Has this happened to you? You’re thinking about getting a personal loan but haven’t yet applied. Then you get a letter in the mail: “You’re preapproved or prequalified for a personal loan!” What does that mean?
Some lenders use “prequalified” interchangeably with “preapproved,” but they are different. Here, we’ll discuss the distinction, and how to know if you’re a good candidate for a personal loan.
What Does Being Prequalified for a Loan Mean?
Prequalification is sometimes considered the first step in the loan approval process. You can think of it as a less comprehensive version of a preapproval. Prequalification simply means that you fit the general description of a customer typically qualified for a loan.
Based on your general profile, the lender can give you an idea of the size of loan you can qualify for. While prequalification can be done fairly quickly, it does not involve a full analysis of your credit report or verification of the financial information you provide. Because of that, there’s no guarantee that your loan will be approved.
Preapproval is a more in-depth stage of the personal loan approval process. A lender will have accessed your financial history to assess you as a potential customer. Being preapproved means that, based on the information accessed, you most likely will be approved for a loan.
Preapproval allows the lender to show you the size of the loan you might qualify for, and the interest rate and loan terms they’re willing to offer. It’s a step closer to final approval of your loan application. However, this doesn’t automatically translate to being fully approved. For example, a hard credit inquiry can pull in information previously unseen by the lender that was not considered at the preapproval stage.
Does Prequalification or Preapproval Affect Your Credit Score?
Lenders typically prequalify you on the basis of financial information that you provide and perhaps a soft inquiry into your credit history. Soft inquiries don’t affect your credit score, so it’s unlikely that prequalification will either.
Because the prequalification process varies by lender, however, it’s impossible to say for sure that prequalification won’t impact your credit. If it does, the impact will be small and temporary.
Preapprovals are more rigorous than prequalifications, and closer to what you’ll experience when you actually apply for a loan. Preapprovals often involve a hard credit inquiry, which does impact your credit. Again, any effect will be minor.
How Do I Know If I’m a Good Candidate for a Personal Loan?
A personal loan application considers your existing debt and your ability to repay the loan. Your current employment will factor into how well-suited you are to repay the loan, as will your credit score. In most cases, this means you need a good credit score to qualify for an unsecured personal loan at a low interest rate.
If you can’t otherwise qualify because of a poor credit score, consider asking a close friend or family member to cosign your personal loan. Adding a cosigner with a good credit score to your application can help you get a lower interest rate on your loan.
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Will You Prequalify for a SoFi Personal Loan?
Some nontraditional lenders, like SoFi, look at other parts of a financial package when evaluating a candidate’s personal loan application.
SoFi considers additional factors such as your earning potential and cash flow after expenses. This means that even if you have a shorter credit history (because you just graduated college, for example) you may still qualify for a personal loan based on your education and career.
To find out if you qualify for a SoFi personal loan, first go through the online prequalification process. This requires you to create an account, and input your basic personal information, education, and employment history. It takes only a few minutes, after which SoFi will immediately show you which loan options you prequalify for.
After selecting a preliminary personal loan option, you’ll have to finalize your application by uploading documentation to verify your personal information. This may include pay stubs and bank statements. Once you’re approved, the loan is typically disbursed within a week.
If you’re ready to apply for a personal loan, check out SoFi personal loans today.
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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.
The cost to become a nurse or nurse specialist ranges from a few thousand dollars to hundreds of thousands. The cost rises with education level — from a two-year associate degree to a doctorate — but so do average earnings.
You already know that you’ll be in demand. More than 203,000 new openings for registered nurses alone are expected each year over the next decade.
There are a number of routes to becoming a nurse or nurse assistant. Here are the main types, median pay (based on 2021 figures from the U.S. Bureau of Labor Statistics), and average educational costs.
Keep in mind that many students benefit from student loans and scholarships. Working nurses reaching for the next rung up may be eligible for tuition reimbursement from their current employer.
Certified Nursing Assistant (CNA)
Becoming a CNA may require a high school degree. You typically need to complete four to 12 weeks’ worth of courses and onsite training and pass an exam.
The cost of a CNA program varies, sometimes substantially, based on length and whether the program is state approved.
Average education cost: $600 to $2,000
Median pay: $30,310
Licensed Practical Nurse (LPN)
Also known as a licensed vocational nurse, an LPN must complete a state-approved educational program, which typically takes 12-18 months, and pass a licensing exam.
