Financial Topics Archives | Page 716 of 808

Feb

2023

Investment, financial report statistic concept, close-up of black pen on printed stock exchange data price number or valuation table with green and blue yearly graph

What Is a Certificate of Deposit?

By Jamie Cattanach | Growing Wealth, money, Terminology | Comments Off

A certificate of deposit (or CD) is considered a type of savings account, but a CD holds your money for a fixed time period in exchange for a higher rate of interest than a standard savings account.

While a savings account allows you to access your cash at any time, you typically purchase a CD for a set period of time during which you can’t withdraw the funds without paying a penalty. Typical CD terms can vary from one month to five years.

While CDs are generally considered cash equivalents from an investing standpoint, and therefore very low risk, they aren’t risk free. Rather, putting your money into a CD provides a balance between growth opportunity and risk management.

Is a Certificate of Deposit Just a Savings Account?

A CD has some similarities to a savings account, but several differences. It’s a financial product designed to help consumers save their money, and because CDs typically pay a fixed rate of interest they can offer savers a predictable return over time.

However, unlike a savings account, CD holders aren’t able to access the funds in their account whenever they feel like it — at least not without paying an early withdrawal penalty, in most cases. CD holders are also not allowed to deposit more money into an existing CD, generally speaking, although they can buy another CD.

In exchange for giving up the ability to freely withdraw the money in a CD, the institution rewards CD holders with higher interest rates than they’d see in a typical savings account.

What Is APY vs Interest Rate?

Note that when you deposit money into an interest-bearing account, you would earn an annual percentage yield or APY on those dollars. The APY is different than the interest rate because it takes compounding into account.

A financial institution may offer simple interest or compound interest. If the latter, then it also matters how often the financial institution compounds that interest, e.g. monthly or quarterly.

The longer the maturity date and the higher the minimum balance, the higher the annual rate. The average APY for a 5-year CD, as of February 1, 2023, is 1.21%. But a CD with a minimum deposit of $10,000 might have an APY as high as 4.0%, given the current high-rate environment.

What Is a Jumbo CD?

A jumbo CD, which typically has a minimum deposit of $100,000 or more, could offer an even higher rate.

Ordinary CDs are insured by the FDIC up to $250,000, as are jumbo CDs — but any amount in a jumbo CD above $250,000 is not FDIC-insured and subject to risk of loss.

How Does a Certificate of Deposit Work?

When a customer goes to open a CD they’ll be asked to put down a lump sum, usually with a fairly high minimum deposit amount — perhaps $1,000 or $5,000.

The initial deposit placed in a CD is called the principal, because it is essentially a loan the consumer is offering to the bank. The interest the customer collects is what the bank pays for the privilege of borrowing their money.

Certificates of deposit also carry a “term,” much like a loan does; the term is the amount of time the funds must be left in the CD in order to glean the advertised interest rate.

The term might be as short as a few months or as long as a decade, and generally, longer terms carry higher interest rates. The day the term is over is also known as the CD’s maturity date.

Long story short: When opening a CD, a customer deposits a set amount of money for a set amount of time and agrees to leave it untouched in return for a relatively high fixed interest rate they’ll earn on the principal once the CD matures.

But how high, exactly, are the rates we’re talking about?

Certificate of Deposit Rates

Certificates of deposit are attractive savings options because they usually offer higher rates than the savings accounts, but are also a lower-risk option than, for example, investing in the stock market.

Since funds in CDs are FDIC-insured, account holders can rest with some assurance that their cash won’t simply disappear (as it might when invested in shares of a company).

As of Feb. 1, 2023, the national average rate for a normal savings account is 0.33% APY, whereas the national average rate for a 12-month CD is 1.28% APY. The national average rate for a 60-month CD is about 1.21%% APY. Online banks typically offer higher rates, closer to 4.0%.

But it’s possible to find CDs with even higher rates than that by shopping around.

Certificate of Deposits: Fine Print

There are a few more things it’s important to know about CDs before deciding to open one.

Generally, CDs automatically renew once the term is up, if the account holder doesn’t take the money out. Generally, the bank will roll over the existing CD into a new CD with the same term. (For example, a one-year CD whose funds aren’t collected on the maturity date would be rolled over into a new one-year CD.)

Most financial institutions offer CD holders a grace period, or a fixed amount of days after the maturity date, during which the account holder can decide whether to withdraw the funds, transfer them to a new account or CD, or allow them to roll over.

Finally, but importantly, most CDs are generally subject to an early withdrawal penalty, which is incurred if the money is accessed prior to the maturity date.

Early withdrawal penalties are determined by each financial institution. Depending on the policy, account holders could lose out on interest, or even lose some of their principal deposit.

Certificates of Deposit: Pros and Cons

CDs can play an important role in an overall savings strategy because they balance growth and risk management.

But as with any financial product, CDs have both drawbacks and benefits, which should be considered carefully before opening one.

Pros of CDs

• Because CDs are FDIC-insured, they’re a relatively low risk account. The FDIC insures up to $250,000, which means if an FDIC-insured institution goes out of business, account holders with a CD would receive their principal and interest, up to $250,000.

• Higher interest rates are available for CDs than for similar savings vehicles, like savings accounts, making it easier to see a higher return on investment.

◦ For savers who are worried about spending down their savings, a CD provides a safe place to place cash, where it’s locked up for a certain period of time.

