Most people could use a cash injection at some point in their lives. Perhaps they need to cover major home repairs, a big-ticket purchase, or emergency expenses. Whatever the reason, a personal loan may be a good idea, especially for borrowers with a strong credit history.
Read on to learn how to get a $50,000 personal loan. Find out why it might be right for you (and when it may be wrong), how the terms are decided, and possible alternatives to a personal loan for $50K.
Key Points
• Personal loans provide quick access to funds, often available within days after approval.
• Credit score plays a crucial role in determining interest rates and loan terms.
• Monthly payments must align with the borrower’s budget to prevent financial difficulties.
• Alternatives such as a HELOC or credit cards should be considered for potential benefits.
• Taking a personal loan can positively or negatively affect credit, based on repayment consistency.
Factors to Consider When Applying for a $50,000 Personal Loan
Personal loans are a convenient way to fund a short-term cash flow problem or consolidate credit card debt. In many cases, once the loan is approved, the funds are deposited to your account within a day or two.
Banks, credit unions, and online lenders can all provide personal loans for $50K. Note that payback terms are flexible, running from 12 months to several years, and loan payments are due monthly. Personal loan rates vary depending on the credit score of the borrower: A higher credit score will be rewarded with better terms and a lower interest rate.
As you consider whether to apply for a $50K personal loan, it’s a good idea to first assess your financial health and your credit score. (Your bank or credit card issuer may allow you to check your score for free.)
You’ll also want to determine whether you’d be able to pay back the loan. Making a budget can help. Simply subtract your recurring expenses from your income, and see if the amount left over is enough to cover the monthly loan payment.
Next, find out the average personal loan interest rate, then shop around with different lenders. Be sure to look out for origination fees and prepayment penalties hidden in the small print.
How to Qualify for a $50,000 Personal Loan
Criteria varies by lender, but in general, to qualify for a $50K personal loan, you’ll need to satisfy a few requirements:
• Maintain a good credit score. For such a significant loan amount, a traditional bank or credit union may require a credit score of 670 or more, which is considered a good credit score. However, other lenders may work with borrowers who have a credit score of 580 and up.
• Provide proof of employment and income. Examples include paycheck stubs, tax returns, Social Security payments, alimony payments, or disability benefits statements.
• Have a debt-to-income (DTI) ratio of 36% or lower. That said, lenders may allow a higher DTI ratio for borrowers who are using the loan funds to consolidate credit card debt.
What Can You Do With a $50,000 Personal Loan?
One of the upsides of a $50,000 personal loan is that you can use the funds for just about any purpose. But considering the size of the loan, you may choose to put the money toward a larger financial goal. Common examples of this include consolidating high-interest debts, paying for home improvement projects, and funding a major purchase, like a bucket-list vacation.
Understanding the Costs of a $50,000 Personal Loan
Borrowers should pay special attention to these factors when comparing the cost of a loan.
Interest Rates
The biggest consideration for a $50,000 personal loan is the interest rate, because the rate and the length of the loan will determine the total cost of the loan. The shorter the loan, the less interest you will pay, and the lower the total cost.
In most cases personal loans have a fixed interest rate, but some do have variable rates. Variable rate loans often start out with a relatively low interest rate, but the rate can rise significantly later, increasing the monthly payments.
Fees
Origination fees can be hidden in the fine print, so make sure you understand how they impact the annual percentage rate (APR) that you are charged. Also check if there’s a prepayment penalty for paying off your loan early.
Total Repayment Cost
The total repayment cost of a $50,000 loan will depend on the interest rate and the length of the loan. You will make more payments over a longer term, racking up more interest and increasing the total cost of the loan. A shorter term will lower the total repayment cost. To minimize total repayment costs, select a loan with the biggest monthly payment you can comfortably afford and the shortest repayment term.
Monthly Payment Amount
The monthly payment is critical. If a monthly payment offered by a lender seems like a stretch, try to negotiate a longer repayment period. For instance, if a five-year loan is extended to a seven-year loan, you’ll make 84 smaller payments compared to 60 larger payments. Just remember, you’ll pay more interest over the life of the loan.
Is a $50,000 Personal Loan the Right Choice for You?
A $50,000 personal loan is a huge financial commitment. Ask yourself the following questions before signing on the dotted line.
How Much Do You Really Need?
Minimizing your debt load means you pay less to lenders in fees and interest. Consider whether you can borrow money from another source at a lower cost and reduce the amount that you need from a personal loan.
Can You Afford the Monthly Payment?
If the monthly payment is going to take a big bite out of your paycheck each month, you may find yourself unable to meet the payments. Make sure your cash flow is sufficient to meet your monthly payments.
Is a Personal Loan Your Best Financing Option?
Look at other options before you settle on a $50,000 personal loan. If you have equity in your home, refinancing your mortgage or obtaining a HELOC might be a better choice. Credit cards and borrowing from family or friends are also good alternatives.
How Will the Loan Affect Your Credit?
When you are shopping for a loan, whether it be for $5,000, $10,000, or $100,000, a lender may pull a soft credit check to prequalify you. This will not affect your credit score. When you formally apply for your loan, the lender will do a hard credit check. This may reduce your credit score by around five points for one year.
Aside from credit checks, personal loans can help build your credit history or seriously hurt it, depending on how you manage your payments. If you make a payment that’s over 30 days late and it gets reported to the credit bureaus, it could lower your credit rating from excellent to fair. But if you use your loan to consolidate existing debt, your score might actually rise because your credit utilization ratio has improved.
What Are the Pros and Cons of Borrowing?
Despite their flexibility and convenience, there are pros and cons to personal loans that a borrower should be aware of before they opt for this financing option. One of the biggest advantages of an unsecured personal loan is that no collateral is required, which means you don’t risk losing your home or car. On the other hand, interest rates can be high if your credit score is low, and fees and penalties often apply.