Registered nurses need at least a two-year associate degree in nursing from an accredited college or technical school to practice.
Average in-state tuition cost: $3,500 per year at public institutions; $15,470 per year at private schools
RNs with an associate degree in nursing can seek a bachelor of science in nursing (BSN) in an RN-to-BSN program, which usually takes one to two years to complete.
Average cost of online RN-to-BSN: $25,000 to $80,000
The American Association of Colleges of Nursing considers the four-year Bachelor of Science in nursing the degree that provides the educational and experiential base for entry-level professional practice.
Average total in-state cost of a BSN: $40,000 to $80,000 at a public school; $60,000 to $120,000 at a private school
Median pay for all RNs: $77,600 per year
Advanced Practice Registered Nurse (APRN)
An advanced practice registered nurse holds at least a master’s degree in nursing. The four specialties are nurse practitioner, certified registered nurse anesthetist, certified nurse midwife, and clinical nurse specialist.
A Master of Science in nursing will take one to two years. The tuition cost is often higher than that to obtain a BSN.
Tuition cost of a Master of Science in nursing: $22,000 to $100,000 per year
Master’s-level programs still allow grads to join the APRN ranks, but a doctorate is quickly becoming the standard, according to the American Association of Colleges of Nursing.
Most research-focused doctoral nursing programs grant a Ph.D. The Doctor of Nursing Practice degree is more practice focused.
Cost of Doctor of Nursing Practice program after earning a master’s degree: $20,000 to $40,000
Median pay for nurse anesthetists, nurse midwives, and nurse practitioners: $123,780 per year
If you need to borrow in order to get through school, know that you’re in good company. Most nurses take out loans (federal and private student loans are available) to earn their professional titles.
Other Fees While Studying to Be a Nurse
The anatomy of a nursing degree consists of much more than tuition, which might be the figure on a website that catches your eye. Still, the cost of college tuition alone can be helpful in calculating the total tab: Multiplying the current tuition price by four will yield a rough estimate.
Myriad fees can add up to hundreds of dollars. Books and software can average $2,000 to $3,000 per academic year.
Other expenses to keep in mind include travel costs, living costs (especially if you’re unable to work while studying), lab fees, and the cost of a laptop.
Some nursing schools may also require students to take out liability insurance and get immunizations.
Before stepping into a new job or practice, aspiring RNs have to pass the National Council Licensure Examination test, better known as the NCLEX exam, which costs $200 per attempt. Taking the NCLEX exam a second (or even third or fourth time) time costs more in studying, coursework, and time.
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How to Pay for Nursing School Without Going Broke
If just thinking about the cost of nursing school raises your blood pressure, know that student loans, grants, and scholarships are available.
Plus, some hospitals will help pay for nursing school. Duke University Health System employees, for example, may be eligible for tuition assistance.
Students can apply for federal aid — including student loans, scholarships, grants, and work-study — by completing the FAFSA, the Free Application for Federal Student Aid, each year.
It’s a good idea to submit the FAFSA even if you’re not expecting federal aid because other student aid programs piggyback off the application.
Many nurses plan to work for a qualifying nonprofit or government organization. They aim for the federal Public Service Loan Forgiveness program and one of the income-based repayment plans.
Scholarships and Grants
An aspiring nurse may want to use a scholarship search tool and seek out grants. Pell Grants go to undergraduate students only.
The Nurse Corps Scholarship Program will pay your tuition, fees, and other educational costs if you agree to work at a critical shortage facility after graduation.
If federal aid does not cover the total cost of nursing school, private student loans are another option.
Private student loans are available from private lenders and generally allow students to borrow up to the school’s estimated annual cost of attendance. That includes tuition and fees, room and board (or living expenses), books, supplies, a personal computer, transportation, and child care.
Two- and four-year colleges are required to publish the cost of attendance on their websites.
It’s important to keep in mind that federal protections and programs like income-based repayment apply only to federal student loans.
How much is nursing school? Getting an associate degree can cost a few thousand dollars. The full path leading to a master’s or doctorate can cost hundreds of thousands. A lot will depend on whether the school is public or private, whether you’re an in-state student, and whether you receive scholarships or grants.
In any case, here’s to your health, and to heeding the call to become a nurse.
It’s quick and easy to get a rate quote on a SoFi private student loan.
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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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.