Cons of CDs

• Although CDs carry higher interest rates than some other types of savings vehicles they don’t have the same kind of earning potential that stock market investments can have. By investing your money in a CD you’re losing out on potentially much higher market returns (but you’re also protected from market risk).

• CD holders generally don’t have the ability to withdraw their money at any time, at least without being subject to a penalty. That makes a certificate of deposit a poor choice for certain savings goals, like an emergency fund, which should be readily available.

◦ Savers will owe taxes on the earnings in the account, which effectively lowers the amount you earn. Be sure to take this into consideration shopping around for the best APY.

Where to Open a Certificate of Deposit

Certificates of deposit are available from a wide variety of financial institutions, including national and regional banks, credit unions, and online-only financial institutions.

Shopping around can help ensure consumers find the best rates and most favorable terms for their needs.

That said, there are also some alternatives to opening a certificate of deposit that are worth considering carefully.

Alternatives to Opening a Certificate of Deposit

Although CDs are a great way to earn interest, they’re far from the only high-interest account option out there. Here are a few options to mull over.

High-Yield Checking and Savings Accounts

Although typical savings accounts offer a relatively low interest rate, high-yield savings and checking accounts are available from some banks.

This option helps consumers combine growth potential with the ability to access their money as they need it, and can be a good alternative to CDs for those who aren’t ready to lock away their money for a year or more.

Certain high-yield accounts may offer a higher APY. However, there may be fine print involved requiring that savers meet certain terms in order to maintain that rate, such as making a minimum number of transactions per month or maintaining a minimum account balance.

It’s a good idea to review all the account terms carefully before opening any kind of financial account.

Money Market Deposit Accounts

Money market deposit accounts are another option which, similarly to CDs, tend to offer higher interest rates than your typical savings account does.

And unlike CDs, money market deposit account holders are generally allowed to write checks or process debit transactions against their funds, which are still covered by FDIC insurance.

While money market deposit accounts can earn higher interest rates than traditional savings accounts, there are monthly restrictions on the number of deposits and withdrawals.

Money market deposit accounts might require a high minimum balance in order to avoid monthly fees.

Stock Market Investments

Finally, for consumers focused on growing their money in the long-term, investing in the stock market can provide a lot of potential for growth.

Historically, the S&P 500 — an index tracking 500 of the largest corporations in the U.S. — has seen an average annual return of 13.8% over the last decade.

Of course, an investment account is very different from a savings account or CD in that there is no FDIC insurance on the funds.

Investments in the stock market are vulnerable to market fluctuation, and there’s no guarantee that investments will be safe and make money.

It is important to remember that investments have no guarantee and are subject to potential losses.

That said, many financial professionals and advisors still recommend long-term investing as one of the best ways to grow wealth over time and as a part of an overall plan for long-term financial goals like retirement.

The Takeaway

CDs, money market deposit accounts, and even plain-old checking and savings accounts can all be important parts of a sound financial strategy. CDs in particular can be good vehicles to help augment savings for shorter-term financial goals.

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.

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.

SOBK0123038

Feb

2023

Can You Buy a Car with a Credit Card?

By Austin Kilham | Budgeting & Goals, Credit, money | Comments Off

You can buy a car with a credit card in certain circumstances, or at least cover a portion of the purchase, such as the down payment. However, it’s likely not a good idea. That’s because you’ll face high credit card interest charges and potentially fees, and you’ll drive up your credit utilization (that is, if your credit limit is even high enough to cover a car purchase).

Before swiping your card for a new set of wheels, pause to ask yourself whether this is really the best way for you to purchase your vehicle. There are alternative options to help you purchase a car that may not cost you to the same extent.

Recommended: What is the Average Credit Card Limit?

What to Know About Buying a Car With a Credit Card

In short, the benefits of using a credit card to buy a car will likely outweigh the perks. That being said, it is possible to do — assuming you can find a dealership that will accept credit card payments for car purchases. Not all dealerships do, and many that do will tack on a fee for credit card payments.

Perhaps the biggest draw to buying a car with a credit card is the potential to earn rewards. You might also be able to take advantage of a promotional offer that features 0% interest for a limited period of time. But be sure to consider those perks against the risks. If you don’t pay off your full balance before interest kicks in, you’ll be paying at a high rate — much steeper than car loans, for instance. You also could do damage to your credit if you’re late on payments or if your automobile purchase eats up too much of your credit limit.

Buying a Car With a Credit Card

If, after considering the drawbacks, you decide you want to use a credit card to buy a card, here’s a step-by-step look at how to do so.

1. See if the Dealership Takes Credit Card Purchases

You’ve decided how much you want to spend on a new car, and you’ve negotiated a fair price with a dealer. But before slapping down your plastic to purchase a new or used car, you’ll first need to check with your car dealership to verify that they accept credit card purchases. Additionally, you’ll need to find out which cards they accept and how much of the total purchase price they will allow you to charge.

If you go to a dealer that won’t accept credit card purchases, or that limits the amount, you’ll have to decide whether to pay another way or to go to another place that sells the car you want and allows credit card purchases.

2. Check Your Credit Limit To Determine if It’s High Enough

If you’ve selected a car at a dealership that takes credit card payments, your next step is to check your credit limit to determine whether it’s high enough to use one card. You may need to spread out the purchase across multiple cards.

If your combined limits aren’t enough, you could pay the difference with a cashier’s check and still reap some of the rewards available through credit card use. Or, you could ask your credit card companies to increase your credit limits.

