May
12
2023
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Flexible Spending Accounts: Rules, Regulations, and Uses

By | Budgeting & Goals, money | Comments Off on Flexible Spending Accounts: Rules, Regulations, and Uses

Flexible spending accounts, or FSAs, are special savings accounts offered through some employer benefit plans. They allow the account holder to pay for certain out-of-pocket medical and dependent care costs with tax-free money.

However, FSAs come with some rules and regulations. For instance, FSA rules cap the amount of money that can be placed in the account each year ($3,050 for 2023), and also dictate which types of expenses qualify for an FSA distribution.

Still, FSAs can be a powerful tool for covering unavoidable medical costs that could otherwise wreak havoc on finances.

Flexible Spending Account Explained

FSAs are savings programs offered through employers — which means that self-employed people aren’t eligible. Those who are self-employed may be covered through an employed spouse’s plan, or they may choose to open an HSA, if they qualify.

FSAs are also sometimes called flexible spending arrangements, and they can cover you, your spouse, and your dependents. There are also a few sub-types of FSAs, such as dependent care FSAs (DCFSAs) and limited purpose FSAs (LPFSAs).

Recommended: Benefits of Health Savings Accounts

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Flexible Spending Account Rules: An Overview

FSA contributions work similarly to employer-sponsored retirement plans like 401(k)s: a certain amount of wages is withheld each pay period and contributed to the account.

The account holder elects how much to withhold at the beginning of the plan year — and, importantly, they may not be able to change it unless there’s a change in employment or family status. That means it’s important to think the decision through carefully.

But unlike a 401(k), the funds placed into an FSA aren’t just tax-deferred — they’re actually tax-free. That means they aren’t included in the account holder’s total taxable income, nor are taxes due when distributions are made.

Recommended: Tax Credits vs. Tax Deductions: What’s the Difference?

How Much Can I Contribute to My FSA?

In 2023, account holders may contribute up to a maximum of $3,050 per year to their FSAs. Employers may also place limits on the amount an employee can elect to be contributed, up to this federal cap.

Unused Funds: FSA Rollover and Reimbursement Rules

Another rule regarding FSAs is the fact that, generally speaking, unused FSA funds are forfeited.

In other words, FSAs are “use it or lose it” accounts; the money that isn’t used for qualified expenses by the end of the plan year can’t be rolled over into the next.

Thus, account holders may want to be cautious to avoid over-contributing to the plan and carefully estimate how much they think they’ll need to spend on out-of-pocket health expenses. Setting up a budget may help with this.

However, there are some exceptions that may be accessible, depending on the employer’s policy choice. They may allow for a “grace period” or a carry-over option — one or the other, but not both, and they’re not legally required to offer either.

•   The grace period option allows account holders to use their FSA funds for an additional two and a half months after the plan year to pay for qualified medical expenses.

•   The carry-over option allows account holders to roll over up to $610 of unused funds into the account for use the next plan year, though the employer may specify a lower dollar figure. Carryover doesn’t affect the maximum allowable contribution for the next year’s plan.

Recommended: How to Negotiate Medical Bills

What Can a Flexible Spending Account Be Used For?

Given the contribution limits and forfeiture rules of flexible spending accounts, FSA account holders usually want to be careful about calculating how much money they might be able to use — otherwise, significant amounts of their paycheck might end up right back in their employers’ hands.

And although many medical expenses qualify, not all of them do, or especially rules apply. For instance, non-prescription medications are covered only with a doctor’s prescription. The exception is insulin, which is covered without a prescription.

FSA funds are also ineligible to be used for health insurance premiums (though you can use them for deductibles and copays) or long-term care coverage and expenses, which may affect those with chronic illnesses or disabilities.

There are, however, a wide range of procedures and healthcare services that FSA funds can be used to cover, including dental expenses.

In basic terms, any treatment that would qualify for a medical expense tax deduction can be covered by FSA funds; the full list of which can be found in IRS Publication 502 .

From acupuncture and alcoholism to birth control pills and psychological counseling, many services do count as qualified medical expenses.

Along with being the right kind of medical expense, services paid through FSA funds must be applied to the right people in order to be covered. Eligible beneficiaries include:

•   The account holder

•   Their spouse

•   Dependents claimed on their tax return

•   Children age 26 and under

Keep in mind, too, that FSAs generally work in conjunction with other types of health benefits and coverage, and funds can’t be used to reimburse services that are covered under other health plans.

It might be a valuable exercise to write out all of the expected medical expenses you’ll face as a family at the beginning of the plan year in order to decide how much to contribute, including additional coverages, in order to avoid over-contribution. While nobody can predict the future, some routine expenses can be foreseen — and a little bit of planning might save a lot of forfeited funds in the end.