It is possible to use your utility bill payment history to help build credit. However, utility bills, like your gas, water, and power bills, aren’t automatically reported to the credit bureau agencies. To get them reported — and thus to have your utility bills affect your credit score — you’ll typically need to work through a third-party company that reports your utility bill payments so they show up on your credit report.
If you’re interested in making this happen, we’ll walk you through how to leverage paying utilities to build credit, and also explore other options to help establish your credit score.
How Do Utility Bill Payments Appear on My Credit Report?
Utility bill payments typically do not automatically appear on your consumer credit report. That’s because they’re not considered credit accounts. When you pay for utilities, you are paying for a service, rather than opening and maintaining a line of credit, or borrowing money that you then repay over time.
However, utility bill payments can appear on your credit report if you work with a third-party service that does the reporting on your behalf. These services typically charge a small monthly fee, but there are companies that offer this free of charge. If you’re paying utility bills on time, then getting that information reported to the credit bureaus could help to build credit.
How Do Utility Bill Payments Affect Your Credit Score?
While utility bill payments don’t appear on your credit report, they still can ding your credit score if you fall behind on payments, and the balance you owe becomes delinquent and goes to collections. Under the Fair Credit Reporting Act, debt can linger on your credit report for up to seven years. Because your payment history makes up a lion’s share of your credit score, a debt that enters collections and then remains on your report can have a significant impact on your credit score.
On the flipside, utility bills also have the potential to build credit. As mentioned, this could occur if you sign up to have your utility payments reported to the three major credit bureau agencies, and you consistently make your payments on time. To ensure this happens, you might consider setting up automatic bill payments.
Utility bills could also help build your credit score if you opt to pay bills with a credit card. Staying on top of your credit card payments is a key determinant of your credit score though, so just make sure to pay off your statement balance on time and in full when it becomes due. That way, you’ll avoid late payment consequences and also dodge paying interest on the utility bill payments charged to your card.
Late utility bill payments can hurt your credit if you miss enough payments for your account to enter “delinquent” status, after which it would get sent to collections or get handled as a charge-off. If this happens, that information can stay on your credit report for up to seven years.
Similarly, if you sign up for a credit reporting service but then are late on making payments, that late payment activity could negatively impact your score. Often services will not report late payments for utility bills too.
Still, given the potential consequences of late payments, organizing your bills is a good idea to help ensure you pay on time and don’t lose track of due dates.
Your payment of the following bills will generally show up on your credit report and as such will have an impact on your credit score:
• Car payments
• Credit card payments
• Student loan payments
• Mortgage payments
Similarly to your utility bills, some bills have the potential to impact your credit, but don’t automatically show up on your credit report. However, you may be able to sign up for a credit reporting service or pay them using your credit card to have them help build your score. These types of bills include your rent payments, insurance payments, and bills for services like internet and cable.
Other Ways to Build Credit
Beyond your utility bills, there are other ways you can establish credit. This includes:
• Opening a traditional credit card and then using it responsibly.
• Taking out an auto loan to pay for your next car.
• Getting a secured card, which is easier to qualify for than a traditional credit card because it requires a deposit.
• Taking out a personal loan and then staying on top of payments.
• Becoming an authorized user on the credit card account of someone with a solid credit history and responsible credit usage.
• Getting your timely rent payments reported to the credit bureaus.
• Taking out a credit-builder loan, which gives you the funds once you pay it off.
While paying utilities doesn’t automatically establish credit, it can help your score if you work with a third-party service to have your payment activity reported. There are other ways you can build credit from scratch as well, such as taking out a personal loan or opening a credit card account, and then handling payments responsibly.
If you’re looking for a credit card, the SoFi Credit Card offers an array of perks. Cardholders can earn cash-back rewards on all eligible purchases. Plus, you’ll get rewarded for responsible usage, as SoFi will lower your APR after you make 12 on-time payments of at least the minimum amount due.
FAQ
What is the impact of paying your utility bills early on your credit score?
Historically, utility bills are not reported to the credit bureaus and in turn, don’t impact your credit score. However, if you work with a third-party service, you could have your utility bills reported. In this instance, paying your utility bills on-time could help build your score.
Are utility bill payments reported to a credit reporting service?
Utility bill payments can be reported to a credit reporting service if you sign up for an account and opt in to have your utility bills reported. You might need to pay a monthly fee for this service though.
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 .