Benefits of Choosing SoFi for a $50,000 Personal Loan
Traditional banks, credit unions, and online lenders like SoFi all provide flexible personal loans. SoFi personal loans offer competitive interest rates and no origination fees or prepayment penalties. The application process is quick and easy, and funds could be available as quickly as the same day your loan is approved. The terms of a SoFi personal loan will depend on your credit score — the higher your score the lower your interest rate.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
What credit score do I need to get a $50,000 personal loan?
Most lenders will require a credit score of 670 or more, which is considered a good credit score. Other lenders may require a credit score of at least 580, but they’ll likely charge higher fees and a higher interest rate.
How can you qualify for a $50,000 personal loan?
In general, to qualify for a $50,000 personal loan you will need to show you have sufficient income to make the monthly payments and have a credit score of 580 or higher. You also must be 18 years old and a U.S. citizen, legal resident, or visa holder.
Is it hard to get a 50k personal loan?
It’s not difficult to get a personal loan for $50K if you have good credit. If you have poor credit, the number of lenders available to you will be limited, and you will likely face higher interest rates and high fees, making the loan quite costly.
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
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.
Futures and options are both derivative contracts that enable an investor to buy or sell an investment for a certain price by a certain date. Although they share similarities, they work quite differently and pose different risks for investors.
With an options contract, the holder has the option (but not the obligation) to buy an underlying asset, such as stock in a business, for a specified price by a specific date. A futures contract requires the holder to buy the asset on the agreed-upon date (unless the position is closed out before then).
The underlying asset for a futures contract is often a physical asset, such as commodities like grain or copper, but you can also trade futures on stocks or an equity index, such as the S&P 500. The underlying asset for an options contract can be a financial asset like a stock or bond, or it could be a futures contract.
Key Points
• Futures contracts make obligations about trading an underlying asset at a set price and date.
• Options give the buyer the right, not the obligation, to trade the underlying asset.
• Futures are riskier due to high leverage and daily mark-to-market adjustments.
• Options buyers risk only the premium paid, while futures leverage amplifies gains and losses.
• Both futures and options are used by hedgers and speculators for different purposes.
Main Differences Between Futures and Options
Although futures and options are similar, as they are both derivative contracts tied to an underlying asset, they differ significantly in terms of risk, obligations, and the ways in which they are executed.
How Futures Work
Futures contracts are a type of derivative in which buyers and sellers are obligated to trade a specific asset on a certain future date, unless the asset holder closes their position prior to the contract’s expiration.
A futures contract consists of a long side and a short side, where the short side is obligated to make delivery of the underlying asset, and the long side is obligated to take it (unless the contract is terminated before the delivery date).
Both options and futures typically employ some form of financial leverage or margin, amplifying gains and losses, increasing potential risk of loss.
How Options Work
Options trading consists of buying and selling derivatives contracts that give the holder the right, but not the obligation, to buy or sell an asset at a specified price (the strike price) by the contract’s expiration date.
• The options buyer (or holder) may buy or sell a certain asset, like shares of stock, at a certain price by the expiration of the contract. Buyers pay a premium for each option contract; this represents the cost of acquiring the option.
• The options seller (or writer), who is on the opposite side of the trade, has the obligation to buy or sell the underlying asset at the strike price, if the options holder exercises their contract.
💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
The Role of Risk
Trading options come with certain risks. The buyer of an option could lose the premium they paid to enter the contract. The seller of an option is at risk of being required to purchase or sell an asset if the buyer on the other side of their contract exercises the option.
Futures can be riskier than options due to the high degree of leverage they offer. A trader might be able to buy or sell a futures contract putting up only 10% of the actual value, known as margin. This leverage magnifies price changes, meaning even small movements can result in substantial profit or loss.
With futures, the value of the contract is marked-to-market daily, meaning each trading day money may be transferred between the buyer and seller’s accounts depending on how the market moved. An option buyer is not required to post margin since they paid the premium upfront.
The Role of Value
Futures pricing is relatively straightforward. The price of a futures contract should approximately track with the current market price of the underlying asset, plus any associated costs (like storage or financing) until maturity.
Option pricings, on the other hand, is generally based on the Black-Scholes model. This is a complicated formula that requires a number of inputs. Changes in several factors other than the price of the underlying asset, including the level of volatility, time to expiration, and the prevailing market interest rate can impact the value of the option.
Holding constant the price of the underlying asset, futures maintain their value over time, whereas options lose value over time, also known as time decay. The closer the expiration date gets, the lower the value of the option gets. Some traders use this as an options trading strategy. They sell options contracts, anticipating that time decay will eat away at their value over time, expire worthless, and allow them to keep the premium collected upfront.
Options come with limited downside, since the maximum loss is the premium. Futures, however, can fall below zero: the contract’s value is tied to the underlying asset’s price, meaning traders may have to pay more than the contract’s original value.
Here are some of the key differences between futures and options:
Futures
Options
Buyer is obliged to take possession of the underlying asset, or make a trade to close out the contract. Seller is obligated to deliver the asset or take action to close the position.
Buyer has the right, but not the obligation, to buy or sell a certain asset at a specific price, while the seller has the obligation to fulfill the option contract if exercised.
Futures typically involve taking much larger positions, which can involve more risk.
Options may be less risky for buyers because they are not obliged to acquire the asset.
No up-front cost to the buyer, other than commissions.
Buyers pay a premium for the options contract.
Price can fall below $0.
Price can never fall below $0.
Understanding Futures
Futures contracts are similar to options in that they set a specific price and date for the trade of an underlying asset. Unlike options, that give the holder the right to buy or sell, futures investors are obligated to buy at a certain date and price.
