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Whether to borrow from a 401(k) or take out a personal loan is a decision that will depend on your unique financial situation and goals. There are several variables to consider. For instance, a loan from a 401(k) can offer a limited amount of cash and reduce your retirement savings, while a personal loan can offer more cash but can impact your credit score.

Here, learn more about these options for accessing cash so you can make the right decision for your needs.

Understanding 401(k) Loans

Retirement plans such as your 401(k) are designed to tuck away money toward expenses during what are known as your “golden years.” And while you didn’t initially open and contribute to a retirement account to take money out prematurely, if you’re in need of some funds, you might consider a 401(k) loan.

Yes, it’s entirely possible to borrow against your 401(k). While it depends on the specifics of your employer’s plan, you might be able to access up to half of what’s vested in your account, or $50,000, whichever is less. So if you have less than $10,000 vested in your 401(k), you can only take out up to $10,000.

Usually, you’ll have up to five years to pay back your loan amount, along with interest. The interest rate and terms of the repayments depend on your employer’s plan. When you repay the 401(k) loan, the principal and interest go back into your account.

How 401(k) Loans Work

Taking out a loan from your 401(k), or the retirement vehicle known as a 403(b), doesn’t require a credit check, nor does it show up on your credit report as debt. As mentioned, you’re essentially taking out funds from yourself. There’s no third-party lender involved, so there are fewer steps in the application process. Plus, your loan payments go straight into your retirement plan.

The restrictions and requirements can vary according to your employer’s plan, so it’s probably a good idea to talk to a benefits administrator or rep from the retirement account for specifics.

Pros and Cons of Borrowing from Your 401(k)

Looking at the advantages and downsides of borrowing against your 401(k) can help you decide whether a 401(k) loan is the right financing choice for you,

Pros
First, consider the upsides of borrowing from your 401(k) account:

•   Doesn’t require a credit check. Because you’re taking out a loan against yourself and there’s no outside lender involved, a 401(k) loan doesn’t require a hard credit inquiry, so it won’t negatively impact your credit score.

•   Easier to obtain. These loans can be easier to get, and you don’t have to jump through as many hoops (including the credit check mentioned above) as other forms of financing.

•   Lower interest rate. While this hinges on your credit, borrowing against your 401(k) often comes with a lower interest rate than other financing options, such as taking out what’s known as a personal loan or using your credit card. This means it can cost you less in interest.

Usually, the interest rate is the prime rate, plus 1% to 2%. As of August 2024, the prime rate is 8.50%, so you’re looking at a 9.50% to 10.50% interest rate.

•   Won’t show up on your credit report. Another plus of a 401(k) loan is that it doesn’t show up on your report as a form of debt, so you won’t have to worry about your payment history impacting your credit in any form.

•   No penalties or taxes. As long as you don’t default on the loan, you won’t have to pay taxes and early withdrawal penalties that come with making early 401(k) distributions. (This is a benefit vs. taking a 401(k) distribution, which will trigger taxes and possibly penalty fees if you are under age 59½.)

•   Interest goes back to you. While you have to pay interest on your 401(k) loan, that money goes into your retirement account.

Cons
Now, review the potential downsides of taking out a 401(k) loan:

•   Not all 401(k) plans allow loans. Many plans do offer the ability to take out a 401(k) loan, but not all of them. Check with your plan administrator to learn whether this is even a possibility for you before planning on getting funds via this method.

•   You might have to pay back the loan right away. Should you lose your job or change workplaces, you might be required to pay the remaining balance on your loan quickly. That can be a tall order, especially after a major financial blow such as a job loss.

•   Smaller retirement fund. When you take money out of your retirement plan, that means losing out on the money in an account designated for your nest egg. Because the clock will be set back, it will take you longer to hit your retirement savings goals.

•   Missing out on potential earnings. Plus, you’re losing out on any potential growth on that money if it were sitting in your 401(k) account instead. While you are paying yourself interest on the loan, the earnings on your returns could be more than the interest.

•   Possibility of taxes and penalties. If you don’t pay back your debt in a timely manner, you could owe taxes and penalty fees on it. That’s because it becomes a 401(k) distribution vs. a loan if you don’t keep up with your payments.

•   Lower loan amounts. How much you can borrow from a 401(k) account has limits. Currently, those are $50,000 or 50% of your vested account balance, whichever amount is less. That may or may not suit your needs.

•   Longer funding times. The funding time can take up to two weeks or longer in some cases.

Overview of Personal Loans

Personal loans are a type of installment loan where you’re approved for a certain loan amount and receive the entire amount upfront. Personal loan amounts vary from $1,000 to $100,000 (some large personal loan amounts go even higher), but the exact amount depends on your approval.