It’s a good idea to regularly review your credit report. Doing so can help ensure that the information used to calculate your credit scores is accurate and up to date. It can also alert you to fraud or identity theft.
Unfortunately, understanding your credit report can sometimes feel like a challenge — especially if it’s the first time you’re doing it. Below, we’ll explain how to read a credit report, as well as highlight some common credit report errors to look out for.
What Is a Credit Report?
Your credit report contains a large amount of information about your financial life and payment history. If you have credit cards or loans, for instance, those accounts and how you pay them are included in your credit report. Often, you’ll have more than one credit report, as creditors are not required to report to every credit reporting company.
Credit card issuers and lenders can pull these reports and review them in order to determine your creditworthiness. They will rely on this information to make a decision on whether to loan you money, as well as the terms they’ll offer if they do.
Who Compiles Credit Reports?
Credit reports are created by three national credit reporting agencies: Equifax, TransUnion, and Experian. The information the credit bureaus compile in credit reports comes from creditors — like lenders, credit card companies, and other financial companies — that submit information on your accounts and payment history to the bureaus.
Who Can See Your Credit Report?
Your credit report is accessed whenever a lender (or an employer or landlord) conducts what’s known as a hard credit inquiry. This is when a business accesses your credit report to make decisions about your creditworthiness, likely in order to make a decision about extending a loan (or a job or housing).
Hard credit inquiries will appear on your credit report, so you should recognize any credit inquiries that appear. They may also subtly affect your credit score. Multiple inquiries in a short period of time may signify to lenders that you’re seeking multiple loans, which may bring up concerns about your financial stability.
Your credit report can also be accessed by consumers (like you). The Fair Credit Reporting Act requires each of the credit reporting companies to provide you with a free copy of your credit report, at your request, once every 12 months. Your credit score will not be impacted when you request a copy of your own credit report.
How to Get a Credit Report
Each year, you have the right to ask for one free copy of your credit report from each of the credit bureaus. There are a few ways you can request it:
• By visiting AnnualCreditReport.com
• By calling (877) 322-8228
• By downloading and filling out the Annual Credit Report Request form, and mailing it to the following address:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281
You also can request credit reports from consumer reporting companies, though these may charge a fee. Additionally, you’re eligible to request free reports beyond your one per year under certain circumstances, such as being denied credit or due to potential inaccuracies because of fraud.
Also know that you can only check your own credit report — checking someone else’s credit report is generally illegal.
When you get your credit reports, it’s a good idea to read each section closely. Here’s a rundown of the sections you’ll typically find included, so you’ll know what to expect and thus how to read a credit report.
This section of the report is used to identify you. It contains basic information like your name, address, and place of employment. You may also find previous addresses and employer history listed here. Your employment history doesn’t affect your credit score. Rather, it’s included on your credit report only to verify your identity.
When scanning this area you’ll want to make sure that your name, address, and employer match up. Any incorrect or unfamiliar personally identifiable information (like company names you don’t recognize or employers you never worked for) may be a sign of identity fraud.
Personally Identifiable Information Included in Your Credit Report
• Name(s) associated with your credit
• Social Security number variations
• Address(es) associated with your credit
• Date of birth
• Phone numbers
• Spouse or co-applicant(s)
• Current or former employers
• Personal statements, such as fraud alerts, credit locks, or power of attorney
Credit Summary
This section summarizes information about the different types of accounts you have, including credit cards and lines of credit, mortgages and other loans, and any accounts that have been sent to collections. For each account, your credit report will include the date the account was opened, its balance, its highest balance, the credit limit or loan amount, payment status, and payment history.
As you read this section, make sure that all the information looks familiar. It’s not unusual for a credit report to have slightly dated information, such as a higher balance because you just paid off a bill this month. However, all information should seem recognizable. In particular, you’re looking for:
Unfamiliar accounts
Late payments that do not align with your records
Balances that do not match your records
The information in this section is pulled from public records and may include debt collections or bankruptcy information.
If you have any debt collections and bankruptcy on your record, it’s important to remember that they won’t stay there permanently. The following statutes of limitations apply to different types of debt, restricting how long the information will remain on your credit report:
• Chapter 13 bankruptcy: Removed seven years after the filing date
• Chapter 7 bankruptcy: Removed 10 years after the filing date
• Late payments: Removed seven years after they occur
• Payment defaults: Removed seven years after they occur
If you see information that’s not familiar, you’ll want to flag it, since this could be a sign of identity theft. You may also want to flag any information that is still on your credit report after the statute of limitations has expired.