Among the most common types of futures are those for commodities, with which speculators can attempt to benefit from changes in the market without actually buying or selling the physical commodities themselves. Commodity futures may include agricultural products (wheat, soybeans), energy (oil), and metals (gold, silver).
There are also futures on major stock market indices, such as the S&P 500, government bonds, and currencies.
Rather than paying a premium to enter a futures contract, the buyer pays a percentage of the market value, called an initial margin.
Let’s say a buyer and seller enter a contract that sets a price per bushel of wheat. During the life of the contract, the market price may move above that price — putting the contract in favor of the buyer — or below the contracted price, putting it in favor of the seller.
If the price of wheat goes higher at expiration, the buyer would make a profit off the difference in price, multiplied by the number of bushels in the contract. The seller would incur a loss equal to the price difference. If the price goes down, however, the seller would profit from the price difference.
Who Trades Futures?
Traders of futures are generally divided into two camps: hedgers and speculators. Hedgers typically have a position in the underlying commodity and use a futures contract to mitigate the risk of future price movements impacting their investment.
An example of this is a farmer, who might sell a futures contract against a crop they produce, to hedge against a fall in prices and lock in the price at which they can sell their crop.
Speculators, on the other hand, accept risk in order to potentially profit from favorable price movements in the underlying asset. These may include institutional investors, such as banks and hedge funds, as well individual investors.
Futures enable speculators to take a position on the price movement of an asset without trading the actual physical product. In fact, much of trading volume in many futures contracts comes from speculators rather than hedgers, and so they provide the bulk of market liquidity.
Understanding Options
Options buyers and sellers may use options if they think an asset’s price will go up (or down), to offset risk elsewhere in their portfolio, or to potentially enhance returns on existing positions. There are many different options-trading strategies.
Example of a Call Option
An investor buys a call option for a stock that expires in six months, paying a premium. The stock is currently trading at just below the option’s strike price.
If the stock price goes up above the strike price within the next six months, the buyer can exercise their call option and purchase the stock at the strike price. If they sell the stock, their profit would be the difference in the price per share, minus the cost of the premium.
The buyer could also choose to sell the option instead of exercising it, which can also result in a profit, minus the cost of the premium.
If the price of the stock is below the strike price at the time of expiration, the contract would expire worthless, and the buyer’s loss would be limited to the premium they paid upfront.
Example of a Put Option
Meanwhile, if an investor buys a put option to sell a stock at a set price, and that price falls before the option expires, the investor could earn a profit based on the price difference per share, minus the cost of the premium.
If the price of the stock is above the strike price at expiration, the option is worthless, and the investor loses the premium paid upfront.
Who Trades Options?
Options traders often fall into two categories: buyers and sellers. Buyers purchase options contracts — be they calls or puts — with the hope of making a profit from favorable price movements from the underlying asset. They also want to limit potential loss to the premium they paid for the option. Sellers can potentially profit from the premium they’ve collected when writing the options contract, but they face the risk of having to fulfill the contract if the market moves unfavorably.
The Takeaway
Futures and options are two types of investments for those interested in hedging and speculation. These two types of derivatives contracts operate quite differently, and present different opportunities and risks for investors.
Futures contracts specify an obligation — for the long side to buy, and for the short side to sell — the underlying asset at a specific price on a certain date in the future. Meanwhile, option contracts give the contract holder (or buyer) the right to buy or sell the underlying asset at a specific price, but not the obligation to do so.
Investors who are ready to try their hand at options trading despite the risks involved, might consider checking out SoFi’s options trading platform offered through SoFi Securities, LLC. The platform’s user-friendly design allows investors to buy put and call options through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.
Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors. Currently, investors can not sell options on SoFi Active Invest®.
Both options and futures are considered high-risk investments. Futures are considered more risky than options, however, because it’s possible to lose more than your total investment amount.
Which uses more leverage: futures or options?
Typically, futures trading uses more leverage, and that’s part of what makes futures higher risk, and potentially appealing to speculators.
Which is easier to trade: futures or options?
Options strategies can be more complicated, and in some ways futures contracts are more straightforward, but futures trading can be highly speculative and volatile.
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INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
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Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
*Borrow at 11%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information. Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. 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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Once you begin looking for financing options, you may find your search leads you to multiple forms, including personal loans. One choice available to prospective borrowers is a short-term loan.
A short-term loan is a personal loan that can help with personal financial needs. But this type of loan may not fit every situation, since it typically only provides limited funds. Read on to find out whether a short-term loan may help you meet your financial goals.
Key Points
• Short-term loans offer smaller borrowing amounts, often without collateral.
• Interest rates and fees for short-term loans are higher than long-term options.
• Approval for short-term loans is faster, with less stringent credit checks.
• Repayment periods are shorter, sometimes requiring weekly payments.
• Short-term loans can lead to a cycle of debt due to strict repayment terms and high costs.
What Is a Short-Term Loan?
When you take out a short-term loan, you borrow funds to address immediate financial needs for a limited period. These loans serve a variety of functions, depending on your situation. For example, individuals may take out a short-term loan to keep them afloat until their next paycheck.
Or, someone running their own business who needs to cover small expenses may take out a short-term business loan.
Essentially, short-term loans operate on a short time scale. The approval process and repayment schedule occur quickly, usually within a year.
Average personal loan interest rates range from 5.99% to 36% APR, depending on the applicant’s creditworthiness. Short-term loans tend to be near the higher end of this scale, in addition to fees and penalties that may be charged by a lender.
However, lenders such as banks or credit unions offer varying personal loan terms and rates. So, it’s important to research and shop around before you apply for one.
What Can You Use a Short-Term Loan For?
Short-term loans can be used for many purposes when you need quick access to money and your cash flow is low. You can use the funds from a short-term loan to cover unexpected costs such as medical bills or for everyday expenses until you reach your next paycheck.
