While there are many things that determine your credit score — including your payment history, credit utilization, and the average age of your credit accounts — investing in stocks is not one of them.
That being said, while investing or opening an investment account does not directly affect your credit score, it’s possible for it to have an indirect effect. For instance, if you open a margin investment account that comes with a loan or line of credit, that debt may show up on your credit score. Additionally, your investment performance may have an impact on your overall financial picture, which can affect your ability to pay off your debts.
There are many factors to consider before investing in stocks, like how to choose good investments or making sure that your overall finances are sound. The good news is that in most cases, you won’t need to worry about how trading stocks affects your credit score.
That’s because the amount of money you have in investment accounts (and how well you do at investing in stocks) does not usually show up on your credit report or impact your credit score. As such, investing isn’t a path toward establishing credit.
What Happens to Your Credit Score if You Open a Brokerage Account?
If you’re looking to get started with investing in stocks by working with a broker, know that brokerage accounts are not typically reported to the major credit bureaus. This means that opening a brokerage account generally should not have any overall impact on your credit score.
One possible exception is if you open a margin account. Margin accounts allow you to borrow money and buy stocks for more than the actual cash you have in your account. Because some brokerages consider margin accounts as loans, there may be a credit check involved. This could have a small impact on your credit score, but it usually goes away after a few months.
How Does Opening an Investment Account Affect Your Credit Score?
Most investment accounts do not show up on your credit report. So, opening an investment account will generally not affect your credit score. Whether you are buying stocks with a credit card or investing by depositing cash into your account, your balance and investment performance will not impact your credit score.
That being said, opening an investment account and actively investing in stocks or other investments can indirectly affect your credit score. If you end up losing money in the stock market, it might negatively impact your ability to meet your other debt obligations. Should you have money tied up in your investment account and end up leaning more on your credit cards to cover costs or missing payments, that can have a negative impact on your credit score and hamper your efforts at building credit.
How Making Investments May Affect Your Credit Score
There are many different ways to invest your money, and many different types of investments. But nearly all investment accounts do not show up in your credit score. So regardless of what type of investing you prefer — whether stocks, bonds, mutual funds, precious metals, or something else — your investing activity should not impact your credit score.
The Takeaway
Investing in stocks is one popular way that some people build wealth. While there are pros and cons to investing in stocks, it’s important to realize that investing in stocks — or most types of investments, for that matter — does not show up on your credit report and does not affect your score.
If you’re looking to build credit, one option might be applying for a cash-back rewards credit card like the SoFi credit card. If you’re approved for the SoFi credit card, you can earn unlimited cash-back rewards. You can use those rewards as a statement credit, invest them in fractional shares, or put them toward other financial goals you might have, like paying down eligible SoFi debt.
FAQ
Can I open a brokerage account with a bad credit score?
Yes, you can open a brokerage account with a bad credit score. Generally speaking, your broker will not issue a credit check to open a brokerage account. Additionally, in most cases, your brokerage account will not show up on your credit report. One exception may be if you apply for a margin account. Margin accounts can be considered loans, so your broker may not approve you for one if you have bad credit.
Can I open an investment account with a bad credit score?
There generally is not a credit check to open an investment account, so it is usually possible to open an investment account even if you have a bad credit score. Further, most investment accounts will not show up on your credit report, help you build credit, or impact your credit score.
Do stocks show up on your credit report?
In most cases, stocks (as well as bonds, mutual funds, and other investments) do not show up on your credit report. Your account information, balance, and investment performance do not usually impact your credit score.
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 .
While joining a credit union likely won’t affect your credit score in and of itself, some of the financial products offered by credit unions can have an impact on your score. For example, a credit union may offer lower interest rates on loans, which can help you keep an affordable monthly payment that’s easier to make on time. You also may be more likely to get approved for a credit union credit card than one from a bank, and responsibly using that card could help you build your credit score.
If you’re considering a credit union membership in the hopes that a credit union can help build credit, it helps to first understand how you can accomplish this. That way, you can better determine if joining a credit union is worthwhile for you.