You’re responsible for paying off the personal loan during the repayment term, which is usually anywhere between one and seven years. The time you have to pay off the loan depends on the lender and the specifics of your loan.

Personal loans also come with interest (typically but not always a fixed rate). Your rate depends on factors such as the lender, your credit score, debt-to-income ratio (or DTI), and other aspects of your finances. The national average for a 24-month personal loan as of May 2024 is 11.92%.

Types of Personal Loans

There are different types of personal loans to learn about so you can decide which one might be best for you:

•   Secured personal loans. Secured personal loans are loans that are backed up by an asset, such as a car, home, or other valuable property. Should you fall behind on your payments, the lender can seize your collateral to recoup the money. While you risk a valuable asset, secured loans usually have lower credit score requirements and other less stringent financial qualifications. Plus, you can get a higher amount than with unsecured personal loans.

•   Unsecured personal loans. Unsecured personal loans are loans that don’t require any collateral to secure. They usually have higher credit score requirements and more strict approval criteria than their secured loan counterparts. Unsecured vs. secured personal loans usually have lower amounts available.

•   Fixed-rate personal loan. A fixed-rate personal loan can be unsecured or secured. The interest is the same throughout your loan term, which makes for predictable monthly payments.

•   Variable-rate personal loan. A loan with a variable vs. fixed interest rate, however, can see the interest charges go up and down throughout your repayment term. This means the amount you’ll end up paying in interest on the loan is unknown. Plus, budgeting might be harder, as your monthly payments could change.

Personal loans offer a lot of flexibility. You can use them for various purposes, from funding a major home improvement project to making a big-ticket purchase to financing a wedding or vacation. In some cases, personal loans are geared toward specific purposes:

•   Home improvement loans. A home improvement loan is an unsecured personal loan that can be used for repairs on normal wear and tear, general maintenance, or toward a renovation project.

•   Debt consolidation loans. Debt consolidation loans are used to take multiple loans and lump them together into a new, single personal loan. The main benefits are that debt consolidation loans can potentially lower your interest rate or monthly payment, or both.

Advantages and Disadvantages of Personal Loans

Next, take a look at the pluses and minuses of personal loans:

Pros

•   Quicker access to funding. You might be able to tap into the funds of your personal loan as fast as within 24 hours of approval. So, if you need money in a flash, this could be a good option for you.

•   Flexible amounts and repayment terms. Unlike 401(k) loans, where there’s a borrowing limit of $50,000 and a repayment term of five years, there’s a wide range of borrowing amounts and repayment periods. You’ll likely have a better chance of finding a personal loan that’s a good fit for your time frame vs. with a personal loan.

•   It can accrue lower interest than other financing options. The interest rate of a personal loan can range from 8% to 36%, and the average rate stands at 12.38% as of August 2024. While it might not be lower than the 401(k) loan rate, personal loan rates can be lower than using a credit card or payday loan to make purchases.

Cons

•   Impacts your credit score. When you take out a personal loan, the lender needs to do a hard pull on your credit. This usually reduces your credit score by a few points and will impact your score for up to a year.

Also, since your payments are reported to the credit bureaus, if you fail to keep up with payments, your score could be dinged.

Taking on a loan also drives up your credit utilization, which also can negatively impact your score.

•   Fees and penalties. Some personal loans have origination fees, which can add to your loan amount and your debt. Plus, you might incur late fees. On the flip side, the lender could charge a prepayment penalty if you’re ahead of schedule on your payments. This is to recoup any losses they would’ve earned on the interest.

•   Additional debt. While a 401(k) loan is an additional financial responsibility, personal loan debt means making payments and owing interest that doesn’t go back to you. Instead, you’ll be on the hook for payments until the loan is paid off.

Recommended: Personal Loan Calculator

Key Comparison Factors

Here are key factors to compare when evaluating taking out a personal loan vs. a 401(k) loan:

•   Interest rate. The higher the interest rate, the more you’ll pay for the same amount of borrowed money.

•   Repayment term. The shorter the repayment term, the higher the payments. On the other hand, the longer the repayment term, the lower the payments (but you’re likely to pay more interest over the life of the loan).

•   Impact on retirement savings. You’ll want to weigh the different ways a loan can eat into your retirement goals. For example, a 401(k) loan will shrink your retirement fund. However, if you take out a personal loan, you may have less cash available to put toward retirement since you need to make your monthly payments.