Businesses might use short-term loans in the form of merchant cash advances so they can replenish inventory or purchase new equipment even when short on cash. In this scenario, the business receives a lump sum of cash from a lender and repays it with a percentage of credit or debit card sales until the advance is paid in full.
A bank overdraft can be considered a short-term loan the bank provides when your account balance isn’t sufficient to pay for a purchase you’ve made. In this scenario, your account lacks funds to make a payment, but the bank lends you that money. In return, you pay a fee.
How Long Is a Short-Term Loan?
Every loan varies based on the lender and applicant. Often, short-term loans mature within a year or less. However, it is possible to find a short loan term that extends up to two years. Any loan term longer than that qualifies as either a medium-term or long-term personal loan.
Characteristics of Short-Term Loans
Short-term loans have unique features, such as:
• Smaller borrowing amounts compared to other loans.
Short-term loans come with certain disadvantages, mostly due to their high interest rates. But they can be helpful if you find yourself in a tight spot. Some benefits include:
High Approval Rates
Since short-term loans only provide limited funds, the lending requirements may be easier to meet. Because of that, more applicants have a chance of approval. Even though you may not need a stellar credit score, you could still have some trouble if you have a low credit score. Your lender may ask for proof of a steady income, among other criteria.
Online Application
Short-term loans are also easy to access. Lenders often offer online applications, so there’s no need to visit a brick-and-mortar office. Applications are typically easy to fill out, taking only minutes to complete.
Quick Access to Funds
The short-term loan processing time is usually fast. As a result, you will probably receive approval and loan proceeds faster than you would for a long-term loan. They might be a good option if you have an unexpected expense you need to pay as soon as possible.
Lower Accrued Interest
While short-term loans can come with high interest, they generally have a short time frame. Because of that, there are fewer total interest payments. As long as you pay on time, you could save money on built-up interest with a short-term loan.
Lower Credit Score Requirements
As mentioned above, you don’t typically have to have an excellent credit score to get approved for a short-term loan. Applicants with average credit scores may also be able to usually qualify for a short-term personal loan.
No Collateral
When it comes to the difference between a secured vs. unsecured loan, a secured loan means more risk on the borrower’s part. That’s because a secured loan requires collateral, such as your car or your home. But most lenders don’t require collateral for a short-term personal loan because it doesn’t carry enough risk.
Disadvantages of a Short-Term Personal Loan
While short-term loans are easier to qualify for, they may not be the right choice for everyone. Here are some drawbacks to be aware of:
Lower Limit
For borrowers who need a significant amount of money, a short-term personal loan may not be the right choice. The borrowing limits for these types of loans tend to be small, sometimes just a few hundred dollars, to make it easier to pay off in a short amount of time.
May Lead to a Cycle of Debt
Because of the high-interest rate and steep fees attached to short-term loans, they really aren’t long-term solutions. They might be an option in an emergency but can lead to a cycle of debt if relied on too often.
Types of Short-Term Loans
There are a few variations on the short-term loan available to you. The type of personal loan you apply for will generally depend on the amount of cash you want and how quickly you need it. Here are some worth considering:
Payday Loans
A payday loan is a short-term loan that some people use to tide themselves over financially until their next paycheck. The funds are meant to be repaid at the time of the borrower’s next payday — thus, the name. However, payday loan issues arise if the borrower can’t repay the loan in the short time frame required.
Installment Loans
Installment loans give borrowers a way to access a lump sum of money that’s repaid in monthly installments over a set time frame. A fixed-rate loan with steady monthly payments makes budgeting during the repayment period more convenient.
Lines of Credit
A line of credit is similar to a credit card. You receive a credit limit and can tap into the line of credit as needed. Funds can be taken out in installments of the amount needed at the time they’re needed. But you can’t surpass your limit, which the lender bases on your creditworthiness.
Merchant Cash Advance
Merchant cash advances are used by businesses that make mainly debit or credit card sales. As a means to secure cash, the business will borrow a lump sum, which is advanced against the business’s daily sales. The lender is then repaid through a certain percentage of the business’s daily sales.
Invoice Financing
Similar to merchant cash advances, invoice financing is a type of short-term loan that can help business owners meet financial needs. The business submits unpaid invoices, i.e., accounts receivable, to a lender as collateral. The lender charges a fee for the financing and can collect on the invoices if the borrower defaults.
Short-Term Loan vs Long-Term Loan
It’s always important to explore your options. Short-term loans probably aren’t the right option if you need a large amount of funds in a lump sum or will need to periodically draw small amounts from a set amount of credit. In these situations, a long-term loan might be a better solution.
Long-term personal loans can sometimes have high-interest rates depending on the applicant’s credit score and other factors used by the lender. They may not require collateral, which makes them seem risky to lenders.
Here’s a breakdown of how these two loans stack up against each other:
Short-Term Loans
Long-Term Loans
Loan Amount
Typically, a few hundred to a few thousand dollars, but can be up to $100,000
Depending on the lender, amounts can be a few thousand dollars to $100,000 or more
Loan Term
A couple of weeks to 18 months
Up to 25 years
Interest
High interest rates
Competitive interest rates
Eligibility
May qualify with bad credit
Stringent qualifications such as good credit
Typical Requirements to Get a Short-Term Loan
Requirements to be approved for a short-term loan vary by lender, but all lenders will evaluate your creditworthiness in some way. Generally, a higher credit score will likely secure you better terms and interest rates. You also need to be able to show your lender a range of personal and financial information such as proof of identity, verification of employer and income, and proof of current address.
Can I Get a Short-Term Loan With Bad Credit?