A credit union is a non-profit financial organization that exists to serve its members, who are also its owners. This can mean that credit unions are able to offer higher interest rates on savings and lower interest rates on loans and credit cards, as well as charge fewer fees.
Credit unions can offer many of the same financial services and products as banks and online lenders, though their lineup and number of locations can be a bit more limited. To gain access to a credit union’s products, you’ll need to become a member, which entails meeting certain requirements. Credit unions often target certain communities or regions.
Here’s a brief look at how credit unions compare with both banks and online lenders:
Credit Unions
Banks
Online Lenders
Not-for-profit
Usually for-profit
Usually for-profit
Typically offer lower interest rates on loans than banks or online lenders
Typically charge higher interest rates on loans than credit unions
Typically charge higher interest rates on loans than credit unions
May offer an array of basic financial products
Often offers a full spectrum of financial products and services
May offer an array of basic financial products
What Is a Credit Union Credit Card?
Many credit unions partner with credit card issuers to issue a co-branded credit card. The types of credit cards that are offered by credit unions vary widely depending on the particular credit union. They can include rewards credit cards that offer points or cash back or secured cards designed for those looking to build their credit.
What Credit Score Is Typically Needed for a Credit Union Credit Card?
Each credit union is owned by its respective members, so there isn’t a set credit score that’s needed for a credit union credit card. Rather, each credit union sets its own parameters for the credit score and other financial requirements for approval.
That being said, you may have better luck getting approved at a credit union compared to a traditional bank, even if you are still building your credit.
How a Credit Union Credit Card Can Help Build Your Credit Score?
Here are some of the ways a credit union credit card could help you to build your credit score.
Potentially Easier Approval
Getting approved for and opening a credit card or loan is key to establishing credit. However, it can be challenging to get credit if you’ve never had it before. Because credit unions are owned by their members, you may find it easier to get approved for a new credit card. And if you are denied, it may be easier to talk with a customer service representative.
Lower Interest Rates
While this isn’t necessarily true across the board, many credit unions offer lower interest rates on debt products like loans and credit cards. Having a lower interest rate can help you build your credit score by making it easier to stay on top of paying down debt.
Along with lower interest rates, it ‘s common for credit unions to charge fewer fees than traditional banks or other lenders. Since credit unions are not-for-profit, they don’t need to charge some of the fees that banks and other financial institutions do. Paying fewer fees can help you keep more of your money in your pocket to pay down debt and save for the future.
Automatic Payments Option
Many credit unions allow you to set up automatic payments on your credit union credit card account. Additionally, most credit unions offer different checking and savings account options, so you can easily pay your credit card from your checking account. This setup helps avoid missing payments, which can help to build your credit score, given one of the best tips for building credit is to pay your debt obligations in full and on time, each and every month.
Just like money in banks is insured by the Federal Deposit Insurance Corporation (FDIC), the funds you keep in credit union accounts are insured by the National Credit Union Administration (NCUA). The NCUA is an organization of the federal government that insures up to $250,000 per account that you have at a federally insured credit union.
Joining a credit union can be a wise financial move, especially if you find one that is a good fit for you and that offers the products and services you need. Many people enjoy being a partial owner of a credit union rather than just being one more customer at a for-profit bank, as credit unions tend to be more community-oriented. And the good news is that switching banks is usually not that difficult.
Alternative Ways to Build Your Credit Score
Joining a credit union won’t help build your credit score on its own, but it can be a good first step toward building your credit. Here are a few other ways that you can build your credit score:
Credit unions are nonprofit financial institutions that offer many of the same financial products as banks and other online lenders. But unlike banks, credit unions are owned by their members, which can help keep interest rates high and fees low. Joining a credit union won’t help you build your credit by itself, but taking advantage of credit union perks and financial products may help you build your credit.
Another way to build credit can be by applying for a credit card like the SoFi credit card. If you’re approved for a cash-back rewards credit card with SoFi, you can earn unlimited cash-back rewards. You can use those rewards as a statement credit, invest them in fractional shares, or put them toward other financial goals you might have, like paying down eligible SoFi debt.
FAQ
Will joining a credit union improve my credit score?
