Aug
08
2023

15 Easy Ways to Save Money

By | Budgeting & Goals, Financial Independence, money | Comments Off on 15 Easy Ways to Save Money

Saving money is a common goal. Who doesn’t want more cash available to air out one’s budget, pay off debt, sock away for a future dream (whether that’s a month spent on the Amalfi Coast or an early retirement)?

Saving money is important for an array of reasons. It can allow you to pay for significant expenses without running up high-interest credit card debt.

It can offer peace of mind, since you know you can navigate rough times without hardship. And having more money in the bank can give you freedom of choice. You might leave a job you frankly hate without waiting until you land another one. You can also likely afford some luxuries for yourself and your family.

That said, you may fear that saving money means living so frugally that there’s never a fancy coffee or weekend getaway in your foreseeable future. But in truth, saving money can be fairly painless if you’re smart about it.
Here, learn some clever, simple strategies for how to save money each month.

1. Tracking Your Weekly Spending

Looking at your spending on a weekly basis can feel more manageable than trying to keep track of a month’s worth of spending at a time.

That’s not to say that you shouldn’t budget on a monthly basis, but breaking your timeline into smaller segments can simplify the process.

You can track spending (including every cash/debit/credit card transaction and every bill you pay) by using an app, jotting down every purchase, or collecting all of your receipts and writing it all down later.

You might then set a certain day of the week to look over the week’s spending. This can be an enlightening exercise. Because spending can be so frictionless these days, many of us don’t have a real sense of how much we are actually spending on a day-to-day basis.

Just seeing it all laid out in black and white can immediately make you think twice before you buy something nonessential and inspire you to become more intentional with every dollar.

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2. Creating a Simple Budget

Once you’ve mastered tracking your cash flow, and have a good idea as to your spending habits, you may want to take it one step further and set up a simple budget.

A budget is nothing more than setting limits for spending in different categories. To get started, you’ll want to list all of your monthly expenses, grouping them into categories, such as groceries, rent, utilities, clothing, etc.

If your goal is to save some money every month, you’re going to want to set a budget for yourself that includes an allocation to saving.

Next, you may want to tally up all of the income you’re taking home each month (after taxes), and see how your monthly spending and monthly income compare.

If spending (including putting some money towards savings) exceeds income, the next step is to look at all your expenses, find places where you can cut back, and then give yourself some spending parameters to stick to each week.

3. Automating Savings

If you do nothing else to get yourself on the savings path, consider doing this.

Automating savings is a great way to remove a huge barrier to saving — forgetting to put that money aside, then ultimately spending it.

The reality is, we all live busy lives and while we may have every intention of stashing away cash, there are many reasons why it’s hard to save money. It often doesn’t happen without a plan.

Automating is an easy way to save money without ever having to think about it.

The idea is to have money moved from a checking account and into a savings account on the same day each month, perhaps soon after your paycheck is deposited.

This way, the money is whisked from the checking account before it can be spent elsewhere.

If you are new to automating or have an irregular income, it’s okay to start with smaller dollar amounts. Likely, you won’t even notice that the money is gone from your account, and you’ll be able to increase that amount over time.

You can set up automatic transfers to your savings, retirement, and other investing accounts.

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4. Planning Your Groceries

Here’s another easy way to save money: Spend less on groceries by making a meal plan and a shopping list before you go to the store.

Without a list, you may be tempted to buy things that look good but that you don’t need or can’t use. Plus, you may end up having to go back to the store later, where you may be tempted to buy more things.

You don’t have to be a pro at meal-planning. It can be as simple as picking a few recipes that you want to make throughout the week (making large enough portions to provide for leftovers is another way to save).

You can then write a list of the ingredients that you’ll need, making sure to check your cabinets and use what you have first. Doing so is a life skill that can save you money.

You may also want to list exactly what snacks and/or desserts you plan to buy, so you’re not overly tempted once you get to the chips or cookies aisle.

Another way to save money on groceries is to cut back on pricier items, such as meat and alcohol, and to go with store or generic brands whenever possible. With tactics like these, you could be saving money daily.

5. Negotiating Your Bills

Some of those recurring bills (such as cable, car insurance, and cell phone) aren’t carved in stone.

Sometimes you can get a lower rate just by calling up and asking, particularly if the provider is in a competitive market.

Before calling, you may want to do a little research and know exactly what you are getting, how much you are paying, and what the competition is charging. You may also want to get competing quotes.

Even a small reduction in a monthly bill can save significant cash by the end of the year.

If you are experiencing hardship, you may also be able to negotiate down your electric and/or other utility bills by calling and explaining your circumstances. It never hurts to ask. The same holds true with doctor’s charges: You may be able to negotiate medical bills as well.

6. Actively Paying Down Credit Cards

This might sound more like spending than saving, but if you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going towards interest. Chipping away at the principal can feel like a tall mountain to climb.

If possible, consider putting more than the minimum payment towards your bill each month. The faster those credit cards are paid off, the faster you can reallocate money that was going out the window (and into interest) into savings.

Can’t seem to make a dent in your credit card debt? You might want to look into a zero-interest balance transfer offer, using a lower-interest personal loan to pay off the debt, or finding a debt management plan.

7. Canceling Subscriptions

It can be all-too easy for money to leak out of your account due to sneaky subscriptions.

From unused gym memberships to shopping subscription programs, subscription bills (even small ones) can rack up quickly because they come every single month without fail.

