Oct
29
2024
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What to Do if Your Check is Lost or Stolen from the Mail

By | Budgeting & Goals, money | Comments Off on What to Do if Your Check is Lost or Stolen from the Mail

Writing checks may not be an everyday occurrence for you, but they are still a reliable form of payment that have a place in most people’s finances. So if you think a check you wrote got lost or was stolen, it’s important to report it to your bank ASAP and request to stop payment on it.

If you suspect there’s criminal activity afoot, you may also want to notify your local police. In addition, it becomes important to monitor your accounts and credit reports for any signs of identity theft.

By acting quickly, you could avoid major stress as well as financial loss.

Key Points

•   Taking immediate action is crucial if a check is lost or stolen; reporting it to the bank and requesting a stop payment can minimize potential financial loss.

•   Gathering detailed information about the missing check, such as account and check numbers, can help expedite the process when contacting the bank.

•   Monitoring bank accounts regularly allows individuals to quickly identify any unauthorized transactions and take necessary action if a check is cashed in error.

•   It is advisable to notify both the sender and local authorities if a check sent to you is lost or stolen, particularly to prevent identity theft.

•   Implementing preventive measures, such as mailing checks securely and tracking transactions, can help reduce the risk of check theft and associated complications.

What if a Check You Sent Never Got Cashed or Deposited?

If you’re concerned because a check you sent hasn’t cleared your online bank account, you may want to start by contacting the recipient (whether it’s a person or business) to make sure they aren’t just sitting on it.

These days, electronic payments are processed so rapidly, we’ve become accustomed to seeing payments show up immediately on online bank statements.

If your paper check is slow to show, it could be that it’s still sitting on someone’s desk or in their wallet.

But what if the check never made it to its destination? It’s possible for checks to get lost in the mail or stolen, so there are steps you should take.

How to Report a Lost or Stolen Check

So if it does seem that a check has gone missing, here’s what to do.

Gather Details about the Check

Before you contact your bank or credit union, you may want to take a few minutes to gather as much information as you can about the check (or checks) that are MIA. This includes:

•   Your account number

•   The check number

•   The routing number

•   The name or names on the bank account

•   The exact name of the payee as you wrote it on the check

•   The check amount.

Contact Your Bank

With that information in hand, you can call your bank or visit your local branch to report the missing check and request a stop payment. Some financial institutions may allow you to do this online. See below for more details on stop payments.

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Monitoring Your Bank Accounts

If the bank didn’t receive the stop payment order in time or if the information you provided was incorrect, it still might process (or pay) the check.

So if you don’t already monitor your checking account online, you may want to start. For many people, monitoring your bank account a few times a week works well; daily if you think there’s reason for concern.

If you believe the bank cashed a check in error and you want to dispute it, it can help if you move as quickly as possible in order to avoid liability.

Some banks don’t impose time limits for customers to report fraudulent check cashing. But because stolen paper checks aren’t regulated by federal laws the way stolen debit and credit cards are, policies can vary from one bank to the next.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

Sending a New Payment

The person or business that didn’t receive your check is still going to be looking for that payment (or expecting that gift), so you’ll likely want to send a replacement as soon as possible.

However, you may want to consider using a more secure method for sending the second check. Keep in mind:

•   If the payee is a person or vendor who insists on personal checks, you might want to deliver the payment in person.

•   If you must mail a check, consider using certified mail. The cost is higher than regular mail, but you’ll get a receipt from the U.S. Postal Service when you send it, plus a notification when it’s delivered.

•   Or you could see if the payee will accept an online method of transferring money to another bank account.

Issuing a Stop Payment on a Check

If you do indeed wind up issuing a stop payment on a check that is lost in the mail or otherwise missing, here are points to keep in mind:

•   Fees for stopping a check vary from one bank to another but can run around $15 to $35. Some banks will waive the fee for customers with premium accounts, and some don’t charge fees if the missing checks are blank.

•   With a stop payment order, the bank flags the missing check number, and as long as the check hasn’t already been processed, it won’t allow the check to clear.

•   A stop payment typically lasts for six months. According to state law, however, a stop-payment request made by phone (and not in writing) can lapse after 14 days, so you may want to ask your bank if any forms need to be filled out to get the full six-month hold.

•   If the stop payment order ends and you suspect criminal activity, you can renew the order for an additional six months, but you may have to pay another fee.

Recommended: What Is a Routing Number?

Protecting Yourself From Fraud and Identity Theft

There are a few different ways in which checks can be stolen. Someone could possibly remove it from the outgoing mail in your mailbox or the payee’s mailbox. There have also been some cases in which mail has been stolen from a blue U.S. Postal Service mailbox. Or the check might have been stolen from the recipient after they received it.

What can someone do with a stolen check?

•   Once they’ve intercepted your check, thieves might find a way to cash it for the amount written or change it to a larger amount. In some cases, they may use chemicals to alter the name of the payee, or the amount.

•   It may also be possible for a thief to use the information on the check to steal your identity and use that information to open new accounts in your name.

If you believe your check was stolen and you’ve already reported it to your bank, there are a few more steps you may want to take to protect yourself.

Recommended: What Can a Scammer Do With Your Bank Account and Routing Number?

Filing a Police Report

By going to your local police department, you can create a paper trail to show the bank and others you’ve been doing all you can to get to the bottom of your loss and stop any further theft.