Joining a credit union in and of itself will not improve your credit score, since the fact that you are a member of a credit union does not usually appear on your credit report. However, credit unions offer many financial products, including loans and credit cards. Making responsible use of some of these credit union offerings can help you build your credit.
What are the disadvantages of joining a credit union?
Because credit unions are owned by their members, you generally can’t simply open up an account. Instead, you may have to belong to a specific group or pay a small membership fee to get an account. Many credit unions are also smaller than most banks, so they may not offer all of the financial products you’d find at a larger bank.
Will credit union credit card payments show up on my credit report?
Most credit card payments — including credit union credit card payments — are reported to the major credit bureaus. Paying your statement balance on time and keeping your balance low can be great ways to help build your credit.
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 .
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.
Store credit cards can help you get started with building credit as long as you use them responsibly and the activity is reported to the major credit bureaus. If you’re not sure if you’re ready for a traditional credit card, you might consider a retail store credit card as an alternative.
Retail credit cards, also known as store credit cards, are credit cards issued by specific retailers. Some store credit cards are good only at the issuing store (or their partners). Others are co-branded by a network like Visa or Mastercard and accepted anywhere those networks are.
What Is a Store Credit Card?
A store credit card is a credit card that is issued by a specific retailer, and usually has perks and benefits associated with that specific store or chain. This category of credit card generally works much like other credit cards, which means they can be useful in building credit as long as they’re used responsibly. However, store credit cards tend to have higher interest rates and easier approval requirements compared to traditional credit cards.
Similarly to prepaid credit cards, there are two main types of store credit cards:
• Close-loop store credit cards: The first type of store credit card is a closed-loop store credit card. These can typically only be used at the retailer that issues the card.
• Open-loop store credit cards: Open-loop store credit cards are another type of store credit card. They’re typically co-branded alongside a credit card payment network like Mastercard, American Express, or Visa, and are good anywhere those networks are accepted.
Is Getting a Store Credit Card a Good Idea?
Getting a store credit card can be a good option if you are working on establishing credit. If your store credit card reports usage to the major credit bureaus, then responsibly using a store credit card can be helpful. However, this can work against you, too, if you open a store credit card and don’t follow good credit card habits.
Factors to Consider When Getting a Store Credit Card
The biggest factor you’ll want to consider when getting a store credit card is whether it’s a closed-loop or open-loop card. That will let you know whether you can only use it at the issuing store or whether it’s good at other places.
You’ll also want to understand whether your store card is a charge card or credit card (with a charge card, you won’t have the option to carry a balance). Also find out whether the issuer reports usage to the major credit bureaus, especially if you intend to use the card to build your credit from scratch.
Store credit cards can help build your credit, as long as the card reports usage information to the major credit bureaus. Responsibly using a store credit card can show a history of on-time payments and add an additional line of credit to your credit mix. Additionally, it has the potential to positively affect your overall credit utilization — the amount of your total available credit limit you’re using — by bolstering your overall credit limit.
Can a Store Credit Card Set Back Your Credit Progress?
It’s important to use credit cards wisely, and that includes store credit cards. A store credit card certainly can set back your credit progress if you don’t use it responsibly. If you have late or missed payments or carry a balance that’s near your total credit limit, it may have a negative impact on your credit score.
Do Store Credit Cards Applications Require Hard Inquiries?
Yes, in most cases a store credit card application will generate a hard inquiry on your credit report. A hard credit inquiry shows up on your credit report when a potential lender asks for your complete credit report. This inquiry may lower your credit score by a few points for a short period of time, so you’ll want to limit how many credit accounts you apply for.
Benefits of Store Credit Cards
One benefit of a store credit card is that it may be easier to get approved for, especially if it’s a closed-loop store card. Retailers know that cardholders are likely to shop more frequently at their store. As such, they may be more inclined to approve you for a card, even if you don’t have an extensive history of good or excellent credit.
Another potential benefit is the store-specific perks, rewards, or benefits that a store may offer to its cardholders.