Credit inquiries list all parties who have accessed your credit report within the past two years.
These could be from lines of credit you opened, such as applying for a credit card, or from applying for a loan.
Both hard inquiries and soft inquiries will appear, though they have different impacts on your credit — hard inquiries will affect your credit, whereas soft inquiries will not. You can distinguish the two types of inquiries based on how they appear on the report:
How a Hard Inquiry Will Appear
How a Soft Inquiry Will Appear
Business name
Company name
Business type
Inquiry date
Inquiry date
Contact information
Date inquiry will be removed
Contact information provided by the creditor for the account
It’s a good idea to make sure you recognize any recent credit inquiries, as they can be a red flag for identity theft.
Why Credit Reports Are Important
Your credit report can play a critical role in determining your financial future. That’s because creditors will refer to your credit report to decide whether to approve you for a loan or a credit card and, if so, what terms they’ll offer you, including the interest rate. In other words, your credit report will help determine whether you’ll get the auto loan you need to purchase a new car, or the mortgage necessary to purchase a home.
It’s not just creditors looking at your credit report either — landlords, insurers, potential employers, and even phone and cable companies may look at your credit report as part of their vetting process. This is why it’s so important to understand what information your credit report contains, so you can know what information these potential parties can learn from viewing it.
What Information Is Not Found on Your Credit Reports?
One surprising piece of data that you may be surprised to find out credit reports do not include is your credit score. Beyond that, your credit report will not contain the following information:
• Salary
• Employment status
• Marital status
• Spouse’s credit history, if applicable
• Assets, such as bank account balances, investments, or retirement accounts
• Any 401(k) loans
• Public records outside of bankruptcy
• Medical information
• Expired information
• Race or ethnicity
• Religious beliefs or information
• Political affiliates
• Disabilities
What To Do If You Find Errors on Your Credit Report
None of the information on your credit report should look unfamiliar. In fact, one of the main reasons you want to read your credit report is to make sure that your credit report matches your records.
But sometimes, there can be discrepancies. If you detect an error on your report, such as a payment incorrectly reported as late, you’ll want to file a formal dispute. You’ll need to dispute credit report errors with both the credit reporting company and the entity that provided the information (such as a credit card company).
When writing a dispute letter, you’ll want to include:
• A clear explanation of what is wrong in the credit report.
• Supporting documentation showing the information is inaccurate (such as a copy of a paid bill).
• A request for the information to be fixed.
By law, the credit reporting company must investigate your dispute and notify you of its findings.
If you notice an error that suggests identity theft (such as unknown accounts or unfamiliar debt), it’s a good idea to sign up with the Federal Trade Commission’s (FTC’s) IdentityTheft.gov site in addition to alerting the credit bureaus. The FTC’s tool can help users create a recovery plan and figure out next steps, which may include placing a security freeze on your accounts.
The Takeaway
It’s easy and free once a year to gain access to your credit reports from the three major bureaus. Taking advantage of this service can help you maintain good credit and good overall financial health.
Reviewing your credit report can give you a chance to correct any errors, and make sure your credit report is an accurate representation of your financial situation. It can also alert you to any fraudulent activity. In addition, reading your credit report can help you understand how creditors see you as a borrower and cue you into any potentially problematic information that may lead to a lower credit score than you would like.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
FAQ
When should you check your credit report?
The Consumer Financial Protection Bureau (CFPB) recommends checking your credit report at least once a year to ensure there are no errors and that all information is up-to-date. You might consider checking them even more frequently than that though to have the most accurate picture of your current financial situation.
What do the numbers mean on a credit report?
Your credit report may contain a variety of different numbers. This can include your name identification number, your Social Security number, the IDs for addresses associated with your credit, phone numbers, account numbers, and more. It can help to go through section by section if you’re unclear as to what a particular number means.
What should I look for on a credit report?
When reading your credit report, you’ll want to look out for any changes to your personal information, such as changes to account details, inquiries, or data available in public records. Keep your eye out for any errors or anything that otherwise seems amiss, as this could be a sign of fraud.
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.
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.
A mobile wallet can be a great way to pay for things as you go through your day without having to carry an actual, potentially cumbersome wallet with you. Instead, an app holds digital versions of your credit, debit, loyalty, and ID cards, allowing you easy access when needed.