Reporting Stolen Mail

If you think you’ve been the victim of mail theft or tampering, you can report it to the U.S. Postal Inspection Service online or call 1-877-876-2455.

Reporting Identity Theft

The Federal Trade Commission (FTC) offers step-by-step advice on what to do if you think your personal information has been compromised, including placing a fraud alert on your credit reports.

Watching Bank Accounts Closely

Keeping an eye on other accounts — including savings and credit card accounts — could help you spot identity theft faster.

If anything looks out of the ordinary, you can check into it immediately and take any necessary actions to report the theft and protect your account.

What If a Check Written to You Is Lost or Stolen?

If a check that was sent to you never arrives and you’re wondering what to do if the check is lost in the mail, follow these steps:

•   Notify the person or business who sent it as soon as possible so they can stop payment before someone else can cash or deposit it.

•   If you believe the check was stolen from your mailbox and could be cashed, it’s also a good idea to report it to the police.

•   If someone cashed and/or altered the check, and you’re worried about identity theft, you may want to report the theft to the FTC.

•   You may also want to ask the issuer to send the replacement funds in a more secure way.

What If Your Checkbook or Multiple Checks Are Missing?

If several checks or your entire checkbook go missing and you suspect they were stolen, it’s wise to spring into action to protect yourself.

•   Quickly report the loss to your bank and also file a report with the police. If you don’t, you could be held responsible for any unauthorized activity.

•   If you know the numbers of the missing checks, you may choose to put a stop payment on each one.

•   Consider putting a freeze on the account or closing it. If you have other transactions that haven’t finished processing, a bank representative can help you decide which are safe to clear.

How Can You Help Prevent Check Theft?

Implementing a few safeguards could help save you from the stress of dealing with a lost or stolen check. These might include:

Guarding Your Checkbook

It’s wise to treat your checkbook as if it were a big stack of cash. If you don’t think you’ll need it, why not leave it in a safe place at home? Or you could tuck one check in your wallet, just in case.

Mailing Checks with Extreme Care

Putting the flag up on your mailbox can be a signal to thieves looking for an opportunity to steal checks.
Rather than leave envelopes with checks in your mailbox or in an outgoing mail basket at work, consider taking them to the post office yourself. If you want to be extra-safe, consider sending them by certified mail.

Using Your Check Registry

If you aren’t writing checks very often, it may seem silly to maintain the check register. But the information you keep there can help you keep track of when and where you sent a check. And if a check is stolen, you’ll have the details you need to report it.

Checking Your Transactions Daily

It doesn’t take long to log into your account and check your transactions frequently, even daily. If you have an app, you can often do this quickly with your phone.

If something looks fishy or a check you sent a while ago hasn’t cleared, it’s a good idea to follow up with the payee and/or your bank.

Being Cautious When Writing Checks

It’s a good idea to be careful when filling in the front of your checks. This includes making sure your signature is clear and consistent, not putting your Social Security number on a check, and only writing your phone number or driver’s license number on a check if a merchant known to you requests it.

The less information you provide, the harder it will be for someone to impersonate you and attempt to cash your check.

Paying with Checks Only When Necessary

Many transactions can be completed online these days, so you may want to consider that route whenever it’s a choice.

You can also set up automatic payments so you don’t have to write checks for recurring expenses.

And if you have to send money to friends or family, you may want to try switching to P2P transfers. You may want to keep in mind that, depending on the money transfer service or app you use, both parties may need to have access to the app or set up an account to exchange money. Also be aware of any fees assessed as you move funds around this way.

The Takeaway

When you write a check and it gets lost or stolen, it’s a good idea to act quickly to protect your finances. This may involve putting a stop payment on the check and possibly contacting authorities if you believe a crime was committed or that identity theft may be the goal. There is typically a fee charged for a stop payment, but it can be worthwhile to protect yourself. After a check is stolen, you run the risk of identity theft, so it’s wise to monitor your accounts and your credit reports closely.

To make money transfers and all your other everyday financial transactions fast, simple and safe, consider opening an online bank account with SoFi. You’ll be able to send money to any person with a U.S. bank account at no charge. For those times when you do need to write a check, SoFi Checking and Savings offers paper checks at no cost, not to mention we never charge you account fees.

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.

FAQ

Can I cancel a check after it’s been cashed?

Once a check has been cashed, you cannot stop payment or cancel it. If you believe there’s fraudulent activity related to the check, contact your financial institution as quickly as possible and possibly other authorities.

How long before a check is considered lost?

Checks are typically good for six months, meaning that someone could hold onto one for that long and still cash it. However, if you were expecting a check to arrive via mail in, say, a week and you have waited twice as long, you might wonder what to do if a check is lost in the mail. Consider issuing a stop payment and then having payment made again, possibly by another method.

Can someone steal your bank info from a check?

If someone gets one of your checks, they have access to both your bank account number and bank routing number. With those two sets of digits, they can potentially commit fraud, such as printing fake checks that are drawn against your account or setting up ACH (automated clearing house) withdrawals from your account.

How do thieves cash stolen checks?

One common method that thieves use is working with household chemicals to erase the ink on a check they have stolen. They can then write in a new payee’s name and amount and cash the check. Typically, they might do this at an ATM or a currency exchange.

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.

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.

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Oct
29
2024
Can I Use Checks With an Old Address?

Can I Use Checks With an Old Address?

By | Financial Independence, Life & Career, money | Comments Off on Can I Use Checks With an Old Address?

If you’re wondering if it’s okay to use checks with an old address, the answer is yes — most of the time.

