
However, these restrictions do not apply to text messages, emails, or even contact via social media. Fortunately, though, such messages are required to offer a simple opt-out option.
When to Request Debt Validation
If you receive a validation of debt letter and you’d like to file a dispute, you can send a letter requesting proof that you owe the debt in the first place. The collections agency must be able to provide this proof, which is called debt verification, in order to continue to pursue your payment or report the debt to credit bureaus. You can also use this moment to formally ask the creditor not to contact you in any way other than written letters.
However, again, it’s critical that you ask for debt verification in a timely manner — as soon as possible after receiving the original debt validation letter. Debts that are not disputed within 30 days are presumed to be valid by the collector, so be sure to take care of the matter as quickly as possible.
Once you request debt verification, the collector must provide proof that you owe the original debt. This may include documentation from the original creditor. Some key next steps to know:
• If the debt collections agency cannot provide this proof, they are legally required to stop pursuing your payment.
• If they continue to do so, or report an invalid, fraudulent debt to the credit bureaus, damaging your credit history and score, you can sue them.
Benefits of Debt Validation Letters
If funds you legitimately owe have gone to collections, paying the debt off as quickly as possible is usually the best policy. Having a debt in collections can be very bad for your credit score, and collections agencies may be able to charge additional interest or even take you to court.
If you do need to pay off the debt, you can explore your options, such as finding a budgeting method that suits your needs or taking out a personal loan.
However, if the debt is not legitimate or the collections agency can’t definitively prove you owe the debt, requesting validation and verification can help you successfully file a dispute. This can also help you avoid paying money you don’t owe (as well as ongoing negative impacts to your credit history).
A properly executed debt dispute letter should make it clear that you do not recognize the debt and believe it is not yours in the first place. You should also request documentation that proves you incurred the debt. The Consumer Financial Protection Bureau offers a letter template that you can use in this scenario, which makes the process as simple as personalizing the letter, printing it out, and sending it to the agency.
The Takeaway
A debt validation letter is a document that lists how much you owe, to whom you owe it, and who is trying to collect it. It also informs you about your right to dispute the debt. Once you receive a validation of debt letter, you can begin the dispute process by requesting debt verification. In addition, a debt validation letter can help you move forward if you are dealing with too frequent contact from a creditor or believe a scam may be involved.
Becoming debt free can be challenging — but it’s possible. One helpful tool could be a personal loan.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
Do I have to pay a debt if validation is not provided?
If a collections agency contacts you, you should request a debt validation letter — because the agency is required by law to produce validation and verification if they are to continue to pursue your repayment. Additionally, having a debt validation letter in hand is the first step toward filing a dispute if it turns out the debt is illegitimate.
What happens if the creditor doesn’t respond to the validation letter?
If a collections agency does not respond to your request for a debt validation letter, it may be a scam — as all legitimate collections agencies are legally required to validate debts. If the organization continues to harass you, you may want to seek legal counsel in order to ask them to cease and desist.
How long does a creditor have to respond to a debt validation request?
First things first: As the consumer receiving a debt validation letter or notice of collections attempts, you must request debt verification or dispute the debt within 30 days. While there’s not a specific set timeline in which a collector must respond to your debt validation request, if they can prove the debt, their motivation for repayment means you’ll probably hear from them sooner than later.
Photo credit: iStock/sturti
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
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.
Student athletes typically have extra busy schedules along with the usual college expenses. Between classes, course work, practices, and games or competitions, finding the time for a job to make some money can be tough.
Fortunately, there are many ways for college athletes to make money — through coaching, training gigs, remote work options, and more. With a little creativity, it’s possible to earn some cash doing what an athlete does best: playing to your strengths.
Here, you’ll learn more about how college athletes can make money while working on their degree.
Rising Cost of College
There’s no doubt that college is a big-ticket item: In the 2023-2024 school year, the average cost of tuition and fees at a public college was $11,260 for in-state residents, and $29,150 for out-of-state residents. For private college, the average cost was $41,540.
Between 1963 and 2021, the average cost of an undergraduate degree went up by more than 135%.
