If you’re interested in pursuing a career in the tech industry, coding bootcamps can be a quicker, more affordable alternative to getting a traditional degree. However, these courses still require a significant amount of time, energy, and money.
Are coding bootcamps worth it? They can be. You’ll want to keep in mind, however, that bootcamps vary in terms of quality, so finding a good one can take some research. In addition, the skills you learn from a bootcamp may not be enough to land the type of job or career you want.
Read on for key things you need to know about coding bootcamps. Including what they are, how they work, and how much you may be able to earn when you graduate.
What is a Coding Bootcamp?
Coding bootcamps are short, intensive courses designed to provide in-depth training in software development fundamentals, and prepare students for entry-level jobs in the tech industry.
Many people consider bootcamps when pursuing a career change or looking for a shorter path into the tech industry, as they last about 15 weeks on average.
Bootcamps are conducted in both traditional classrooms and online, and are designed to accommodate students with little-to-no coding experience.
However, not all coding bootcamps are accredited schools. While some boot camps are affiliated with universities and, therefore, required to uphold the educational standards of the institution it is in partnership with, most coding bootcamps remain privately owned with educational standards that may not necessarily be governed by any scholarly entity.
Therefore, coding bootcamps, no matter how appealing, may not all produce the same quality of education or warrant any recognition outside of the tech industry.
The cost of coding bootcamp can vary widely, and will depend on the school, the length of the program, whether classes are in-person or online, and whether you study full or part time. However, on average, tuition for coding bootcamp can run around $10,800.
While that’s not nothing, it’s a lot less than the cost of a traditional undergraduate degree. According to the National Center for Education Statistics, the average annual tuition at a public university is $9,678 for in-state students and $27,091 for out-of-state students. The average annual tuition for a private institution is $38,768. If you pursue a four-year bachelor’s degree program, tuition can total anywhere from $38,712 to $155,072, depending on where you go.
Like colleges and universities, many coding bootcamps now offer a range of funding options, so you don’t necessarily have to pay the full cost up front and out of pocket. These may include:
• Scholarships: Some bootcamps offer scholarships for women, minorities, vets and even those experiencing hardships. You can often find out about scholarship opportunities by going to the tuition section of the bootcamp’s website.
• Loans: External loans, including private student loans, are a common way to cover the cost of bootcamp.
• VetTec/GI Bill: These military benefits provide veterans with tuition and fee assistance options. They currently only apply to a short, but growing, list of approved coding bootcamps.
• Deferred Tuition: This allows students to enter and complete a coding bootcamp without upfront payment. You are required to pay back your tuition costs only after securing a job.
• Income-Share Agreement (ISA): This is a wage-garnishment agreement between a bootcamp and a graduate. It generally specifies that once a graduate accepts a job, a portion of their income will be paid to the bootcamp for a specified length of time.
Is There a Stigma About Coding Bootcamps?
While coding bootcamps were once similar to Massive Open Online Courses (MOOCs) — virtual, often free or low-cost, classes notorious for their low completion rates — many of these programs are now highly respected by employers.
Unlike MOOCs, which are structured to teach hundreds of students at a time, utilizing a primarily hands-off teaching model, coding bootcamps typically rely heavily on instructor direction. Indeed, there may be more than one instructor assigned to each class, which is often no larger than 20 students.
Many programs are also highly intensive, requiring as much as 40 hours of weekly instruction. In addition, these programs tend to rely on project-based teaching methods that require students to immediately put their learnings into action.
However, there is no standardization for bootcamps, so all programs are not created equal. As a result, finding the right bootcamp can take a fair amount of time and effort.
If you are currently employed, it can be a good idea to talk to your supervisor or HR department about any bootcamps you are considering to get a sense of how the company views the program, and how completing the course could impact your career with the company. It’s also worth investigating if your employer offers a tuition reimbursement program that could help you cover the cost of bootcamp.
Completing any coding bootcamp should ultimately result in fluency in at least one coding language, such as Full Stack JavaScript, NET, Ruby on Rails, or Java. In addition, you will likely graduate with a portfolio of projects you completed during the course.
And because the goal of a bootcamp is to churn graduates directly into the tech industry, these programs often help graduates find, apply, and interview for industry positions.
Bootcamps generally don’t go much further than that, however. While starting salaries for coding bootcamp graduates average $69,000 a year, these programs may not provide all the education you need to succeed in a tech career.
Also, in some cases, coding skills aren’t enough on their own to land a job. Some employers, for example, may be looking for a broader set of skills in computer science or specialization in a certain field. Others may place high value on interpersonal or soft skills that allow you to work effectively in a team and communicate with coworkers.
Whether or not coding bootcamp is worth it depends on your career goals and the quality of the coding camp.