Having a checkbook with your old address isn’t so unusual these days. Checks can come in handy sometimes, but many of us don’t need to use them too often in this era of online electronic payments. Because of this, it’s easy to see how the address on checks might become outdated.

Key Points

•   Using checks with an old address is generally acceptable as long as the routing and account numbers remain accurate for processing payments.

•   Informing recipients about an outdated address on a check is advisable to ensure smooth communication regarding payments or receipts.

•   New checks should be ordered if there are changes to the bank account number or routing number due to bank mergers or account closures.

•   Checks do not expire as long as the bank account is open and the check details are accurate, but closed accounts render checks unusable.

•   Alternative payment methods like money orders, cashier’s checks, or P2P transfer apps can be considered if using checks is not preferred.

Can You Use a Personal Check With an Old Address?

It is possible to use a personal check with an old address on it as long as it still has the correct routing and account numbers on it. If those numbers properly identify which bank and account the money should come from in order to pay a check, you’re good to go. However, it’s a good idea to let the bank know about a change of address to ensure they send statements and other important information about the account to the correct location.

In addition, it can be helpful to let the check recipient know that the address on the check is old just in case they need to send a receipt or any other correspondence regarding the payment via mail.

It’s a different story if you get a new bank account number or the bank changed routing numbers — this can happen, for instance, when one bank merges with another. In this situation, it is necessary to order new checks with the correct information on them.

It’s important to make sure a check’s routing numbers and account number are accurate. If someone knowingly writes a check for an account that has already been closed, this is considered writing a bad check, which is a form of fraud. Because of this, it’s a good idea to confirm check details, including your address, are current and accurate whenever you move or switch banks or set up a new checking account.

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No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

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Can You Use a Business Check With an Old Address

It is possible to use a business check vs. a personal check that has an old address on it as long as the account number and routing number are accurate. The main difference between business checks and personal checks is that business checks are drawn on personal accounts and business checks are drawn on business accounts.

Can You Use a Personal Check With a Wrong Address?

It’s fair to wonder, is it really okay if my checks have the wrong address? Whether it’s a typo on the check or you moved, this situation definitely happens.

While writing a personal check with the wrong address on it isn’t ideal, it is possible to use one. As mentioned earlier, as long as the routing number and account number for your checking account are accurate, the check can be cashed properly. However, as noted previously, you may want to inform the check recipient of your current correct address in case they need it. And, of course, if you open a new bank account, you’ll want to make sure that your address on the checks you order is correct.

Can You Use a Business Check With a Wrong Address?

Even if the address on a business check isn’t just outdated but wrong, it is still possible to write a business check with the wrong address on it as long as the routing number and account number listed on the check remain accurate.

Most businesses will want to order new checks with the correct address on them to avoid confusion about where their business is located and where correspondence should be directed. But they don’t need to worry if they have old checks left to use up. Those checks should still be fine to use.

Do Unwritten Checks Expire?

As long as an individual keeps their account open and the correct account number and routing number remain on a check, the check won’t expire. There is an important exception, however. If someone closes a bank account, this means the checks associated with the account become unusable.

Another situation to be aware of is that bank routing numbers can change, especially when banks merge. So it’s a good idea to confirm from time to time that a check’s information is up to date.

When Are Checks With an Old Address Unusable?

Checks with an old address on them only become unusable if the routing number or account number listed on the check are inaccurate. This causes problems because these numbers are used to verify that the check is good and identify the account the money needs to be withdrawn from in order to process the check.

Ordering New and Correct Checks

If an individual needs new checks for any reason — such as a desire to update their address — these are the steps they’ll generally take to order new ones.

•   Log on to their online bank account. It’s usually possible to order checks online or via a mobile account dashboard.

•   Request a counter check. If someone is really in a rush and can’t wait for new checks to come in the mail, they can go to a local bank branch and purchase counter checks. These are temporary checks that will have your account information on them, and they typically cost $1 or $2 per check, though fees may vary.

•   Review terms and fees. All banks charge different fees to buy checks or a checkbook, so double check how much doing so will cost.

Changing Your Address on Checks

If you need to change the address listed on the checks in your personal checkbook, order more checks via one of the methods previously mentioned. This can be done online or via your mobile banking app. You may also be able to order checks in person at your bank.

Do You Need to Write Your Address on a Check?

Checks typically have an address already printed on them. Therefore it is not necessary for the check writer to write it on the check themselves. However, some people may prefer that only their name appears on their checks. Maybe they know they’ll be moving soon, or perhaps they simply prefer this for privacy and security reasons.

If you do need to write your address on a check that doesn’t have your address — perhaps because the recipient such as a merchant is requesting it — it’s generally best to:

•   Use blue or black pen

•   Print your new address under your name at the upper lefthand corner of the check

•   See if the business or merchant wants your phone number as well; this is a fairly common request so they can reach you if necessary.

Do Checks Need an Address?

Checks do not need to have an address printed on them. However, if you choose to omit an address (say, because you know you’ll likely be moving soon), some businesses may hesitate to accept the check. They might ask for a form of ID or a phone number in case they need to contact you.

Alternatives to Personal Checks

If an individual doesn’t want to write a check for whatever reason, these are some alternative payment options.

Money Orders

It’s possible to buy a money order from the post office and other locations, including some big box stores and grocery stores. Money orders are a very quick form of payment, and can cost about $2 in fees.