3. Notify Your Credit Company

It makes sense to notify your credit card companies that you intend to use your credit cards to make a large purchase. If you don’t regularly make large purchases on your credit cards, the transaction might get flagged as potentially fraudulent and could get declined.

4. Get Strategic With Credit Card Rewards and Promos

At a car dealership that does let you pay for a car with a credit card — or at least a portion of it — you might consider using a card that offers credit card rewards. If you have cash to pay the charge before it starts accruing interest, you’re basically getting a no-interest, short-term loan while taking advantage of credit card perks.

5. Determine How You’ll Pay Off Your Balance in Time

Before handing over your credit card to buy a car, make sure you know how you’ll pay off your balance. Ideally, you’ll pay it off in full by the statement due date, so as to avoid accruing interest on what’s likely already a hefty charge. Or, if your credit card has a 0% introductory APR offer that you’re taking advantage of, determine how you’ll pay off the full balance before the standard interest rate kicks in and interest charges start accruing.

If you’re not sure you can pay off your car before interest kicks in, you might reconsider whether you realistically can use a credit card to buy a car. Instead, you might consider ways to save money on your car purchase, such as buying a high-mileage car or weighing the cost of leasing vs. buying a car.

Recommended: What is a Charge Card?

Why Some Car Dealers Don’t Accept Credit Cards

On the surface, it might seem odd that auto dealers wouldn’t accept credit cards. Afterall, they want to make a sale, right? Of course they do, but, like other merchants, auto dealers must pay credit card processing fees for each credit card transaction they make. These fees tend to be around 2%, and they can add up pretty quickly when you consider that cars can cost in the tens of thousands of dollars. By rejecting credit cards, dealers can save themselves the expense and hassle of paying these fees.

If a dealer that normally doesn’t allow credit card purchases makes an exception, expect them to tack on convenience fees of 2% to 4% to help them cover the cost of the transaction. Pay close attention to these fees because they may offset any benefit you might gain from using a rewards card.

How Much Will Buying a Car With a Credit Card Cost You?

The cost to buy a car with a credit card can exceed the vehicle’s sticker price. For one, it’s likely that you’ll see a convenience fee added to your bill. Some dealerships may have this already baked into their prices, but for others that don’t commonly accept credit cards, they’ll add it on themselves to cover their processing costs. Typically, convenience fees run anywhere from 2% to 4% of the purchase amount, which may be enough to offset any credit card rewards you’d earn.

Second, your costs could increase thanks to interest charges. If you buy a car with a credit card and then don’t immediately pay off the full statement balance, interest can start to accrue. Average credit card interest annual percentage rates (APRs) are around 16.44%. That can start adding up fast on a car purchase that’s likely in the tens of thousands of dollars.

Pros of Car Buying With a Credit Card

Under certain circumstances, using a credit card to buy a vehicle may be a strategy you’d consider, especially if you have enough money to pay off the balance in full when your statement comes. Here’s a look at the upsides to buying a car with a credit card.

Fast and Easy Way to Buy a Car

With a credit card, you’ll have a fast and easy way to purchase your car of choice. You can skip the hassle of filling out loan paperwork and waiting to find out if you’re approved.

Potential to Earn Rewards

By purchasing a car with a credit card, you may earn rewards — something you wouldn’t get if you simply used a cashier’s check to buy the car. But before you get too swept up in your purchase’s rewards potential, see if the amount you’ll earn in rewards will offset how much you may end up paying in fees or interest.

Take Advantage of a Zero-Interest Promo

You may have slightly longer to pay off your purchase if you use a no-interest credit card. Often, these 0% interest offers last for a certain period of time, usually anywhere from six to 21 months. In order to avoid interest payments, you must finish paying off your vehicle in that time period. Still, it offers a little leeway.

Keep in mind that this strategy may be riskier than paying off your full balance immediately though. If, for some reason, you can’t pay off the balance within the introductory no-interest period due to unforeseen circumstances, the card will revert to its regular rate, which may be quite high. Should that happen, the situation can go downhill from there. Some credit card companies will then charge the full interest rate on the entire purchase, not just on the remaining balance.

Recommended: When Are Credit Card Payments Due?

Cons of Car Buying With a Credit Card

In contrast to the few upsides, there are a number of major drawbacks to turning to your credit card to make a car purchase.

High Credit Card Interest Rates

The biggest reason not to buy a car with your credit card is that credit card interest rates are typically much higher than other available options. The average credit card APR is 16.44%. In contrast, the average interest rate for an auto loan to purchase a new car is close to 4%, while for used cars it’s over 8%.

Credit Card Fees

You also might get stuck with some costly fees by buying a car with a credit card. For starters, there’s the previously mentioned fee that the dealership will likely charge you for the convenience of using your credit card. Convenience fees typically run 2% to 4% of the purchase amount.

That’s not the only fee you might run into either. For example, let’s say that your strategy is to purchase a car on your current credit cards, then transfer the balance to a zero-interest credit card. Besides the challenges listed above, you may add balance transfer fees to the mix. These fees can be as high as 5%, which, on a $20,000 car, is $1,000.

Potential to Harm Your Credit Score

Another major downside of purchasing a car with a credit card is that it can majorly increase your credit utilization, which accounts for 30% of your FICO score. With the price of a car, it can be easy to push your credit utilization ratio way past the recommended 30%, which could translate to negative effects to your credit.

Further, if you miss payments or are late making them, that could lead to further damage to your credit score.