Even if you’ve been awarded a scholarship, student athletes still need money for everyday expenses and all those protein bars. If you’re wondering how to make ends meet, read on to learn how you can make money as a college athlete.
Earn up to 4.20% APY with a high-yield savings account from SoFi.
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12 Smart Ways to Make Money as a Student Athlete
If you need to balance athletics and academics, there are an array of part-time job opportunities well-suited for the student athlete.
Here are 12 ways you can use your skills and talents to add to your college bank account.
1. Working for the Athletics Department
Landing a job in your school’s athletics department can be a convenient way to earn money while figuring out how to get involved at college and meet other students. Many college athletic departments can provide part-time gigs — in the office or the locker room.
Try asking your coach or athletic director about money-making opportunities. Athletic departments often need the support and, since they’ll be helping out a student athlete, the arrangement can be a real win-win.
2. Training Younger Athletes
Your athletic talents can help nurture the next generation. You could earn an hourly wage working in an after-school sports program for kids — either directly at a school, with a private league/program, or with an organization such as the YMCA.
Parents are often looking for role models to coach and train their children. Some college athletes offer their expertise in a private one-on-one or small group setting for an hourly rate — often between $20 and $25.
Your coach or athletic director may have insight on opportunities for working with children. Bonus: Running around with those energetic kids can help keep you in shape.
Still curious about how a college athlete can earn money? Think about all those hours spent training, whether your sport is baseball or gymnastics. You can parlay your workout know-how into income. As a personal trainer, you could make a $20-plus an hour working with a client, and schedule sessions around your availability.
However, some clients (definitely gyms) may require you to have a personal trainer certificate from an accredited program, which could take time and money to acquire.
4. Managing Social Media
In addition to hours in the weight room, college athletes, like most young people, have likely spent a lot of time on social media. Why not turn those hours of screen time into cash?
Some small businesses don’t have a social media presence. You could check with your campus pizza joint, a local fitness center, or your team’s favorite coffee bar and see if they might hire you to set up or maintain their social media accounts. You could arrange for an hourly rate or flat monthly fee.
Some student athletes start their own YouTube vlog relating their experiences or testing sports equipment. If you’re able to grow your audience, you may be able to eventually monetize it by using income-producing programs such as Google Adsense.
The flexibility of vlogging can be great for a busy college athlete’s schedule, but it might take a while for you to learn how to get paid for social media and start bringing in income.
6. Writing Sports Articles
You might be able to make some extra dough by writing about your experiences as a college athlete, such as personal stories or articles about your triumphs and challenges, or perhaps an insider’s scoop on the big match.
Check with local newspapers or online sports publications for submission requirements and pay scale.
7. Working Seasonal Jobs
Many college athletes may have more hours for a job during the off-season. If the bulk of your athletic commitments are in the spring, you might consider an easy way to make money in the winter, whether shoveling driveways or ski detailing in a sporting goods store.
If your sport primarily takes place in the winter, you might have free time for an athletic summer job, such as being a lifeguard or a counselor at a sports camp.
8. Selling Old Sports Gear
Student athletes can clean out their closets and earn extra money by selling their gently used sports equipment, apparel, and footwear. Online marketplaces such as SidelineSwap and Geartrade deal specifically in used sports products. Or you can always list your items on Ebay, Facebook Marketplace, and/or Craigslist.
9. Selling Sports Cards
Like many college athletes, you may have spent your childhood collecting trading cards of your sports heroes. Now your hobby could really pay off. There are many websites and antique stores that might be interested in buying individual cards or your whole collection.
Only one problem: Some of your sports cards may have high sentimental value. You may not be able to part with them!
10. Starting an Online Business
Being your own boss can be a great way to ensure a flexible schedule for a college athlete, so think about tapping your entrepreneurial instincts and off-the-field talents. The possibilities are endless — editing services, translation services, online T-shirt sales with a unique logo for your team. You might also hire your teammates to help out.
11. Modeling
Yet another way student athletes can make extra money on the side: Many are physically fit, which might make them good candidates for modeling work. You could submit photos to a local talent/modeling agency and mention your athletic skills as a plus. A photo shoot for a print ad or an on-camera commercial can yield good money for a few hours of work.