Drawbacks of Store Credit Cards
There are downsides to store credit cards to consider as well. For one, they may come with higher interest rates and lower credit limits. It can be easier to drive up your credit utilization ratio, a factor that affects your credit score, with a lower credit limit. Further, if your store credit card is a closed-loop card, you’ll be limited to using it at that specific retailer.
To recap, here are some of the pros and cons of applying for and using a store credit card:
Pros of Store Credit Cards
Cons of Store Credit Cards
Easier to get approved for than a traditional credit card
May come with higher interest rates
Can offer solid store-specific perks, benefits, and rewards
May have lower credit limits, which can make it easier to drive up credit utilization
Can help you build credit when used responsibly
Closed-loop store cards can only be used at that specific store or chain
If applying for and using a store credit card doesn’t fit into your financial plans, here are a few other ways to build credit that you might consider:
• Apply for a traditional credit card, like the SoFi credit card
A store credit card can help you build credit, as long as it reports usage to the major credit bureaus. In fact, opening a store credit card and using it wisely can be a smart step toward establishing credit since, in many cases, they’re easier to get approved for than a traditional credit card.
FAQ
Do store credit cards affect your credit?
Yes, store credit cards can affect your credit if they report usage and history to the major credit bureaus. If you regularly pay off your bill each month and keep your statement balance low, it should help build a positive credit history.
Do store credit cards require hard credit checks?
Yes, most store credit cards require a hard credit check when you apply. A hard credit check (or hard pull) happens any time a potential lender asks for your full credit history to help decide whether they will extend you credit. Because each hard pull can temporarily lower your credit score by a few points, you’ll want to limit how many new credit accounts you apply for in a short period of time.
Will closing store credit cards hurt my credit score?
There are some cases where closing a credit card — either a store credit card or a traditional credit card — can hurt your credit score. The main reason why closing a credit card can impact your credit score is by possibly driving up your credit utilization percentage, as your overall credit limit will decrease. Make sure that you understand the possible ramifications before you close a credit card account.
Do retail credit cards build credit?
Retail credit cards can help you build credit as long as they report to the major credit bureaus. Just make sure to use your store or retail credit cards wisely so that it will have a positive impact on your credit score.
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.
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.
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 .
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.
Green banking is a branch of the financial industry that focuses on promoting environmentally-friendly practices. Similar to sustainable investing, green banks emphasize the importance of reducing negative environmental impacts as they go about their business.
The latest data indicates that global warming is likely increasing, and, in response, so is the market for renewable energy sources and other green solutions. The emergence of green banking may also reflect this rising interest in being more eco-conscious.
This is a relatively new concept, and you may have questions about what it really means. In this guide, you’ll learn answers to:
• What is green banking?
• How does green banking work?
• What are examples of green banks?
What Are Green Banks?
There is no standard way to define what is a green bank. According to the Environmental Protection Agency (EPA), green banks are financial institutions that may leverage public funding to attract private capital for clean energy projects. These can include energy efficiency, renewable energy, and other distributed energy resources), as well as other “green” investments.
In simpler terms, green banks are mission-driven. They work to further environmentally-sound goals alongside financial goals. Those objectives can include:
• Financing projects that will create green jobs
• Expanding solar power
• Lowering energy costs
• Reducing greenhouse gas emissions
• Building green infrastructure
• Closing funding gaps for green energy retrofitting projects
• Advancing sustainability.
As of 2022, there were 22 financial institutions in the U.S. operating as green banks, according to the Green Bank Consortium. Collectively, those banks have helped to drive $9 billion in clean energy investment since 2011.
Broadly speaking, green banks work by adhering to practices that promote sustainability. Sustainable banking encompasses two different things:
• Green banking
• Sustainable finance
So what does that mean? When you’re talking about green banking, you’re referring to implementing practices that are designed to reduce a bank’s environmental footprint.
Sustainable finance, on the other hand, involves the use of financial products to support or encourage environmentally-friendly behavior.
Green banks work by incorporating aspects of sustainability into their operations. That spans everything from the products and services the bank offers to its IT strategy to the way it hires and retains employees. It may encompass socially responsible investing as well.