•   Credit score implications. Understanding how taking out either loan can impact your credit score is important, especially if you are building your credit score. A 401(k) loan doesn’t require a hard credit pull nor will payments show up on your credit report. A personal loan, however, does require a hard credit inquiry, and late payments will end up on your credit file and can lower your score.

•   Tax considerations. If and when you’ll be taxed is also something to consider. As for whether a personal loan is taxable, the answer is usually no. But a 401(k) loan could be taxable if you fail to meet certain loan requirements, such as sticking to your repayment schedule.

Scenarios: When to Choose Each Option

If you are contemplating the choice between taking a 401(k) loan or a personal loan, reviewing these scenarios could help you make your decision.

401(k) loan: Going with a 401(k) loan might make more financial sense in these scenarios:

•   You’re far off from retirement. You likely have time to pay back the loan and replenish your account, which can help you hit your target amounts within your desired time frame.

•   Time frame and loan amount are also important considerations: You’ll want to ensure you can repay your loan within five years. If you fall behind, the amount you owe can be treated as a distribution – and you’ll be hit with early withdrawal penalties and taxes.

•   A 401(k) loan can also be a wise move if your credit score doesn’t qualify you for a personal loan with favorable terms. A hard credit inquiry isn’t part of tapping funds from this kind of retirement savings.

Personal loan: A personal loan might be the stronger choice in these situations:

•   If you want quicker access to the funds, a personal loan could be a good bet as you may be able to apply, be approved, and access funds within just a few days. A 401(k) loan can take a few weeks to move funds into your bank account. You will, of course, need to meet the lender’s criteria, such as minimum credit score and debt-to-income requirements.

•   A 401(k) loan also might be a better route if you can stomach another form of debt (since you are, in a sense, borrowing from yourself and not a lender) and feel confident you can stay on top of your payments.

•   A personal loan can also be a good move if you are hoping to borrow more than the $50,000 cap on 401(k) loans. A personal loan may allow you to access twice that amount.

•   If you feel you might be changing jobs soon or that your job is in jeopardy, a personal loan could be a better option than a 401(k) loan. If you leave or lose your job, a 401(k) loan could be due in less than the five-year term.

With either option, you want to make sure you have a steady income to repay the loan. It’s important to prioritize paying off the loan. Otherwise, you’ll get hit with potential fees and/or damage to your credit score.

Long-Term Financial Impact

Borrowing from a 401k vs a personal loan can have a different long-term impact on your money situation. In deciding between the two, you’ll want to take a close look at the following:

Effect on retirement savings. Taking out a 401(k) means a smaller retirement fund, potentially a loss in growth in your investments, and also potentially a setback on your retirement goals.
While a personal loan doesn’t have the same impact on your retirement savings, having less money freed up each month can mean you’ll have less to contribute to a tax-advantaged retirement account.

Potential opportunity costs. Taking on more debt, whether against your retirement account or a loan through a lender, means your money will be tied up in debt repayments. In turn, you might miss out on opportunities to boost your finances, whether that’s putting money toward education, a business venture, your savings, or an investment account.

Debt management considerations. With a 401(k) loan, you’ll want to feel comfortable that you can shore up your retirement funds by paying off the amount within five years. You’ll be required to make payments at least once a quarter. With a personal loan, the monthly payment and repayment term can vary, but you’ll want to make sure both are a good fit for your budget and goals.

The Takeaway

In deciding whether to borrow a 401(k) loan or a personal loan, you’ll want to understand the basics of how each works, their respective advantages and disadvantages, and what factors to consider before landing on the best choice for you. A 401(k) loan can avoid the potential negative credit impact of a personal loan, for instance, but there is a limit to how much you can borrow, which could sway your decision.

If you’re curious about personal loans, see what SoFi offers.

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.

FAQ

What happens to my 401(k) loan if I leave my job?

If you leave or experience a job loss, you might be required to pay back the remaining balance on your 401(k) quickly.

Can I take out multiple 401(k) loans?

Most plans only allow you to have one 401(k) at a time, and you must pay it back before you can take out another one. However, it’s worthwhile to check with your plan administrator, as you might be allowed to take more than one, as long as the total between the two doesn’t go over the plan’s limit, which is typically $50,000.

How does each option affect my credit score?

A 401(k) loan doesn’t require a hard pull of your credit, nor do your payments show up on your credit report. It therefore doesn’t affect your credit score. A personal loan does trigger a hard credit inquiry, and late or missed payments on your personal loan can negatively impact your score. Plus, taking on a personal loan increases your credit utilization ratio, which can also lower your score.