The first step is to cancel any of which no longer serve you. Try to be honest with yourself: Are you likely to start going to the gym? Could you work out at home instead?

If you’re looking to save money faster, you might consider making a sacrifice on a subscription that you do enjoy. For example, maybe you pay for Netflix, Hulu, and Disney+. Is it possible to use just one or two, instead of three? That could be a good way to save on streaming services.

8. Renewing Your Library Card

If you’re a reader and love books, one creative way to save money is to dig out your library card, or if you don’t have one, stop in to apply for a card.

The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums.

These days, you can typically get many of the benefits of being a card-holder without ever actually going to a branch. You can often get audio books and e-books, as well as access to online publications and online entertainment (via services like Hoopla and Kanopy), all from your computer or phone. Cost: Zero.

9. Shopping for Quality

Buying well-made, durable items instead of cheap, trendy, or single-use items may mean spending a little more up front.

But this can be a shrewd money move that can save you a bundle over the long run because you won’t have to repeatedly make the same purchases.

Buying a few classic, well-made pieces of clothing you will wear for a few years, for example, can end up costing less than picking up eight or ten cheaper, trendier items that you’ll end up replacing next year.

It may also pay off to spend a little more for appliances that are known for being reliable and lasting a long time and have great customer reviews, than buying the cheapest option.

Shopping for quality takes some education and practice, but it can be a worthwhile skill that your wallet will appreciate.

10. Pressing Pause on Big Purchases

Making impulse purchases can wreck a budget. That’s why if you’re tempted to buy an expensive item that is more of a “want” than a “need,” you may want to give yourself some breathing room, and allow the initial rush to wear off.

For example, you might tell yourself that you’ll wait 30 days and if, after the waiting period is over, you still want the item, you can get it then.

During that time you may lose interest in the item. If, however, you still want it in a month, that’s a good sign that this purchase will add substantial value to your life, and isn’t just a fleeting desire. If you can make room for purchase in your budget, then go for it.

This helps you make spending decisions from a slower, more thoughtful place, and can be a huge help in learning to budget and save money.

11. Round up Purchases

A painless and fun way to save money can be by rounding up purchases. You can do this in one of two ways.

•   The old-fashioned way is to pay for things with cash and keep the change in a jar. Then, at the end of a week or a month, deposit that change into your savings account.

•   Today, there are a variety of apps that allow you to round up purchases. That extra money can then be put into savings or invested. Check with your bank; they may offer a program like this making for a seamless experience.

12. Look into Refinancing Your Loans

Interest rates go up and down, and there may be an advantage to refinancing your loans if you can find a lower rate and/or a shorter term. Doing so could save you considerable money in interest over the life of the loan, whether that’s a mortgage, car payment, or student loan.

13. Bundle Your Insurance Policies

You may be able to whittle down your bills by combining your insurance policies (typically home and auto) with one company. Typically, when you do so, you can reap a solid amount of savings.

14. Gamify Savings

Many people find it helpful to give themselves monthly challenges to save money. It can make the pursuit of spending less more fun and can get your competitive spirit going.

For example, one month, you could vow not to get any takeout coffee and put the savings in the bank. The next month, you could vow to not take any rideshares and instead walk or take public transportation. Again, you’d put the cash saved in the bank.

15. Go Fee-Free

It can be wise to take a look at your financial institution and see how much you are paying in fees. There can be everything from overdraft charges to out-of-network fees to foreign transaction costs. In addition, your account might be hit with monthly maintenance or minimum balance fees. All of that can add up.

You might want to shop around for a new banking partner if you’re getting assessed a number of these charges.

Why Saving Money Is Important

Why go to the trouble of pinching pennies like this? Saving money is important for several reasons.

•   It can help you build wealth.

•   It can give you security.

•   It can reduce money stress.

•   It can help you achieve short- and long-term financial goals.

•   It can allow you to navigate bumpy times (such as job loss).

•   It can give you breathing room to splurge at times on the fun stuff of life.

Finding a Good Place to Grow Your Savings

Even if you’re only putting a small amount of money into savings each month, over time, that account will grow.
One way to help it grow faster is to park the money in a place where you won’t accidentally spend it and where it can earn more interest than a typical savings account.

You might consider opening up a high-interest savings account, money market account, online savings account, or a cash management account.

You may find that separating your savings, and watching it grow, keeps you motivated to save.
In some cases, you may be able to create “buckets” within your account, and even give them fun names, such as “Sushi Tour in Japan” or “My Dream House” that can help keep you motivated.

The Takeaway

Saving may not seem nearly as fun as spending, but it can give you the things you ultimately want, whether that’s a posh vacation, a downpayment on a new home, or a comfortable retirement.

And, there are plenty of ways to save money that don’t require sacrifice. You can use a mix of short-term strategies (like spending less every time you go to the supermarket) and long-term moves (like paying down debt and buying higher quality goods) to achieve your goals.

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

What is the 50/30/20 rule?

The 50/30/20 budget rule says that, of your take-home pay, 50% should be allocated to needs, or basic living expenses and minimum debt payment; 30% should be for wants, or discretionary spending; and 20% should go into savings.

What is the 30 day rule?

The 30 day rule is a way of avoiding impulse purchases and helping you take control of your money. If you find yourself about to make a significant impulse purchase, agree to wait 30 days. Right down the item, its cost, and where you saw it in your calendar for 30 days in the future. If that date rolls around and you still feel you must have it, you can see about buying it, but there is a good chance the sense of “gotta have it” will have passed.