While short-term loans don’t typically require excellent credit, the higher an applicant’s credit score, the better their chances of approval. A lender may also offer more favorable interest rates and terms to a borrower with a higher score. Since short-term loans are often for relatively small amounts of money, requirements tend to be more relaxed.
Personal Loan Options From SoFi
SoFi offers personal loan options to fit a variety of financial situations and needs. With competitive interest rates and a range of terms, there may be a SoFi personal loan that works for you. SoFi does not charge fees on personal loans, so you only repay the loan principal and interest. A personal loan calculator can help you compare loan options and figure out monthly payments.
The Takeaway
What is a short-term loan? It’s a small loan that’s designed to be repaid quickly, usually within 12 to 18 months. Short-term personal loans vary based on your financial situation and the lender you use. Some lending institutions use high-interest rates and hidden fees that can add to the overall cost of a short-term personal loan. That doesn’t make a personal loan bad, but it’s important to be aware of what you’re agreeing to when you borrow money.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
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.
When you own shares of a security, that’s a long position. When you borrow shares in order to sell them, that’s a short position (since you’re literally “short” of the shares).
Going long is considered a bullish strategy, whereas selling short is a bearish strategy because you’re banking on the share price declining. But there are exceptions to these conventions, and ultimately your strategy can depend on the securities being traded.
Key Points
• Long positions in stocks involve buying shares with the expectation of potential price increases, that may come with unlimited upside and limited downside risk.
• Short positions in stocks involve borrowing shares to sell, hoping for price drops, with unlimited risk and interest costs.
• Long options positions can be bullish or bearish, influenced by time decay and volatility.
• Short options positions involve selling contracts, aiming for price drops, with strategies based on market projections.
• Long positions are typically used when bullish, while short positions are typically used for bearish outlooks or hedging.
Investors can buy call and put options on SoFi Active Invest, but they are not able to sell options on the platform at this time.
Long vs. Short Position in Stocks
An investor in a short position aims to benefit from a decline in the price of the asset. When you go short, your goal is to borrow shares at one price, sell them on the open market and then — assuming the price drops — return them to the broker at a lower price so you can keep the profit. Executing a short stock strategy is more complicated than putting on a long trade, and is for experienced traders.
When you go long on an asset, you are bullish on its price. Your potential downside is limited to the total purchase price, and your upside is unlimited. That’s a key difference in a long vs short position, since short positions can feature an unlimited risk of loss (if the price rises instead of dropping), with a capped upside potential (because the price can only drop to zero).
Long Positions and Stocks
To take a long position on shares, you execute a buy order through your brokerage account. This involves purchasing the stock with the expectation that its price will increase over time, allowing you to sell it later at a profit. In essence, a long position represents traditional stock ownership — buying low and selling high.
Short Selling a Stock
Short selling a stock is done by borrowing shares from your stock broker, typically using a margin account, then selling them on the open market. This is known as “sell to open” because you’re opening a short position by selling the shares first.
By using a margin account (a.k.a. leverage), you would owe interest on the amount borrowed, and you face potentially unlimited losses since the stock price could hypothetically rise to infinity. Investors must meet specific criteria in order to trade using margin, given its potential for significant losses as well as gains.
You must close your short position in the future by repurchasing the shares in the market (hopefully at a lower price than that at which you sold them), and then return the shares to the broker, keeping the profit. Remember: you’re paying interest on the money borrowed to open the position, which may influence when you decide to close.
A short squeeze is a danger short sellers face since intense short-covering — a rush to buy stock to cover short positions — leads to a rapidly appreciating share price (when traders rush to buy back stock, causing prices to increase quickly). It can also create opportunities for market participants who anticipate the squeeze, however.
💡 Quick Tip: Options can be a cost-efficient way to place certain trades, because you typically purchase options contracts, not the underlying security. That said, options tradingcan be risky, and best done by those who are not entirely new to investing.
In options trading, going long means entering a buy-to-open order on either calls or puts. A long options position can be bullish or bearish depending on the type of option traded.
• For example, in a long call position, you hope that the underlying asset price will appreciate so that your call value increases. The maximum potential gain for buying a long call is unlimited, while the maximum loss is limited to the premium paid.
• In a long put position, you want to see the underlying asset price drop below the strike price, since buying a put offers the holder the right, but not the obligation, to sell a security at a specified price within a specified time frame. The maximum potential gain for buying a long put is the difference between the strike price and the asset price, minus the premium paid, while the maximum loss is the premium paid.
Investors may employ options strategies designed to seek returns from volatility, though these also tend to be higher risk. These strategies for options trading rely on the expectation that a stock price may become more erratic, thus making the options potentially more valuable.
A long straddle strategy, for example, is one of several strategies that bets on higher volatility by taking bullish and bearish positions of different financial values, anticipating upside or downside while still hedging against one or the other. These strategies may under perform if volatility decreases or remains stable. In that case, the maximum potential loss is limited to the total premiums paid for both options.
Short Selling Options
You can sell short options by writing (a.k.a. selling) contracts. The goal is the same as when selling shares short: you are expecting the option price to drop. Unlike shorting shares, which always reflects a bearish expectation, shorting options can involve either a bearish or bullish outlook, depending on whether you short calls or puts. An options seller enters a sell-to-open order to initiate a short sale.
You can take a bearish or bullish strategy depending on the options used. Whether you short call vs put options makes a difference: If you short call options, you are bearish on the underlying security. Shorting puts is considered a bullish strategy.
With options, you can short implied volatility and benefit from the passage of time. Entering a short position on calls and puts is done in the hope of seeing the option premium decline in value — that can come from changes in the underlying asset’s price, but it can also come from a decline in implied volatility and as expiration approaches.These are plays on two of the options Greeks: vega and theta.
Examples of Long Positions
Long positions come in different forms: going long on a stock – where you purchase shares outright, and going long on calls and puts – where you anticipate fluctuation on the price an investor pays to purchase the stock.
