SoFi

The inflation rate doesn’t directly affect mortgage rates, but the two tend to move in tandem. Rising inflation shrinks purchasing power as prices of goods and services increase. Higher prices can then influence the Federal Reserve’s interest rate policy, affecting the cost of borrowing for lending products like mortgages. Then, as inflation cools, mortgage interest rates often ease as well.

What Is Inflation?

To understand how inflation and mortgage loan rates are connected, it helps to first understand what inflation is in the first place: a general increase in prices and a related drop in the purchasing value of your hard-earned money.

When prices rise but paychecks remain steady, people feel the pinch of inflation. The Federal Reserve, the central bank of the United States, tracks inflation rates and trends using several key metrics, including the Consumer Price Index (CPI), to determine how to direct monetary policy. A target inflation rate of 2% is considered ideal for maintaining a stable economic environment over the long run, and in 2024, many borrowers were relieved to see the inflation rate — which trended upward in 2022 — ebb. By the end of 2024, it had come close to the target goal.

Types of Inflation

Several factors may cause inflation. Supply and demand play a large role in how prices rise.

Supply

In supply-side inflation, also known as cost-push inflation, prices rise due to supply challenges. When the cost of labor or raw materials used to make a product increases, prices often follow. Homeowners saw this during the COVID-19 pandemic when building materials were in short supply and renovation projects became much more expensive. More recently, talk of tariffs on imports from China, Mexico, and Canada has caused economists to warn of inflation.

Demand

Demand-pull inflation happens when there is increased demand for a product or service. Sometimes this is a natural outgrowth of demographic patterns, such as when a large population group moves into a new lifestage. Anyone in the home-buying market can relate to this: When there are lots of homebuyers and limited inventory of properties for purchase, sellers can command higher prices.

Inflation Spiral

An inflation spiral — also known as a wage-price spiral — happens when wages rise in reaction to price increases. Increased wages in turn cause elevated demand for goods and services. It can be hard for economic policymakers to break this back-and-forth pattern.

How Are Inflation Rates Related to Interest Rates?

Once you understand the basics of inflation, you might wonder: What does all this have to do with interest rates on a home mortgage? As we’ve said, inflation rates don’t have a direct impact on mortgage rates, but there can be indirect effects because of how inflation influences the economy and the Federal Reserve’s monetary policy decisions.

The Federal Reserve does not set mortgage rates. Instead, the central bank sets the federal funds rate target, the interest rate that banks use when they lend money to one another overnight. A Fed increase in this short-term interest rate often pushes up long-term interest rates for U.S. Treasuries.

Fixed-rate mortgages are tied to the yield on those 10-year U.S. Treasury notes, which are government-issued bonds that mature in a decade. When the 10-year Treasury yield increases, the 30-year mortgage rate tends to do the same.

So in terms of what affects fixed-rate mortgage rates, movement in the 10-year Treasury yield is the short answer. Higher yields can mean higher rates, while lower yields can lead to lower rates. But overall, inflation rates, interest rates, and the economic environment can work together to sway mortgage rates at any given time.

Higher rates can make borrowing more expensive while also providing more interest to savers. People borrowing less and saving more can have a cooling effect on the economy. When the economy is slowing down too much, however, the Fed may lower interest rates to encourage borrowing and spending.

If you track the average 30-year fixed-rate mortgage rate and the average annual inflation rate, you’ll see that the percentages often move more or less in concert. Here’s a look at the past 22 years and some key dramatic years before that.

Inflation Trends for 2025

In September 2022, the U.S. inflation rate hit 8.2%, well beyond the Federal Reserve’s 2% target inflation rate. While prices for consumer goods and services were up almost across the board, the most significant increases were in the energy category. Many consumers noticed inflation because of increased food prices: In the year ending August 2022, prices for food at home increased 13.5%, the largest 12-month percentage increase since the year ending March 1979. Prices for food away from home increased 8%.

Rising inflation rates in 2021 and 2022 are thought to have been driven by a combination of increased demand for goods and services, shortages on the supply side, and higher commodity prices due to geopolitical conflicts. The Federal Reserve responded by raising interest rates — 11 times between March 2022 and October 2023. Mortgage interest rates also trended north to 7.00%. But the Fed’s measures appear to have had the desired result, putting the brakes on inflation, although it remained above the target. By early 2024, inflation seemed to be moderating when compared to recent years.

Recommended: Understanding the Different Types of Mortgage Loans

Is Now a Good Time for a Mortgage or Refi?

There’s a link between inflation rates and mortgage rates. But what does all of this mean for homebuyers or homeowners? Although interest rates have remained stubbornly between 6.00% and 7.00% for the last couple years, mortgage rates are still below average when viewed through a historical lens. Moreover, the latest market research predictions in early 2025 indicate that mortgage rates may hover around an average of 6.50% in 2025 and drop only marginally in 2026. So if you are thinking about a refi or home purchase, it pays to take that forecast into account.

If you can get a reasonable mortgage rate, buying now with a fixed-rate mortgage could help you lock in that deal. Going with an adjustable-rate mortgage could allow borrowers to benefit from future rate drops, though if interest rates rise, an adjustable rate would follow.

If you own a home and are considering refinancing your existing mortgage, the math gets a bit trickier. You would be wise to determine your break-even point — when the money you save on interest payments matches what you’ll spend on closing costs for a refinance.

To find the break-even point on a refi, divide the closing costs by the monthly savings. If refinancing fees total $3,000 and you’ll save $250 a month, that’s 3,000 divided by 250, or 12. That means it’ll take 12 months to recoup the cost of refinancing.