No Addition to Your Credit Mix

Here’s something else to consider: Having different kinds of debt can actually help with your credit score. So using an installment loan, such as a traditional auto loan, to buy your car instead of a credit card may be helpful to your overall long-term financial situation. And if you have a good enough credit score to get approved for an auto loan with lower interest rates than the average credit card interest rate, you’ll come out ahead.

Other Options for Buying a Car

While technically you can pay for a car with a credit card, it might not be your best option. Here are a couple of alternatives to consider.

Auto Loan

If you decide to finance some or all or all of your auto purchase, you can apply for a car loan through the dealership or other lenders. Auto loans are typically secured loans that use the vehicle as collateral. So, if you fail to make payments, your lender has the option to repossess the vehicle to cover some of your debt.

Dealers are often able to get same-day financing approved, but there may be some pressure to buy while the salesperson takes advantage of your excitement. Banks and private lenders may take longer to approve an application, but sometimes offer better deals on terms or interest rates. Taking emotion out of the equation when buying a car will allow you to compare rates and terms to get the best deal for your financial situation.

Personal Loan

You may also want to consider buying a car with a personal loan, which is an unsecured loan that’s not backed by collateral. Personal loans can be used to cover many expenses, including the cost of buying a car. Because they are unsecured, interest rates on personal loans may be higher than other auto financing options, depending on the applicant’s creditworthiness.

The Takeaway

While you can buy a car with a credit card, you may not necessarily want to now that you’re aware of all of the potential pitfalls. But if you find a dealership that accepts credit card payments and you decide it’s the best path for you, make sure to take the necessary steps of checking in on your credit limit, alerting your credit card company, and making a plan for prompt repayment.

It might be better to select another option to cover your car purchase, and reserve your credit card for other spending. With the SoFi credit card, for example, you can earn generous cash-back rewards that you can then use to invest, save, or pay down eligible SoFi debt.

FAQ

Do car dealers accept credit cards?

It depends. Many dealers won’t accept credit cards due to the processing fees they’d incur, but some do. In those cases, dealers may pass the cost along to the consumer in the form of a convenience fee.

Can you use a credit card for a car down payment?

It’s more common for dealers to allow you to use a credit card to use a credit card to pay for a portion of your purchase, such as your down payment, as opposed to the entire car purchase. Still, some dealers won’t accept credit cards at all.

Is it better to pay for a car with a credit card or loan?

It’s likely better to use a loan to pay for a credit card. That’s because loans tend to have significantly lower interest rates than credit cards.

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.

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

Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points toward active SoFi accounts, including but not limited to, your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, Student Loan Refinance, or toward SoFi Travel purchases, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

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 .

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.

SOCC0123009

Feb

2023

Guide to Building Credit With Prepaid Credit Cards

By Dan Miller | Credit, credit card | Comments Off

We increasingly live in an electronic financial society, and if you are unbanked or underbanked, you may be missing out on some opportunities. While cash is still accepted at many retailers, there are some places where you’ll need a card to make a purchase. And sometimes, using a card is simply more convenient.

If you don’t have, don’t want, or can’t qualify for a credit card, you may consider a prepaid credit card as an alternative. Unlike traditional credit cards, prepaid credit cards do not report transaction or payment information to the major credit bureaus. That means that prepaid credit cards will not help build credit directly.

Recommended: What is a Charge Card?

Do Prepaid Cards Build Credit?

Having or using a prepaid credit card will not have any impact on your credit score. That’s because one of the major differences between a prepaid credit card and a traditional credit card is that prepaid credit cards do not report transactional or payment information to the major credit bureaus. As such, that activity cannot have an affect on your credit score.

Understanding Prepaid Credit Cards and How They Work

When you use a traditional credit card, you are borrowing money from the credit card issuer. Then, each month when the statement comes due, you make a payment toward the loan the credit card company has issued you. This payment history is reported to the major credit bureaus. Other potential lenders will review how much credit you have open and how reliably you make payments on your debt obligations to help them decide if they want to issue you additional credit.

On the other hand, a prepaid credit card does not offer access to revolving credit. With a prepaid credit card, you will first purchase the card, and the purchase amount will be loaded onto the card. Then, you can use the card at participating retailers. Each purchase that you make will get subtracted from the total value that is stored on the card. Once the total value reaches $0, the card will no longer be accepted.

Recommended: When Are Credit Card Payments Due?

Who Might a Prepaid Credit Card Be Suitable For?

There are certain groups of people for whom a prepaid credit card might be an ideal solution. This includes those with poor credit and those who desire the flexibility that a credit card can offer.

People With a Poor Credit Score

One group of people who might get value from a prepaid credit card are those that have a poor credit score or limited credit history. If you’re not able to qualify for a traditional credit card, or are concerned with how much a credit card costs, you might want to use a prepaid credit card for transactions where using a card is required or preferable.

People Who Want the Flexibility of a Credit Card

If you don’t have a credit card or prefer to use cash for most of your transactions, there still may be some circumstances where you might appreciate the flexibility of using a credit card. If that description fits you, you should explore the benefits and risks of prepaid credit cards, and decide if one might be right for you.

If, on the other hand, you are already in a solid financial state and want to apply for a card that offers excellent rewards, consider the SoFi credit card. When you apply for a credit card with SoFi, you can earn unlimited cash-back rewards with every eligible purchase.

How Can a Prepaid Card Improve Your Credit Rating?

Since prepaid credit cards do not report payment or transactional usage to the major credit bureaus, they won’t improve your credit score directly. However, getting in the habit of using a credit card responsibly can help prepare you for when you do have a traditional credit card. Starting those habits can keep you from making some of the common credit mistakes that can harm your credit score.