How much should you save a month?

Many financial experts advise saving 20% of your take-home pay, but of course the exact amount will vary depending on such factors as your income, your debt, your household (how many dependents, for instance), and your cost of living.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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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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Aug
08
2023

Guide to a Personal Slush Fund

By | Budgeting & Goals | Comments Off on Guide to a Personal Slush Fund

You may have heard the term “slush fund” used to refer to a business setting aside money for miscellaneous and sometimes shadowy expenses.

However, a personal slush fund can be something quite purposeful and useful. It can serve as a pool of money that you can use for discretionary expenses. It can be an asset to your budget and might keep you from being tempted to dip into your emergency fund when you really shouldn’t.

Here, you’ll learn more about:

•   A slush fund’s definition

•   What a slush fund is for

•   The pros and cons of having a slush fund.

Including Slush Money in the Budget

A slush fund typically describes money set aside for miscellaneous purposes, often fun, discretionary expenses.
The word “slush” was created in the 17th century to describe half-melted snow. By the following century, “slush” was also used to describe the fat from meat that was boiled on a ship for sailors to eat.

When any leftover fat was sold at ports, the proceeds became the crew’s “slush fund.” When a military publication suggested that the money be used to buy books of the men’s choice, the phrase began to take on one of today’s meanings: as extra cash to spend on wants, rather than needs.

In modern business accounting, a slush fund is an account on a general ledger that doesn’t have a designated purpose and so is treated as a reserve of funds.

In its most negative meaning in the business world, a slush fund is kept off a company’s books for nefarious purposes. In the political arena, the term can be used to describe money, perhaps raised secretly, to be used for illegal activities.

When talking about personal finances, however, a slush fund is usually considered fun money: an account with some easily accessible cash you can use versus using your credit card or dipping into other funds.

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Including Slush Money in the Budget

So do you need a slush fund? It may make sense to have one.
First, it can help people to not overspend on wants. If someone uses (or has at least heard of) the 50/30/20 rule of budgeting, the slush money can be what goes into the 30% category.

For those who haven’t heard of this budgeting strategy, here’s an overview.

A person takes their after-tax income and divides it into three buckets:

•   50% to needs: This comprises rent or mortgage payments, car payments, groceries, insurance, student loan payments, minimum credit card payments, and so forth.

•   30% to wants: From eating out to buying a piece of jewelry or tickets to a game or concert, this is the discretionary spending category.

•   20% to savings: From emergency savings account to retirement account contributions, this money is for future spending, including but also going beyond rainy-day needs.

Here’s another reason why some people may want a slush fund: They are part of a couple and have a joint account for bill-paying and other practical purposes. Each partner may also want to have a slush account of their own, though. Those individual accounts can be used for your own personal spending (yoga classes, iced lattes, clothing, etc.) without your partner being privy to your purchases.

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Pros and Cons of Slush Funds

Slush funds have their pros and cons. First, consider the upsides:

•   Easily accessible

•   Allows for discretionary spending

•   Helps you avoid using high-interest credit cards

•   May help reduce money stress.

As for downsides, consider:

•   Could encourage you to overspend

•   Could incur banking fees on an additional account

•   Funds might be better used to pay down debt or to save

•   Money might grow more or faster if saved or invested.

Here is this information in chart form:

Pros of a Slush FundCons of a Slush Fund
Easily accessibleMight grow faster if saved/invested
Allows for discretionary spendingCould be used to pay down debt or invest instead
Avoids credit card usageCould lead to overspending
Could reduce money stressCould incur banking fees

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Slush Funds vs. Emergency Funds

You may wonder how a slush fund and emergency funds differ, as both are pools of money kept in reserve.

Consider this typical distinction:

•   A slush fund is usually a smaller amount of excess cash, perhaps similar to a cash cushion, that’s kept for discretionary spending, such as concert tickets, a last-minute weekend getaway, or other purchases.

•   An emergency is typically an account with three to six months’ worth of basic living expenses. It’s meant to be tapped when a true emergency crops up, such as paying bills during a period of job loss or covering an unexpected medical, dental, or car-repair bill.

Prioritizing What Matters

The way people organize how their money is spent is at the heart of budgeting (whether using the 50/30/20 or other budgeting method).

When their savings and spending are understood and tracked, people can adjust their budgets for even more effective prioritization.

How to set money goals? A review of your budget might indicate, for instance, that paying down high-interest credit card debt (and then paying it off) can free up money for more enjoyable pursuits.

Some people may focus on paying off student loan debt more quickly, again to free up cash in the monthly budget, while still others may prioritize building up their emergency savings account.

Each situation is unique. This trifecta might be a good place to start: a budget that meets your needs, helps you reach financial goals, and includes some room for discretionary spending.

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Reaching Savings Goals

If you want to create a slush fund just for fun, good for you. Enjoying hard-earned money may be a nice counterbalance to responsible bill-paying. To help you manage your cash to reach your money goals, here is a six-step process to consider:

1.    Identify goals: In this case, the goal is to set aside slush money, but priorities come into play. If, for example, an emergency fund is at the ready and retirement contributions are regularly being made, it may be time to focus on the slush fund. If one or both still need some attention, the slush fund may be third on the list for savings. Again, each situation is unique.

2.    Select a monthly deposit amount for the account: Perhaps there’s a specific goal (like creating a travel fund) or an amount can comfortably be budgeted. For a specific goal, such as a trip, it can help to figure out the time frame available to save and then divide the cost of a trip by the number of months available to save for it. That’s the monthly deposit amount required to reach the goal. For the second, saving as much as is reasonable to enjoy in the future can be key.