On the plus side, coding bootcamp generally costs a fraction of the cost of a typical college degree. At the same time, these programs allow you to gain in-demand skills in a relatively short period of time, and many also provide job search assistance.
However, coding bootcamp may not be a great choice if you are not sure that a tech career is right for you, or you don’t have the time, interest, and motivation to complete an intensive and demanding program. Also, if you are interested in a management career or moving beyond coding, you will likely need a traditional college degree.
Whatever education route you pursue, you will need to figure out how you will cover the cost of tuition and expenses. Fortunately there are numerous options, including scholarships, grants, work-study, tuition payment plans, and both federal and private student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
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If you’re interested in possibly refinancing your student loans, but you don’t think your credit history is strong enough, there are options that might help. One is to refinance student loans with a cosigner.
A cosigner could potentially help you qualify for a refinanced loan. But is taking out a new loan with a cosigner the right choice for you? There are pros and cons to carefully consider in order to decide if student loan refinance with a cosigner makes sense for your personal situation.
What Is a Cosigner on a Loan?
A cosigner is someone who legally agrees to pay your debt, such as your student loan debt, in the event that you can’t make payments yourself. The exact terms will vary based on the loan type and lender, but in general, this person signs your loan with you and accepts responsibility for your loan if you don’t make payments.
A cosigner can potentially be used for several different types of loans, from taking out a mortgage to borrowing for a car.
If you have private student loans, you might have needed a cosigner to qualify if your credit history was too new or not robust enough to qualify on your own.
Creditors review a variety of factors to determine whether or not they will give someone a loan. Things like a lot of existing debt or a low credit score can sometimes serve as an indicator to lenders that an individual could be a credit risk. Adding a cosigner could make a potential borrower appear less risky, since there’s another person (ideally one with a strong financial background) to help guarantee repayment of the loan.
If you can’t qualify for a loan based on your own credit history or current income, sometimes student loan refinancing with a cosigner who has a strong credit history could help improve your prospects.
You could ask a friend or relative to be a cosigner for refinancing student loans. Being a cosigner can be a hefty responsibility, so treat the request with respect, and perhaps plan to be open and honest about why you need to refinance student loans with a cosigner.
Pros and Cons of Having a Cosigner
Taking out a loan with a cosigner is a significant commitment, so it’s worth considering some pros and cons. What’s right for you will depend on your personal and financial situation.
One of the most notable benefits of refinancing with a cosigner is the potential to qualify for a loan that may not have been an option otherwise. A cosigner could also possibly help you qualify for a lower student loan interest rate than you otherwise may have received. If you have little to no credit history or bad credit, it could help to refinance student loans with a cosigner by giving you an opportunity to begin strengthening your credit.
On the flip side, there can be some cons to refinancing with a cosigner. If you fail to make payments on your loan, your cosigner will be responsible for repaying your debt. As a result, missed payments will likely reflect on both of your credit histories. This could also negatively impact your personal relationship with your cosigner.
In addition, there are pros and cons to the process of student loan refinancing. For instance, if you have federal student loans, refinancing makes them ineligible for federal benefits and protections such as income-driven repayment plans, loan forgiveness for public service, and deferment options. If you want or need access to these programs and benefits, refinancing won’t make sense for you.
Using a Cosigner when Refinancing Your Student Loans
When you’re refinancing your student loans, enlisting a friend or family member to cosign your refinanced loan could help strengthen your loan application.
If you’re trying to find a cosigner, you can start with the people you trust the most. Keep in mind that acting as a cosigner has risks — if you don’t pay back your loans, your cosigner is on the hook. It’s a big request, so take some time to think about how you’ll make it. Here are some tips that may help inform your conversation:
1. Asking respectfully. You’ll want to broach the subject thoughtfully and respectfully. You’re asking the person for a serious commitment, so asking with tact to show you understand the gravity of your request is crucial.
2. Showing your dedication. It’s also important to make it clear to your cosigner that you’re going to be making timely payments on the loan. One simple way to do so is by providing them with regular updates.
3. Illustrating to your cosigner that you understand the intricacies of your loan. They’ll be responsible for the loan if you fail to make payments, so they’ll likely want to make sure you understand the responsibility you’re taking on — and asking them to take on.
💡 Quick Tip: It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.
Things to Consider if You’re Asked to Cosign a Loan
If you’ve been asked to cosign a loan, be aware that serving as a cosigner can come with consequences for your finances if the primary borrower fails to make payments. If you’re a family member or friend with excellent credit and a well-paying job, you could be a candidate as a cosigner. If you have some hesitation, here are a few steps you can take:
1. Talking it out with the borrower. The borrower is going to use your name and credit history to take out a loan. It can be helpful to understand why they feel they need a cosigner while making sure they have the means to repay the loan.