When Should You Use a Prepaid Credit Card?

A prepaid credit card can be a good option for people that need or want to use a credit card but don’t have a traditional credit card. This could include when making purchases online or when making a purchase where you want to make sure there is an electronic record of the transaction.

If you are trying to get a credit card cash advance, however, you may want to consider another option. Most prepaid credit cards will not allow you to get cashback.

Secured Cards vs Prepaid Cards

There are several different types of credit cards, one of which is a secured credit card. A secured credit card is similar to a prepaid credit card in that you have to make a deposit or purchase upfront to load value onto your card.

However, a secured credit card allows you to regularly reload value onto your card. A secured credit card also reports usage information to the major credit bureaus, which can make it one way to help with establishing credit.

Alternative Ways to Help You Build Credit

Besides secured credit cards, there are a few other ways to help you build your credit. Some options include:

• Becoming an authorized user: One is being an authorized user on the credit card account of a trusted friend or family member.

• Making on-time payments on other debt obligations: Another possible way to help build your credit is reliably making payments on other types of debts, like student loans, car loans, or personal loans.

• Getting a cosigner: If you’re hoping to get a loan or unsecured credit card to begin building your credit, one way to increase your odds of approval is by getting a cosigner. Just know that this means that person will also be on the hook for your debt if you fail to repay it, so make sure to abide by credit card rules to avoid that situation.

The Takeaway

Prepaid credit cards can be a great way to make a purchase when using cash is not an option or is less advantageous. However, it’s important to understand that prepaid credit cards do not send information about your transaction or payment history to the major credit bureaus. That means that having or using a prepaid credit card will not have any impact on your credit score.

If you want a credit card that reports transactions to the major credit bureau, you’ll need to have a more traditional type of credit card. One option to consider is the SoFi credit card. With the SoFi credit card, you can earn cash-back rewards, which you can then use to invest, save, or pay down eligible SoFi debt.

FAQ

What challenges are involved in having prepaid credit cards?

One challenge is that any transactions or payment history associated with a prepaid credit card are not reported to the major credit bureaus. That means that using a prepaid credit card will not help you build your credit. There also may be some types of credit transactions where the merchant will not accept a prepaid credit card.

Can prepaid cards be run as credit?

In some ways, prepaid cards work just like traditional credit cards. This means that typically, a prepaid card can be run as credit when making a purchase. Additionally, depending on the merchant and the type of prepaid card you have, you may be able to set up a PIN and use your prepaid credit card as a debit card.

Do prepaid cards damage credit?

Prepaid credit cards do not report any type of purchase or payment history to the major credit bureaus. So while this means prepaid credit cards can’t help build credit, the good news is they also will not damage it.

Do prepaid cards report to credit bureaus?

No, prepaid cards do not report to the major credit bureaus. Any purchases that you make on a prepaid credit card will not have any impact on your credit score, either positive or negative. So if you are working on establishing credit, you will need to use a traditional credit card or another type of financial instrument that reports usage to the major credit bureaus.

Photo credit: iStock/Visiondreams

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

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.

Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points toward active SoFi accounts, including but not limited to, your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, Student Loan Refinance, or toward SoFi Travel purchases, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

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 .

SOCC0123003

Feb

2023

Does a Phone Bill Build Credit? How Phone Bills Affect Credit

By Jackie Lam | Credit, credit card | Comments Off

If you’re one of millions of Americans with a blank credit file or too little data on your credit reports, you might wonder: Does a phone bill build credit? In short, paying your cell phone bill typically does not help you build credit.

That being said, there are steps you can take to have your phone bills affect your credit. For instance, paying your monthly bill with a credit card and then making on-time payments on your balance can help you build your credit score from scratch. You also could enroll in a third-party service to have your phone payment activity reported to the credit bureaus.

Recommended: When Are Credit Card Payments Due?

How Cell Phone Bill Payments Work

If you have a cell phone, each month you will likely receive a bill — either in the mail or digitally — with an amount that you have to pay for using the cell phone carrier’s service. This amount will vary depending on the type of plan you have and how many lines you have under the account, among other potential charges like device protection or insurance. If you’ve financed the cost of your physical cell phone, that amount will also get added into your monthly cell phone bill.

Recommended: What is a Charge Card?

Will Paying Your Phone Bill Build Credit?

Unlike payments on your credit card or loans like your auto loan or mortgage, cell phone payments usually don’t get reported to the credit bureaus. As such, cell phone payments typically don’t show up on your credit report and therefore don’t impact your credit score.

The only exception to this is if you finance a cell phone and the creditor reports your payments to the three major credit bureaus. In that scenario, those payments could help build your credit.

There are also a couple of ways that you can get your phone bills to help with building credit. These include:

• Reporting payments to the bureaus through a third party: Cell phone companies usually don’t report directly to the credit bureaus, nor can you self-report your cell phone bill payments to the bureaus. Instead, you can sign up for a third-party service that will report your payment activity to the bureaus on your behalf, so they appear on your credit report. You might owe a subscription fee for this service though.

• Paying your cell phone bill using your credit card: By paying bills with a credit card — in this case, your cell phone bill — and then making on-time payments on your credit card balance, you can help build your credit score. Beyond serving as a credit-building tactic, using your credit card to cover your phone bills can offer access to added perks like cell phone protection.

What Happens to Your Credit Score When You Miss Phone Bill Payments?