Recommended: 15 Creative Ways to Save Money

Taking Distributions from an FSA

The process for taking distributions from an FSA may vary based on the plan. In some cases, distributions are made from an FSA to reimburse the account holder for medical expenses they’ve incurred. Some FSAs also have a debit, credit, or stored value card that can be used to pay directly for qualifying expenses.

In order to take a distribution, the account holder may have to provide a written statement from the doctor or medical service provider that specifies the medical expense incurred, as well as a statement documenting that the expense hasn’t been covered by any other health plan. In other situations, a receipt may be sufficient documentation in order to be reimbursed.

FSA reimbursements are only available for verifiable medical expenses that have already been incurred, rather than expenses the account holder plans to incur in the future. (In other words, you can’t write to the FSA and tell them you’re going to the doctor next month.)

Finally — and importantly — FSA participants must be able to use the entire benefit (that is, the total amount of money they pledged to contribute to the plan) even if those monies haven’t yet been contributed. There is some opportunity for roll-over, depending on the plan rules. Some FSAs allow account holders to carry over up to $610.

For example, if you decide to contribute $2,000, but get hurt midway through the year when only $1,000 has been deducted from your pay, you’ll still be able to use up to $2,000 worth of tax-free FSA coverage for qualified expenses. Pretty cool, huh?

Is a Flexible Spending Account Worth It?

A flexible spending account can be a helpful tool, but it’s not the only option for footing medical bills.

For one thing, $3,050 might not even scratch the surface of some common medical procedures, such as childbirth.

Furthermore, although the tax-free nature of FSAs is attractive, the prospect of forfeiting parts of a paycheck is definitely not — and there are other ways to save cash for medical expenses and other emergencies which offer not just flexibility, but growth.

For example, you could open an online bank account with a high-yield and earn more than 4% APY (annual percentage yield) in interest. That could be an option to explore.

Another idea is to create an emergency fund to help pay medical expenses. However, if you think you’ll use all the funds in an FSA, going that route instead may be worth more to you.

The Takeaway

The tax benefits of the FSA can make them an appealing and useful tool, especially for those who know they’ll spend a decent amount out of pocket on healthcare.

But if you’re not sure you’ll use the funds saved in an FSA, a SoFi Checking and Savings account could be an alternative solution. You’ll earn a competitive APY and you’ll pay no account fees. You could even use a SoFi Checking and Savings account as a complementary tool, along with your FSA, to work toward other saving goals.

Got medical expenses? Let SoFi Checking and Savings help you save for your healthcare needs.

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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.

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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May
11
2023
What Is the U.S. Debt Ceiling?

The US Debt Ceiling, Explained

By | Growing Wealth, invest, Investing | Comments Off on The US Debt Ceiling, Explained

These days, the U.S. debt ceiling is in the headlines and on everyone’s mind. Although the debt ceiling is technically the amount of money the country can legally borrow to pay its bills, that doesn’t do justice to the hotly debated issue the debt ceiling has become.

As the country’s fiscal obligations continue to grow, Congress periodically must increase the limit the government can borrow, so that the U.S. can issue bonds to have enough money to continue to operate. The U.S. reached its current debt ceiling on January 19, 2023.

Many lawmakers and economists worry that increasing the debt ceiling continually could have a negative impact on the U.S. economy over the long term, as it allows the federal government to spend more than it takes in.

The danger, however, is that failing to raise the debt ceiling would have an immediate negative impact because the U.S. could default on its debts — pushing domestic and global markets into turmoil.

What Is the Debt Ceiling?

The U.S. debt ceiling — sometimes called the debt limit — is the legal limit on how much money the U.S. federal government can borrow to fund government operations. The debt ceiling only authorizes borrowing to cover existing obligations; it does not allow for new spending.

The U.S. government owes more than $31 trillion, which it accrues by issuing bonds. That includes more than $24 trillion owed to the public, including individuals, businesses, and foreign governments, and nearly $7 trillion to itself, borrowed from government agencies, such as the Social Security Administration.

💡 Recommended: Who Owns the U.S. National Debt?

Recent Changes to the Debt Ceiling

When federal spending pushes up against this limit, as it is right now, Congress must vote to raise the debt ceiling.

For example, in August of 2021, Congress reinstated the debt ceiling to about $28.5 trillion after suspending it in 2019. In October 2021, Congress voted to raise the debt ceiling limit by $480 billion to keep the government running through early December.