2. Following up often. Keeping the lines of communication open so you are aware of any issues can be helpful for both parties. If need be, you could discuss making payments on their behalf to avoid the effect of a late or missed payment on your own credit score.
3. Accepting negative outcomes. Even if you’ve done everything you can to ensure the borrower is trustworthy, something might come up where they let you down. Your credit score might take a hit and you might be responsible for making payments yourself. Remember that this could happen, so accepting it as a possibility may be helpful.
Cosigning a loan is a big responsibility that can have implications on your financial future, so take some time to consider if there’s anything you’re not comfortable with.
If you decide not to cosign, you can let the requester down gently by trying to help them think of some alternative options to secure the loan or money they need.
Refinancing Student Loans With SoFi
If you’re interested in refinancing student loans but your credit isn’t strong enough, enlisting a trusted person with a strong financial background as a cosigner may help you qualify for a loan.
But remember: Refinancing federal student loans makes them ineligible for federal programs or borrower protections. If you think you may need these federal benefits, refinancing may not be right for you.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
Do I need a cosigner for student loan refinance?
The specific requirements for refinancing a loan with a cosigner will depend on your credit history and income (among other factors) and the eligibility requirements of the lender. Borrowers who have a less than stellar credit history may find adding a cosigner to their application allows them to qualify for a more competitive interest rate.
Can I consolidate my student loans with a cosigner?
If you are consolidating federal loans through the Direct Consolidation Loan program, you don’t need a cosigner.
Can a cosigner become the primary borrower?
In order for the cosigner to become a primary borrower, the loan would generally need to be refinanced.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
Can you pay off someone else’s loan? As a general rule, yes — so if you’re a student loan borrower and someone offers you assistance in paying off your loans, you may want to take them up on it. But it’s important to understand the implications. While a parent, grandparent, or even a mysterious benefactor could pay off your student loans, they may be responsible for a gift tax if they contribute more than the annual limit. The gift could also come with emotional strings attached.
Read on to learn about the tax implications of paying off someone else’s student loans — and how to repay your loans if the responsibility is all yours.
• If someone pays off your student loans, they may face a gift tax if the amount exceeds the annual IRS exclusion limit.
• Employers can contribute to your student loans without it counting as taxable income, up to a certain amount per year.
• Payments made by parents or others directly to the loan servicer do not count as taxable income for the recipient.
• Gift tax implications apply if a single individual gifts more than $17,000 in one year, but actual tax liability may depend on lifetime gift amounts.
• Financial planning is recommended for parents considering paying off a child’s student loans to ensure it doesn’t impact their retirement
Student Loan Repayment
For federal student loan borrowers, the end of the three-year pause on federal student loan payments has made repayment top of mind again. The resumption of federal student loan payments, which was part of the debt ceiling bill President Joe Biden signed into law in early June 2023, requires interest accrual to resume on September 1, 2023, and payments to resume on October 1, 2023. (Borrowers who held private loans did not have any uniform break in payments.)
Additionally, the President’s plan to forgive up to $20,000 in federal student loan debt was struck down by the Supreme Court in late June 2023. That means federal student loan borrowers no longer have that course of action.
The bottom line: If you have a student loan balance, it needs to be paid. If you have a cosigner — which may be the case if you have private student loans or federal PLUS Loans — then that person is legally responsible for repaying the loans if you are unable to do so. But if your student loans are solely in your name, you are responsible for repayment according to the outlined terms.
Getting Help From Your Employer
More employers are offering student loan repayment as a perk. Through CARES Act legislation, employers can contribute up to $5,250 per employee per year toward student loans without the payment counting toward the employee’s taxable income, through 2025.
💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing makes sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections.
Can Parents Pay Off Their Child’s Student Loans?
Yes they can. But can parents pay off student loans without a gift tax? It depends. If a parent is a cosigner, paying the student loans in full will not trigger a gift tax. In the mind of the IRS, the parent is not providing a gift but is paying off a debt.
However, if a parent is not a cosigner, a gift tax could be triggered, depending on how much they pay.
How the Gift Tax Works
The gift tax applies to the transfer of any type of property (including money), or the use of income from property, without expecting to receive something of at least equal value in return, the IRS says — adding that if you make an interest-free or reduced-interest loan, you may be making a gift.
There are some exceptions. Gifts between spouses aren’t included in the gift tax. That means if you are married and your spouse pays off your loans, that would not trigger a gift tax event. (The IRS includes lawfully married same-sex couples.)
Tuition paid directly to qualifying educational institutions in the United States or overseas is also not subject to gift tax. But student loans are different.