12. Cashing in on Endorsements
In 2021, college athletes earned the legal right to profit off of their names, images, and likeness (NIL). Essentially, NIL allows college athletes to market their personal brands in a variety of ways. including endorsements, sponsorships, social media posts, and more. While some student athletes have raked in six-figure (and higher) endorsement deals, the average income from NIL deals for student-athletes ranges from $1,000 to $10,000.
While the ruling may be controversial, for some, it’s an easy way to benefit from your years of hard work and dedication to your sport.
The Takeaway
Many student-athletes are able to leverage their years of training and discipline into finding a part-time job. You may be able to channel your sports knowledge and work ethic into coaching, personal training, vlogging, writing sports articles, or launching an online business.
It may take some time, effort, and creative thinking, but you can likely find an income source that is financially rewarding and won’t put your studies or athletic performance in the penalty box.
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
Is it legal for student athletes to make money?
Student athletes are allowed to hold on-campus and off-campus jobs.
How many hours are student athletes able to work?
The NCAA dictates that student athletes are limited to participate in school athletic activities for a maximum of four hours a day, or 20 hours a week. Depending on a student’s course load, that leaves a few hours a day for a part-time job.
Do student athletes get paid?
Student athletes don’t receive salaries from colleges. However, they are allowed to monetize their name, image, and likeness, and benefit financially from commercial endorsements.
*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.
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.
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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.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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In this era of the Gig Economy, side hustles, and entrepreneurship, many people are freelancers. Working this way can offer flexibility and unlimited earning potential, but it can also bring a learning curve when it comes to managing your money. Financial planning for freelancers means knowing how to handle things like tracking income and expenses, planning for taxes, and investing for retirement.
Mastering freelance money management can take some time and focus, but it’s a worthwhile pursuit if it helps you to achieve your financial goals. The better you understand how to manage finances as a freelancer, the easier it can be to get ahead.
To help get on the right path, read on to learn, among other topics:
• Why financial planning is important for freelancers
• How to create a budget as a freelancer
• How to track cash flow
• How to separate business and personal expenses
What Is a Freelancer?
A freelancer is someone who gets paid to complete work on a per-job basis. Freelancers are independent contractors, not employees. A freelancer can work with multiple clients on a contract basis, performing a variety of tasks.
Why does understanding this definition matter for freelance money management? It’s important because freelancers are not entitled to the same financial perks as hourly or salaried employees.
As a freelancer, you’re responsible for handling things like retirement planning, health insurance, and taxes yourself. You also won’t have paid vacations and holidays the way employees do, which may factor into your cash flow and money management planning.
Why Financial Planning Is Important
What is financial planning? Financial planning is the process of creating a plan for managing your money. A financial plan can include both short-term and long-term goals and the steps you’ll need to take to achieve them. For example, your financial plan might include a strategy for paying off student loans or saving money toward a down payment on a home.
Financial planning for freelancers is important because you’re in charge of deciding what happens with your money. Learning how to manage finances as a freelancer can help you to:
• Create a workable budget, even if you have irregular income
• Formulate a plan for saving for retirement
• Stay on top of your tax obligations
• Streamline expenses so you can avoid debt
• Plan for emergencies or unexpected costs
Planning can be a pathway to good financial health. And it’s an opportunity to develop positive habits and improve your money mindset, both of which can benefit you throughout your freelance career.
11 Tips for Financially Planning as a Freelancer
If you’re new to freelance money management, you may not know where to start or what you even need to be doing. Having a blueprint to follow can make it easier to develop a workable plan for managing money. Here are some essential steps to include in your financial plan if you have a freelance mindset.
1. Having and Maintaining a Budget
A budget is a plan for spending the money you make each month. If you want to be better with money as a freelancer, then creating and sticking to a budget is non-negotiable. It will help you both understand and optimize your finances.
When making a freelancer budget, start with income first. If your income is irregular, it can help to create an average as your baseline. So you’d add up all the money you made from freelancing over the past 12 months, for instance, then divide by 12 to arrive at a monthly average income.
You can then plan out your expenses (more on that in a minute), using that average as your baseline. You’ll tally how much money flows out for necessities every month, and see how much profit you are making.