Next, Congress passed a $2.5 trillion increase in the debt ceiling in December 2021, which President Biden promptly signed, bringing the debt limit up to about $31.4 trillion. Analysts expected the U.S. government to hit the debt ceiling in January 2023, which it did on January 19.

What Will Happen to the Debt Ceiling?

As of May 9, 2023, the debt ceiling battle was front and center, with a few possible outcomes:

•   Congress could vote to raise the debt limit, as it has done since the debt ceiling was first created in 1917 (see more on the history of the debt ceiling below).

•   Both parties could negotiate a way forward, by agreeing to cut spending while also raising the debt ceiling.

•   The president could use his executive powers to bypass the debt ceiling.

Finally, although very unlikely, the government could default on its debts. This has never occurred, and would be unprecedented — potentially leading to a global financial crisis.

Where Did the Debt Ceiling Come From?

Congress first enacted the debt ceiling in 1917 at the beginning of World War I through the Second Liberty Bond Act. That act set the debt ceiling at $11.5 billion. The creators of the debt ceiling believed it would make the process of borrowing easier and more flexible. In 1939, as World War II loomed on the horizon, Congress established a debt limit of $45 billion that covered all government debt.

Before the creation of the debt ceiling, Congress had to approve loans individually or allow the Treasury to issue debt instruments for specific purposes. The debt ceiling granted the government greater freedom to borrow funds via issuing bonds, allowing it to spend as needed. And over time the ceiling was often raised, and rarely contested.

The debt ceiling has, however, become a partisan pain point in recent years.

Benefits and Drawbacks of the Debt Ceiling

The debt ceiling has several advantages. It allows Congress to fund government operations and simplifies the process of borrowing. It also, theoretically, serves as a way to keep government spending in check because the federal government should consider the debt ceiling as it passes spending bills.

However, there are also some drawbacks. Congress has consistently raised the debt ceiling when necessary, which some analysts claim dampens the legislative branch’s power as a check and balance. And if Congress does not increase the debt ceiling, there is a risk that the government will default on its loans, lowering the country’s credit rating and making it more expensive to borrow in the future.

Debt Ceiling and Congress

In the last 10 or 15 years, Congress has found itself embroiled in partisan battles over raising the debt ceiling. For example, during the Obama administration, there were two high-profile debt ceiling standoffs between the president and Congress. In 2011, some members of Congress threatened to allow the U.S. government to hit the debt ceiling if their preferred spending cuts were not approved.

This standoff led Standard & Poor’s, a credit rating agency, to downgrade U.S. debt from a AAA to a AA+ rating.

Moreover, in 2013 there was a government shutdown when members of Congress would not approve a bill to fund the government and raise the debt ceiling unless the president made their preferred spending cuts. This standoff ended after 16 days when Congress finally approved a spending package and a debt ceiling increase partially due to the potential for a further downgrade of U.S. debt.

However, only some debt ceiling increases have been a partisan battle. Congress has raised or made changes to the debt ceiling nearly 100 times since World War II, usually on a bipartisan basis.

What Happens if Congress Fails to Raise the Debt Ceiling?

The current debate centers on finding a long-term solution for raising the debt ceiling. If the executive and legislative branches can not reach an agreement, there could be several consequences.

•   The government will swiftly run out of cash if it can not issue more bonds. At that point, the money the government has coming in would not cover the millions of debts that come due each day. The government may default, at least temporarily, on its obligations, such as pensions, Social Security payments, and veterans benefits.

•   A U.S. government default could also have a ripple effect throughout the global economy. Domestic and international markets depend on the stability of U.S. debt instruments like Treasuries, which are widely considered among the safest investments.

•   Interest rates for Treasury bills could rise, and interest rates across other sectors of the economy could follow suit, raising the borrowing cost for home mortgages and auto loans, for example.

•   A default could also create stock volatility in global equity markets, turmoil in bond markets, and push down the value of the U.S. dollar.

💡 Recommended: What Is the U.S. Dollar Index?

Even the threat of a default can have serious economic ramifications. In 2011, delays in raising the debt limit increased the cost of borrowing by $1.3 billion, according to the U.S. Government Accountability Office estimates.

What Are Extraordinary Measures?

When the government hits the debt limit, there are certain “extraordinary measures” it can take to continue paying its obligations. For example, the government can suspend new investments or cash in on old ones early. Or it can reduce the amount of outstanding Treasury securities, causing outstanding debt to fall temporarily.

These accounting techniques can extend the government’s ability to pay its obligations for a very short amount of time.

Once the government exhausts its cash and these extraordinary measures, it has no other way to pay its bills aside from incoming revenue, which doesn’t cover all of it. Revenue from income tax, payroll taxes, and other sources only cover about 80% of government outlays, according to the U.S. Treasury.