The annual exclusion for gifts is $17,000 in 2023. That means an individual can give you up to $17,000 without triggering the gift tax, which the givers, not receivers, generally pay. If your parents file taxes jointly, they would be able to give a combined $34,000 a year, which could include paying down loans. Borrowers who have the good fortune to snag $17,000 from Mom, Dad, Granddad, and Grandma could get a total of $68,000 without any family member having to file a gift tax return.
Note, though, that even a gift of more than $17,000 towards your student loans doesn’t mean that your generous benefactor is on the hook for paying a tax on their gift. The excess amount just gets added to the lifetime exclusion — currently set at $12.92 million. As long as the benefactor’s total lifetime gifts are below that amount, they don’t have to worry about paying a gift tax. Still, if bumping against that lifetime exclusion is a concern, they can spread out their support over the years to avoid gifting you more than $17,000 in a calendar year.
The upshot is that the main concern when it comes to helping children out with their student loans is probably not the gift tax, but whether the parent can afford it. It’s a good idea for parents to consider their retirement plans and test what-ifs before offering to pay their children’s student loans. Working with a financial planner may help parents find a path that works for them and their children.
It’s also not an all-or-nothing decision. Some parents choose to pay a portion of student loans or offer cash toward repayment in lieu of other gifts.
What Happens When Someone Pays Off Student Loans For You?
A person can pay off student loans for you in a couple of ways:
• Pay the lender directly
• Pay you, with the expectation you will pay the lender
But if someone pays off your debt, is that income? Once another person has paid off your student loans, it’s as if you had paid them off yourself. You would not have any tax liability.
Other Options to Pay Off Student Loans
Not everyone has a benefactor, of course. While someone taking your student loan balance down to zero can seem like a dream, there are realistic ways to ease the burden of student loans, no third party required.
These strategies include student loan consolidation, student loan refinancing, and in some cases, student loan forgiveness.
The one thing that won’t help: if you stop paying your student loans. Ignoring your student loan payments will result in an increased balance, additional fees, and a lower credit score.
If you hold federal student loans and stop paying them, part of your wages could be garnished, and your tax refund could be withheld. If you default on a private student loan, the lender might file a suit to collect from you.
In other words, coming up with a repayment plan is crucial.
💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.
“With debt it is important to remember that you can either pay now or pay later.” says Brian Walsh, CFP® “Repayment options that lower your payment now may be necessary, but typically mean that you will spend more money over the long-term. The exception here would be PSLF (public service loan forgiveness) which can provide reduced payments now and in the future. If you are eligible for PSLF, make sure to strongly consider it. If not, you need to decide if you will prioritize current payments or how much you pay back over the life of the loan. Assuming your focus is current payments you may consider an extended repayment plan, a graduated repayment plan, an income driven repayment plan (especially SAVE), or refinancing your debt.”
What Is Student Loan Consolidation?
If you have federal student loans, you may consider consolidation, or combining multiple loans into one federal loan. The interest rate is the weighted average of all the loans’ rates, rounded up to the nearest one-eighth of one percentage point.
Federal student loan consolidation via a Direct Consolidation Loan can lower your monthly payment by giving you up to 30 years to repay your loans. It can also streamline payment processing.
Consolidating federal loans other than Direct Loans may give borrowers access to programs they might not otherwise be eligible for, including additional income-driven repayment plan options and Public Service Loan Forgiveness.
What Is Student Loan Forgiveness?
Although President Biden’s federal forgiveness program was blocked by the Supreme Court, there are still several paths toward student loan forgiveness for federal student loan holders. They include:
• Income-based repayment. Federal income-driven repayment plans promise loan forgiveness after a certain amount of time, depending on the plan.
For instance, under President Biden’s new SAVE Plan, which is based on income and family size, qualifying federal student loan borrowers with undergraduate federal loans can get their monthly payments reduced by half — from 10% to 5% of their discretionary income. And after 10 to 20 years of making payments (the number of years depends on how big their original student loan balance was), the remainder of what they owe will be forgiven.
• Public Student Loan Forgiveness: This federal program was designed to help graduates working in public service have any remaining loan balance forgiven if they meet criteria that include working for a qualifying organization and making 10 years’ worth of payments.
• Disability discharge: Some people may have their loans forgiven because of total and permanent disability.
What about bankruptcy? It’s extremely difficult to have student loans discharged through bankruptcy.
What Is Student Loan Refinancing?
With student loan refinancing, a borrower takes on one new, private student loan to pay off previous federal and/or private student loans. Ideally, the goal is a lower interest rate. The repayment term might also change.
However, there is a very important caveat for those with federal student loans: Refinancing those federal loans means that borrowers will no longer be eligible for federal repayment plans, forgiveness programs, and other benefits. If a borrower needs access to those programs, student loan refinancing won’t make sense.