But you may wonder which of the mobile wallet options are best, how safe these transactions are, and whether it wouldn’t just be better to slip your debit card in your pocket on most days.
Read on to learn more, including:
• What is a mobile wallet?
• How does a mobile wallet work?
• How do you set up a mobile wallet?
• What are the pros and cons of a mobile wallet?
What Is a Mobile Wallet?
A mobile wallet is just what it sounds like: It’s a virtual wallet that lives on your mobile device (aka your cell phone). It can store credit cards and charge cards, as well as debit, loyalty, and store card information. This allows you to quickly and easily pay for goods and services with your smartphone, smartwatch, or another mobile device. No more digging through your bag or backpack for your “real” wallet and fishing out the right piece of plastic.
Mobile wallets (sometimes called digital wallets) can go a step further, too. You can also stash insurance cards, ID, coupons, concert tickets, boarding passes, and hotel key card information in them. Some digital wallets also enable you to send money to friends, as well as receive payments.
You may also be able to use your mobile wallet instead of a physical card at some ATMs for contactless withdrawals.
💡 Quick Tip: One way to add your debit card to your mobile wallet is by accessing your online checking account via your preferred banking app and following the instructions in-app.
How Does a Mobile Wallet Work?
Here’s how a mobile wallet works:
• You install the app and type in your personal and payment information, which is securely stored. (Unique identifying numbers are used for your details vs. your actual card or account information.)
• When you are ready to make a payment with the mobile wallet, a technology called NFC (near-field communication) kicks in. This allows the two devices (your mobile wallet and the vendor’s reader) to communicate. Typically, you will wave your device over the merchant’s terminal or tap your device against it.
• As the two devices communicate, your transaction will likely go through. Funds will transfer, and you will usually be pinged with a confirmation.
What Is the Best Mobile Wallet App?
The major mobile wallets are:
• Apple Pay
• Google Pay
• Samsung Pay
These may come already installed on mobile devices. Although they differ in layout, these mobile wallet apps have the same basic function that allows you to pay with a phone tap.
Other ways to make payments on the go include mobile wallets you can download from app stores, including wallets from banks and merchants such as PayPal, Walmart, and Starbucks.
Deciding which mobile wallet is best will largely depend upon your own personal needs, which options are compatible with your device, how you like to manage your money, and what your financial goals are. A couple of points to keep in mind:
• When choosing a mobile wallet app, be aware that a mobile wallet offered by your credit card company may only be accepted at certain retailers.
• Merchant wallets will typically only work in that merchant’s store or online. For instance, the Starbucks wallet will only work at Starbucks. Enjoy that latte, but don’t expect to buy new boots at the mall with it.
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Setting up and Using a Mobile Wallet
Here’s how to set up most of the major mobile wallet apps; it’s usually quite simple:
• You launch the app (it may be pre-installed on your device), take a photo of your card or enter its information (such as your credit card number), and follow the step-by-step instructions.
• This process is then repeated for all other cards entered. Generally, even if you load up several credit cards into your mobile wallet, only one of them will be your default payment option. That card will be the one that is used to process a purchase. If you want to use a different card, you may need to change the default card before you make the transaction.
• Beyond credit and debit cards, the app may also walk you through configuring peer-to-peer payments like Apple Cash or Google Pay fund exchanges. You may also be able to link your PayPal account.
• You may be able to import retail-store rewards cards, as well as museum or library memberships cards, event tickets, and airline boarding passes. This may involve scanning a QR code or selecting the “add to wallet” button in an email or a text message from the issuer.
• When you are ready to pay for purchases using your mobile wallet, you’ll want to make sure the merchant accepts mobile money. These businesses can typically be identified through a contactless payment indicator (usually a sideways Wi-Fi symbol).
• To pay, open your digital wallet app if necessary, hold the phone near the wireless reader or tap your device against the terminal. This will authorize the payment. Your phone’s screen will typically confirm the transaction.
Are Mobile Wallets Safe?
Overall, mobile wallets are considered to be safe. Here’s why:
• Unlike cash, which can be stolen, and credit cards, which can be copied, the card information you load into a mobile wallet is encrypted. That means that your actual card or account numbers are never shared with the merchant.
• In order to make a payment, you typically have to unlock your device and also type the passcode or use your fingerprint or face recognition to unlock the mobile wallet. Or you may be able to unlock an iPhone with a double-click of a button and then authenticate with Touch ID or Face ID.These steps may be simple but they add layers of security.