Cashier’s Checks

A cashier’s check, which usually costs a small fee, can be bought at the bank and is a check that is guaranteed by the bank. It will usually require a visit to the bank to get one, though.

P2P Money Transfer Apps

P2P money transfer apps — like Venmo — that allow users to instantly transfer cash electronically to an individual as long as they have enough money in their bank account can be a convenient option. These are often free to use but they can involve a small fee (a percentage of the transaction) in certain situations, such as if you’re sending money via credit card. (Sometimes e-checks, or electronic checks, are a payment option for utilities and other accounts. While not a P2P app, they do allow for a seamless transfer of funds.)

The Takeaway

As long as the routing and account numbers on the check are accurate, it’s possible to use a check with an old, incorrect address on it. That said, it’s a good idea to order new checks with the correct address on them to help lessen any confusion the wrong address might cause with check recipients. Having all your details correct can help make banking as simple as possible.

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

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.

FAQ

Does it matter if the address on my check is wrong?

It is possible to use a check with a wrong address on it. The key is to make sure both the routing number and account number are still accurate on the check before using it.

Can you cash a check with an incorrect address?

Yes, you can cash a check with the incorrect address on it as long as the routing and account numbers on the check are accurate.

Do checks need an address?

Checks commonly have an address on them, but it’s not a requirement. If you are using a check without an address, the business or service you are playing may require some additional ID or info.

Photo credit: iStock/MicroStockHub

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® 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.

4.00% APY
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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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29
2024
Can You Cash a Check at an ATM?

Can You Cash Checks at an ATM?

By | Budgeting & Goals, Family Finances, money | Comments Off on Can You Cash Checks at an ATM?

If your paycheck or another check is burning a hole in your wallet, you might be able to cash it at an ATM. Depositing a check into an ATM can be a convenient, painless way to get your cash fast.

If you don’t have access to remote banking or just can’t make it to a bank during business hours, cashing a check at an ATM can be an excellent alternative.

Key Points

•   Cashing a check at an ATM requires a checking account, a debit card, and a PIN. Ensure these are ready before attempting the transaction.

•   The process involves endorsing the check, possibly filling out a deposit slip, and following the ATM’s on-screen instructions for cashing the check.

•   Various types of checks, including personal, cashier’s, and certified checks, can generally be cashed at ATMs, depending on the bank’s policies.

•   Not all ATMs support check cashing; it’s advisable to use ATMs located at your bank to avoid fees and ensure your check is processed efficiently.

•   Alternative methods for cashing checks include visiting a bank teller, using mobile deposit features, or cashing checks at retail stores, though fees may apply in some cases.

🛈 Cashing checks at an ATM is unavailable for SoFi members. As an alternative, members can deposit checks via the mobile app.

Steps to Cash a Check at an ATM

If you do use a bank that offers ATM check cashing, the first thing you’ll need in order to cash a check at an ATM is a checking account. A checking account traditionally comes with an account number and a debit card. You will need both of these.

Make sure you’ve activated your debit card, selected and memorized a PIN number, and know your account number. The debit card and PIN number are essential for performing the most basic of transactions, including making ATM deposits and withdrawals.

Once you have your account details, card, and PIN number, cashing your check at an ATM is pretty much the same as making a cash deposit at an ATM. Most banks will require you to have a minimum amount in your checking account in order to cash your check.

Here are the steps to cashing a check at an ATM:

•   Endorse the back of your check. With a pen (not pencil), sign your name on the back of your check and write your account number. Security tip: Wait until you get to the ATM location to sign the back of your check, even if you have to bring a pen with you. If an endorsed check gets lost or stolen, someone else could cash it.

However, do add your signature before your turn at the ATM itself to save time and as a courtesy to those waiting behind you.

•   Fill out a deposit slip. Some banks may still require you to fill out a deposit slip to insert into the ATM along with your check. The deposit slips are typically available in the bank branch or the ATM area. Some banks may require you to put a check and the slip into a deposit envelope.

•   Insert a compatible card. To begin the transaction, you’ll need a valid ATM card, debit card, or prepaid debit card issued from a bank or credit union.

•   Enter your PIN. After inserting your card, the ATM will prompt you to enter your personal PIN number. Do not share your PIN number with anyone.

•   Follow the prompts. Follow the ATM’s instructions that appear on the screen. This can involve selecting “Make a deposit” and “Get cash back” and entering a dollar amount.

•   Insert the check into the machine. The ATM will invite you to make your deposit. If no check envelope is used, it will scan your check and ask you to confirm the amount.

If you are a customer who qualifies for same-day deposits, you may be able to withdraw funds right away, essentially “cashing your check” while avoiding additional transaction fees. In other situations, you may only have, say, $225 available to withdraw.

One thing to keep in mind: Even an in-network machine may have ATM withdrawal limits — typically between $500 and $1000 per day.

With some bank’s ATMs and account types, the funds may not be available until the second business day after the deposit. And if you are using an out-of-network ATM, you may be charged additional ATM transaction fees, and it can take up to 5 business days before you see the money in your account.

Types of Checks That May Be Cashed at an ATM

There is more than one kind of check. Personal, cashier’s, and certified checks are all ways to distribute sums of money without the risk of handling cash. But what kind of checks will an ATM accept?

Here are some check types you can feed an ATM that won’t get spit back out:

•   Personal checks. If you find yourself wondering, “Can I cash a personal check at an ATM?”, the answer is “yes!” So, go on — deposit that birthday check from Aunt Trudy. You can even write a check to yourself from another account and deposit it.