But for borrowers who have no plans to use the federal programs, a lower rate could make refinancing worthwhile. Using a student loan refinancing calculator can help a borrower see how much money they might save by refinancing one or all of their loans.
Refinancing Student Loans With SoFi
Even if your parents, grandparents, or others in your life are not in a position to pay off your student loans for you, understanding your options for potentially lowering your monthly payments or saving money over the life of a loan can give you multiple avenues to explore as you work toward taking control of your finances.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
Can I pay off my child’s student loans?
Yes, you can pay off your child’s student loans. But, depending on the amount, there may be tax implications.
Is paying off a child’s student loans considered a gift?
Yes. Paying student loans for someone else is considered a gift and would incur a gift tax for any gift above $17,000, which is the gift exclusion cutoff for 2023.
That means both parents can contribute $34,000 per calendar year toward their child’s student loans without owing gift tax.
Can I pay off my sibling’s student loans?
Yes. You can absolutely win sibling of the year and pay off your sibling’s student loans. Just know that any gift above $17,000 in 2023 will trigger a gift tax that you will be responsible for paying.
Photo credit: iStock/Halfpoint
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.
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.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
Single parents typically carry a lot of weight on their shoulders, paying for their child’s food, clothes, medical care, after-school programs, and more.
It can be challenging to make ends meet and avoid credit card debt. Saving for the future (including college) can be difficult.
But that doesn’t mean it’s impossible. There are smart strategies that help make it possible for single moms and dads and their kids to thrive. Establishing a basic budget, knowing how to handle taxes, and whittling down debt can all play a part in boosting your financial wealth.
Here, learn some important financial moves for single parents.
9 Ways to Budget As a Single Parent
Setting up a simple budget can be a smart move for a single parent. It can help you take control of your cash and also make your money work harder for you.
1. Crunching the Numbers and Creating a Single Parent Budget
A great way to get a better financial path is to first figure out where you currently stand and come up with a monthly budget.
How to budget as a single mom or dad is similar to what anyone else would do. You can do this by gathering your financial statements for the past several months, then using them to figure out your average monthly income (after taxes), including any child support or alimony you receive.
Next, you can tally up your fixed expenses (monthly bills) and variable expenses (clothing, food, entertainment) to see how much, on average, you are spending each month.
Ideally, you want your monthly inflow to be larger than the outflow — that way, you have money left over for savings and paying off debt. One smart technique can be the 50/30/20 budget rule, which divides your income into three parts: 50% for needs, 30% for wants, and 20% for savings and paying off debt beyond the minimum.
If your current income isn’t high enough to make that work, you can re-jigger the percentages and come up with a spending and saving plan that works for you.
If you find yourself breaking even or, worse, going backwards each month, you may next want to look hard at your list of expenses and start searching for ways to save money.
A key single parent budgeting move is to hone in on your recurring bills to see if there are any ways to lower them. You may now be living on a single income, which can involve some lifestyle tweaks. You might be able to switch to a cheaper cell phone, for example. Or, maybe you can find a better deal on car insurance or ditch your cable subscription.
You can also look for ways to cut everyday spending, such as breaking a morning coffee shop habit, cooking more often and getting less take-out, and using coupons (say, via RetailMeNot or Coupons.com) whenever you shop.
💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.
3. Opening an Interest-Bearing Account
Once you start freeing up some money each month, it can be a good idea to start siphoning it off into a high-yield savings account. This can help you create some financial security for your family, as well as help you reach short-term goals, like going on a vacation or putting a downpayment on a home.
Even if you can only afford to set aside $25 or $50 per month, it will begin to add up.
Some good places to stash cash you may need in the next two or three years include a high-yield savings account, an online savings account, or a checking and savings account. These accounts typically earn more interest than a standard savings account, yet allow you to have easy access to your money when you need it.
You may want to keep an eye out for fees, and shop around for financial institutions that won’t charge you monthly and other account fees (which can take a bite out of your hard-earned savings).
Get up to $300 when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 4.00% APY on savings balances.
Up to 2-day-early paycheck.
Up to $2M of additional FDIC insurance.
4. Prioritizing Emergency Savings
Expensive problems you can’t plan for often come up, like a car or home repair, taking a child to urgent care, or a sudden loss of income. Without a cushion, small money problems can quickly balloon into big ones if you are forced to run up high interest credit card debt to deal with them.
As you start building savings as part of your monthly single parent budget, it can be wise to prioritize emergency savings. Experts often recommend having at least three- to six-months worth of living expenses stashed away in a separate savings account where you won’t be tempted to spend it. That way it’s there when you need it.
5. Paying Off Your Credit Cards
A debt elimination plan can make a significant change in your monthly cash flow. When creating a budget for a single mom (or dad), it can be a good idea to leave room for credit card payments that are higher than the minimum.