It’s important to note that it can be easy to confuse banks that are authentically green with financial institutions that engage in greenwashing. Greenwashing happens when companies have the appearance of being environmentally-friendly or sustainable, based on their marketing claims, but in reality are not. It may require a bit of consumer research to make sure you can differentiate what is a green bank and what isn’t.
The number of green banks in the U.S. is still relatively low, and they don’t exist in every state yet. You may not see them among your local retail banks. However, there are some notable examples of financial institutions that are focused on sustainable banking. These include:
California Infrastructure and Economic Development Bank
The California Infrastructure and Economic Development Bank (known as IBank) offers a variety of paths to sustainable banking. The bank offers infrastructure loans, bonds, small business financing, and climate financing in order to create jobs, bolster the economy, and improve quality of life for Californians. IBank financing accounts for more than $52 billion in infrastructure and economic development within the state.
Connecticut Green Bank
Connecticut Green Bank is the nation’s first green bank, established in 2011. The bank evolved from the Connecticut Green Energy Fund and bases its business model on the use of sustainable financing to maximize the use of public funds. As of 2022, the bank and its partners have helped $2.26 billion in capital to find its way into clean energy projects across the state.
NY Green Bank
NY Green Bank is a state-sponsored financial institution operating in New York that works with the private sector to increase investments into clean energy markets. The bank is specifically interested in projects that are both financially sound and focus on creating energy savings or clean energy that helps reduce greenhouse gas emissions. Many of the bank’s funding projects revolve around the expansion of solar energy.
Green banks and sustainable banking aim to play a role in environmental preservation. However, they aren’t the same thing as your standard traditional bank or online bank. While you may never use a green bank directly, it’s important to understand how they can still affect you. Here’s what to know about the advantages and potential downsides associated with sustainable banking.
Banking Advantages
Banking Disadvantages
• Green banks help to advance the use of clean energy technology.
• Clean energy projects funded by sustainable banking can help to increase job growth and promote economic development.
• Green banking can attract large-scale private investment, which can help to accelerate clean energy projects.
• Green banks are not widespread, and their reach may be limited.
• Sustainable banking is still a relatively new subset of the banking industry, which can translate to higher credit risk.
• Banks that engage in greenwashing can taint the image of sustainable banking and lead investors to look elsewhere.
The Future of Green Banking
Predicting the future of sustainable banking is difficult, though signs indicate a growing interest in how green banks might help create a cleaner environment. At the federal level, for instance, the passage of the 2022 Inflation Reduction Act notably included a provision allowing for the establishment of a national green bank.
Globally, sustainable banking is increasingly in the spotlight in emerging markets. There’s growing interest in the positive environmental gains that may be made through green banking. That said, there are still questions about how to encourage sustainable finance in economies that are still developing. This could in turn lead to more global collaboration among banks in furthering sustainable finance worldwide.
One potential result of sustainable banking: There may be greater carryover in the traditional banking sector. For example, there may be a push for banks to offer personal or small-business banking products and services that have a sustainable or green angle. Green loans and mortgages could end up being another byproduct of enhanced attention on sustainable finance.
As the spotlight on green banking grows, you may begin to notice changes at the retail banking level. For example, Citigroup issues an annual report on its ESG (Environmental, Social and Governance) program results. And it’s not just traditional banks showing dedication to this topic; online banks are part of the effort, too. In March 2022, SoFi announced the launch of its ESG Committee to help formulate strategies for positive environmental, social, and governance impacts.
Many people are adopting a greener lifestyle and finding ways to reduce their carbon footprint. Where you choose to bank could make a difference in your efforts if you’re keeping your money at a financial institution that advocates sustainability. Green banking is the term used to describe financial institutions that try to both make their business practices more sustainable as well as invest funds towards eco-conscious goals. This segment of the market may well grow in the years ahead.
Switching to an online bank is something you might consider if you’d like to streamline the way you manage your money. Instead of driving to a bank or receiving paper statements in the mail, you could track your finances online without leaving home. When you open a checking and savings account with SoFi, you can get all the banking tools you need to stay on top of your finances. Sign up with direct deposit, and you’ll enjoy the terrific combination of an and no fees, which can help your money grow faster.