3.    Write down goals: Writing down what you want to achieve can boost the chances of reaching those goals. These jottings can be an ongoing reminder of what you want to achieve, keeping it front of mind. And because slush money is used for pleasurable purposes, it can be fun to write about plans.

4.    Monitor progress: By tracking daily spending habits and long-term savings habits, the process can be further refined. Some people like to rely on pen and paper, while others use an Excel spreadsheet or Google Docs. Still others use an app to track spending and set monthly budget targets. At the risk of sounding like a broken record (do people use that phrase anymore?), do what works best.

5.    Celebrate successes: For longer-term goals, savings fatigue can set it. To combat that, celebrate even the smallest of successes. Able to save $50 more this week than expected? Buy yourself a little treat (a quick massage or perhaps a bubble tea) to reward yourself for a job well done.

6.    Automate the process: Make the savings process easier by automating your finances. A certain dollar amount out of each paycheck can automatically be deposited into the savings account, or an automatic transfer can be set up from a checking account.

Recommended: How to Save Money From Your Salary

4 Tips to Help You Manage Your Slush Fund(s)

Here are a few ideas for accruing a slush fund:

1.    Be consistent. If you make a plan to save $10 or $25 or more per paycheck for a slush fund, keep up with it.

2.    Stash extra cash. If a financial windfall comes your way — a bonus, a tax refund — you may want to see how much can be earmarked as slush money.

3.    Bring in more money. Consider the benefits of a side hustle. Think of what hobbies can be turned into income earners and consider putting those extra dollars into the fund.

4.    Earn interest. Think about the best place to keep your slush account. You might choose to keep it in your usual checking account, a separate checking account, or a savings account. Shop around for the best interest rate so your money can earn money. Online banks vs. traditional banks tend to offer higher rates.

Opening a Savings Account for Your Slush Fund

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

What is a slush fund used for?

Typically, a slush fund is used for discretionary spending on fun purchases. It is used for the wants, not the needs, in life.

How much should you have in a slush fund?

There is not a set amount you should have in a slush fund, unlike the case with an emergency fund. Rather, you should have enough to cover unplanned purchases or expenses, such as joining a yoga studio, buying a new suitcase, or going away for the weekend, instead of charging those costs.

What are the differences between a slush fund and a petty cash fund?

In the business world, a petty cash fund is kept for incidentals, such as catering a breakfast for a client, running out to get an office supply you ran out of, and the like. A slush fund is for other miscellaneous expenses that can crop up. Perhaps you’re an entrepreneur and have to hop on a plane to pitch a new client: The price of the ticket might come out of your slush fund.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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Aug
07
2023
What Is a Nominated Advisor (NOMAD) in an IPO?

What Is a Nominated Advisor (NOMAD) in an IPO?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What Is a Nominated Advisor (NOMAD) in an IPO?

A nominated advisor (NOMAD) is a type of corporate advisor, such as a boutique finance firm, investment bank, or accounting firm, which helps international companies get listed on a branch of the London Stock Exchange (LSE).

NOMADs have to be approved by the LSE, and they assist smaller, riskier companies gain access to public capital through an initial public offering or IPO on the Alternative Investment Market, or AIM, which is less stringent compared to larger exchanges.

The NOMAD determines whether the company can be listed on AIM, even if the company will not IPO. If the company ends up pursuing an IPO, the NOMAD advises the company through the AIM IPO process and afterward. Here’s how the process works.

Recommended: What Is the IPO Process?

Nominated Advisor (NOMAD), Explained

NOMADs or Nominated Advisors determine whether a company should be admitted on LSE’s AIM. These are typically small- or mid-cap companies that are seeking aggressive growth and want to be listed on a public exchange. Thousands of companies have gone public, thanks to the more flexible listing requirements of AIM. But these companies are also required to work with a NOMAD that will guide it through this process and continue to be a resource once the company is admitted.

A NOMAD focuses on specific sectors in which they are an expert in, and they provide the company with continuous guidance on all the AIM rules. Assuming the company goes public via an IPO and gets listed on AIM, the NOMAD makes sure the company remains compliant with AIM standards, is up-to-date with AIM’s regulatory changes, and provides the company strategic advice depending on the market cycle.

Some NOMAD responsibilities include: providing financial planning advice, determining whether the company is eligible to be listed on AIM, preparing the company to be listed on the public exchange, and acting as the company regulator during its time on the AIM.


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How Do Nominated Advisors Work?

The Alternative Investment Market (AIM) is a sub-market of the LSE. It is a network that’s designed to allow certain companies that may not be ready for a larger exchange to gain access to the markets and thus reach their full potential.

In order for a company to gain entry into this market, a NOMAD needs to facilitate the process.

The NOMAD does research to see if a company is viable to join this part of the stock market, which is a market for small to mid-sized growth companies. If the company fits the AIM listing requirements, the NOMAD will work with the company to apply to the exchange. If the company is admitted successfully, the NOMAD continues to oversee the company, much like a regulator, to make sure the company is adhering to all the AIM rules.

Recommended: How to Buy IPO Stock

Qualifications for NOMADs

The NOMAD has to be approved by the London Stock Exchange, and there are certain criteria the advisor must meet in order to hold the title of a NOMAD.