You may want to start with the debt that has the highest interest first since borrowing from those creditors is costing you the most money. However, if you’re likely to get discouraged because it’s taking a long time to pay off that debt, you can start with the lowest balance debt. Getting some small debts paid off may motivate you to keep going.
Whatever debt you target, you can then pay more than the minimum payment on that debt while continuing to pay the minimum on others, with the goal to eliminate them one by one.
Another option: personal loans for single moms can help pay off the debt and substitute a lower-interest payment for what you were paying the credit card company. This may be an avenue to explore.
6. Planning for the Future
Once you’ve mastered your day-to-day finances, you may want to look toward your two big long-term financial security goals: retirement and your children’s college education.
If you can’t comfortably save for both at the same time, you may want to begin with retirement. While your kids can likely get loans for college, there aren’t loans for retirement.
You may want to start by contributing to any employer-sponsored 401(k) plan. If your employer is matching contributions, it can be a good idea to chip in at least enough to get the match (otherwise you’re turning away free money!). Or you can set up an IRA; even $25 or $50 a month at first is a start.
When you’re in the habit of regularly contributing to a retirement savings account, you may want to turn your attention to saving for college: An ESA (education savings account) or 529 college savings fund can help you save towards college expenses while getting a tax break.
💡 Quick Tip: Want a simple way to save more each month? Grow your personal savings by opening an online savings account. SoFi offers high-interest savings accounts with no account fees. Open your savings account today!
7. Automating Your Finances
As a single parent, you may be super busy, making it easy to pay bills late simply because you forgot. Automating your finances can simplify your budget (and your life) and help ensure you don’t get slapped with expensive fees or interest charges for being late with payments.
A good place to start is to set up autopay for all your recurring bills, either through your service providers or your bank. This way you don’t have to stay on top of due dates and remember to make every payment.
Automating can also be a great idea when it comes to saving. Often referred to as “paying yourself first,” you may want to set up an automatic transfer of money from your checking to your savings account on the same day each month, perhaps right after your paycheck gets deposited. This prevents you from spending those dollars or having to remember to transfer the funds to your savings at a later time.
8. Increasing Your Income
If your budget is super tight even after cutting expenses, then you may want to find ways to increase your income. This can help take a lot of the stress off budgeting as a single mom or dad.
There are many ways you can increase your income. For starters, if you’ve been at your job for a while and are performing well, you may want to consider asking for a raise. It can be helpful to research what the industry average pay is for your position with your experience to get an idea of how much you should ask for.
Another way to increase your income is to start a side hustle, like walking dogs, becoming a virtual assistant, taking on freelance work in your profession, selling your crafts, becoming a tutor, caring for other people’s kids, or offering music lessons.
9. Taking Advantage of Tax Breaks
Tax credits for single vs. married people can vary. When you’re budgeting as a single mom or dad, it can be smart to be aware of all the tax benefits you may be entitled to. A tax credit is directly subtracted from the amount you owe in taxes, while an exemption means that amount is deducted from your total income before your taxes are calculated.
Here are few tax benefits that may be worth investigating:
• Filing as “Head of Household” instead of “Single.” If you meet the requirements, you may be able to get a higher standard deduction.
• The child tax credit. If you share equal custody with your child’s other parent, only one of you can claim this. You may want to consider alternating years.
• The earned income tax credit. Single working parents with low to moderate incomes often qualify.
• The child and dependent care credit. If you’ve been paying for childcare so that you can work (or look for work), you may be entitled to this. But only one parent can claim it each year.
The Takeaway
Budgeting as a single mom or dad can be challenging. With some simple financial planning, however, you can start to feel less stressed about money and get closer to both your short- and long-term goals.
Key steps for single moms and dads include taking a close look at your monthly cash flow, trimming expenses, paying off your credit cards, taking advantage of tax benefits for parents, and saving a little each month to create financial security. If you’re looking for a simple way to stay on top of your single parent budget, you may want to consider if you have the right banking partner.
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 4.00% APY on SoFi Checking and Savings.
FAQ
How do single parents survive financially?
Single parents can survive financially by taking control of their money and budgeting, managing expenses, building up an emergency fund and savings, and minimizing debt. Budgeting for single moms and dads is important since you are likely the only income stream so every dollar counts.
How can a single parent afford everything?
To afford everything (meaning all the expenses related to raising a child), single parents can budget wisely, seek child support, bring in additional income, and seek government assistance if needed.
How much should a single parent have in savings?
It’s important for single parents to have an emergency with a minimum of three to six months’ worth of living expenses set aside. This can help if there’s an unexpected medical or car repair bill or if you are laid off; since you don’t have another income in the family, this is a very important move. Beyond that, experts recommend saving 20% of your salary if possible.