Bank smarter with SoFi today and enjoy a hyper competitive interest rate, plus zero fees.
FAQ
What is sustainable banking?
Sustainable banking encourages environmentally-friendly practices, products, and services. A sustainable bank or green bank may be committed to specific environmental goals, such as reducing greenhouse gas emissions, promoting the advancement of clean energy, or funding green building projects.
How can banks be more sustainable?
Banks can encourage sustainability by reviewing their environmental footprint and addressing areas that could improve. The types of changes banks can implement may be large or small, but the end goal is fostering a cleaner environment. Reducing paper waste, for example, is one simple way to be more sustainable.
Which banks are green banks?
There are a handful of banks operating in the U.S. that are designated as green banks, according to the Green Bank Consortium. Whether a bank is considered “green” or not can depend on the type of certifications they hold. Examples of green banks include IBank, Connecticut Green Bank, and NY Green Bank.
Photo credit: iStock/baona
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi 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.
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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.
Don’t believe everything you hear about student loans. With tuition costs outpacing income, the fact is that 70% of college graduates need student loans to help pay for college. But bad information can make borrowers feel like they might have made the wrong decision.
Relax. Here are 5 myths about student loans that are pure fiction.
5 Myths About Student Loans
Have you been taken in by any of these student loan fictions and fallacies? A lot of students and parents are, which is why they’re still floating around.
Myth #1: Interest Rates Are Super High
It’s true that federal student loan interest rates can be higher than auto loan rates. But that doesn’t make student loans a bad deal. Here’s why.
Auto loans and mortgages are “secured” loans. The borrower’s car or home serves as collateral and can be repossessed by the bank if they default on the loan. Secured loans have lower interest rates because they’re less risky for the lender.
Student loans, meanwhile, are “unsecured.” If a borrower defaults on student loans, the bank doesn’t have anything to repossess. And so the interest rate is set a bit higher. But the interest rates on federal student loans are still much lower than what you’d qualify for at a bank.
Myth #2: Saving Money Is Impossible With Student Loans
For most people, student loan payments aren’t sky high. The key is choosing the right repayment plan. Take income-based repayment plans, which set monthly payments at just 10% of “disposable income” — or what’s left after your other bills are paid.
Let’s run some numbers. The average new graduate from a 4-year public college has $32K in student loan debt. And the average salary for 20- to 24-year-olds is $37K.
With income-based repayment, a single grad might pay about $138 per month. If they start a family, they pay much less: just $20 a month until their income grows. Which still leaves room for saving.
Like any loan, student loans could help or hurt your credit depending on how you manage them. As long as you make your payments on time, student loans may build your credit history and boost your score over the long run.
If you’re struggling financially, consider switching your payment plan, or applying for student loan deferment or forbearance. Neither of these options will hurt your credit.
Myth #4: Student Loans Are All the Same
Nope. In fact, federal student loans are typically a better deal for borrowers than private loans. With subsidized loans, the government pays your interest while you’re in school and for 6 months after. And all federal loans offer special protections to borrowers in case of financial hardship.
In short, subsidized federal loans are pretty much the gold standard.
Myth #5: You Can Get Student Loans Forgiven, for a Fee
It sure seems plausible that a law firm or financial advisor might be able to cut through the red tape and reduce your payments or get them forgiven entirely. For a fee, of course.
Alas, this is a scam. If anyone reaches out to you by phone, text, email, or social media promising to help you with your student loans, it’s utter bull. You may catch on when the caller asks for your financial info, but your parent or grandparent may not, so you might want to warn them.
To make sure you hear about the latest student loan forgiveness news straight from the source, sign up for alerts from the DOE .
ReFi With SoFi
SoFi refinances student loans — both federal and private. (Just be aware that refinancing federal loans makes them ineligible for federal forgiveness and protections.) You can choose to lower your monthly payment by extending your term or pay off your debt faster and save money on interest. SoFi offers flexible terms and low fixed or variable interest rates. And there are no fees: no origination fees or late fees.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
Photo credit: iStock/Khosrork SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.
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.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