If you refinance to a shorter-term mortgage, your savings can multiply beyond the break-even point. A shorter term means you will pay less interest over the life of the loan, although monthly payment amounts will be higher than they would be for a 30-year loan.
Keep in mind that the actual rate you’ll pay for a purchase loan or refinance loan will depend on things like your credit score, income, and debt-to-income ratio.

💡 Quick Tip: Lowering your monthly payments with a mortgage refinance from SoFi can help you find money to pay down other debt, build your rainy-day fund, or put more into your 401(k).

The Takeaway

Inflation abated somewhat by the end of 2024, but 2025 presents some unknowns. Homebuyers can likely expect continued variation in interest rates. It’s true that buying a home or refinancing when mortgage rates are lower could mean substantial savings over the life of your loan. But if you’re ready to buy and your finances are in good shape, it doesn’t make sense to wait for slight changes in interest rates — if you’re ready to own your own home, the time is right for you.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What effect does inflation have on interest rates and why?

If inflation rises, interest rates typically follow. The opposite is also true (when inflation ebbs, interest rates usually fall).

Does inflation affect fixed-rate mortgages?

Inflation will not affect the amount of your monthly payment if you have a fixed-rate mortgage because your interest rate remains steady over the life of your loan. Your overall budget may feel tighter when prices of things like groceries and gas rise, but your actual mortgage payment will stay the same.

Does inflation affect adjustable-rate mortgages?

Inflation may have an impact on your monthly mortgage payment if you have an adjustable-rate mortgage. With this type of mortgage, your interest rate usually adjusts every 6 months or every year (after an initial rate period which might be 5, 7, or 10 years, for example). How much the rate can change will depend on your loan agreement.

Does inflation affect housing prices?

Inflation generally means an upward trend in housing prices, in part due to the rising cost of building or refurbishing a home. But this is not always the case. Sometimes the high overall cost of goods and services leads would-be homebuyers to stay out of the market. Less demand might lead to a drop in home prices. Over decades, however, home prices have increased at a rate greater than the rate of inflation.

Photo credit: iStock/Max Zolotukhin

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 Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

SOHL-Q125-065

Checks may not be used as often as they were in the past, but they’re still a useful financial tool to have around. You may need to write a check when making a large payment, gifting money, making a charitable donation, or even paying rent. A voided check can also come in handy when setting up direct deposit at work.

Often, when you open a checking account, you receive a book of complimentary checks to get you started. Sooner or later, however, you are likely to run out and need some additional checks. When that happens, how do you order a new checkbook? Should you order through your bank? Or is there a faster, cheaper option elsewhere?

What Are the Different Types of Checks?

There isn’t just one kind of check in the world. Get acquainted with these four common options that can play a role in managing your money.

Personal Checks

When people wonder about how to order checks, they are typically referring to personal checks. These are the rectangular documents you usually get when you open a checking account. They allow you to transfer funds from your account to a payee, whether that’s your cousin, your WiFi provider, or your dentist.

When you first open an account, you may get a small number of what are called counter checks, which may not be fully personalized with, say, your name and address.

Later, your fully printed checks are likely to arrive, complete with your name, address, account number, and bank routing number. These checks are not only useful for making payments, but also for setting up direct deposit. A voided check can be used by your employer to route your paycheck to the correct account.

Business Checks

What’s the difference between a business check vs. a personal check? Business checks are similar to personal checks, but are drawn from a business checking account instead of a personal one. If you run your own business, you might use these checks to, say, pay for your office rent or send funds to suppliers.

Cashier’s Checks

Sometimes also called a bank check or official check, this is a secure payment used to make significant purchases.

A cashier’s check requires a teller to withdraw funds from your personal account and then cut a check from the bank to pay the recipient on your behalf.

With these checks, the bank is guaranteeing payment, so there is no chance the check will bounce. There is typically a fee for getting a cashier’s check, often around $10 or $15.

Certified Check

A certified check is a type of personal check that the bank guarantees. When you write the check, the bank verifies you have enough money in your checking account to cover the amount and may place a hold on that money until the check clears.

The bank will typically then stamp or print “certified” on the check. Fees vary depending on which bank you use and the size of the check, but are often in the $15 to $20 range.

Recommended: What Is an Electronic Check (E-Check)?

Reasons Why Checks Are Used Today

In a tap and app world, checks may seem like a byproduct of a past era. Some transactions, however, still require a check. It’s not uncommon, for instance, for some landlords to require a check for a security deposit or for some smaller businesses to prefer cash or check payment.

Here are some of the reasons why checkbooks can still be useful and even a preferred payment form:

•   Checks can protect your money. A transfer can be misdirected with a typo, and cash can get lost or stolen. A check made out to the recipient is challenging to cash if it gets into the wrong hands.

•   If a check is lost, you can stop payment on the check and reissue a new one.

•   A check provides a paper record of payments made.

•   Checks can also be a way to verify identity. A voided check (a check you pull from your checkbook and write VOID so no one can cash it) can be necessary to set up autopay or direct deposit, or as a way to verify your address for certain services. (While you can use a check with an old address, it may cause confusion and can be wise to order a checkbook of new, updated ones.)

Of course, checks have their drawbacks too.

•   There can be a significant delay between the day you write a check and the day it gets processed, which could cause you to accidentally overdraw your account if you don’t keep careful records.

•   Checks can sometimes get lost in transit or stolen. Since a check is good for six months, it can be a smart idea to cancel any checks that don’t get to the intended recipient in a timely fashion.