When you have higher-income months, you can stash extra money in a savings account to help cover expenses in months when income is lower. You’ll also want to put money towards an emergency fund and retirement (more details below).
2. Giving Yourself a Consistent Paycheck
When you freelance, there’s no such thing as a weekly or biweekly paycheck. Instead, you might get paid on different dates each month, depending on how your clients handle payments.
That can lead to uncertainty about when to pay bills. You can avoid that issue by giving yourself a consistent paycheck on a regular schedule. So you might pay yourself a set amount on the 1st and 15th of each month, for example.
To do that, you might need to set aside enough money to cover one month’s worth of bills in your checking account first. That way, you can pay yourself according to the schedule you set without having to worry about overdrawing your bank account.
3. Keeping Track of Your Expenses
Tracking expenses is central to managing money better as a freelancer, especially if you’re worried about going over budget. It’s important to keep tabs on both your personal expenses and your business expenses so you know how much you’re spending each month. When adding up your business expenses, be thorough: Do you rent an office? If so, don’t forget about the electrical bill and any cleaning services as expenses.
Also track the costs of legal fees, insurance, website hosting and any online advertising you may do. Some of these charges can be billed annually, and you may lose sight of them since they don’t recur.
Keeping up with business spending also matters from a tax perspective. There are a number of tax deductible expenses for freelancers that can help to reduce your tax bill.
For example, you might be able to write off marketing expenses if you maintain a website for your business or claim an office at home tax deduction. Having a paper trail to back up those deductions is important in case the IRS targets you for an audit.
4. Timing Your Freelance Projects
Staying booked and busy is every freelancer’s dream since no work means no income. Timing your freelance projects can help to keep your income and cash flow consistent, so that you’re not struggling to stay on top of the bills. For example, if you’re a freelance writer, you might set deadlines to allow yourself enough time to invoice for your work (and get paid) before certain bills come due.
There’s another dimension to timing to consider as well. It’s important to think about how much time it will take to complete a project when setting rates. Underestimating the amount of time involved could cause you to shortchange yourself when quoting rates to clients. A good rule of thumb is to assume that any project will take 20% to 50% longer than you think it will. Then base your rates on that higher number.
5. Paying Down Your Debt
Debt can be a stumbling block to getting ahead financially as a freelancer. If you have student loans, a credit card balance, or other debt, it’s to your advantage to create a plan for paying off your debt as quickly as possible.
If your income is irregular, your budget should be designed to ensure that your most important living expenses are paid first. You can then decide how much room you have left in your budget to commit to debt repayment.
Also, consider ways to make your debt less expensive. Refinancing student loans, for example, may help you to get a lower rate and monthly payment, if you qualify for them, which can ease budget strain. You might also consolidate credit card debt with a better APR (annual percentage rate) credit card or even a rate of 0% with a balance-transfer offer. This can help you save on interest, which could make it easier to pay off your debt.
Earn up to 4.20% APY with a high-yield savings account from SoFi.
No account or monthly fees. No minimum balance.
9x the national average savings account rate.
Up to $2M of additional FDIC insurance.
Sort savings into Vaults, auto save with Roundups.
6. Separating Business and Personal Expenses
Keeping business and personal spending separate is a good idea for a few reasons. It makes it easier to create budgets for personal expenses and business expenses, so you know what you’re spending on each one. And you may encounter fewer headaches at tax time when trying to claim freelance tax deductions if business expenses are separate.
Opening a business bank account is a simple way to separate your spending each month. You can link it to your personal checking account in order to pay yourself your regular paycheck. You may also consider opening a separate business credit card to cover freelancing expenses if you can afford to pay the bill in full each month and avoid interest charges.
7. Investing in Insurance
As a freelancer, you don’t have access to employer-sponsored health insurance. So if you want to get covered, you’ll need to purchase a policy yourself. Self-employed individuals, including freelancers, can buy health insurance through the Health Insurance Marketplace.
When comparing health insurance plans, pay attention to:
• Premiums
• Deductibles
• Copays and coinsurance
• Coverage limits
You may also consider applying for health insurance through Medicaid if you have little to no income or financial resources. Eligibility for Medicaid is based on your income, household size, and assets. You can apply through your local department of social services.