•   Cashier’s check. A cashier’s check draws on a bank’s funds and is signed by a cashier to guarantee the money. To cash this kind of check, it is beneficial to use an ATM connected to the bank that issued the check. You can also deposit it in your own bank’s ATM if you want the money to go into your account.

•   Certified checks. Like cashier’s checks, certified checks are issued by the bank but signed by you vs. a cashier. As long as you have your debit card, you can go ahead and deposit it in the ATM.

•   Any pre-printed check. Basically, any pre-printed can be deposited and withdrawn against at an ATM if your bank allows it. Government checks (such as a tax refund check) are the easiest for a bank to verify, and you might get your money right away. Foreign-issued checks may take longer to process.

Do All ATMs Support Check Deposits?

Not all ATMs support check deposits. Some ATMs located in grocery and convenience stores, restaurants, and other businesses may only have the ability to dispense cash and check your bank balance.

If you’re looking to cash a check at an ATM, your best bet is to use the machine at your bank. Most major banks and credit unions support check cashing at their ATMs. Plus you’re likely to avoid ATM fees.

Alternative Ways to Cash a Check

You don’t have to use an ATM to turn your paycheck into paper money. There are other ways to cash a check for free because who wants to pay more in bank fees? These techniques include:

•   Go to a bank teller. If you have time during business hours, you can cash your check the old-fashioned way. Your bank branch or credit union will likely perform the service, as long as you have a deposit slip, debit card, a valid ID, and meet your account’s requirements.

•   Go to the check distributor’s bank. You may be able to cash the check by paying a visit to the bank where the check writer holds the account. This could be a valid option if you are unbanked (don’t have any bank accounts). The check writer’s bank will probably be able to verify that the issuing account is in good standing and extract the funds for you.

•   Mobile apps. Who uses cash anyway these days? If your bank offers a mobile banking feature, also called mobile deposit, and you have a smartphone, you can use their app to snap a photo of your check and deposit it from the comfort of your living room sofa. You can gain access to your money quickly (instantly with some accounts), and pay back your bestie through Venmo.

•   Visit a retail store. Some retail shops, such as Walmart, grocery stores, and even gas stations may cash your check. However, they could charge you a small fee.

•   Check-cashing stores. The name says it all. Check-cashing businesses will give you cash for your check, but typically charge a stiff transaction fee. You may want to pursue other options and save this as a last resort due to the steep charges.

The Takeaway

Using an ATM to cash a check can be a quick and secure way to get your money. As long as you have a bank that supports check cashing, have the minimal required funds in your account, and have your debit card and PIN number ready, you’ll likely be on your way with some green in your hand.

FAQ

Can you deposit a check at an ATM?

It depends on your bank or credit union, but most banking institutions allow you to deposit checks at an ATM.

How long does it take to cash a check at an ATM?

As long as you’ve endorsed your check, written the account number on the back, and have your debit card and PIN number ready, cashing a check at an ATM shouldn’t take more than a few minutes if the financial institution makes the funds available. Not all ATMs will be this fast; in some cases, it will take at least two days for the funds to clear.

Can any type of check be cashed at an ATM?

As long as the routing and account number are legible, you can insert most traditional check types into an ATM. Personal and government-issued checks will probably be validated and credited to your account faster.

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.

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.

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

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

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29
2024
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How Is Savings Interest Calculated?

By | Budgeting & Goals, money | Comments Off on How Is Savings Interest Calculated?

In a world where it can seem hard to make and stretch a dollar (hello, inflation!), isn’t it nice to know that there’s a way to earn money without any effort? That would be by collecting interest on a savings account. Your financial institution pays you for the privilege of using the cash you have on deposit, pumping up your wealth without the least bit of work on your part.

Knowing how to calculate interest helps you more effectively compare savings accounts.

While the basic concept may sound simple, understanding the different rates offered on interest-bearing accounts (typically savings accounts, though some checking accounts may earn a bit too) can get complex.

Here, you’ll learn the ins and outs of how interest works. For those trying to grow their money to achieve financial goals, it’s helpful to know how to calculate interest on a savings account. This knowledge can help you determine how much money earned in interest you can expect. It can also aid you when you are deciding which savings account best meets your needs.

Key Points

•   Understanding interest helps individuals compare savings accounts and determine potential earnings, enhancing their financial decision-making process.

•   Simple interest is calculated using the formula: Simple Interest = Principal x Rate x Time, allowing for straightforward calculations of earnings.

•   Compound interest accelerates wealth growth by allowing interest to earn interest, thereby increasing the principal over time and enhancing overall returns.

•   The annual percentage yield (APY) simplifies the comparison of different savings accounts by incorporating both the interest rate and the effects of compounding into a single rate of return.

•   Various factors, including Federal Reserve rates and promotional offers, influence the interest rates banks provide, making it essential to shop around for the best savings account.

What Is Interest?

Interest is the amount of money that a bank pays a depositor who is keeping their money with the financial institution. While that money remains accessible to the account holder, the bank uses money on deposit for other purposes, such as lending it out for a mortgage loan. One way banks can make money is via the differential between the interest they pay for money on deposit (say, 3%) and the interest they charge when someone else borrows it (say, 6% on a home loan).

Simple Interest Formula

Calculating interest involves some not-too-complex math; in fact, it’s primarily multiplication you need to use. The formula for simple interest looks like this:

Simple Interest = P x R x T

Where:

•   P stands for the principal, or the amount on deposit.