• In the case of theft, it’s not possible for anyone to use a mobile device to make a payment without providing the required security credentials.
These safeguards actually make mobile wallets more secure than carrying physical credit cards and cash, which can easily be compromised.
Pros and Cons of Using Mobile Wallets
Is a mobile wallet right for you? Here are some key pros and cons you may want to consider.
Mobile Wallet Pros
Here are some of the upsides of using a mobile wallet.
They’re convenient. If you’re out and about without your wallet or bag, you can still make purchases, as well as use your coupons and rewards cards. You may also be able to get cash at an ATM or check a book out of the library, all from your mobile device. What’s more, they’re often allow for a contactless payment, meaning they can be extra quick and easy.
They’re secure. Mobile wallets provide a layer of security you don’t get with cash or using a debit or credit card. Your payment information is saved in one protected, central location. Card numbers are never stored in the app itself but are instead assigned a unique virtual number. This protects your money even if your smartphone is lost or stolen.
They can help you track your spending. A mobile wallet can help you track and better manage your spending. All of your transaction information is stored in the app so it’s easy to see how much you’re spending and where each week. You might even wind up using a credit card more responsibly.
Mobile Wallet Cons
There are also some downsides to mobile wallets to be aware of.
They’re not accepted everywhere. There are still some industries where cash is the only currency accepted. Even in businesses that do take credit, not all of them accept mobile wallets. To accept a mobile wallet, businesses need to have payment readers that take NFC payments, and not all of them have these terminals. This can cause a problem if a mobile wallet is all you have on hand.
Your phone could die. Cell phones often run out of battery life, and if you’re without a charger, that handy mobile wallet will no longer exist. That can put a crimp in your shopping plans or become a major problem if you have important documents such as train passes or concert tickets stored in your mobile wallet.
You may end up overspending. The use of mobile wallets can be similar to that of using a credit card. Because cash isn’t physically leaving your hands, spending can feel less real, which can be a cause of overspending. If you have spending issues, a mobile wallet can make it easy to spend mindlessly and swipe or tap too often.
The Takeaway
A mobile wallet is a digital way to store credit, debit, ID, and gift cards so that purchases can be made using a mobile smart device rather than a physical card.
Mobile wallets can help simplify your financial life. They allow users to make in-store payments without having to carry cash or physical credit cards. They’re easy to use and have hefty safeguards.
However, they aren’t universally accepted. It’s worth your while to determine whether the retailers you frequent accept them to help determine if a mobile wallet is a good option for you.
Looking for more convenient ways to manage your money? With a SoFi Checking and Savings bank account, you can spend and save in one convenient place, earn a competitive annual percentage yield (APY), and pay no account fees. You can also track your weekly spending, pay bills, and send money to friends right from your smartphone using the SoFi app.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.
4 Tips for Using Your Mobile Wallet
To keep your mobile wallet safe and smooth transactions, keep these tips in mind:
Do your research before downloading payment apps. Look for reliable brands/companies, many positive reviews, and a significant number of downloads. Avoid untested apps; they could be a kind of scam and contain spyware or malware.
Know how to remotely lock and locate your phone in case it gets lost or stolen. Check your phone’s device manager capabilities before you find yourself in an emergency situation.
Always have appropriate locking technology. Carrying around a phone that doesn’t lock means you could be risking loss.
Review your credit and debit card statements. Make sure those purchases are yours. While mobile wallets are secure, problems can occasionally arise, and you want to be alert.
FAQ
How many places support mobile wallets?
While there isn’t a precise tally of how many retailers and other businesses support mobile wallets, a recent study found that there are 1.35 billion registered mobile money accounts globally, indicating significant adoption of and acceptance of this technology.
Do mobile wallets support all debit/credit cards?
Each mobile wallet will have its own policies, but most credit cards from major banks are supported by, say, Google Pay. Small business credit cards may also be added, and possibly some debit cards, especially those from established banks. You may find, though, that prepaid cards are not supported.
Will mobile payments replace cash?
According to a 2022 study by GSMA, the global mobile money industry saw a 31% increase in processing transactions, up to $1 trillion in value. While this might indicate that mobile payments are on track to replace cash completely, that may not happen soon or perhaps even ever: Some sources say cash still accounts for 85% of all consumer payments around the world.
Photo credit: iStock/hiphotos35
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.
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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.
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