In addition to health insurance, you may also want to look into insurance for your business. Liability insurance, for example, can protect you against claims arising from copyright infringement, libel, or defamation. That type of insurance can come in handy if you’re sued.
8. Having an Emergency Fund
An emergency fund is money that you set aside for unexpected expenses; say, a major car repair or medical bill. As a freelancer, an emergency fund can be invaluable if your work assignments dry up or you get sick and are unable to work temporarily.
In terms of how much to save for emergencies, three to six months’ worth of expenses is a commonly-used rule of thumb. But you might want to double or even triple that amount if your freelance income is irregular or you’re worried about a sustained client drought.
Recommended: Ready to build your emergency fund? Use our emergency fund calculator to determine the right amount.
Keeping your emergency fund in an online savings account is an option to consider. The annual percentage yield (APY) tends to be higher than what bricks-and-mortar banks offer. Online savings accounts may also charge fewer fees than traditional savings accounts.
9. Accounting for Taxes
Freelancing means you don’t have an employer taking out taxes from your paychecks. So you’ll have to handle taxes yourself.
Generally speaking, the IRS requires you to file an annual tax return and pay estimated quarterly taxes if you expect to owe $1,000 or more for the year. Quarterly taxes are essentially an advance payment against the amount of tax you’ll likely owe for the year.
Estimated taxes are due four times a year, typically:
• April 15 (1st payment)
• June 15 (2nd payment)
• September 15 (3rd payment)
• January 15 of the following year (4th payment)
Failing to make those payments on time can trigger penalties. If your state collects income tax, you’ll also need to make estimated payments to your state revenue agency.
You can use an online tax calculator to gauge how much you’ll need to pay for estimated taxes each quarter. It may be helpful to set up a separate business checking account or savings account to hold the money for those payments. As your clients pay invoices, you can allocate part of each payment to your tax account.
If filing taxes as a freelancer seems overwhelming, consider talking to an accountant or another tax professional who can help you figure out how much to set aside for taxes and how to maximize deductions in order to lower your tax bill. You may be surprised to learn about some business tax credits you didn’t know about.
10. Investing Your Money
Investing is key to building wealth since it allows you to take advantage of the power of compounding returns. If you already have an emergency fund in place, the next step in freelance money managing is creating an investment portfolio.
You can start with a retirement account if you don’t already have one. Freelancers can use traditional IRAs, Roth IRAs, SEP IRAs, and solo 401(k) plans to save for retirement. Each of these plans can offer a tax-advantaged way to save for the future. You can supplement your retirement savings with investments in a taxable brokerage account if you choose.
When investing as a freelancer, consider your risk tolerance and how much you have to invest, based on your budget. You may need to start with a small monthly amount, but you could build on that over time. The most important thing is to start saving and investing for the future.
11. Taking Advantage of Resources
Financial planning as a freelancer can be easier when you have the right tools and resources. For instance, some of the things you might consider incorporating into your plan include:
• Budgeting apps
• Tax management apps
• Online bank accounts for freelancers
• Investment apps
You can also search online for resources to help with things like insurance and tax planning.
Managing Finances With SoFi
Between managing deadlines, tracking invoices, and keeping up with client needs, freelancing can be demanding. Finding ways to simplify money management as a freelancer, including opening the right bank account, can save you valuable time and money.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.
FAQ
How is freelancing paid?
Freelancers can get paid in a number of ways, depending on their clients’ preferences. For example, clients can send payments through PayPal, Stripe, direct deposit, or paper checks. When negotiating a freelance contract with a new client, it’s important to understand how and when you’ll be paid for the work you perform. In some professions, it can be typical for clients to take 30 days or longer to pay invoices.
Do you need insurance if you are a part-time freelancer?
If you freelance part-time while working a full-time job, you may be covered by a policy from your main employer. But if you have no insurance coverage at all, it could make sense to buy a policy for yourself through the healthcare marketplace. You may also want to look into buying separate liability insurance for your business.
What are some good freelancer jobs?
There are lots of ways to make money as a freelancer. Some of the highest-paying freelance gigs can include copywriting, graphic design, and editing. There are also a variety of freelance jobs that may be desirable because you can set your own hours, such as driving an Uber.