•   R stands for the interest rate, expressed as an annual rate usually, in decimal form.

•   T stands for time, or how long the money is held by the bank.

How Do You Calculate Interest in a Savings Account?

Now, consider how this formula could be used to calculate the interest earned on savings you deposit at a financial institution.

If you deposited $5,000 in a bank for one year at a 3% interest rate, the simple interest after one year would be, using the PxRxT formula:

5,000 x .03 x 1 = $150

So, by calculating savings interest, you see that you’ve earned $150. To put it another way, at the end of one year, your $5,000 would have grown to $5,150.

This, of course, represents simple interest. When putting your money in the bank today, you may well earn compound interest. Read on to see how that works or use the savings account interest calculator below to see how much interest you can earn.


Simple vs Compound Interest

When you earn interest on the principal amount alone, such as in the example above, it’s called “simple interest.”

But the reason savings accounts can be such an effective tool for growing money is that not only is interest earned on the amount deposited, but the interest also earns interest. This is called compounding.

Depending on the account, interest may compound daily, monthly, or quarterly. Each time this happens, the interest earned to date becomes part of the principal, and the amount of interest earned from the compounding date onwards will be based on both the principal plus the interest earned to date. You might think of it as accelerating your money’s growth as time passes.

Example

Here’s what compound interest looks like in action, using the same $5,000 initial deposit, but that 3% interest compounds on a monthly basis.

•   After one month, the account would have $5,000 plus interest totalling one-twelfth of the 3% annual interest, $12.50.

•   The next month, the interest would be calculated on $5,012.50, adding $12.53 to the principal for a new total of bringing the new principal to about $5,025.03, and so on.

•   At the end of the year, the account would have $5,152.08.

•   After 10 years, monthly compounding will grow that initial $5,000 to $6,746.77, without adding a single penny more to the account.

Compounding means you earn interest on the interest you’ve already earned.

Here’s a chart showing the difference simple vs. compound interest can make at a rate of 3% on $5,000 deposit:

Time

 Simple Interest

 Interest Compounded Daily
Account opened $5,000 $5,000
1 year $5,150 $5,152.27
5 years $5,796.37 $5,809.14
10 years $6,719.58 $6,749.21
20 years $9,030.56 $9,110.37

It may not seem like a huge difference, but adding to the principal regularly can grow your money faster. In addition, seeking out a higher interest rate can of course boost your cash faster as well.

APY vs Monthly Interest Rate

Calculating compound interest can get complicated; the equation involves more complicated math. But some banks simplify an account holder’s potential earnings into a single rate called the annual percentage yield, or APY. The APY factors in both the interest rate and the effect of compounding into an actual rate of return over the course of one year. To calculate how much interest will be earned on a savings account using the APY, simply multiply the principal by the APY.

This simplicity makes APY a more helpful rate to use when comparing interest rates for different accounts or banks, because it includes the effect of compounding, regardless of how frequent. Banks will usually post this information because the APY is higher than the stated interest rate. A savings account interest calculator can be helpful when calculating interest on savings accounts and to see how different rates of compounding will affect earnings.

Earn up to 4.00% APY with a high-yield savings account from SoFi.

No account or monthly fees. No minimum balance.

9x the national average savings account rate.

Up to $2M of additional FDIC insurance.

Sort savings into Vaults, auto save with Roundups.


Understanding Interest Rates

In comparing savings accounts at different banks (or even within the same bank), consumers may notice that interest rates can vary with the type of account. What’s more, interest rates posted by the Federal Reserve may vary considerably from the interest rates banks offer their customers.

Tasked with maintaining economic stability, the Fed uses signals such as employment data and inflation to determine its rates. During economic slowdowns, the Fed typically lowers rates to reduce the cost of borrowing and incentivize big businesses to spend more, stimulating the economy. Conversely, when the economy appears to be growing too quickly, the Fed may raise rates, increasing the cost of borrowing in order to slow spending. This has been the case in recent years, with the Fed repeatedly raising rates in an effort to bring inflation down.

How does this play into the interest rate consumers might earn on their own savings? There are a number of factors that determine the interest rate a bank posts:

•   The target federal funds rate, set by the Fed, is one such cue.

•   Banks, however, set their own interest rates and these may vary depending on factors such as promotions the bank may have in place to attract new customers or incentivize greater account balances, as well as how much work an account takes to administer.

This last factor is why checking accounts, which are often used for a higher volume of everyday transactions, often pay less interest than savings accounts, where customers are more likely to let their money sit and accrue.

•   Interest rates also change over time, so the posted rate when an account is opened may not remain the same.

•   Banks may also have tiered interest rates, where account holders earn different rates of interest depending how much they have in their account, or balance caps, in which an interest rate can only be earned up to a certain amount.

Recommended: Basics of a High-Yield Savings Account

What Is a Good Savings Account Interest Rate?

What is a good savings account interest rate will vary with the times. During the 1980s, the interest rates on savings accounts were around 8%, while from 2018 to 2021, the average was barely one-tenth of one percent, which could hardly keep pace with inflation.

As you shop around for the right account at the right rate, you may find that online banks offer among the higher rates. Since they don’t have bricks-and-mortar locations, they can pass their savings on to their clients. As of March 2023, online banks were offering in the 3% to 4% range, while some of the big traditional banks were still offering just a fraction of a percentage point.