While your phone bill payments don’t directly impact your score, should your account become delinquent, then the delinquency does get reported to the credit bureaus. At this stage, your cell phone bill can negatively impact your score.

Your cell phone account could become delinquent if you miss several payments in a row, or if you end your contract with your carrier earlier and fail to pay off your balance. This information can remain on your credit report for up to seven years from the date the delinquency occurred.

What Happens to Your Credit Score When You Start a New Phone Plan?

When you apply for a new phone plan, the carrier will do a hard pull of your credit to help them determine how likely you are to stay on top of your cell phone payments. A hard pull can negatively impact your credit score, though its effects are usually minor and short-lived.

However, your subsequent payments on your new phone plan likely will not get reported to the credit bureaus, meaning your payment activity generally won’t affect your credit.

Does Buying a New Phone Affect My Credit Score?

Buying a new phone won’t impact your credit score. And should you get financing through your cell phone carrier and enter a payment plan, your payments usually don’t get reported to the credit bureaus.

One way that a new cell phone purchase can impact your credit score is if you pay for your new phone with a credit card. If you make on-time payments on your credit card balance, that could help you build your score. But on the flipside, making late payments or missing payments entirely could negatively affect your score.

Importance of Building Credit

Establishing credit and building a strong credit score can not only help you get approved for that car loan, mortgage, or credit card in the future, but it can help you land the most favorable rates and terms.

Without a good credit score, the cost of taking out a car loan or mortgage, or carrying a balance on a credit card, could be more costly. Getting approved is also more challenging with a thin credit history or a credit score that’s not so great.

Other Ways to Build Credit

Besides reporting your cell phone bill through a third-party company or paying your cell phone bill with your credit card, here are some ways you can build your credit from scratch.

Open a Secured Credit Card

If you’re just starting out on your credit journey, consider applying for a secured card. A secured card works just like a credit card, but it requires a deposit. Your deposit serves as collateral.

Secured cards are designed for those who are building their credit and as such, generally have lower credit limits. The deposit you make is usually the same as your credit limit. For example, if you have a $250 credit limit, your deposit is also $250.

Once you demonstrate a history of on-time payments, you might graduate to a traditional credit card, which does not require a deposit as collateral and which generally offer higher credit limits. Plus, once you move up from having a fair credit score, you may have access to lucrative rewards and perks.

Recommended: What is the Average Credit Card Limit?

Get a Credit-Builder Loan

Banks, credit unions, and online financial platforms might offer credit-builder loans, which are small loans that are stowed in a savings account. Unlike with a typical loan, where you receive a lump sum upfront, you only get the loan amount once you’ve paid off the loan in full. The payments you make on a credit-builder loan are reported to the credit bureaus, which can help you build credit.

Become an Authorized User

Being added as an authorized user on someone else’s credit card means you can make purchases using their card but aren’t on the hook for payments. Instead, the authorized user, generally a family member or trusted friend, is responsible for making payments.

If the account holder maintains responsible credit card behavior, that can help you on your credit-building journey, as their activity appears on your credit report.

Use a Credit Card Responsibly

Using a credit card responsibly and making on-time payments each month can help you to build your credit score. Payment history makes up 35% of your FICO Score, making timely payment the most influential factor among what affects your credit score. Additionally, keeping your credit card accounts open can help increase the average age of your credit accounts, another factor that influences your FICO Score.

Beyond building your score, a credit card can offer other advantages as well. The SoFi Credit Card, for instance, offers competitive cash-back rewards on purchases made using the card. Cardholders can redeem those rewards to save, invest, pay down eligible SoFi debt, or use as a statement credit.

The Takeaway

Paying your cell phone bill likely won’t help you build credit. However, there are steps you can take if you’d like your phone bills to affect your credit score. This includes using your credit card to cover your phone bill, and then making on-time payments on your balance. You can also build credit with cell phone payments by getting them reported through a third-party company. No matter how you do it, building credit is crucial to do, as it opens the door to future financial opportunities.

FAQ

How long does a cell phone bill stay on your credit card report?

Cell phone payments usually aren’t reported to the credit bureaus. In turn, they won’t show up on your credit card report. However, should you miss several payments in a row, the account can become delinquent. Delinquent accounts can stay on your credit report for up to seven years.

Will missed payments on my cell phone bills hurt my credit score?

Missed cell phone payments won’t hurt your credit score unless you miss several payments in a row, and the account falls into delinquency. Delinquency can linger on your credit report for up to seven years.

Does upgrading my phone build my credit score?

Because your cell phone carrier generally doesn’t report to the credit bureaus, any changes to your cell phone plan, such as a phone upgrade, will not build your credit score.

Photo credit: iStock/Kanawa_Studio

Feb

2023

How to Pay Your Taxes With a Credit Card

Can You Pay Taxes With a Credit Card?

By Sarah Li Cain | Credit, Family Finances, money | Comments Off

Sadly, there’s no avoiding paying taxes to the IRS — whether that’s once a year or multiple times for those who are self-employed. However, what you do have agency over is how you pay. One of the few ways you can pay taxes is with a credit card.

Whether you want to pay the IRS with a credit card so that you can earn rewards or have a bit of financial breathing room, it’s important to be aware of the implications of using such a payment method. Read on to learn more about how to pay taxes with a credit card.

Can You Pay Federal Taxes With a Credit Card?

Yes, you can. More specifically, you can pay your federal taxes with a credit card (and in some cases, you may even be able to pay your state taxes with one as well). The IRS offers different third-party payment processors that accept credit card payments for taxes.