•   Checks can also come with fees (such as when cashing a check) and other costs (like having to buy checks).

Fortunately, there are ways to cash a check without a fee. And, if you look beyond your bank when it comes to re-ordering checks, you can often pay significantly less.

Where Can I Order Checks?

Many people will order checks through their bank simply because it’s convenient. Traditional banks will often charge $30 or more per box, though they may be less or even free if you are a premium account holder.

However, you don’t have to buy your checks at your bank. There are numerous online vendors, such as Checks In The Mail and Carousel Checks, as well as big box retailers (such as Costco and Walmart) that offer customized personal checks that include the same security features as bank checks.

Prices range from around 10 to 34 cents per check, and minimum orders might be anywhere from 80 to 200 checks.

But how do you order checks from the best vendor? Because you need to input sensitive information, such as your bank account number and the routing information for your bank, it can be a good idea to make sure you choose a vendor that takes security measures seriously and also that the checks you buy are secure.

Some actions that can help maximize security:

•   Making sure the site where you buy checks is secure. A lock image in the address bar of your browser indicates a secure connection and that any information transmitted, such as your bank account info, will be done in a secure manner.

•   Choosing a reputable seller. It can be a good idea to vet any company you are considering buying checks from by taking a look at their Better Business Bureau ratings and reviews.

•   Considering security features. Some check printing companies offer enhanced security features, including watermarks, hard-to-copy microprint, hologram foil, and thermochromic ink (ink that disappears with heat). These features can add to the cost of your checks, but they can make your check payments even more secure.

What You Need for Ordering Checks Online

When you’re wondering “How do I order checks online?” it can be wise to have some key information ready to complete your transaction. This typically includes:

•   Your personal information. This is your name (or the name of your company for business checks) and address.

•   Bank information. This includes the name and address of your bank, which you can find on your existing checks.

•   Your checking account number. You can find this at the bottom of your existing checks or on your bank statement. Of the three listed numbers along the bottom of your check, your account number will be the second number from the left.

•   Your bank routing number. Also known as an ABA number, this number serves as an address so the banking system knows which bank will pay the check. You’ll want to look for the nine-digit number on the bottom left of your checks.

•   Check number. To keep your finances organized, it’s a good idea to have your new checks start with the next number in your checkbook series. For instance, if the last check in your last checkbook is 199, consider starting the new set with check number 200.

When ordering checks, you may want to keep in mind that, depending on the company, production time may take a few weeks. That’s why it can be a good idea to order checks well before you may need them.

Recommended: What Is a Voucher Check?

The Takeaway

If you’re like many Americans, you probably don’t use checks often these days. But checks are still with us, and it can be a good idea to always have checks on hand for those times when you need or want to pay by check.

Buying checks from the bank can be pricey though. Fortunately, it’s fine to search the web for cheaper options, provided you take some security precautions. Another option is to open an account with a bank that doesn’t charge for paper checks.

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

FAQ

Can you print checks by yourself?

It is possible and legal to print checks at home. However, you will need the tools to do so. This includes: a printer, software to format the checks properly, special paper (known as check stock paper) with security features, a magnetic ink character-recognition font (for the numbers at the bottom of the checks in a way that can be read electronically), and magnetic ink.

How much does it cost to order checkbooks?

When you order additional checkbooks from a bank, a box of 100 may cost $30 or more. Some banks and premium accounts will lower or even eliminate that fee. When you order from check companies or mass merchants, the per-check price can range from ten cents to more than 30 cents per check, with minimum orders typically starting at 80 or 120 checks.

Do I have to order checks through my bank?

You do not have to order checks through your bank. If you want to, you may order from online check companies or merchants like Costco and Walmart.

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

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

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

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

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

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

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q125-010

As anyone who has ever watched their bank account balance decline after paying bills knows, owing money is no fun. But debt often serves an important function in people’s lives, putting things that can cost tens of thousands of dollars or more — like a college degree or a starter home — within reach.

Such cases aren’t quite the same as racking up a high credit card balance on restaurant meals and shopping trips, underscoring that when it comes to owing money, there can be good debt and bad debt.

What Is Debt Exactly?

It’s a simple four-letter word, yet debt is often not as straightforward as it may appear. Carrying a credit card balance? That’s debt. Have a student loan or a car lease? Also debt.

When individuals owe money, they generally have to pay back more than the amount they borrowed. Most debt is subject to interest, the borrowing cost that is applied based on a percentage of money owed. Interest accrues over time, so the longer consumers take to pay off debt, the more it may cost them.

Across people and households, debts add up. According to the Federal Reserve Bank of New York, by the third quarter of 2024, total household debt climbed to $17.94 trillion. Housing debt — specifically mortgages and mortgage refinancing — accounted for the majority of money owed, $12.59 trillion. Non-housing debt, such as credit card balances and school and car loans, accounted for the rest.

For individuals, average debt amounted to $105,056 in the fall of 2024, according to the credit reporting company Experian. While student loan debt was down, shrinking by 9.2% from the year before — many other debts, including amounts owed on credit cards, car loans, home equity lines of credit (HELOCs), and mortgages, all increased from the year before, according to Experian.

Recommended: Free Credit Score Monitoring

Good Debt vs Bad Debt

When you have debt, not only do you have to repay the money borrowed, but you also usually incur ongoing costs — specifically interest — which increase the amount you have to pay back.

While incurring more debt probably isn’t the most attractive proposition, there are occasions when taking on debt can be necessary or even beneficial in the long term. This is where good debt vs. bad debt comes in.