First, a NOMAD is not an individual person, rather it is a firm or company that a company uses to get on the LSE. And according to the AIM rules, the NOMAD has to have practiced in corporate finance for at least two years.

The NOMAD needs to also have experience in facilitating at least three qualified transactions.

Lastly, the NOMAD must employ at least four qualified executives on staff of the firm. To become a NOMAD, the firm needs to complete the Nominated Advisor application form.

Once the NOMAD is appointed for the company, typically a smaller company by market cap, the Nominated Advisor is then responsible for advising and guiding the company on how it can be successfully admitted into AIM. The Nominated Advisor must maintain its eligibility status even after it is approved by the LSE.

The Exchange can conduct interviews with the NOMAD to ensure it maintains understanding of AIM rules for companies seeking admission and maintaining their position in the exchange. This is important to mitigate the potential for risk for investors. IPOs are considered extremely volatile events, and can expose all investors — but particularly inexperienced individual investors — to heavy losses.


💡 Quick Tip: Keen to invest in an initial public offering, or IPO? Be sure to check with your brokerage about what’s required. Typically IPO stock is available only to eligible investors.

The NOMAD Process

The NOMAD is needed once a company decides it wants to be listed on the AIM. Next, the NOMAD is appointed to assist the company through the application, admissions processes and ongoing guidance while listed on the exchange. After the company is finally listed on the AIM, the NOMAD offers consistent oversight of the company to ensure its listing.

Once admitted to the exchange, if the company the NOMAD oversees does not continue to meet AIM requirements, the NOMAD may choose to resign from their position or report the company, otherwise, the NOMAD could be subject to a fine for not upholding AIM expectations. In such a scenario, the company’s shares would be suspended and eventually de-listed if a NOMAD replacement is not found within a 30-day period.

What Is the Importance of a NOMAD During the IPO Process?

The Alternative Investment Market was launched in 1995, and its success can be partly attributed to the role that NOMADs play. When a company applies to be admitted into AIM, the NOMAD facilitates the process and is integral to the company getting listed on the exchange. The company that wants to be listed in AIM must appoint a NOMAD, a trusted and experienced representative that ideally may lead the company to go public.

This critical process requires the NOMAD to make sure the company is following the AIM’s rules and regulations, which is why the LSE had strict criteria for becoming a NOMAD. The Exchange wants to ensure the company seeking admission to AIM meets the criteria and has the potential to be a long-term success, and to keep the integrity of the market and protect shareholders who may invest in companies listed on the exchange.

The Takeaway

For some smaller, perhaps riskier, companies hoping to gain access to market capital, a NOMAD or nominated advisor, is required to become listed on the Alternative Investment Market (AIM), a submarket of the London Stock Exchange (LSE).

This route may offer an easier path to an initial public offering. The AIM is considered less rigorous in its requirements, compared with some larger exchanges, and they will consider listing small companies seeking aggressive growth as long as those entities are paired with a NOMAD.

The NOMAD is typically a corporate finance advisor that thoroughly reviews the AIM applicant in terms of its business model, track record, executive team, financials, and so forth. Assuming the company satisfies all requirements, the NOMAD agrees to assist the company in its application to the AIM, and to continue to provide oversight afterward.

Whether you’re curious about exploring IPOs, or interested in traditional stocks and exchange-traded funds (ETFs), you can get started by opening an account on the SoFi Invest® brokerage platform. On SoFi Invest, eligible SoFi members have the opportunity to trade IPO shares, and there are no account minimums for those with an Active Investing account. As with any investment, it's wise to consider your overall portfolio goals in order to assess whether IPO investing is right for you, given the risks of volatility and loss.

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

What is a NOMAD company?

A NOMAD company is a financial entity that has been approved by the London Stock Exchange (LSE) to help eligible companies who are interested in being admitted into Alternative Investment Market (AIM), which is part of the LSE.

What do NOMADs do during an IPO?

As corporate nominated advisors, NOMADs provide advice to a company that wants to go public on AIM. The NOMAD has market sector expertise and does their due diligence to make sure a company meets the eligibility requirements to be listed on the exchange.

What is a NOMAD investment?

NOMADs is integral in the pre-IPO process because they provide guidance for being admitted into the exchange along with ongoing oversight once the company has successfully been accepted into the public exchange.

Photo credit: iStock/ridvan_celik

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. IPOs offered through SoFi Securities are not a recommendation and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation.

New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For SoFi’s allocation procedures please refer to IPO Allocation Procedures.

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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Aug
07
2023
How and Where to Get a Cashier’s Check Without a Bank Account

How to Get a Cashier’s Check Without a Bank Account

By | Budgeting & Goals, Financial Independence, money | Comments Off on How to Get a Cashier’s Check Without a Bank Account

When the recipient of a payment wants reassurance that a check is valid and will not bounce — especially in large transactions like a car purchase or a down payment on a house — a cashier’s check can be a good solution. In fact, in some financial transactions, a cashier’s check is required.

If you need a cashier’s check but don’t have a bank account, you will likely have to put some time and effort into getting the form of payment you need. You might open an account ASAP, find a financial institution that will issue a cashier’s check to those who aren’t account holders, or else consider using a money order.

The reason why cashier’s checks can be so restrictive and desirable is that they are a very secure form of payment, issued against a financial institution’s own funds. That is why they are not given out casually.

If you don’t have a bank account but need a cashier’s check, this guide will walk you through your options.

Key Points

•   A cashier’s check is a form of payment that is issued by a bank from its own account and signed by a representative of the financial institution.