Can Congress Get Rid of the Debt Ceiling?

As noted above, the debt ceiling debate has become fertile ground for partisan fighting in Congress, but theoretically, it doesn’t have to be that way. For example, Congress could give responsibility for raising the debt ceiling to the president, subject to congressional review, or pass it off to the U.S. Treasury. Congress could also repeal the debt ceiling entirely.

The Takeaway

A failure to raise the debt ceiling and a subsequent default could have a significant impact on financial markets, from increased volatility to a decline in the value of the dollar to a lower national credit rating or even a recession. Given such consequences, it’s likely that Congress will continue to find ways to raise the debt ceiling, although political battles around the issue may continue.

Even if the debt ceiling continues to go up, the growing national debt could lead to economic instability, according to some economists. It’s hard to predict, since the debt ceiling has been raised about 100 times since World War I, when it was first established, and the U.S. has yet to face grave consequences as a result.

While it’s important to keep an eye on macroeconomic trends, it’s also wise to stay focused on your own investment goals. One way to start is by opening an investment account with SoFi Invest®. With a SoFi online brokerage account, you can build a portfolio suited to your financial needs.

Take a step toward reaching your financial goals with SoFi Invest.

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In our efforts to bring you the latest updates on things that might impact your financial life, we may occasionally enter the political fray, covering candidates, bills, laws and more. Please note: SoFi does not endorse or take official positions on any candidates and the bills they may be sponsoring or proposing. We may occasionally support legislation that we believe would be beneficial to our members, and will make sure to call it out when we do. Our reporting otherwise is for informational purposes only, and shouldn’t be construed as an endorsement.

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May
11
2023
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4 Tips for Handling Finances After a Pay Cut

By | Budgeting & Goals, Financial Independence, Life & Career, money | Comments Off on 4 Tips for Handling Finances After a Pay Cut

Because of economic uncertainty, some companies have resorted to pay cuts to help cut costs. For the workers affected, it likely means scouring their budgets to trim some of their expenses. Taking a pay cut means facing the reality of no longer living the same financial life.

If you’ve just taken a pay cut — or you’re worried that you might soon be facing one — here are four strategies to handle your finances after your salary is reduced.

1. Update Your Budget

First and foremost, create a budget if you don’t already have one. List all your expenses for weekly purchases, from groceries to gasoline and parking fees. Add monthly bills, including rent or mortgage, car loan, streaming services or cable, cellphone, utility bills, credit cards, student loans, and any other debt such as personal loans.

Next, examine all your expenses to see which ones you can lower or eliminate for the next six months. Add your income and include part-time jobs or side hustles, tax refunds, bonuses, and any child support or alimony. This will help you determine how much money you can spend for necessities, expenses, entertainment, and other things such as doctor visits.

In addition to a budget, create a plan for both short-term financial goals and long-term goals. A plan will help you determine when you can pay off any loans and how much you want to save for something like a down payment on a house.

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2. Track Your Spending

You could use a free money tracking app that can help you keep tabs on your spending and help manage your debt. To track your spending, decide if you want to track it daily, weekly, or biweekly. You might try different time periods before you decide on one.

After you track your spending for two or three months, you’ll see a pattern emerge that indicates where most of your money goes.

3. Cut Expenses

One place many consumers can cut costs is from entertainment, such as their streaming services. These can really add up. Canceling all or some of these services can improve your cash flow, which is how much money you have left over at the end of the month.

Another place where you can slash expenses is from your food budget. Consider using digital coupons, shopping at warehouse clubs, or going out to eat for lunch instead of dinner to save money on food.

Your expenses include debt such as credit cards, student loans, and personal loans. Paying more than the minimum balance, refinancing to a lower interest rate. and making extra payments can help you pay down the loan sooner.

Consider refinancing your student loans by checking out both fixed and variable rates. Interest rates are at historic lows. You might be able to pay down your credit card bills faster by taking out a personal loan; those interest rates are often lower. And if that’s the case, the debt could be paid sooner.

Automating your finances can make your life easier. This will also help you avoid paying late fees. You can either have your bills paid automatically through your checking account or set yourself a reminder on your calendar if you have some bills such as utilities that are a different amount each month.

You can also automate your savings. You can have money taken out of your checking or savings account each month and have it automatically invested into your workplace 401(k) plan or an individual retirement account (IRA).

In addition, you could consider opening an online bank account with a high-yield APY. That way, your savings could earn money for you as it’s sitting in your account.

Ways to Save

When your salary has been slashed, there are several ways you can save money immediately and long term.