Though the idea of good vs. bad debt might seem complicated (and is often subject to some misconceptions), as a rule of thumb, the difference between good debt and bad debt usually has to do with the long-term results of borrowing.

Good debt is seen as money owed on expenditures that can build an individual’s finances over time, such as taking out student loans in order to increase one’s earning potential, or a mortgage on a house that is expected to appreciate in value.

Bad debt is money owed for expenses that pose no long-term value to a person’s financial standing, or that may even decrease in value by the time the loan is paid off. This can include credit card debt and car loans.

While owing money may not feel great, debt can serve some helpful functions. For starters, your credit score is used by lenders to determine eligibility and risk level when it comes to borrowing money.

Your credit score is based on your history of taking on and paying off debt, and helps to inform a lender about how risky a loan may be to issue. Your credit score can play an important role in determining not only whether a credit card or loan application will be approved but also how much interest you will be charged.

With no credit history at all, it may be harder for a lender to assess a loan application. Meanwhile, a solid track record of paying off good debt on time can help inspire confidence.

While there are no guarantees, good debt can also mean short-term pain for long-term gain. That’s because if paid back responsibly, good debt can be an investment in one’s future financial well-being, with the results ultimately outweighing the cost of borrowing.

Conversely, with bad debt, the costs of borrowing add up and may surpass the value of a loan.

What Is Considered Good Debt?

Mortgages

Like other lending products, mortgages are subject to annual interest on the principal amount owed.

In the United States, the average rate of a 30-year fixed-rate mortgage was averaging 6.95% nationally in January 2025, according to the Federal Reserve Bank of St. Louis. That’s up from January 2024, when the average rate for a 30-year fixed-rate mortgage was 6.69%.

Meanwhile, data from the Federal Housing Finance Agency showed that home prices grew 4.5% from October 2023 to October 2024.

This illustrates how the potential appreciation of a home might outweigh the cost of financing. But it’s best to not assume that taking on a mortgage to buy a house will increase wealth. Things like neighborhood decline, periods of financial uncertainty, and the individual condition of a home could reduce the value of a given property.

Personal loans or home equity loans used to improve the condition of a home may also increase its value, and in such instances may also be considered “good” debt.

Recommended: Should I Sell My House Now or Wait?

Student Loans

Forty-three percent of Americans who attended college incurred some kind of education debt, with the average federal student loan debt in the U.S. coming in around $37,850, according to the office of Federal Student Aid.

Cumulative income gains may eclipse the cost of a student loan over time. But higher education may be linked with greater earnings, and cumulative income gains might eclipse the cost of a student loan over time.

According to the U.S. Bureau of Labor Statistics, the median weekly earnings for a bachelor’s degree holder are $1,541, which is more than $625 greater than the median weekly pay of someone with a high school diploma.

But just as taking out a mortgage is not a sure-fire way to boost net worth, student debt is not always guaranteed to result in greater earnings. The type of degree earned and area of focus, unemployment rates, and other factors will also influence an individual’s earnings.

Recommended: Staying Motivated When Paying Off Debt

What Is Considered Bad Debt?

Credit Card Debt

Credit cards can be useful financial tools if used responsibly. They may even provide cash back or other rewards. And because interest is generally not charged on purchases until the statement becomes due, using a credit card to pay for everyday purchases need not be costly if the balance on the card is paid before the billing cycle ends.

However, credit cards are often subject to high interest rates. According to the Federal Reserve Bank of St. Louis, the average annual interest rate for credit cards is 21.47% — but some charge rates even higher.

Credit card interest adds up, making that takeout dinner or pair of jeans far more costly than the amount shown on its price tag if a balance is carried over. For example, if you were to charge $500 in takeout food to a credit card with a 20% APR but only pay the $10 minimum each month, it would take nine years to pay off the full balance. The total amount paid — including interest — would be $1,084. That’s more than double the cost of those takeout meals!

If you’re paying down credit card debt, consider enlisting the help of a budget app from SoFi. You can use it to get spending breakdowns, credit score monitoring, and more — at no cost.

Car Loans

The dollar value of your car may not be what you think it is. Cars famously start to lose value the second you drive them off the lot. A new vehicle loses 20% or more of its value in the first year of ownership, according to Kelley Blue Book. After five years, a car purchased for $40,000 will be worth $16,000, a decrease in value of 60%.

But a car may also be necessary for getting around. For some individuals, owning a car can also help them earn or boost income, reducing or negating depreciation.

The Takeaway

Both good debt and bad debt can be stressful — and both types of debt can be more costly than they need to be if you don’t keep tabs on what you owe and pay back loans efficiently. A digital tracker could be the remedy.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

What is the difference between good debt and bad debt?

Debt that allows you to build finances over time or increase your earning potential can be considered good debt. On the other hand, if debt doesn’t increase your net worth, has no long-term value to your financial standing, and you don’t have the money to pay for it, then it qualifies as bad debt.

What are some examples of bad debt?

Credit card debt and car loans are two common types of bad debt.

What is an example of good debt?

Taking out a student loan or a mortgage on a house that’s expected to increase in value are two examples of good debt.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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

SORL-Q125-037

Opting to buy a used vehicle rather than the newest model on the lot can be a great way to save some money. Used cars often cost significantly less than new cars. In addition, older cars are generally cheaper to insure (since they are worth less than new cars).

The process of shopping for, and financing, a used car, however, can feel intimidating. To demystify the process, we’ve got nine simple strategies that can help you find a reliable used car that fits your lifestyle and budget.