4.20% APY
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.
*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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Third-Party 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.
The main differences between checking and savings accounts is that checking accounts are for spending and come with a debit card and checks, while savings accounts are a place to stash and grow your money via interest earned but your access may be more limited. These two kinds of financial products can form the foundation of how you manage your money day to day.
Read on to learn what the difference between a savings and checking account is, how they are the same, and the role each plays in your financial life.
Key Points
• Checking accounts typically give you check-writing privileges and a debit card, as well as unlimited transactions.
• Savings accounts may limit the number of withdrawals you can make, and the account holder usually doesn’t get a debit card or checks.
• Checking accounts, which are for spending, may earn no or low interest, while savings accounts are for saving (as the name implies) and do earn interest, helping your money grow.
• Both types of accounts are likely to be insured and may involve fees.
Quick Comparison of Checking vs Savings Accounts
To help you understand the difference between checking and savings accounts, here is a chart summarizing some key points.
Checking Account
Saving Account
Fees
Varies
Varies
Interest earnings
Minimal (if at all)
Yes
Debit card access
Yes
No
Check writing capabilities
Yes
No
Withdrawal limits
None
May be capped at 6 per month
Maintenance fees
Varies
Varies
Minimum opening balance
Varies
Varies
Best used for
Spending
Saving
There are similarities when you compare checking vs. savings accounts, such as varied minimum opening deposits, maintenance fees, and other monthly fees. Also, both kinds of accounts are typically insured by the FDIC (Federal Deposit Insurance Corporation) or NCUA (National Credit Union Administration), which can give you peace of mind.
That said, there are also three major points of difference between checking and savings accounts: how account holders access their money, withdrawal limits, and interest earnings.
Three Major Differences to Know
Consider these three important ways that checking vs. savings accounts can differ.
1. Interest Earnings
When it comes to earning a bit of a return on an online bank account, savings accounts typically offer a higher interest rate than checking accounts. In many cases, checking accounts aren’t interest-bearing, meaning no interest is earned at all. Interest rates for savings accounts vary. The current average is 0.46% APY (compared to a current average of 0.07% APY for checking accounts), according to the Federal Deposit Insurance Corporation, or FDIC. That said, you probably will find higher rates at online banks instead of bricks-and-mortar ones, with rates ranging from 4.35% to 5.15%. By not having physical locations, online banks save money and can pass savings onto their customers.
2. Liquidity
Here’s a key difference between a savings and checking account: Checking accounts are usually used by account holders to access their cash frequently, whether paying monthly bills or buying a latte. Checking accounts generally include a debit card, which can be used for purchases or ATM withdrawals. Checks, while not as popular as they once were, are also typically provided.
Savings accounts, on the other hand, don’t usually come with debit cards. Some financial institutions offer an ATM card for deposits and withdrawals to a savings account. Similarly, they lack checks. This reinforces the idea that these accounts are not for spending.
3. Withdrawal Limits
Checking accounts allow unlimited withdrawals, whereas savings accounts may only allow up to six per month. After that point, the transaction could be denied or the account holder charged a penalty. The bank might even convert the savings account into a checking account.
However, in April 2020, the Federal Reserve lifted this limitation of six transactions imposed through Regulation D. Financial institutions are no longer required to limit savings account withdrawals or transfers to six per month, but some may continue to do so. Check with your financial institution to learn the full story.
Earn up to 4.20% APY with a high-yield savings account from SoFi.
No account or monthly fees. No minimum balance.
9x the national average savings account rate.
Up to $2M of additional FDIC insurance.
Sort savings into Vaults, auto save with Roundups.
What Is a Savings Account?
A savings account is an account held at a financial institution such as a bank or credit union, and its primary purpose is to store your funds safely. Most savings accounts allow the account holder to earn interest on the account balance.
A few points to note:
• Savings account rates are generally higher than those offered with checking accounts (if those pay any interest at all). For this reason, they can be a good option as a savings vehicle for money that the account holder doesn’t need to access frequently.
• Common uses for savings accounts are emergency funds, short-term savings goals, and funds for occasional expenses. The cash can accumulate in the savings account and have an opportunity to earn interest.