Keep in mind that if you pay the IRS with a credit card, this type of transaction isn’t free, given how credit cards work. Whichever third-party payment service provider you choose, you’ll be charged additional processing fees for the convenience of using your credit card to pay taxes. For example, all of the third-party options charge a percentage of the amount you’ll be paying in taxes, but there’s also a minimum flat fee you’ll owe.

In addition, there may be limitations on how many times you can use your credit card for IRS payments. For instance, if you wanted to pay your personal income taxes, you can only do so twice per year for the current tax year due. However, if you worked out a monthly payment plan with the IRS, you can pay with a credit card up to two times per month.

What to Know Before Paying Taxes With a Credit Card

Before pulling out your credit card to pay your taxes, it’s important to know what your goals are. Here are some common reasons taxpayers choose to pay their taxes with a credit card:

• You may earn rewards points, cash back, or miles. Many consumers love to earn perks offered by their credit card issuers and see it as a major benefit of what a credit card is. Even with the additional fees associated with paying taxes with a credit card, you may feel like the rewards offset what you’ll pay. In other words, if the value of the rewards is much higher than the service fees, it might be worth using your card. As an example, let’s say you’ll be able to earn 4,000 rewards points from your tax payment, which equates to $100 toward a flight or hotel room. If you owe $3,000 in federal taxes and the third-party payment service charges a 1.96% fee, you’re effectively paying $58.80 in fees to earn $100 in rewards. Whether that’s worth it is up to you.

• It’s possible to earn a major rewards bonus. If you signed up for a new rewards credit card and need to meet a minimum spending threshold to earn a huge bonus, it might be worth considering paying your taxes with that credit card. For instance, if you signed up for a credit card offering 50,000 bonus miles — an equivalent to $1,000 worth of travel — paying a $4,000 tax bill with a payment service charge of 1.96% equates to $78.40 in fees. Assuming that meets your minimum spending threshold, the value you receive is pretty high. Just make sure you can make more than your credit card minimum payment, and ideally your full balance, to avoid interest accruing.

• You’ll gain the ability to spread out your payment. Paying taxes with a credit card might be worth considering if you’re looking for a low-cost way to spread out your tax payments. If you have excellent credit, you may qualify for a credit card offering a 0% introductory annual percentage rate (APR), meaning you’ll have time until the offer runs out to pay off your taxes interest-free. Sure, you’re paying card processing service fees, but that could be worth it to spread out your payments. However, many credit card companies have terms and conditions that stipulate how you can remain in good standing for the introductory offer for the APR on a credit card — make sure you’re following them, or you could end up paying a high amount in interest.

What Is the Fee for Paying Taxes With a Credit Card?

As mentioned, the amount of the fee you’ll owe for paying taxes with a credit card will vary depending on which payment processor you use. Here’s a look at how much each processor’s fees run:

Payment Processor	Fee Rate	Minimum Fee
payUSAtax	1.85%	$2.69
Pay1040	1.87%	$2.50
ACI Payments, Inc.	1.98%	$2.50

Pros and Cons of Paying Taxes With a Credit Card

There are advantages and disadvantages to paying the IRS with a credit card. Here’s an overview of the pros and cons, which we’ll cover in more detail below:

Pros of Paying Taxes With a Credit Card	Cons of Paying Taxes With a Credit Card
Earn cash back and credit card rewards	Third-party payment processors charge fees
Meet spending thresholds for bonus rewards earnings	Rewards earnings may not offset fees paid
Use a convenient form of payment	Potentially pay high credit card interest rates if you carry a balance or the introductory APR period ends before your balance is paid off
Spread out payments interest-free if using a card with 0% introductory APR	IRS payment plan interest rates may be lower than what’s offered by credit cards

Pros of Paying Taxes With a Credit Card

There are the major upsides of paying the IRS with a credit card, including:

• You can earn cash back and credit card rewards. By putting the amount of your tax bill on your credit card, you might earn some credit card rewards. Just make sure your rewards earnings will offset any fees you’ll pay (though rest assured, taxable credit card rewards usually aren’t a thing, except in certain cases).

• It can help you meet spending thresholds to earn bonus rewards. Often, credit cards that offer bonuses require you to spend a certain amount within a specified period of time in order to earn them. If you’re struggling to reach that threshold, paying your taxes with your credit card could help, allowing you to snag those bonus rewards.

• It’s a convenient form of payment. Anyone who has paid with a credit card knows it’s easy. You don’t have to fill in various bank account numbers like you otherwise would if you opt to cover your tax bill with a credit card.

• You can spread out payments — and interest-free, if you have a 0% APR card. If you’re tight on cash or simply want to spread out your tax payment, a credit card can enable you to do so. Even better, if you have a card that offers 0% APR, you’ll avoid paying any interest while you space out your payments.

Cons of Paying Taxes With a Credit Card

It’s not all upsides when it comes to paying taxes with a credit card. Make sure to consider these drawbacks as well:

• You’ll pay third-party processing fees. Perhaps the biggest drawback of paying the IRS with a credit card is you’ll pay fees. The exact amount you pay in fees will vary depending on which third-party payment processor you use, but they can range from 1.85% up to 1.98%. If your tax bill is $1,000, for example, you could pay up to $19.80 in fees.

• The rewards you earn might not offset the fees. If your rewards rate is close to the amount in fees, those two will effectively cancel each other out. In other words, you’ll pretty much break even if you pay roughly the same amount in fees as you earn in credit card rewards, which might not make using a credit card worthwhile.