1. Setting a Budget for a Used Car

Before you start researching used cars, you may want to first think about how much you can afford to spend on a car and how you will pay for it.

If you will be paying cash, you may want to consider how much of your savings you can realistically put towards a car. If you don’t have quite enough, or the purchase would completely gouge your savings, you may want to spend a few more months saving up for a car.

If you will be getting a loan for the car, you’ll want to think about what would be a comfortable monthly payment. One rule of thumb is to put at least 10% down and finance the car for three years. You may also want to try to keep your total monthly auto expenses no higher than 20% of your monthly take home pay.

You can use an online auto loan calculator to get a rough idea of how much you might need to spend each month on financing.

💡 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!

2. Getting Financing Before You Start Shopping

If you plan to get a loan to buy the car, it can be a good idea to get preapproved for a car loan from a bank, credit union, or another lender before you start shopping.

While you may opt to go with financing offered by a car dealership, having a pre-approved car loan offer in your back pocket can give you a great negotiating tool. Dealers tend to mark up the interest rate to make a profit, but if you already have a deal in place, they will know they need to beat it in order to get your business.

Even if you’re going to buy a car through a private sale, having a pre-approved loan in place will allow you to jump on a great deal as soon as you find it.

Recommended: Buying a Car with a Personal Loan

3. Choosing Your Ideal Car

Now that you have a car buying budget in mind, you may want to look into what types of cars you can get for that money.

Do you need a truck, SUV, or sedan? You can save money outright by buying a smaller car and also down the line if it’s good on gas mileage. If safety is a top priority, you may want to check out the Insurance Institute for Highway Safety Ratings to see which cars perform the best in crash tests. You can also narrow the field by making a list of must-have features, and then searching for cars that have them using a search tool like Edmunds Car Finder.

Once, you’ve narrowed your list to three target models that you can research in more detail. You may also want to read reviews about the cars you’re interested in on sites like Kelley Blue Book and J.D. Power.

Recommended: How to Save Up for a Car

4. Shopping for a Used Car

Once you know how much you can spend and what kind of car is going to be a good fit for you, you can actually begin shopping for a used car. There’s no need to start driving to car lots all over town — you can browse through tons of vehicles online.

Good places to look include: used car superstores like Carmax or Carvana, used car dealerships, as well as new car dealerships (which often also sell used cars, though not always at the lowest prices). You may also want to look at listings from local private party sellers, which you can find on Craigslist, eBay Motors, Facebook Marketplace, and Nextdoor.com.

💡 Quick Tip: Are you paying pointless bank fees? Open a checking account with no account fees and avoid monthly charges (and likely earn a higher rate, too).

5. Researching the Car

Once you’ve pinpointed a vehicle you might want to buy, it can be a good idea to find out as much as you can about the vehicle’s history.

You can get a vehicle history report from a company like Carfax or Autocheck , which can tell you if the car has any red flags, such as reported accidents or flood damage, as well as information on the car’s maintenance and service history. To get a report, you’ll need to get the car’s vehicle identification number (VIN) or license plate number from the seller. There is typically a fee for running a report (around $25) but many dealers will provide the report for free.

You may also want to run the VIN number through the United States Department of Transportation Recalls site to check for any safety recalls. If there have been any recalls, it’s a good idea to make sure that the issue has been fixed.

6. Going for a Test Drive

It can often be helpful to try before you buy, especially when it comes to buying a car. A car dealership will typically let you take a few cars for a drive so you can get a sense of how they feel.

You may want to call ahead before visiting a dealership to make sure they have the car on the lot that you’re interested in so you can see it that day. A private seller will also likely allow you to take the car for a brief spin to see how you like it.

Some things to consider when going for a test drive:

•   How well the car accelerates and corners
•   If the breaks are responsive
•   If there are any unusual noises or vibrations that could indicate a mechanical issue
•   How well the car fits you — is there enough leg room? Can you comfortably reach all of the controls?

7. Inspecting a Used Car

Even if you’re far from a car expert, it can be a good idea to do a visual inspection of the car. Is the car’s body and paint in good shape? Are the lights all working? Are there signs of cracks or water inside the lights?

You may also want to turn on the air conditioning and heating, radio, and navigation system and make sure they are all working properly.

When examining the interior, you’ll want to make sure it is in decent condition and there aren’t any unpleasant smells — a moldy smell can indicate flood damage and cigarette smells can be hard to get rid of.

8. Getting a Mechanic to Inspect the Car

Unless you are buying a certified used car with factory warranty coverage from a dealership, you may want to consider getting a car you are close to buying inspected by an independent auto mechanic. While this does involve an investment of some cash (typically $100 to $200), it can potentially save you from dealing with a costly repair soon after you buy the car. The inspection report may also give you some bargaining power when haggling over the price of the car.

9. Negotiating the Price of a Used Car

It’s rare that you’re going to come across a used car price where the seller is unwilling to budge, even a little. Before you negotiate a car deal, however, you’ll want to have all your research ready, including how much the average make and model car for a particular year goes for, and any concerns or issues that came up during your personal and professional inspection.

If you’re negotiating with a dealer, it can be a good idea to keep the focus on total cost of the car, rather than bring a trade-in or financing into the mix. Dealers may want to merge all of the numbers into one deal, which can be confusing — and also make a not-so-good deal look better.

When discussing price at a dealership, you may also want to make sure you are talking about the out-the-door price, including all fees (so there aren’t any surprises).