•   It can be challenging to get a cashier’s check without an account, but local banks and credit unions may be willing to accommodate this request.

•   If a financial institution does issue a cashier’s check to someone without an account, they will likely have to pay in cash.

•   Money orders are an alternative to a cashier’s check and typically have a maximum of $1,000.

•   Other options include using a P2P app to transfer funds, such as PayPal or Venmo.

What Is a Cashier’s Check and How Does It Work?

A cashier’s check is a type of check that is issued by a bank from its own account and signed by a representative of the financial institution. Because the funds are guaranteed by the bank as opposed to the check writer, recipients of a cashier’s check can be assured of its security. They can feel confident that it won’t bounce.

(This is assuming, of course, that it’s not a fake or forged document — not even cashier’s checks are immune to fraud, which is why it’s important to verify a check.)

When a consumer buys a cashier’s check, the bank will typically withdraw funds from that person’s checking or savings account and then deposit them into its own account. From there, the bank will write the cashier’s check from its own account.

You may wonder what the difference is between a cashier’s vs. a certified check. With a certified check, the money is withdrawn from an account holder’s check and then certified by the bank. This certification indicates that there are enough funds in the account to cover the check and verifies that the account’s owner’s identity was confirmed by the bank. However, the money is not placed into the bank’s own account as an interim step.

Procedures involving checks, like ordering checks or having a cashier’s check prepared, often involve a fee. For cashier’s checks, this could be a flat fee of $10 or $15 or sometimes a percentage of the check’s amount. The fee may be waived for clients who have premium accounts.

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Can You Get a Cashier’s Check Without a Bank Account?

Bank policies can vary, but it can be more challenging to get a cashier’s check without an account. Credit unions may be more willing to offer this service than banks, but it’s important to check with an individual institution to find out whether they’ll offer a cashier’s check without an account.

Keep in mind that you can only get a cashier’s check through a financial institution like a bank or credit union. You cannot purchase one at, say, the post office or Western Union.

If you do find a financial institution that will issue a cashier’s check to non-customers, the rest of the process will be largely the same as it is for customers — except that you will need to pay in cash because the funds can’t be withdrawn from an account.

The steps will likely involve:

•   Providing proper identification

•   Giving the financial institution the cash to deposit into its account

•   Letting the bank employee know the amount of the check you’ll need

•   Supplying the correct spelling of the recipient’s (payee’s) name

•   The bank prints all of the information; this means you can’t make any changes or handwritten corrections

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No account or overdraft fees. No minimum balance.

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Where to Get a Cashier’s Check Without a Bank Account

As far as where to get a cashier’s check without a bank account, most financial institutions won’t accommodate this request. You will likely have to do a bit of research to find one that does. You might try smaller local banks and credit unions in your area to see if they will accommodate this request.

Here is another work-around:

Opening and Closing an Account

If you know you’ll need to have a cashier’s check in the near future, opening a checking account now can position you for this financial transaction. To do so, you will typically need to provide information confirming your identity and choose which type of account you wish to open. From there, you can fill out an application and make an opening deposit, if required.

Then, once the account is up and running, you can request a cashier’s check. Make sure not to get one too far in advance of when it’s needed, because how long a check is good for is typically six months.

When you’re ready to close the account, be sure to transfer funds and move automatic transactions over to a new one, if that’s your plan, or to find other ways to handle these matters.

Can You Get a Cashier’s Check at Any Bank?

Virtually all financial institutions (traditional and online banks, credit unions) will issue cashier’s checks. The challenge can be that they typically only create these financial instruments for account holders.

If you just walk into or contact a bank where you do not have an account, they may not be willing to issue a cashier’s check for you. That’s true even if you have enough cash on you to cover the amount of the check you’re seeking.

Is There a Maximum Amount for a Cashier’s Check?

There is typically no upper limit for cashier’s checks, though policies may vary from one financial institution to the next.

The fact that there isn’t usually a maximum amount for cashier’s checks makes them particularly useful for larger purchases. For example, when undertaking a real estate transaction or buying a car, a cashier’s check may be a preferred form of payment for both parties involved.

Money Order: An Alternative to a Cashier’s Check

If you’re struggling to get a cashier’s check without a bank account or are simply curious what alternatives there may be, you may consider a money order. A money order is a type of paper check that can’t bounce because it’s been prepaid by the sender. Typically, there’s a limit to these, a maximum of $1,000. One big advantage of them is that you don’t need a bank account to get one. This can make it an important option for unbanked people.

For instance, you can go to the post office and do the following:

•   Purchase money orders using cash, a traveler’s check, or a debit card (though not a credit card)

•   Pay the face value of the money order, plus a fee of a couple of dollars (for a domestic money order)

•   Fill out the money order to the payee and complete the transaction

Many banks and credit unions also sell money orders for a small fee of $50 or $10, which may be waived for certain customers.

Money orders are also available at some retail locations, such as pharmacies, convenience stores, Western Union, Moneygram, and more. While fees may vary from location to location, they are usually no more than a few dollars.

Another Options to a Cashier’s Check

If a money order isn’t the right vehicle for you, there may be another way to move money if you cannot access a cashier’s check. You might be able to use a P2P app to transfer funds, such as PayPal or Venmo. These services can have transaction limits and fees, so do your research first.

The Takeaway

A cashier’s check is a form of payment that must be issued by a financial institution. Typically, funds are taken out of a customer’s savings or checking account and deposited into the bank’s account. Then the check is issued from the bank’s account, which provides a significant amount of security.