SoFi members with direct deposit activity can earn 4.00% 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 4.00% 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 4.00% 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 12/3/24. 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.
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.
Some of the best things in life are worth saving for, from an incredible vacation in Asia to the down payment on your dream house. A long-term savings account can keep your money safe and pay interest as you accumulate funds over time. This is in comparison to, say, a checking account which may have money constantly flowing in and out.
Long-term savings accounts can help you reach goals that take at least a few years or possibly decades to attain. They may be a savings account at a financial institution, a certificate of deposit (CD), a retirement fund, or other financial products.
Here, you’ll learn more about these options, including:
• What are long-term savings accounts
• What are the pros and cons of long-term savings accounts
• What types of accounts are considered long-term savings accounts
Pros and Cons of Long-Term Savings Accounts
If you are wondering about long-term savings, consider the potential upsides and downsides of this kind of account.
Pros of Long-Term Savings Accounts
Here are some benefits of long-term savings accounts:
• Your money makes money. Compounding interest turbocharges the impact.
• Your money is safe. Look for an account that’s insured by the Federal Deposit Insurance Corporation, or FDIC, or NCUA (The National Credit Union Administration), and you’ll be covered for $250,000 per depositor, per insured bank, for every account ownership category. Some financial institutions may offer ways to cover even larger amounts.
• Savings accounts are widely available and typically very easy to open.
Cons of Long-Term Savings Accounts
As you might expect, there are also some disadvantages to long-term savings accounts. These include:
• Relatively low interest rates. If you have your money in a traditional savings account, you may not earn that much. You might do better with a high-interest savings account or investing in the market.
• There’s no tax advantage to putting your money in a savings account, while some retirement accounts may offer you an advantage on that front.
• Restrictions and fees. Some savings accounts may limit you to six withdrawal transactions per month, and there’s a possibility that you’ll pay minimum balance or other charges.
💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.
4 Long-Term Savings Options
While savings accounts are one popular way to stash cash, they aren’t the only game in town. Here are five options, along with some pros and cons of each of them.
1. High-Interest Savings Accounts
This type of savings account can provide considerably higher interest rates than the average savings account.
You may hear it referred to as a high-interest, high-yield, premium, or growth savings account.
It’s generally just as easy to access a high-interest savings account as it is a standard checking account, although there may be limits on the number of withdrawals you can make per month with this type of savings account. They often offer ATM access, sometimes with fee reimbursement, mobile check deposit, and online account management via an app.
Financial institutions that offer these accounts include regional banks and local credit unions; online savings accounts will also often offer these benefits.
To open and maintain this type of account, there are often certain requirements that need to be met. This could include setting up a direct deposit, maintaining a minimum balance, or limiting the number of withdrawals per month. Some high-interest savings accounts also offer tiered interest rates for different balance ranges. For instance, a bank might offer a base tier on balances up to $25,000, and an upper tier with a higher rate on balances greater than $25,000.
One item to check for in the fine print: the balance cap on interest earned. If that’s included, this means that there’s a limit to the balance on which interest can be earned. For example, if the interest rate is 4%, but the balance cap is at $2,500, then the interest rate is only earned on money up to the cap. Any amount above the balance cap will not earn a high interest rate.
Earn up to 4.00% 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.
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2. Money Market Accounts
A money market account is similar to a high-interest savings account, but it will likely have more requirements for keeping it open. For example, some accounts require initial deposit minimums, and a certain minimum balance may be required to prevent monthly fees from being charged.
With both high-interest savings accounts and money market accounts, funds can typically be deposited and withdrawn fairly easily.
3. Certificates of Deposit
A certificate of deposit (CD) is a deposit account that typically offers higher interest rates than a regular savings account and pays compounding interest. In other words, interest is paid on the interest.
One challenge with a CD, though, is that it’s a time deposit. You’ll usually know the interest rate in advance, but you must agree to keep the funds in the account for a predetermined amount of time. (The range is often from a few months to several years.) So this may not provide the liquidity — the ability to quickly turn the account into cash — that some people want and need. If funds are withdrawn before the maturity date, a penalty will likely be assessed.
Interest rates on CDs are typically structured in tiers, based upon how long a person agrees to keep the money in the account. A short-term vs. long-term CD will probably pay a lower interest rate. A six-month CD, for instance, will likely pay a bit less in interest than a two-year CD.
4. Retirement Accounts
Retirement accounts have one thing in common: they are investment vehicles designed to help people save for their post-working years. They typically have tax advantages. Here are three of the types.