Call your mortgage, auto loan, utilities, credit card, and student loan companies to see if you can defer loan payments for several months. Skipping a few payments can help you get back on your feet sooner. If the company cannot provide this option, see if the interest rate can be lowered on, say, credit cards.

Check with your local nonprofit organizations. Many provide food or partial payments for utility bills. Look online to see if stores are offering deals. Stock up on staples such as beans, rice, and pasta if they are on sale.

If you are still short of money, you might consider talking to family members and friends about obtaining a short-term loan.

Now might be the time to use credit card rewards for cash, food, or gift cards.

People who have been saving credit card rewards for a vacation might want to go ahead and use them now. Some credit card companies will let you transfer the rewards for cash to your statement or use them for food delivery.

Other companies let you use your rewards to receive gift cards. Using these gift cards at retailers that sell staples and necessities such as food, detergent, and other personal items can help you spend less money.

Many credit cards will give cash back on purchases such as food and gasoline. See which credit cards are the most beneficial for your financial needs before signing up for a brand-new credit card.

Another way to save money is to use cash for gasoline. Some gas stations offer a cheaper price for consumers who use cash. The savings can add up quickly, especially if you have a longer commute.

Finally, each month, look for other ways you can save money. If your credit card company denied your request last month to lower your interest rate, try calling again. Rules can change often.

4. Save for Retirement

While you could skip saving for retirement, it’s ideal to continue socking away some money each month from your paycheck into a 401(k) plan or IRA. The money you stash away for retirement can lower your taxable income, meaning you’ll owe the IRS less.

Continuing to save money for retirement is a good habit, especially if your salary reduction is temporary. Once you stop contributing to a retirement account, it can be difficult to catch up on your retirement savings. If you have your retirement contribution automatically deducted from your checking or savings account, saving for your future is easier.

The Takeaway

While it can be difficult to navigate a pay cut, creating a budget, tracking your spending, shopping for deals, and cutting expenses can help you save and get through a tough time.

In addition, opening a new savings account could help you maximize your money. With SoFi Checking and Savings you’ll earn a competitive APY and pay no account fees.

See how SoFi Checking and Savings can help your money do more.

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

SoFi members with direct deposit activity can earn 4.00% 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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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

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May
11
2023

Top 10 Fun Things to Do When Visiting Chicago

By | Credit, credit card | Comments Off on Top 10 Fun Things to Do When Visiting Chicago

America’s coasts tend to steal the limelight from the rest of the country, with travelers setting their sights on New York and Los Angeles. But those cities can be pricey. And perhaps you’re looking for a trip not featured on every third Instagram account.

For me, Chicago checks all the boxes. Nestled against Lake Michigan, Chicago feels like a coastal city even if that isn’t technically true. Plus, you could visit every weekend for a year and not run out of things to do. Here are the must-sees and must-dos for your first visit to Chicago and beyond.

Best Times to Go to Chicago

The best time to visit Chicago is in the summer, as that is when most of the city’s biggest events happen. That includes the Chicago Air and Water Show (Aug 19-20, 2023), the Taste of Chicago (Sept 8-10, 2023; see below), and the Lollapalooza music festival (Aug 3-6, 2023; Lollapalooza.com). Visiting in summer means you’ll also be able to spend time at Chicago’s numerous beaches and catch a Cubs game at Wrigley Field or the White Sox at Guaranteed Rate Field.

Another great time to visit Chicago is in the winter. If you don’t often see snow, downtown Chicago will be especially beautiful at this time. You can shop at the Christkindlmarket or go ice skating in Millennium Park. And the Chicago Auto Show takes place every February.

Recommended: The Best Time to Book Summer Travel

Bad Times to Go to Chicago

There are no bad times to visit Chicago, but the city isn’t as lively during the cold-weather months outside the holiday season. And when the weather is cold, but not quite cold enough for snow and ice, the city will be even less appealing because ice skating may not be an option.

Generally, January and February can be relatively uneventful in Chicago, especially if the Chicago Auto Show doesn’t interest you. If that is the case, you’re better off visiting either during the holiday season or when the weather is a little warmer.

Average Cost of a Chicago Vacation

The average cost of a Chicago vacation can vary significantly depending on the length of your stay and your accommodations. But suppose you plan to stay for one week in a nice hotel and fully immerse yourself in the culture during your trip. In this case, you can expect to spend about $1,260 for a single person and about $1,684 for a couple. It can be more expensive when traveling with a family.