• As mentioned above, banks can still impose a per-month transaction limit on savings accounts — they’re just not required to by the Fed anymore. There could be fees imposed on these excess transactions, which can add up.
• Some financial institutions may automatically close an account holder’s savings account or convert the savings account to a checking account if too many withdrawals are made each month on a regular basis.
• Other financial institutions don’t charge a maintenance fee or require account holders to maintain a minimum account balance, although they may require a minimum deposit to open an account. It’s wise to check with your financial institution to make sure you understand the ground rules.
Benefits of Savings Accounts
Here are some of the upsides of opening and maintaining a savings account:
• Savings accounts are low-risk, which means you are unlikely to lose money. Rather, you are likely to make money, thanks to interest, especially when that interest compounds.
• Interest is a plus. By shopping around for high-yield accounts, you may be able to grow your money without the volatility of investing in, say, stocks.
• Savings accounts are usually insured by the FDIC for up to $250,000 per account holder, per account ownership category, per insured institution. In the highly unlikely event of your bank going out of business, you’d be covered. What’s more, some banks participate in programs that extend the FDIC insurance to cover millions1.
• Easy access is another plus. Unless term or time deposits, in which your money can be locked up for a specific period of time, savings accounts allow for easy withdrawal of your funds.
• Peace of mind can come with savings. Having a savings account can help you feel more secure as you work toward your financial goals. For instance, you’ll know that you have funds available if an emergency cropped up.
A checking account is also held at a financial institution, though its primary purpose is to be used for everyday spending. These accounts generally don’t have any withdrawal limits, so account holders can make as many transactions as their heart desires.
• Debit cards typically come with checking accounts, and can be used for purchases at bricks-and-mortar and online retailers and to withdraw cash from an ATM.)
• Checking account holders may also be able to use paper checks, either complimentary or purchased by the account holder, which can be used to pay bills and make purchases.
• Account holders may also access their funds by P2P platforms (such as Venmo or PayPal) and other means.
Checking accounts may not earn as much interest compared to savings accounts, if they earn any interest at all.
Many financial institutions charge the same types of fees for checking accounts and savings accounts, such as monthly maintenance fees. Additional checking account fees may include overdraft or non-sufficient funds fees and out-of-network ATM fees.
Having enough money in the account and sticking with in-network ATMs are good ways to avoid charges like these, but banks are required to disclose certain fees it charges. Take a look at the fee schedule for any particular type of account you are thinking of opening and get acquainted with the details.
Benefits of Checking Accounts
There are many advantages to having a checking account, including:
• You can pay bills and transfer funds online, in person, or by app; there’s no need to carry around cash for such transactions. Checking accounts can make money management very convenient.
• Checking accounts are typically insured by the FDIC (or, if you bank with a credit union, NCUA), so your money is safe. Even if the financial institution were to go out of business, you wouldn’t lose your money up to $250,000 per account holder, per account ownership category, per insured institution.
• Checking accounts can be an affordable way to conduct financial transactions. For instance, your account is likely to come with checks, which can save you the effort and expense of using money orders or other types of payments in many situations.
• Your checking account may offer rewards, such as cash back opportunities, or if you apply for a loan at the same institution, you may get a better rate.
Yes, there are significant differences between checking and savings accounts. They serve quite separate purposes (spending vs. saving) and can be useful in working toward varied financial goals. For many people, however, it’s not a question of which kind of account to open, but where’s the best place to open both.
When you’re looking for the best banks for checking and savings accounts, see what SoFi can offer.
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
Are interest rates variable on savings and checking accounts?
Savings and checking accounts virtually always have variable interest rates.
Are checking or savings accounts insured?
Yes, both checking and savings accounts are usually insured by the FDIC (or NCUA) for up to $250,000 per account holder, per account ownership category, per insured institution.
Is it better to have most of your money in a savings or checking account?
When comparing checking vs. savings accounts, know this: If you have a chunk of the money that will sit in the bank for a period of time, a savings account can be a wise choice since it will earn interest.
Photo credit: iStock/AleksandarNakic
1SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by banks in the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.
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.
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.