Questions to Ask When Considering a Savings Account

It’s hard to dispute the appeal of earning money on savings. But in addition to knowing how to calculate interest on a savings account, there are other considerations that could affect the flexibility and ease with which that account will help a person achieve their goals. Some account holders may find they need multiple bank accounts to meet both their everyday and long-term financial needs and goals.

Here are some things to consider.

Will You Be Penalized for Everyday Transactions?

Savings accounts typically provide higher interest rates than checking accounts because they require less work for the bank to administer since they’re not meant to be used for everyday transactions.

But savings accounts may limit the number of transactions or transfers account holders can make in a month, or charge a fee for such actions. The Federal Reserve’s Regulation D, which imposed a six-transaction-per-month limit, was loosened during the COVID-19 pandemic. Some banks now follow the new rule; others don’t. Inquire at a potential new home for your funds before opening a savings account.

Is There a Minimum Balance?

Some banks incentivize or penalize customers to encourage them to keep more money in their accounts. For example, an account may be subject to fees unless the balance is maintained above a certain amount. Tiered savings accounts provide a higher rate of interest on bank balances above certain levels.

Can the Money Be Accessed Easily?

Some types of savings accounts provide higher interest rates but limit access to the money for a predetermined earnings period. For example, a certificate of deposit (CD) is a savings vehicle that holds an investor’s money for a certain period of time. At the end of that term, the account holder is paid the original principal plus the interest earned. There may be penalties imposed on early withdrawals from a CD.

Can the Account Help Achieve Money Goals?

Earning interest is a key way a savings account can help savers achieve their financial goals. But they might have multiple reasons for saving, from being able to afford a vacation or other luxuries to ensuring they have enough money in an emergency fund for unforeseen circumstances. If that’s the case, it’s helpful to be able to know at a glance what is saved towards each need. At some banks, separate accounts might need to be opened for each purpose, while others may provide tools to organize your savings within a single account.

How to Streamline Your Savings

High interest rates can indeed be a compelling motivator for opening a savings account. And knowing how to calculate interest on an account is a helpful tool for finding the right financial product. But incurring fees to make necessary transactions or losing flexibility in other ways may negate the benefits of earning interest.

With SoFi online banking accounts, members can earn a competitive APY and not pay any account fees. Plus, SoFi members can access the Allpoint network of more than 55,000+ fee-free ATMs as well as use Vaults and Roundups to help grow their wealth. Plus, whether online or using the SoFi app, members can spend, save, and earn all in one convenient place.

SoFi Checking and Savings: The smart, simple way to bank.

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.

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.

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Oct
29
2024
Can the Government Take Money Out of Your Account?

Can the Government Legally Take Money Out of Your Bank Account?

By | Budgeting & Goals, Financial Independence, money | Comments Off on Can the Government Legally Take Money Out of Your Bank Account?

The government generally can’t take money out of your bank account unless you have an unpaid tax bill (and before they go to that extreme, they will send you several notifications and offer you multiple opportunities to pay your outstanding taxes). If you’re late on a debt or child support payment, on the other hand, the government can’t directly tap your bank account. What they can do, however, is permit other parties to remove the funds. Keep reading for more insight into when and how this can happen.

Key Points

•   The government generally cannot withdraw money directly from bank accounts unless there are unpaid tax obligations, which come after multiple notifications.

•   Financial institutions can exercise the “right of offset,” allowing them to withdraw funds from an account to cover debts owed to the same institution without prior notice.

•   Wage garnishment is another legal method that enables employers to withhold part of an employee’s earnings to satisfy debts, requiring a court order to enact.

•   Certain funds, such as those from tax-deferred retirement accounts, are exempt from being seized under the right of offset or wage garnishment laws.

•   Open communication with financial institutions regarding debts can help avoid unexpected withdrawals, and timely payments can prevent wage garnishment situations.

Times When the Government Can Legally Take Money From Your Account

There are certain situations where the government allows money to be removed from a bank account without the account owner’s permission. Let’s look at a few ways this can happen.

Right of Offset

The “right of offset” is a term that refers to the fact that both banks and credit unions are allowed to take money from an account holder’s checking account, savings account, or certificate of deposit in order to pay off a debt on another account held at the same financial institution. While the government isn’t the one directly taking the money out of a bank account, they do legally allow this to happen.

For example, if you have a checking account and a student loan through a single bank and you fail to pay your student loan, the bank has the right to take money from your checking account to pay for missed loan payments. If you have a bank account with a different financial institution, however, the bank looking for your student loan payments cannot withdraw funds from that account.

Financial institutions don’t have to give account holders advanced warning before exercising the right of offset. This is legally allowed as long as they follow all rules surrounding this practice.

Appeasing Both Sides

Taking funds from your account typically only happens in situations such as a student loan being about to go into default when the person holding the loan has money sitting in checking that could cover the debt. To know whether your funds could be tapped in this way, take a look at the fine print. Financial institutions like banks and credit unions usually have language surrounding this right of offset in the agreement that an account holder signs when they open a savings account, checking account, or a certificate of deposit (CD).

Different financial institutions will have different policies as to how they handle their right of offset process. Typically, credit unions have a bit more leeway when it comes to right of offset, while banks need to stick to stricter standards. For instance, it’s usually illegal for a bank to seize money from an account to pay a credit card debt. However, credit unions may be able to do this.