The Takeaway

Buying a used car can be a smart buying decision. To make sure you get a car that suits your needs and budget, however, you’ll want to research your options, come up with a target price range, and line up financing before you shop.

When shopping for used cars, it’s a good idea to learn a car’s history, test drive the car, and also have it professionally inspected.

Knowing the value of the car in the open marketplace can help you negotiate a good price. If you don’t like the deal, there’s nothing wrong with walking away.

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

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

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

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

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

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

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

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q125-012

There’s no doubt about it, trying to live on minimum wage is no easy feat. This is especially the case with the cost of living consistently increasing while the federal minimum wage ($7.25 per hour) hasn’t budged since 2009. In fact, the federal minimum wage is worth nearly 30% less than it was 15 years ago, and close to 40% percent less than its peak value in 1968.

However, if you are making minimum wage, don’t despair. How to survive on minimum wage can be difficult, but it’s not impossible. The key is to keep track of your spending, cut costs where you can, and create — and stick to —a realistic monthly budget.

If you’re living on minimum wage, learn how you can stretch your dollars and even manage to sock some money away for that rainy day fund.

What is Considered Minimum Wage?

The federal minimum wage, created by Congress in 1938 under the Fair Labor Standards Act (FLSA), establishes a base hourly rate at which employers are required to pay their employees. The current federal minimum wage is $7.25, and as noted earlier, that’s an amount that’s remained the same since 2009.

Many states, cities, and municipalities have realized the federal minimum wage is extremely low. They have therefore passed their own minimum wage laws, offering a higher amount, generally ranging from about $10 to $16 an hour. In addition, many companies (such as Amazon, Costco, Target, and Walgreens) have also enacted their own higher minimum wage, eclipsing the federal minimum wage.

In situations where an employee is subject to both federal and state minimum wage laws, the worker is entitled to the higher of the two minimum wages. For instance, Georgia’s basic minimum wage is $5.15 per hour, but since the federal rate is higher, employers must pay the federal wage of $7.25.

What about tipped employees, such as waitstaff? According to the U.S. Department of Labor, employers may pay the employee no less than $2.13 an hour in direct wages. There is a condition, though. If that amount plus the tips don’t add up to at least the federal minimum wage, the employer must make up the difference. In a number of states, the direct wage for tipped employees is higher than $2.13 per hour to help ensure a livable wage. Worth noting: When an employee is subject to both the federal and state wage laws, they are also entitled to the provisions providing the greater benefit.

Is Minimum Wage Livable?

The term living wage refers to the amount of earnings a person or family needs to cover basic expenses. These can include groceries, utility bills, housing, healthcare, transportation, and childcare. The goal of paying employees a livable wage is to prevent people from falling into poverty and allow them to have a decent, satisfactory standard of living.

Unfortunately, the cost of living in the U.S. has risen over the decades, especially during recent inflationary times, and the minimum wage has failed to keep up with the prices of goods and services. A full-time worker who earns the federal minimum wage has an income of $15,080 a year, which is right around the 2024 federal poverty line for an individual ($15,060), according to the U.S. Department of Health and Human Services. If that worker is a single parent with one child, they’re below the poverty line, which is $20,440 for a family of two. The bottom line: For most people, earning $7.25 an hour doesn’t cut it as providing a living wage. Even if you live in a state with a higher minimum wage, you may still struggle to maintain a modest standard of living.

17 Tips for Living on Minimum Wage

So, how to live on minimum wage? Here are 17 ways that can make it easier to survive on a minimum wage salary and even set aside some money for savings:

1. Evaluate Your Overall Spending

A first step to getting a hold on your finances is to know how much you’re bringing in per month versus how much is going out. One way to do this is to record all of your expenses. Begin tracking your spending for 30 days. Include everything, including the change you put in the tip jar at a coffee shop.

Doing so will give you an overview of exactly where your money is going and help you determine where you may need to make some cuts. Seeing a spending pattern may also pinpoint any causes of overspending, like not being able to say no to a restaurant invite when you really can’t afford it.

2. Create and Stick to a Budget

Having a budget provides you with a structure so you can organize your finances and live better within your means. When you’re not bringing home a lot of bacon, it’s vital to make sure you know exactly where your money is being spent each month. A line-item budget can help you track your spending in various categories and make adjustments as needed.

One common budgeting method to consider is the 50/30/20 rule. With this, you allocate 50% of your income to your needs (essentials), 30% for wants (nonessentials), and the remaining 20% towards savings. This guideline can help you manage your money better.

Recommended: 50/30/20 Budget Calculator

3. Put Some Money Towards Savings

The thought of saving when you’re barely scraping by can seem impossible. But if you’re making minimum wage, even putting $5, $10, or $20 a paycheck towards savings can add up over time. You might even set up an automatic transfer from your checking account into a savings account a day or two after every payday. It’s as effortless as automatic bill payments and can help you build up a nest egg.

Doing so can also get you in the habit of saving and even help improve mental health. One University of Arizona study found people who save money report less psychological distress and have improved financial satisfaction.

4. Look Into Government Benefits

Another “how to survive on minimum wage” tip: Millions of low-wage earners in the U.S. qualify for federal and state government assistance benefits. This aid can help lower costs of food, healthcare, housing, and more for those surviving on minimum wage.

Some of the most popular programs include Medicaid, the Children’s Health Insurance Program (CHIP), Supplemental Nutrition Assistance Program (SNAP), and the Temporary Assistance for Needy Families (TANF). To see what benefits you might qualify for, visit benefits.gov .