As far as the answer to this question, “Where can I get a cashier’s check without an account?,” some banks or credit unions may allow you to buy a cashier’s check even if you are not a customer, but you may need to call around to determine where this is available. Money orders, meanwhile, can be purchased at the post office and some retail and convenience stores.

Still, the easiest way to get a cashier’s check is to open a bank account. If you’re looking to open an online bank account, see what SoFi Banking has to offer. Our checking and savings account offers a competitive annual percentage yield (APY) and charges you absolutely no account fees. Those two features can help your money grow faster. Plus, you’ll enjoy the convenience of spending and saving in one place, and qualifying accounts can get paycheck access up to two days early.

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

FAQ

Can you get a cashier’s check without a bank account?

Many financial institutions do require a bank account to issue a cashier’s check. You may be able to get one without an account, perhaps through a credit union. It’s likely easier to buy a money order if that form of payment is acceptable to the recipient. This type of check is more widely available, including at the post office and some retail and convenience stores.

Can I get a cashier’s check somewhere other than a bank?

No. By definition, a cashier’s check comes directly from a bank’s account. You can, however, get a money order from a variety of establishments, including the post office and some stores.

Can I use a money order instead of a cashier’s check?

That depends upon the recipient. Both forms of payment are considered safer than a personal check, but you’ll need to verify that your payee will accept a money order instead of a cashier’s check if that’s what they requested.

Can you get a cashier’s check at the post office?

Only a financial institution can issue a cashier’s check because it comes directly from the bank’s or credit union’s own account. Thus, you cannot get a money order at the post office. The post office does issue money orders, however. If your recipient will accept a money order, you can buy that at a post office location.

Photo credit: iStock/pixdeluxe

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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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Aug
07
2023
How Old Do You Have to Be to Open a Bank Account?

How Old Do You Have to Be to Open a Bank Account?

By | Budgeting & Goals, Financial Independence, money | Comments Off on How Old Do You Have to Be to Open a Bank Account?

Helping kids gain hands-on money skills can start with learning how a bank account works. After all, bank accounts can provide a hub for most people’s daily financial life. You may be surprised to know that there are many options if you want to open a bank account for a child. While a person typically has to be 18 to open their own account, a child can generally open a bank account at any age — as long as a parent or a guardian serves as a joint account holder.

Key Points

•   While SoFi requires bank account applicants to be 18 years old, some banks allow minors to open an account, as long as a parent or guardian serves as a joint account holder.

•   Custodial accounts are controlled by an adult until the minor reaches the age of majority.

•   Joint accounts list both a minor’s name and an adult’s name as co-owners, with equal control of the account.

•   Withdrawing money from a bank account depends on whether it is a custodial or joint account.

•   To open a bank account, you need government-issued photo identification, contact information, proof of address, and possibly a Social Security card, birth certificate, passport, or school photo ID.

What Age Can You Open a Bank Account?

How old do you have to be to open a bank account? Usually, a person has to be 18 to open their own account. However, there isn’t a federal law that sets a minimum age at which you can have a bank account. Each state can have its own regulations regarding accounts for young savers and, depending on the state, financial institutions also may have the ability to set their own rules.

If you’re interested in opening an account and are unsure of age requirements, you may want to contact a few different financial institutions to ask if they have an account that suits your needs.

🛈 Currently, SoFi only offers bank accounts to members 18 years old and above.

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Can a Minor Open a Bank Account?

Usually, you must be 18, or the age of majority in your state, to open a bank account without a parent or guardian. But there are ways in which a minor can open a bank account and have his or her name on it. Some popular options include:

Custodial Accounts

A custodial account is an account an adult opens on behalf of a minor. The money held in the account belongs to the minor but is controlled by the custodian — usually a parent — until the minor reaches the age of majority (typically 18 to 21, but it may vary by state). There are a few different types of custodial accounts, including savings, educational savings, and investment accounts.

With this type of account, the minor won’t be able to access funds on their own, and they won’t be issued an ATM card. Generally, a custodial account changes over to an individual account when the child reaches adulthood.

Joint Accounts

A joint account lists both a minor’s name and an adult’s name as co-owners, and they have equal control of the account. If the goal of the account is to help a minor learn financial responsibility or to give them control over their own money — but with an adult’s guidance — this might be the right choice. These accounts usually offer the parent the ability to monitor and control the account to some degree. For instance, the parent might set spending limits and get notified of transactions.

Depending on the child’s age, you may want to start with a joint savings account. Or, you might decide to look into the perks of a teen or student checking account that offers youth-friendly benefits (like low minimums and fees), and a debit card and/or checks for purchases and withdrawals.

When minors reach the age of majority, they may choose to keep a joint account, but they also may want to transfer the account to just their name. As another option, they can open a new, individual account that better suits their current needs.

Recommended: Tips to Improve Your Money Mindset

Can a Minor Withdraw Money from a Bank Account?

If you’re wondering if a minor can withdraw money from a bank account, the answer is: It depends. With a custodial account, it is likely that the child cannot touch the money. The adult likely maintains control until the child reaches majority and becomes the account owner.

However, with a joint account, the child may be able to deposit and withdraw funds, just as the adult on the account can. That said, parental monitoring and controls can often be set up.

What Age Can You Get a Debit Card?