Remember that these are only estimates, and you may be able to stay in Chicago for less. For example, a single person traveling on a budget could take a one-week vacation to Chicago for less than $1,000. Again, it depends on where you stay and how much you spend at local attractions, bars, and restaurants.

10 Fun Must-Dos in Chicago

Chicago is known for its music scene, great food, and world-class museums, among other things. There is so much to do in Chicago that choosing just 10 attractions isn’t easy. My picks let you experience the city for what it really is — gritty but determined and altogether incredible.

If you plan to do everything on this list, consider purchasing a Chicago CityPASS (CityPass.com/chicago). While these passes aren’t cheap ($134 adults; $104 children), they include entry to several of Chicago’s most popular attractions and will save you money overall. Also consider buying a weekly or monthly pass for CTA, Chicago’s mass transit system. Renting a car is another option, although it isn’t always the cheapest.

As far as where to stay, you can’t go wrong with areas like West Loop, South Loop, and River North. Or if you want to live more like a local, consider neighborhoods like Lake View, Logan Square, and Old Town. Of course, hotels can be expensive, so you’ll want to save money on accommodations whenever possible. From these areas, you can access most of the spots on this list via the CTA system.

1. Millennium Park

Have you even visited Chicago if you don’t see Millennium Park? The park features iconic art installations such as Cloud Gate (known colloquially as “The Bean”) and the Frank Gehry-designed Jay Pritzker Pavilion, an amphitheater that hosts live music. There’s also Crown Fountain, incorporating a water fountain and oversized LED screen projecting images of faces. Other highlights include Maggie Daley Park, where you’ll find an ice skating ribbon and an outdoor rock-climbing wall. 201 E. Randolph St.

Recommended: How to Balance the Urge to Travel and the Need to Save

2. Willis Tower Skydeck

Formerly the tallest building in the world, Willis Tower stands 1,451 feet tall. Naturally, the Willis Tower Skydeck is the best way to view the city. Chances are, you’ve already seen photos of people visiting the Skydeck, with its clear-glass area simply called The Ledge. Adults $41, youth $33. TheSkydeck.com

3. Original Rainbow Cone

If you find yourself in Chicago during the searing summer months, you’ll need a way to cool down. Fortunately, Chicago has plenty of ways to do that, and one of the best is to visit the original Rainbow Cone in the Beverly neighborhood. The ice cream shop has been around for over 95 years and is famous for its original flavors: orange sherbet, pistachio, Palmer House, chocolate, and strawberry. 9233 S. Western Ave. RainbowCone.com

4. Art Institute of Chicago

Founded in 1879, the Art Institute is one of the oldest and largest art museums in the world. Featuring countless masterpieces, it has one of the best collections of Post-Impressionist paintings outside France. Look for classics like “A Sunday Afternoon on the Island of La Grande Jatte” and Picasso’s “The Old Guitarist.” The Art Institute’s permanent collection features nearly 300,000 works of art. 111 S. Michigan Ave. Adults $32, seniors and students $26, children under 14 free. Artic.edu

5. Taste of Chicago

Chicagoans know that Taste of Chicago is a unique opportunity to try the city’s many flavors all in one place. Sure, the food tends to be overpriced, but there’s no other way to experience so many Chicago dishes in so little time. (And the cost of food is a great excuse to earn credit card rewards.) Years ago, I saw a Counting Crows concert at the Taste, which is completely free to attend. Of course, events vary each year, but it’s worth the investment if you’ll be in town while the Taste is happening. Sept 8-10, 2023, in Grant Park.

6. Celebrate the Irish Spirit

People from all over the world have made Chicago their home since the start of the Industrial Revolution, but the Irish are some of Chicago’s loudest and proudest. As a result, Chicago is home to countless Irish festivals and parades. The St. Patrick’s Day parade downtown (ChicagoStPatricksdayparade.org) and the South Side Irish Parade (SouthSideIrishParade.org), also in March, are two of the best ways to experience Chicago’s Irish culture. And if you’re in Chicago for the downtown parade, be sure to check out the dyeing of the Chicago River. 2024 dates TBD.