Going Long on a Stock
When you go long on shares of stock, you actually own shares in the company. Typically, you would go long on shares if you believe the price will rise, and would look to eventually sell them to potentially realize a gain. Here, you have unlimited upside potential (if the price continues to rise), and the downside is limited to what you paid for the shares ($1,000).
Going long on options, however, works a bit differently.
Going Long on Calls and Puts
Consider this example of going long on a call option. Say, for example, that you believe stock XYZ is poised to increase in value. You can purchase a call option on XYZ with an expiration date of three months, and wait to see if the stock increases within the contract window. If it does, you can exercise the option and purchase the stock at the agreed-upon strike price, with the likelihood of making a profit. If the price doesn’t move or declines, your option expires worthless, and you would lose the premium per share that you paid for the option.
Let’s say on the other hand that you believe stock XYZ’s will decline in a few months. You may then wish to go long on a put option. You would buy a put option for XYZ with an expiration date of three months. If the stock price falls below the strike price before the expiration date, you can exercise the option to sell the stock at its lower price, likely generating a profit (minus the premium). If you believe the stock price will stay flat or rise, your option would expire and be rendered useless – and you would only be out the premium you paid.
Examples of Short Positions
Like long positions, short positions come in various forms as well. Shorting a stock is when you borrow shares in order to sell them and (hopefully) repurchase them at a lower price, while shorting an option is when you sell an option contract with the expectation that the underlying stock will rise to a certain price.
Shorting a Stock
If you wanted to short shares of XYZ, currently selling at $10 per share, this is a bearish strategy as you’re essentially betting on a price decline.
Let’s say you want to short stock XYZ. You would borrow shares from a stock broker and sell them on the open market. If the price falls, you buy back the shares at a lower price and return them to the broker, thus pocketing the difference as profit. Bear in mind that if the stock price rises, instead of falling, your losses are theoretically unlimited. This makes shorting stocks potentially riskier.
Going Short on an Option
If you think that stock XYZ is overvalued, and that its price will remain flat or decline, you might sell a call option with an expiration date of three months. Should the stock price stay below the strike price by the contract’s expiration, the option will expire worthless, and you’ll keep the premium paid by the buyer. If the stock price rises above the strike price, however, the buyer may exercise their right to purchase the stock at the strike price. This would leave you responsible for delivering the shares, which could result in losses.
If you believe stock XYZ is undervalued and its price will rise, you might sell a put option with the same three-month expiration. Should the stock price stay above the strike price, the option will expire worthless and you keep the premium. But if the price falls below the strike price, the buyer may exercise their right to sell the stock to you, and you’d be obligated to buy it, potentially incurring losses if the market price of the stock drops.
Comparing Long Positions vs Short Positions
Although long and short positions have different aims, these strategies do share some similarities.
Similarities
Both exposures require a market outlook or a prediction of which direction a single asset price will go.
If you’re bullish on a stock, you could consider going long by buying shares directly or buying call options. Both may profit from a rising stock price. Alternatively, if you’re bearish, you may opt to short the stock or sell call options. Both depend on a view of a share, or of the markets in general.
Differences
Short vs. long positions have several differences, and the ease with which you execute the trade is among them. For example, when taking a short position you’ll typically be required to pay interest to a broker. With a long position, you do not usually pay interest.
Additionally, long positions have unlimited gains and capped losses, whereas short positions have unlimited losses and capped gains.
Similarities in a Long Position vs. Short Position
Differences in a Long Position vs. Short Position
You can go long or short on an underlying stock via calls and puts.
Taking a long position on shares is bullish, while going short is bearish.
Both long and short positions offer exposure to the market or individual assets.
Short positions can have potential losses that are unlimited with capped upside — that is the opposite of some long positions.
Both rely on predicting price movements within a specific timeframe.
Long positions require paying the upfront cost in full; short positions often require having a margin account.
💡 Quick Tip: If you’re an experienced investor and bullish about a stock, buying call options (rather than the stock itself) can allow you to take the same position, with less cash outlay. It is possible to lose money trading options, if the price moves against you.
Pros and Cons of Short Positions
When considering a short position, it can be helpful to look at both the pros and cons.
Pros of Short Positions
Cons of Short Positions
You benefit when the share price drops.
You owe interest on the amount borrowed.
You can short shares and options.
There’s unlimited risk in selling shares short.
Shorting can be a bearish or bullish play.
There are limited gains since the stock can only drop to zero, and a risk of complete loss if the share price continues to rise.
Pros and Cons of Long Positions
Likewise, when considering a long position, assessing the benefits and drawbacks can be helpful.
Pros of Long Positions
Cons of Long Positions
You can own shares and potentially benefit when the stock rises and may also profit from puts when the underlying asset drops in value.
You face potential losses on a long stock position and on call options when the share price drops.
You can take a long position on calls or puts.
You must fully pay for the asset upfront, or finance through a margin account.
There’s unlimited potential upside with calls and shares of stock.
A long options position may be hurt from time decay (loss of value near expiration date).
The Takeaway
Buying shares and selling short are two different strategies to potentially profit from changes in an asset’s price. By going long, you can purchase a security with the goal of seeing it rise in value. Selling short is a bearish strategy in which you borrow an asset, sell it to other traders, then buy it back — hopefully at a lower price — so you can return it profitably to the broker.
Shorting options can also be a bullish strategy, depending on whether you’re shorting call or put options. Shorting calls is considered bearish, while shorting puts reflects a more bullish sentiment since you profit if the asset’s price rises or remains stable.
Investors who are ready to try their hand at options trading despite the risks involved, might consider checking out SoFi’s options trading platform offered through SoFi Securities, LLC. The platform’s user-friendly design allows investors to buy put and call options through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.
Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors. Currently, investors can not sell options on SoFi Active Invest®.
Invest with as little as $5 with a SoFi Active Investing account.
FAQ
Are short positions riskier than long positions?
Yes, short positions can be riskier than long positions. That goes for selling shares of a stock short and when you write options. Speculators often face more risk with their short positions while hedgers might have another position that offsets potential losses from the short sale.
What makes short positions risky?
You face unlimited potential losses when you are in a short position with stocks and call options. Selling shares short involves borrowing stock, selling it out to the market, then buying it back. There’s a chance that the price at which you buy it back will be much higher than what you initially sold it at.
How long can you hold a short position?
You can hold a short position indefinitely. The major variable to consider is how long the broker allows you to short the stock. The broker must be able to lend shares in order for you to short a stock. There are times when shares cannot be borrowed and when borrowing interest rates turn very high. As the trader, you must also continue to meet margin requirements when selling short.
Photo credit: iStock/Charday Penn
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Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes. Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. 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.
You’re undoubtedly used to those bills coming in every month, such as your housing costs, food, and car insurance, but you may sometimes wonder if there’s a way to better manage them. Budgeting for your recurring living expenses can help you take control of your cash and spend and save smarter.
While there are various techniques you could use, a good starting point can be to first get a handle on your needs vs. wants and next determine which budget technique will work best for you.
Key Points
• Living expenses include costs that are vital to daily life, such as housing, food, clothing, transportation, and healthcare.
• It’s wise to differentiate between needs and wants when budgeting for living expenses.
• Budgeting methods like proportional budgets, line-item budgets, and envelope budgets can help manage living expenses.
• Average living expenses vary across the US, depending on factors like location, cost of living, and household size.
• If income doesn’t cover living costs, options include reducing expenses or increasing income through side hustles or career changes.
What Are Living Expenses?
Basic living expenses, as the name implies, are ones necessary for daily living, with main categories including housing, food, clothing, transportation, healthcare, and relevant miscellaneous costs.
Although not everyone would define basic living expenses in the exact same way, here is a breakdown of expenses to consider.
Housing
For homeowners, this can include their mortgage payment, property tax, and insurance payments, along with monthly utilities and basic maintenance costs.
If living in a condo, this includes condominium fees. For renters, it can include the monthly rent payment, utilities, renters insurance, and any other housing-related costs they’re responsible for paying.
Food and Beverage
Basic expenses would include buying groceries for the family, but not restaurant food or other optional food or drink expenses. So while, yes, dinner at a sushi restaurant is technically food, dining out doesn’t count as a basic living expense. You could do without it.
This includes clothes for work and school for the family, plus footwear, underwear, outerwear, casual clothing, pajamas, and so forth. Designer clothing and other pricier items are typically not categorized in basic living expenses. The same holds true for buying a cool sweater that’s on sale but you don’t truly need it.
Healthcare
Expenses in this category can range from monthly payments for healthcare insurance, to co-pays and additional bills from doctors, dentists, specialists, and so forth. It also includes co-pays for prescription medications and over-the-counter meds.
Transportation
Transportation expenses can include car payments and insurance, gas, and maintenance. It can also include Uber and taxi expenses, public transportation tickets, parking fees, and so forth.
Other Expenses
Cleaning supplies for the home or apartment, personal care items, cell phone and internet bills, and similar items can also be included in a list of basic living expenses.
Minimum Debt Payments
Not to be overlooked are making sure you stay current on such things as student, car, and personal loan payments, as well as at least the minimum due on credit cards.
💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.
Average Living Expenses in the USA
The average living expenses can vary greatly depending on where you live and your household size. Here is a snapshot of a few locations across the country and how much monthly living expenses are, using data from the Economic Policy Institute.
Location
Household size
Housing
Food
Transportation
Healthcare
Rapid City, SD
1
$577
$278
$803
$662
Rapid City, SD
2 (couple)
$664
$510
$980
$1,324
Rapid City, SD
4 (2 parents, 2 children)
$875
$805
$1,152
$2,014
Seattle, WA
1
$1,523
$326
$854
$344
Seattle, WA
2 (couple)
$1,599
$597
$1,057
$688
Seattle, WA
4 (2 parents, 2 children)
$1,906
$941
$1,274
$1.032
Tallahassee, FL
1
$778
$294
$816
$439
Tallahassee, FL
2 (couple)
$843
$539
$1,042
$879
Tallahassee, FL
4 (2 parents, 2 children)
$1,024
$850
$1,170
$1,327
Washington, DC
1
$1,387
$374
$472
$411
Washington, DC
2 (couple)
$1,419
$686
$601
$822
Washington, DC
4 (2 parents, 2 children)
$1,618
$1,082
$747
$1,378
Wants Versus Needs
The challenge, in many of these categories, can be to successfully determine which of these expenses are truly needed and which are extras that would be more appropriately categorized as “wants.” In and of itself, there’s nothing wrong with paying for “wants” that fit within the budget but, for the purposes of making a basic living expense budget, it’s important to tease them apart.
Paying a cell phone bill, for example, could be considered important for safety and to facilitate communicating with work and family. Getting the latest and greatest cell phone for its bells and whistles, meanwhile, is crossing over into a want, not a need.
In the 1970s, something called the Growth-Share Matrix was developed, and it may help people who are wondering how to categorize living expenses and then prioritize them. The process includes listing all expenses, and then putting wants in one column and needs in another. Each column can then be divided into high or low priority. So, when budgeting living expenses, there would be four categories:
• High-priority needs
• High-priority wants
• Low-priority needs
• Low-priority wants
Another way to name these categories is:
• Must have
• Should have
• Could have
• Won’t have
This makes it easier to see what must be paid and what is optional. When budgeting, it can make it easier to choose where to put any discretionary funds. In other words, these methods may be able to help people answer these questions: “What are living expenses that must be paid? Which ones are more optional?”