• You could end up paying interest at a steep rate. If you aren’t able to pay off your balance in full by the statement due date, or if for some reason you don’t pay off your full balance by the time your 0% APR intro offer ends, interest charges will start racking up. Plus, credit card interest rates tend to be pretty high compared to other types of loans.

• There might be lower interest rate payment plans available. If you’re hoping to spread out your payments, using a credit card might not be your most cost-efficient option. The IRS offers a payment plan for those who qualify, and the interest rate can be lower than the APR on a credit card.

Recommended: What is a Charge Card?

How Do You Pay Taxes With a Credit Card?

If you’ve decided you want to use your credit card for tax payments, here’s how you do it.

1. Decide Which Credit Card to Use

Consider your reasons for using a credit card — is it to earn rewards, meet a minimum spending threshold, or spread out your payments interest-free? Whatever it is, make sure to choose a card that meets your goals. If you want to open a credit card, then you’ll want to make sure you receive the card in time to pay the IRS before the tax filing deadline.

Recommended: When Are Credit Card Payments Due?

2. Determine the Amount You Want to Pay

Whatever the amount is, ensure it’s well within your credit card limit. You can spread your payments over multiple credit cards, but keep in mind the transaction limits that the IRS imposes for certain payments.

3. Choose a Third-Party Payment Processor

The IRS website currently lists three approved payment service providers that you can use. Compare which one offers the best features and lowest fees for your situation.

4. Make Your Payment

Once you’ve selected which payment service provider you want to go with, head to their website and follow the instructions. You may be asked to provide information such as the credit card expiration date and CVV number on a credit card. Double check that you’re making the right type of payment and that all the information you’ve entered is accurate before pressing submit.

Other Ways to Cover Your Tax Bill

If you’re not convinced the costs involved in credit card payment are worth it, there are other ways that you can pay your taxes.

Direct Pay With Bank Account

While this option won’t allow you to earn rewards or spread out your payments, you’ll also steer clear of paying any fees or potentially owing interest. To make a tax payment directly from your bank account, you’ll simply need to select this option and provide the requested banking information, such as your bank account and routing numbers.

Recommended: How to Avoid Interest On a Credit Card

IRS Payment Plan

If you’re hoping to be able to pay off your balance over time, you can apply for a payment plan with the IRS. You may qualify for a short-term payment plan if you owe less than $100,000 in combined tax, penalties or interest, or you could get a long-term payment plan if you owe $50,000 or less in combined tax, penalties, and interest and have filed all required returns.

Note that this option may involve fees and interest though. The costs involved will depend on which type of plan you’re approved for.

Looking for a New Credit Card?

Indeed, you can pay taxes with a credit card. Paying taxes using a rewards credit card is a great way to earn perks, helping you maximize your spending. However, there are downsides to consider as well, such as the third-party processing fees and the potential to run into high credit card interest if you don’t have a good APR for a credit card.

If you do want to pay taxes with a credit card, it’s important to find the right card to do so. With the SoFi Credit Card, for example, cardholders can earn generous cash-back rewards on all eligible purchases. You can then redeem rewards for cash, investments, or eligible SoFi loan payments, or as a statement credit.

FAQ

What does it cost to pay taxes with a credit card?

Third-party payment processors charge a service fee to pay your taxes with a credit card. In many cases, it’s typically a percentage of your payment amount, with a minimum flat fee charged.

Does paying taxes with your credit card earn you rewards?

Paying taxes can earn you rewards, depending on the type of credit card you use. Many rewards credit cards offer cash back, miles, or travel points on qualifying purchases. Before doing so, it might be helpful to determine whether the value of the rewards earned will outweigh the fees you’ll pay.

Is it better to pay taxes with a credit card or debit card?

Both methods of paying your taxes can be a great choice, depending on your financial situation. If you’re not interested in earning rewards or spreading out your payments and have the cash on hand, you can pay with a debit card. Some may prefer to pay with a credit card because they feel it’s a more secure way to make payments.

Are credit cards the cheapest way to pay your tax bill?

No. Paying your taxes with a credit card will add an additional fee onto your tax bill, plus you could end up paying interest if you don’t pay off your full statement balance by the due date. Other options, such as direct pay with your bank account don’t involve paying fees or interest.

Can you pay state taxes with a credit card?

It depends. Some states do facilitate tax payments with a credit card. To find out if yours does, check your state’s tax website for more information.

Can you pay property taxes with a credit card?

Once again, it depends which state you live in. Many counties and cities will allow you to pay property taxes with a credit card, though not all do. Reach out to your local tax collector’s office to see which payment options are accepted.

Photo credit: iStock/Moyo Studio

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

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.

New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 12/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet

Members earn 2 rewards points for every dollar spent on purchases. No rewards points will be earned with respect to reversed transactions, returned purchases, or other similar transactions. When you elect to redeem rewards points toward active SoFi accounts, including but not limited to, your SoFi Checking or Savings account, SoFi Money® account, SoFi Active Invest account, SoFi Credit Card account, or SoFi Personal, Private Student, Student Loan Refinance, or toward SoFi Travel purchases, your rewards points will redeem at a rate of 1 cent per every point. For more details, please visit the Rewards page. Brokerage and Active investing products offered through SoFi Securities LLC, Member FINRA/SIPC. SoFi Securities LLC is an affiliate of SoFi Bank, N.A.

SOCC0123010