Which Accounts Can Be Tapped

Here’s another reason why it’s really important to pay close attention to this language: Sometimes a bank or credit union has the ability to access the funds in any joint accounts that the main account holder shares with someone else (like a spouse). So if, say, you had a joint checking account at a bank with funds in it, and the bank also held your student loan which was close to default, both you and your spouse could wind up having your money withdrawn to go towards that overdue loan. Luckily, the right of offset isn’t eligible for tax-deferred retirement accounts (such as IRAs), so the money in those accounts can’t be touched.

Garnishment of Wages

Garnishment of wages is another example of when the government permits taking money from someone without their permission. This is a legal procedure that requires an employer to withhold part of a person’s earnings in order to repay a debt such as child support or a loan. Wage garnishment requires a court order.

Fortunately, Title III of the Consumer Credit Protection Act (CCPA) protects the person who needs to repay their debt. It says that an employer can’t discharge an employee for having their wages garnished for a single source of debt. However, employees with earnings subject to garnishment for a second or subsequent debts do not receive this protection.

Personal earnings such as wages, salaries, commissions, bonuses, and retirement income all qualify for wage garnishment, but tips usually don’t.

Does the Government Take Money From Accounts Often?

Having funds removed from a bank account without the account holder’s permission doesn’t happen all that often. When it does, the account holder can generally anticipate that this scenario is going to unfold, with the exception of it being a right of offset situation and they didn’t read their account holder agreement carefully. Garnishment of wages, however, requires a court mandate and won’t catch anyone off guard.

Let’s look at an example of how these situations can occur. If someone has debt and they don’t respond to a debt collector’s suit against them, the judge usually rules against the person who owes money. The judge may rule that the debt collector can garnish their wages, take a lien out on their property, or take money from their bank accounts.

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Are Any Funds Exempt?

You may wonder if any kinds of funds are exempt from right of offset and wage garnishment. Let’s take a look at the guidelines in this situation. If the documents you signed when you opened a checking account, savings account, or CD included a right of offset agreement, then you’ve permitted the financial institution to take your money to pay a debt under the terms outlined in the agreement. The agreement is a legal contract, and you’re subject to it as long as you’re an account holder.

In some cases, you might not even learn that your bank or credit union has exercised its right of offset until after the fact. The agreement doesn’t, however, open the door for a financial institution to pull money from your account whenever it wants. For instance, federal law prohibits a federally chartered bank from using the right of offset to pay your overdue credit card bill at another bank. Again, it is used to repay a loan that is overdue at the same financial institution.

State laws might also limit a bank’s or credit union’s right of offset. This is the case in California, where a financial institution can’t push your balance below $1,000 when it pulls money from your account to cover a debt. Some states also prohibit draining government benefits like Social Security or unemployment in a right of offset action.

When thinking about wage garnishment, let’s take a look at what the law says. What kinds of funds can be garnished? Title III applies to all individuals who receive personal earnings and to their employers. Personal earnings include wages, salaries, commissions, bonuses, and income from a pension or retirement program, but does not ordinarily include tips.

Ways to Avoid Government Withdrawals

None of these withdrawals are ideal, and there are steps you can take to avoid them. You can avoid the internal revenue service (IRS) from withdrawing money from your bank account by paying all taxes owed each year.

When it comes to right of offset, it’s possible to avoid having this happening with a little communication. If you’re worried you won’t be able to make a debt payment to your bank or credit union, you may be able to connect with your financial institution to work out a repayment plan. Being upfront won’t make the situation worse and can lead to a potential solution. If you lose your job, you can talk to your bank about how to manage your debt until you find a new job.

The best way to avoid wage garnishment is to make the required payments, such as child support, on time. Again, if you’re struggling to make a payment because of financial hardship, it’s best to communicate that upfront and to make a plan for recovery instead of falling behind on payments.

The Takeaway

So can the government take money out of your bank account? The answer is yes if you fail to pay your taxes. In addition, the government permita an employer or financial institution to do so in certain situations.

If you plan for debt and other required payments properly, chances are that money won’t ever have to be removed from your account without your permission. Even though funds can be unexpectedly withdrawn via right of offset and garnishment of wages, a person usually knows they have debt that’s past due and may not be totally surprised by this turn of events. When falling behind in payments, it’s often a good idea to talk directly with creditors and explain the situation. Your lender may be willing to set up a new repayment plan that allows you to avoid these two scenarios we’ve just explored.

A New Way to Bank With SoFi

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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.

FAQ

What is it called when the government takes money from your bank account?

When the government seizes money in a bank account to cover unpaid taxes, it’s called a tax levy.

You can also have money removed from your bank account through a process known as “right of offset” or garnishment of wages (which is money taken directly from a paycheck). These processes don’t involve the government directly taking money out of your bank account, but laws allow a financial institution or employer to do so under certain circumstances.

Can the government take money from your checking account?

Through the “right of offset,” banks and credit unions are legally allowed to remove funds from a checking account. They can do this to pay a debt on another account that the consumer has with that same financial institution.

The internal revenue service (IRS) also has the power to seize assets, including bank accounts, when a taxpayer fails to satisfy their tax obligations.

Can a government take your savings?

Through “right of offset,” the government allows banks and credit unions to access the savings of their account holders under certain circumstances. This is allowed when the consumer misses a debt payment owed to that same financial institution.

In addition, the internal revenue service (IRS) has the power to seize assets, including bank accounts, when a taxpayer fails to satisfy their tax obligations.

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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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.

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