When making a budget, it’s important to also account for any credit card payments, personal loan payments, student loan payments, and other debts that must be paid. After documenting all these expenses, figuring out how to calculate living expenses is as easy as some quick math. Figuring out how to budget for these expenses is the next item on the agenda.
💡 Quick Tip: Bank fees eat away at your hard-earned money. To protect your cash, open a checking account with no account fees online — and earn up to 0.50% APY, too.
Allocating Your Income
Although no two financial situations or budgets are exactly the same, there’s been a long-standing rule of thumb when making a budget that says people shouldn’t spend more than 30% of their after-tax income on housing.
According to the U.S. Bureau of Labor Statistics’ most recent analysis of how people spend their income, the percentages stack up as follows:
• Housing: 33.8%
• Transportation: 16.4%
• Food: 12.4%
• Personal insurance/pensions: 11.8%
• Healthcare: 8.1%
• Apparel and services: 2.6%
This accounts for nearly 85% of what people, on average, have been spending. It shows that, on average, people are slightly above the recommended percentage for housing expenses.
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3 Types of Living Expense Budgeting Methods
There are numerous ways to craft a budget; in fact, we’ve created a guide to cover the different types of budgeting methods. One of the keys to effective budgeting is picking a strategy that allows for consistency. The following methods can help an individual create a budget.
1. Proportional Budget
For people who have divided up their expenses into needs and wants, proportional budgets may make sense. This is a budgetary strategy where monthly income is divided into three categories:
• Needs
• Wants
• Savings
In one type of proportional budget — the 50/30/20 rule featured in the book “All Your Worth” by Senator Elizabeth Warren and Amelia Warren Tyagi — 50% of income would go towards needs; 30% towards wants; and 20% towards savings. It typically makes sense to do this calculation with after-tax income, which is take-home pay.
Advantages of a proportional budget include that it’s a simple formula, which may make it easier to stick to. Plus, it keeps a focus on the big picture, clearly distinguishing between needs and wants. It can also be a useful method for people who want to save money in a straightforward way.
This budget method may not work well for people who are still working on separating needs from wants. And, if a person’s needs currently take up more than 50% of income earned, then the 50/30/20 percentage breakdown may work as a goal vs. something that can be fully implemented right away.
Recommended: Check out the 50/30/20 calculator to see the breakdown of your money.
2. Line-Item Budget
A line-item budget is a granular method where you track expenditures, line by line, in relevant categories. This can be helpful for people who want to keep their focus on spending money on basic living expenses because they can easily see how much of their money is going into what category.
This is also an easy method to create and use. However, it doesn’t necessarily have a focus on savings, and it is more time intensive to manage.
3. Envelope Budget
The envelope system is another way to create a household budget, and it may be the most hands-on way to manage money. People using this method withdraw enough money from the bank each month to cover each budget category. Then, they put the appropriate amount for each category in a separate envelope: housing expenses in one, grocery expenses in another, and so on.
Once a particular envelope is empty, then no more money can be spent in that category for that month, unless cash is taken from another envelope, which reduces the amount that can be spent on that envelope’s category. This method can work well for people who appreciate a tactile way of handling money. The need to get cash from the bank each month does add a step to the process and, like the line-item method, it doesn’t address savings.
This method can be adapted for those who don’t use cash. Instead, you can use your debit card and keep track (by hand or via an app) on how your category spending is going.
Here’s some advice as you create and live on a budget:
• When creating a budget, look for expenses that can be eliminated or at least reduced. For example, you might cut a streaming service or two or drop all that you subscribe to and find free entertainment through your public library’s resources.
• It also generally makes sense to incorporate savings into a budget. First build an emergency savings account and then save for other personal goals, including for retirement.
Although the proportional budget described above has savings as an integral part, the line-item budget and envelope budget don’t. But, a line can be added for savings towards retirement or other goals — and an envelope can be added to the monthly pile.
• Consistency also counts, big time. When budgeting is a part of daily life, it can make it much easier to reach financial goals than when it’s a sporadic activity. If budgeting fades from focus for a month, don’t quit. Get right back on track.
• Finally, when help is needed, ask for it, whether from trusted friends and/or relatives or a qualified financial advisor.
What If Your Income Doesn’t Cover Your Living Costs?
If your income doesn’t cover your living expenses, you have two options (or you could do a combination of both):
• Reduce your expenses. You might take a roommate, move in with a family member for a while, start shopping at warehouse clubs, or decide not to eat out much less.
• Increase your income. This might mean looking for a new job, training up for a different career, or starting a side hustle.
These methods can help you cover your living costs. Worth noting: If part of the issue is considerable debt that is negatively impacting your spending power, you might meet with a non-profit credit counselor for advice on eliminating that drain on your funds.
Budgeting and Saving With SoFi
Budgeting for daily living expenses can help you better understand your financial situation and then meet your money goals. Your financial institution may offer tools to help you track your money and budget successfully too.
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
What are considered living expenses?
Living expenses are the minimum expenditures needed to survive, so typically they include housing and utilities, food, clothing, healthcare, insurance, and minimum debt payments.
What is the average living cost in the U.S.A.?
The current average cost of living in the United States is $61,334. That’s how much the average household spends on expenses, with almost 35% going to housing and housing-related costs.
What salary is needed to live comfortably in the U.S.A.?
The salary needed to live comfortably in the U.S. will depend on many factors, such as cost of living, location, and household size and configuration. One recent study found that, when looking at America’s 25 most expensive cities, a salary of at least $68,499 would be required for an individual to live comfortably. For larger households, the number will rise.
About the author
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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.
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.
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