Typically, checking accounts for kids and teens offer debit cards. The age at which a minor can get a debit card will be determined by the bank offering the account. This feature may only be available to teens, but some banks (such as Chase) allow six-year-olds and up to get debit cards.

There are also options like prepaid or secured debit cards that can be used by kids. GoHenry offers them to children as young as age 6 to help them learn money management skills, while Greenlight says there is no minimum age for its debit card. It is likely, however, that you will find plenty of parental monitoring and controls in place, so it’s not as if the child can spend all their money on a whim.

🛈 Currently, SoFi only offers bank accounts to members 18 years old and above.

What Will I Need to Open a Bank Account?

Whether you plan to open a bank account online or in person, you can expect to be asked for identification and certain types of documentation. Most account applications are straightforward and easy to complete; still, you may save some time by confirming that you meet all the criteria for a particular type of account before you get started.

You may have to provide the following information and documents when you set up a bank account:

•   Government-issued photo identification, such as a valid driver’s license or passport

•   Social Security number or individual taxpayer identification number

•   Contact information, including your full name, address and phone number

•   Proof of address, such as a utility bill or some other type of official document with your current address (you can print an online statement if you’ve gone paperless)

•   Student bank accounts may require proof of school enrollment, such as a student ID or acceptance letter

•   Joint account holders should be ready to provide required documents for all parties named on the account

This can mean that you may need one or more of the following forms of ID for the child who will be on the account:

•   Social Security card

•   Birth certificate

•   Passport

•   School photo ID

•   Immunization record

In addition to the above items, a minimum deposit to open an account may be required as well.

Recommended: How to Open a Bank Account

What to Consider When Choosing a Bank Account

Your goals for the account and how much participation you want the child to have can help you decide between a savings account vs. a checking account and between a custodial account or joint account.

Some other things to keep in mind as you compare accounts include:

Access

If you and/or your child expect to make frequent deposits and withdrawals, you may want to be sure the account comes with access to a large ATM network, easy online banking, or a convenient branch location.

Account Minimums

Many banks and credit unions have minimum balance requirements for savings and checking accounts. If you and your child would struggle to meet that threshold, you may want to look for an account that has a low or no minimum balance requirement.

APY

Earning interest isn’t necessarily a top priority with a bank account, but every little bit helps. Learning how an annual percentage yield (APY) works and how interest is calculated can be a good teachable moment for kids. What’s more, watching their money grow can be educational and motivational for young savers.

Customer Support

Does the financial institution have a reputation for reliable and helpful customer service? This could be important if you have questions or need help with disputing a transaction.

Fees

Fees can quickly eat away at a teen’s hard-earned money, especially if they’re using a non-network ATM to make withdrawals. You may want to find accounts that offer no or low monthly fees, ATM fees, overdraft fees and non-sufficient funds (NSF) fees.

Online/Mobile Experience

Whether you prefer online vs. traditional banking, be sure to check out the financial institution’s web and mobile platforms. It’s likely both parent and child will be using these tools on a regular basis.

Parental Protections

Though having a checking or cash management account can be a big step toward financial independence, it can be wise to put some parental controls on a minor’s account. Many accounts allow parents to monitor their child’s transactions so they can offer timely guidance.

Security

Will the money in the account be insured by the FDIC or NCUA? Will your personal and financial information be protected from unauthorized access with two-factor or multi-factor authentication? If one of your reasons for using a bank account is to keep your money safe, these can be important questions to ask.

Recommended: Investing in Quality of Life

Opening a Checking Account vs Savings Account for a Minor

As you consider options for opening a bank account for a minor, you may be faced with the decision of whether to go with a checking or a savings account. Here are some key differences to be away of; they can help you find the right fit:

Checking Account for Minors

 Savings Account for Minors
Typically not interest-bearing Interest-bearing
Intended for daily spending Intended to accrue funds towards a goal
Comes with a debit card Usually doesn’t come with a debit card
Unlimited withdrawals Withdrawals may be only 6x per month
Has ATM access May not have ATM access
May involve fees May involve fees
Likely to be FDIC-insured Likely to be FDIC-insured

The Takeaway

Though there is likely a minimum age to open a bank account on your own (typically 18), minors can generally share a joint account with a parent or guardian until then. There are several types of accounts that kids and their parents might consider depending on their needs and goals, so it’s important to do a little research before choosing an account.

For example, you might want to prioritize the account’s APY if you hope to grow the money on deposit. But if the account is for daily spending, you might want to focus on low fees and easy access to a wide network of ATMs.

If you’re searching for a banking partner that offers all of those features, see what SoFi offers. Our Checking and Savings Account pays a competitive APY, charges no account fees, and provides access to a network of 55,000+ fee-free ATMs within the Allpoint Network.

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.

🛈 Currently, SoFi only offers bank accounts to members 18 years old and above.

FAQ

What is the youngest age to open a bank account?

In terms of at what age you can open a bank account, there’s no single rule. Typically, though, you must be age 18 or the age of majority in your state to have your own account. But, via joint accounts and custodial accounts, even younger individuals can have some banking privileges.

How do I open a bank account for a minor?

To open a bank account for a minor, you typically need various forms of identification, proof of residence, and an opening deposit. If the minor will share the account, they will need to provide identification as well.

Can a child get a debit card?

A child can get a debit card. On many of the joint accounts for minors, a debit card is part of the offering. You may find them for kids as young as age six. There are also some secured or prepaid debit cards for minors, some with no minimum age available.

Photo credit: iStock/Chaay_Tee

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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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