5. Save on Food

Obviously, minimizing dining out and ordering takeout will lower your food bill. Some other ideas:

•   People and families living on minimum wage can qualify for SNAP (formerly known as food stamps) to help offset grocery costs.

•   Consider shopping at less expensive supermarkets, using coupons, buying the store or generic brand, and if applicable, ask if the store has a customer club card so you can get additional discounts.

•   Buying in bulk and stocking up on frozen foods and pantry staples such as bread, milk, eggs, peanut butter, pasta, beans, rice, tuna, and canned soups can help when money is particularly tight.

•   Food banks or pantries can be another resource. You can search for one in your area at FeedingAmerica.org .

6. Find Additional Ways to Increase Your Income

If you are struggling to make ends meet, you might also think about how you could bring in more income.

•   This might be the time to look for a higher-paying job or simply ask your boss for a raise.

•   Investigate getting a side hustle on your off hours like driving for Uber, Lyft or delivering food for DoorDash, GrubHub, or Instacart. You could also consider house cleaning, babysitting, dog walking, or pet sitting for extra money.

•   Have a marketable craft or hobby? Try selling your creations on Etsy or at a craft fair.

•   If you have unwanted stuff that others might want, put it up for sale on Facebook Marketplace, eBay, or your community’s neighborhood group. A garage or yard sale can also bring in some bucks if you’ve got enough to peddle.

7. Lower Your Housing Costs

Housing is where Americans spend the largest share of their paycheck, according to the U.S. Bureau of Labor Statistics. With the prices to rent or own a home consistently rising across the country, this can be a major issue for those living on minimum wage.

According to a 2024 report by the National Low Income Housing Coalition, a full-time worker needs to earn an hourly wage of $26.74 to afford a modest one-bedroom rental home in the U.S.

If you’re paying more than you can afford for housing, there are ways to cut the costs.

•   Consider downsizing to a smaller home or apartment, moving to a more affordable area in your town or city, getting a roommate, or living with a friend or family member while you save.

•   Look into applying for affordable public housing in your area, specifically established for eligible low-income people. The U.S. Department of Housing and Urban Development (HUD) oversees public housing agencies in your state or city. You can find your local housing authority office at hud.gov or by calling 800-955-2232.

8. ​​Work Towards Reducing Your Debt

When you’re not bringing in a lot of money, it’s easy to accumulate debt, especially by using credit cards to get by until the next paycheck. This can leave you with high credit card bills due at the end of the month and increase the chance of a minimum payment you can’t afford. You can tackle the problem in a few ways:

•   Consolidate your debt by rolling multiple debt payments into one.

•   Consider a balance transfer onto one credit card with a zero or low-interest promotional rate. These can provide a period of time during which you can pay down debt before the interest rate rises.

•   Seek out help from a reputable nonprofit organization such as the National Foundation for Credit Counseling (nfcc.org ), a professional credit counselor, or a financial planner who can help you create a plan to start tackling your debt.

9. Minimize Healthcare Costs

Healthcare can take a big bite out of a tight budget. These moves may help lower those expenses:

•   Medicaid and the Children’s Health Insurance Program (CHIP) are among the government programs providing free or low-cost health care to some low-income families and individuals. To determine if you’re eligible, go to Healthcare.gov where you can also fill out an application.

•   Work towards saving on prescription drug costs at participating pharmacies with a discount card or coupons offered by companies such as GoodRx, SingleCare, or America’s Pharmacy.

•   Try a variety of free things you can do to stay healthier. Take a walk, ride your bike, pick up a basketball game, or do free workout videos on YouTube.

10. Look to Save on Transportation

Owning a car and maintaining it can be costly. Here, some ways to lower expenses:

•   Consider the alternatives to car ownership, such as public transportation, carpooling, walking, or riding a bike.

•   When you drive, try to limit extraneous trips to reduce mileage and wear and tear on your car.

•   Save money on gas by comparison shopping at your local fuel stations.

•   See if you can lower your car insurance payment with good driver discounts or by skipping extras that you don’t really need, like car rental coverage or emergency roadside assistance.

11. Make the Most of Tax Breaks

When it comes time to file your taxes, make sure you’re taking advantage of whatever tax credits and deductions are offered for low- to moderate-wage employees, such as the Earned Income Tax Credit, Child Tax Credit, or Child and Dependent Care Credit. If you qualify, you can use the credits to help reduce the amount of taxes you owe and possibly increase your refund.

Recommended: What Tax Bracket Am I In?

12. Check Your Paycheck Withholding Amount

When you start a new job as a regular employee, your employer will have you fill out a W-4 form to determine how much tax money should be withheld from your pay and sent to the IRS for you. This is determined by what your tax filing status is (single or married, for example) and whether you have any dependents.

If you choose to have too much money taken from each paycheck, yes, you’ll get it back in the form of a tax refund, but it might be more useful to have that extra money during the year. You can change or update the withholding information on your W-4 form with your employer at any time. What’s more, you should do so if you experience any type of personal life change, such as marriage, divorce, or having a child.

13. Mind Your Utility Usage

Americans pay, on average, $583 a month for utility costs, according to a study from Move.org. This can add up to half a minimum wage-earner’s monthly paycheck.

Fortunately, there are many ways to lower your utility bills that can help with the challenge of how to live on minimum wage.

•   Switch to using more energy-efficient light bulbs and you can save on average $225 a year, recommends the U.S. Department of Energy.

•   Avoid phantom energy usage: Turn off or unplug any appliances not in use; even those sitting idle still drain some energy from the outlet.