7. Museum of Science and Industry

If you nerd out over science stuff, you can’t miss the Museum of Science and Industry (MSI). Touted as the largest science center in the western hemisphere, MSI was founded in 1893. Its marquee exhibits include the German U-505 submarine captured during World War II (admission is $18 for adults on top of museum entry fee), a full-size replica coal mine, and the command module from Apollo 8. If you buy a membership to the museum ($95 per year for individuals), you get unlimited entry at no extra cost. 5700 S. DuSable Lake Shore Dr. Adults $25.95, children 3-11 $14.95. MSIChicago.org/

Recommended: Why You Should Try Solo Travel

8. Shedd Aquarium

The Shedd Aquarium opened in 1930, and for a time its 5 million-gallon capacity was the largest in the world. It is home to 32,000 animals today, including fish, marine mammals, birds, snakes, amphibians, and insects. Some of its most popular species are penguins, sharks, sea otters, and turtles. The CityPASS program includes unlimited entries to the Shedd. 1200 S. DuSable Lake Shore Drive. Adults $40, children $30. SheddAquarium.org

9. Vito & Nick’s Pizza

If you think Chicago is all about deep-dish pizza, think again. I grew up just blocks from Vito & Nick’s, which has been featured in countless articles and TV shows over the years. Despite being a hole in the wall, the pizzeria draws people far and wide for arguably the best thin-crust pizza in Chicago. Located in Chicago’s Scottsdale neighborhood (or Ashburn, depending on who you ask), Vito & Nick’s is an escape from downtown, but it’s worth the trip. 8433 S. Pulaski Rd. VitoandNicks.com

10. Schubas Tavern

Located in the heart of the Lake View neighborhood, Schubas Tavern is housed in an old Schlitz brewery. The venue has a wide selection of drinks and food, and features an even wider range of live music, from indie to jazz. Perhaps the best part about seeing a show here is the intimate setting, which gives you an up-close-and-personal look at some great artists. 3159 N. Southport Ave. LH-St.com

The Takeaway

Chicago is a one-of-a-kind city with some of the best food, entertainment, and architecture in the world. Although it can sometimes be overshadowed by cities like London and New York, you can have an equally good time in Chicago — and likely for less money. If you’re looking for fun for the whole family, you are sure to find it here.

SoFi Travel is a new service offered exclusively to SoFi members. Earn 2x rewards when booking with your SoFi Mastercard or debit card. Then apply those rewards to your next trip when you book through our travel portal. SoFi makes planning a getaway fast, easy, and convenient — perfect for people on the move.


SoFi, your one-stop shop for travel.

FAQ

What are the most popular things to do in Chicago with kids?

The most popular things to do in Chicago include trips to Millennium Park, the Shedd Aquarium, and the Skydeck at the Willis Tower.

What are the best outdoor activities in Chicago?

The best outdoor activities in Chicago include visiting Millennium Park, Navy Pier, and North Avenue Beach.

What are 5 things that Chicago is known for?

It’s tough to narrow it down to five, but we’ll go with the Magnificent Mile, Second City, Millennium Park, Chicago Riverwalk, and Skydeck Chicago.

Photo credit: iStock/tunart

**Terms, and conditions apply: The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.

When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.


Eligibility: You must be a SoFi registered user.
You must agree to SoFi’s privacy consent agreement.
You must book the travel on SoFi’s Travel Portal reached directly through a link on the SoFi website or mobile application. Travel booked directly on Expedia's website or app, or any other site operated or powered by Expedia is not eligible.
You must pay using your SoFi Credit Card.

SoFi Member Rewards: All terms applicable to the use of SoFi Member Rewards apply. To learn more please see: https://www.sofi.com/rewards/ and Terms applicable to Member Rewards.


Additional Terms: Changes to your bookings will affect the Rewards balance for the purchase. Any canceled bookings or fraud will cause Rewards to be rescinded. Rewards can be delayed by up to 7 business days after a transaction posts on Members’ SoFi Credit Card ledger. SoFi reserves the right to withhold Rewards points for suspected fraud, misuse, or suspicious activities.
©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender. NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org).



Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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May
11
2023

Differences Between Credit Card Cosigner and Authorized User

By | Credit, credit card | Comments Off on Differences Between Credit Card Cosigner and Authorized User

If you are just starting out in life or your credit is less than you’d like, you may have trouble being approved for an unsecured credit card on your own. Fortunately, there are a few options that you can consider to still have access to credit. Two of those options are applying for a credit card with a cosigner and becoming an authorized user on someone else’s account.

While these two options are similar in some ways, they also come with some key differences. It’s important to understand these important differences if you’re considering either choice. That way, you can choose the option that is best for your specific financial situation.

Read on to learn:

•   What is a credit card cosigner vs. authorized user?

•   What are the pros and cons of being a credit card cosigner?

•   What are the pros and cons of being a credit card authorized user?

•   Is being a cosigner or an authorized user right for you?

What Is a Credit Card Cosigner?

If you are unable to be approved for a credit card on your own, you may be able to apply for a credit card with a cosigner. Similar to a cosigner on a mortgage or a personal loan, a cosigner guarantees they will pay any balance on the card if the primary applicant does not. However, unlike with a joint credit card, a cosigner may not receive a physical card or be able to access the account information.