1. Traditional Individual Retirement Accounts (IRAs)
The account holder opens this account and makes contributions on their own instead of through an employer. There may be an income tax deduction allowed on contributions made, and the funds are tax-deferred, meaning the contributions aren’t taxed but the withdrawals are. For tax year 2023, the maximum allowable contribution amount is $6,500 annually or $7,500 if age 50 or older. If funds are withdrawn before the account holder is 59 and a half, there is a 10% penalty levied on the amount withdrawn in addition to the usual tax on the withdrawal.
Contribution limits and how much is tax-deductible will depend upon factors such as whether you are filing singly or jointly, how much you earn (your modified adjusted gross income, or MAGI), and whether you are covered by a retirement plan at work.
2. Roth IRA
A Roth IRA is another type of individual retirement account that a person opens and funds without the involvement of an employer, this time using after-tax money to contribute. This means that account holders cannot deduct contributions on their income tax. However, the balance grows tax-free, and when funds are withdrawn during retirement, they are also tax-free. Annual contribution caps are the same as a traditional IRA.
To contribute to a Roth, the account holder must be earning an income. Once that person’s MAGI reaches a certain level — for the 2023 tax year, this is $153,000 — then the ability to continue to contribute will begin to phase out. If the account holder is filing joint federal income taxes, then the amount is $228,000 for the 2023 tax year.
As noted above, the maximum total annual contribution to all your IRAs when combined is $6,500 for those under age 50 in tax year 2023; $7,500 if you are 50 or older.
This type of account is typically best for someone who appreciates the ability to withdraw funds in retirement without paying taxes, and a Roth IRA can work especially well for people currently earning a lower income than they expect to earn in the future.
3. 401(k) Retirement Account
What is a 401(k)? It’s a retirement plan offered by an employer to qualifying employees. Contributions are made with pre-tax money, which means they will reduce the person’s taxable income. The money grows tax-free, with taxes paid when funds are withdrawn in retirement.
For the 2023 tax year, the maximum annual contribution amount is $22,500; an additional catch-up contribution of up to $7,500 can be made by account holders over the age of 50. These contributions are taken from the employee’s paycheck, and some companies provide matching funds up to a certain amount. Sometimes these accounts have fees that must be paid.
Although these are not the only kinds of retirement accounts available, they are among those most commonly used.
💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.
Long-Term Financial Goals
By setting long-term financial goals, people can create a plan for a more comfortable future and make a commitment to stay on track with savings goals. The reality is that, according to a recent survey, 37% of Americans have no retirement savings at all.
Creating a long-term financial plan and focusing on that plan can help people reach money goals. Keeping cash in a savings account long-term can help you reach those aspirations.
Steps include setting goals with these five components:
• Clarity
• Challenge
• Commitment
• Complexity
• Feedback
These components are included in “A Theory of Goal Setting and Task Performance,” published by Edwin Locke and Gary Latham.
• First, be clear about what, specifically, you want to accomplish — and don’t be afraid to dream big.
• What challenges might you face? Break your goals into smaller parts to simplify the journey.
• Prioritize them and make a commitment to follow shorter-term goals, one step at a time, which also helps to gain momentum on the longer-term ones.
• The excitement that may be felt about this process can help to solidify a sense of commitment.
• For some people, it can help to partner with another person and share goals, keeping one another accountable. Or perhaps a mentor can be helpful. Other people may find it more effective to reward themselves when certain goals are met. Whichever method is chosen, it typically works best when progress is regularly reviewed and adjusted, as needed.
Emergency Savings Account
Although saving for long-term goals is wise, it can make sense to prioritize creating an emergency fund if one doesn’t already exist. It’s usually wise to choose an account type that offers liquidity because this is one where you’ll want quick access if an emergency occurs.
A typical recommendation is to keep three to six months’ worth of living expenses in this account. That way, if someone in the household loses a job, an emergency home repair seems to come out of nowhere, or medical bills need to be paid, money in these funds can help to keep all on track or at least mitigate the impact of the expenses.
Opening a Savings Account With SoFi
If using separate savings accounts for different financial goals isn’t something you want or need to do, consider using one main account that lets you save for your financial goals, spend money, and earn money. You might want to take a closer look at what SoFi offers.
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 4.00% APY on SoFi Checking and Savings.
FAQ
What type of account is best for long-term savings?
If you are interested in a highly liquid account that is insured, you might look for a high-yield savings account. These are typically found at online banks and can offer significantly higher interest rates than traditional banks.
What is a long-term savings account called?
You may see different terms used for long-term savings accounts, such as high-yield, high-interest, and premium savings.
What is considered long-term savings?
Long-term savings are typically money that is being set aside for a goal that is at least several years or possibly a few decades away. If you are starting to save for the down payment on a house, your child’s college education, or your retirement, those might be considered long-term goals.
SoFi members with direct deposit activity can earn 4.00% 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 4.00% 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 4.00% 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 12/3/24. 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.
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.