•   Save up to 10% on heat and cooling costs by setting your thermostat seven to 10 degrees back from its normal setting for eight hours a day (such as when you are out at work).

•   Switching to doing cold water washes can save on gas and electricity needed to heat water.

•   If you need new appliances, opt for ENERGY STAR labeled machines that use less water and energy than standard ones.

•   Get rid of any streaming channels you don’t watch and/or downsize to a more basic cable plan.

•   If you’re having trouble making payments, call your utility companies and see if you can negotiate rates or be put on a financial assistance payment plan.

14. Take advantage of any Employer-Sponsored Benefits

Make sure you use any plans your employer offers, such as health insurance, retirement accounts like a 401(k), daycare services, or paid time off. These things can be priceless to any employee but especially if you’re surviving on minimum wage.

15. Look for Cheap or No Cost Things to do

Living on a low-income salary doesn’t mean you have to sit home and give up on fun. But instead of pricey entertainment and eating out, consider these ideas:

•   Check to see if any museums have a day where admission is free.

•   Grab a slice of pizza with a friend for a cheapie lunch.

•   Take a walk or bike ride; visit the library to check out free books and DVDs.

•   Host a potluck gathering with friends.

16. Check Out Your Local “Buy Nothing” Groups

Neighborhood “buy nothing” groups, where people post things they want to give away, have become popular. These community networks can be a great way to get clothing, food, toys, appliances, and furniture absolutely free.

Not sure where to start? Visit BuyNothingProject.org or search Facebook to see if there’s a buy nothing group near you.

Recommended: 15 Creative Ways to Save Money

17. Be Kind to Yourself

Living on a minimum wage income can be a constant source of anxiety and stress. But think about thriving rather than just surviving on minimum wage. Be sure to practice self-care. There are lots of low-cost or free ways to reward yourself, from camping out to treating yourself to a fancy coffee to finding free live music in your area.

The Importance of Having a Savings Account

When you’re living paycheck to paycheck, saving money can feel like an impossibility. But opening a high-yield savings account can be a wise move. It’s a place where your money can securely grow over time, thanks to the interest it earns. It’s also a place that may be less tempting to tap into than your checking account, and it’s less risky than, say, investing in the stock market.

You can save for a specific financial goal, such as moving to a bigger apartment, or let it build as a nest egg for the future. Another reason it’s important to have some savings? You need an emergency fund for life’s unexpected and expensive moments, such as having a sick pet, needing a car repair, or suddenly losing your job.

Financial experts generally advise having at least three to six months’ worth of living expenses socked away. This cash can help prevent your using credit cards or money in your checking account slated for bills when an urgent need crops up.

Can You Open a Bank Account While Earning Minimum Wage?

Yes. You don’t have to have a high-paying job in order to open a bank account. Anyone in the U.S. who is 18 years old or older can open a bank account on their own, and that includes people who are unemployed or have no income at all.

It’s important to know that many traditional banks require you to make a minimum deposit when opening a bank account, which can be anywhere between $25 and $100. However, some banks, especially online banks, will allow you to open an account with no minimum balance required.

What to Look for in a Bank on a Minimum Wage Salary

If you earn a minimum wage, you’ll likely want a bank that doesn’t have a lot of hurdles to opening an account or charge a lot of fees. Look for these features:

•   No extra fees: Some banks tack on extra fees for different reasons, such as using an ATM not in their network, overdraft fees for having to cover for insufficient funds, or a monthly maintenance or service fee. Look for a bank that doesn’t charge these fees.

•   Interest-bearing account: A bank account that allows you to earn money on your deposits can only help your money grow. Many banks don’t pay interest on checking accounts and may only pay a sliver of a percentage on savings. Shop around for a better annual percentage yield (APY).

•   No monthly minimum balance requirements: Many banks charge a monthly fee if you don’t keep a minimum balance in your account. Search for one without any rules on how much money you’re required to have in there.

•   Low-to-no minimum deposit requirements: You may find some banks have a minimum amount of money you have to deposit in order to open an account. It could be as low as $10. However, you can also find banks that don’t require any deposit at all to start an account.

The Takeaway

People who live on a minimum-wage salary can benefit from creating and sticking to a budget, finding ways to cut costs, knowing about financial assistance programs, and finding a trusted banking partner that charges low or no fees and pays an above-average APY on your deposits.

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

FAQ

Is minimum wage a liveable salary?

It can be, depending on where you live, your expenses, and how much of a minimum wage you’re earning. Many states, cities, and even companies offer a higher minimum wage than the federal wage of $7.25, making it easier for people to survive. That said, in some parts of the country, you would need to earn more than triple the federal minimum wage to afford a one-bedroom rental.

What are some tips for lowering expenses when earning minimum wage?

Housing, transportation, and food are the biggest expenses for the average American household. Some ways you can lower these costs include downsizing your housing situation or getting a roommate, limiting restaurant meals, cutting grocery costs, and opting for public transportation. In addition, it can be worthwhile to research local and federal programs that can help you lower expenses and get more for your money, from Supplemental Nutrition Assistance Program (SNAP) to Medicaid.

Can you open a bank account when earning minimum wage?

Yes, you can, but it’s wise to shop around for a bank that doesn’t charge any excess fees or require a monthly minimum balance requirement. Also look for ones that pay a competitive annual percentage yield (APY) on your savings and possibly your checking balance as well.

Photo credit: iStock/AsiaVision

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

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

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

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

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

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

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOBNK-Q125-014