Also, it is worth noting that recently many credit cards have changed policies and no longer allow you to apply with a cosigner. In other words, it may be hard to find a card that will let you pursue this path.

Pros and Cons of a Cosigner

Here are the pros of a cosigner:

•   A cosigner can be a good option if you’re unable to be approved for a card on your own. Having a cosigner with good credit may allow you to be approved and start to build credit under your own name with the big three credit bureaus.

However, as noted above, there’s a big con to this arrangement:

•   Most major banks do not allow credit card cosigners. Instead, it may be a better option to apply for a secured credit card or become an authorized user.

What Is a Credit Card Authorized User?

An authorized user on a credit card is someone who has the ability to make purchases on the account, without any obligation to make payments. This might be a spouse, child, or other trusted friend or family member. You can add an authorized user to your account, but just keep in mind that you as the primary account holder will be responsible for any purchases that they make.

Pros and Cons of Authorized User

Here’s the upside of an authorized user:

•   Adding an authorized user to your account can be a good way to earn additional credit card rewards. The reason why? You as the primary account holder will earn rewards for purchases made by any authorized users on your account.

•   It may be a way to help a trusted friend or family member improve their credit, as long as you both use the card responsibly.

Now, for the downside:

•   The biggest con to adding an authorized user to your credit card account is that you are legally responsible for any charges that they make. So if they spend way more than you were expecting, it could put you in an awkward personal and financial situation and possibly damage the relationship.

•   There is also usually a minimum age to be an authorized user, which is something else to keep in mind. If you’re trying to add a child or teen, you may have issues, depending on the card issuer’s policies.

Recommended: How to Get a Credit Card for the First Time

What Is the Difference Between a Cosigner and an Authorized User of a Credit Card?

Here’s a quick look at some of the differences between a credit card cosigner and a credit card authorized user.

Cosigner

 Authorized User
Generally does not get their own physical card Gets their own physical card in their name
Often is not able to access the account Has access to the account
Many credit card companies do not allow credit card cosigners Most credit card companies allow authorized users
A cosigner is legally obligated to repay the debt if the primary borrower does not An authorized user is not legally responsible to pay for any purchases

Do Cosigners and Authorized Users Have Anything in Common?

There are some important differences between being an authorized user and getting a cosigner to apply for a credit card, as mentioned above. However, there is one major thing they have in common. Both of these are strategies for people whose credit may not allow them to be approved for a credit card on their own.

A joint credit card or a secured credit card are two other similar strategies.

Is a Cosigner or Authorized User Right for You?

Because very few major banks allow credit card cosigners, it’s likely that is not going to be an option for most people. Instead, becoming an authorized user may be a better strategy if you’re looking to improve your credit. If you become an authorized user on the account of someone who already has good credit and continues to use the card responsibly, it may help build your credit.

Recommended: Guide to Choosing a Credit Card

The Takeaway

Becoming an authorized user on someone else’s credit card account and getting a credit card cosigner are both strategies intended to help improve your credit. Because very few major banks currently allow credit card cosigners, becoming an authorized user may be a better strategy. When you become an authorized user on the account of someone who is using their card responsibly, it may help build and improve your credit score as well.

If you’re in the market for a new credit card, you might look at a rewards credit card like the SoFi Credit Card. With the SoFi Credit Card, you can earn cash back rewards, which you can then use for travel or to invest, save, or pay down eligible SoFi debt. You can also add an authorized user to your SoFi credit card as a possible way to earn additional rewards.

The SoFi Credit Card: A smarter way to spend.

FAQ

Does adding someone as an authorized user help their credit score?

It is possible that adding someone as an authorized user can help their credit score. Even though authorized users are not legally responsible for the purchases or debt on the account, the account is reported to the major credit bureaus and will appear on their credit report. So as long as the account is used responsibly, it can help both people’s credit score.

Is it better to be an authorized user on someone’s card or to have your own credit card?

If you’re just starting out or having trouble qualifying for a credit card in your own name, it can make sense to become an authorized user on someone else’s credit card account. When used responsibly, it can help improve your credit and possibly put you in a position where you can be approved for your own card. Once that happens, you may prefer to have your own credit card.

Do cosigned credit cards build credit?

When you apply for a credit card with a cosigner, you are responsible for making payments to the account as the primary cardholder. This means that generally your payment history and account balances will be reported to the major credit bureaus and used in determining your credit score. If you use your card responsibly, it can help build your credit.

Photo credit: iStock/PeopleImages


1See Rewards Details at SoFi.com/card/rewards.


Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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

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