Photo credit: iStock/JulPo

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOPL-Q324-014

Having a list of what you want in your dream house makes house hunting fun and exciting. But to be a smart homebuyer and get the most for your money, it’s important to focus on some of the more mundane, nuts-and-bolts aspects of a house as you tour. Looking for potential flaws that could be pricey to fix will help put your mind at ease. After all, maintenance and repair costs are the top concern of would-be homeowners, according to an April 2024 SoFi survey of 500 people. The concern — expressed by 47% of respondents — even beat out worries over mortgage costs or utility bills.

While home inspections play an important role in making sure you don’t buy a money pit, you can do a bit of detective work yourself. Follow this guidance on what to look for when buying a house.

1. The Exterior

While you’re focusing on where you might put a basketball hoop or admiring the property’s beautiful trees, you’d be wise to take a look at these things to consider when buying a house as well.

Roof Damage

Your roof protects you and your possessions from sun, rain, and snow. And roof damage can quickly turn homeownership dreams into a pricey nightmare. To put a price tag on it, a new roof can run $10,000.

Check for obviously cracked or missing shingles. Look for signs of water damage on the ceilings inside, indicating that the roof isn’t keeping rain out. Later, since the roof is hard to see from the ground, you may want to have your home inspection professional take a closer look. You might also invest in a pro roof evaluation to determine how many years the roof has before it needs to be replaced.

You can also avoid future problems by eyeballing the gutters. Are there telltale depressions, muddy spots, or rust stains outside the house which might indicate gutters are leaking?

Siding Issues

Be on the lookout for cracked or warped siding, or for blisters or bubbles that have formed underneath, which can indicate hidden water damage. Siding’s job is to prevent water from entering the house, so water stains on the inside could also signal siding issues.

Bad Foundation

Obvious cracks in the foundation or exterior walls are a warning sign, but pay attention when you step inside the house as well. Signs a foundation might be faulty include: floors that slope, crack, or sink; cabinets that are pulled away from the wall; interior cracks; and doors that stick.

Yard Problems

Most yard issues can be fixed with a little landscaping muscle, but drainage issues can be more costly to resolve. Look for standing water or soggy, low-lying areas in the yard, signs that the space has drainage problems that can compromise the foundation or cause mosquitoes to invade.

💡 Quick Tip: With SoFi, it takes just minutes to view your rate for a home loan online.

2. The HVAC

You’ll want to find out how the home is heated and cooled, and if possible, learn as much as you can about the annual or monthly cost. Then look for these red flags.

Damaged A/C Unit or Furnace

When touring with your real estate agent, ask the agent to turn on the heating and air conditioning system. Listen for any loud noises. Watch for water around the unit itself, a sign of possible drain line or refrigerant problems.

Broken Thermostat

Locate the thermostat and confirm that it appears to be receiving power. If the heat or air cycles on and off in brief cycles while you are touring the home, there may be a thermostat or power issue.

3. The Plumbing

Problems related to water are one of the most important things to look for when buying a house. Be aware of these issues:

Strong Smells (Good or Bad)

As you walk through a potential home, give it a good sniff. Your nose might know if mold or a damp basement is present. If you notice air fresheners or potpourri, don’t assume the homeowner is just a big fan of floral scents. Scents could be a sign that a plumbing issue, water drainage problem, or basement leak will siphon away a lot of your hard-earned cash. Buying a house out of state? Ask your real estate agent to sniff around for you, but plan on visiting in person once you have narrowed the field.

Recommended: Housing Market Trends By Location

Water Spots and Stains

Look at the ceilings and walls, especially those adjacent to bathrooms, for hints of water seeping in. Do you smell fresh paint? It might be covering up mildew. Ask the seller’s real estate agent if any new color is covering up any old mold or possibly water-damaged walls or ceilings.

Rusty or Corroded Pipes

Poke around the basement as well as under and behind bathroom and kitchen fixtures. Look for rust stains in sink basins, or blue stains under pipes, which may be a sign of corrosion.

Low Water Pressure

Ask the real estate agent if you can run the water in the kitchen and bathrooms, then run the sink and shower simultaneously. You’re doing an informal check for low water pressure. If the water is coming from a well on the property, taste it. While unpleasant flavor or odor in well water isn’t always a sign of problems, you’ll want to be aware of it before buying, and you’ll also want to have well water tested for contaminants by a professional during a home inspection. Most well water issues can be fixed, but it would be important to factor the costs into any offer you might make.

Slow Drainage

While the water is running, check that it is also draining properly.

Recommended: What Are the Most Common Home Repair Costs?

4. The Electrical System

Particularly in an older home, you’ll want to have the electrical system evaluated as part of the home inspection. Here are some things you can look for before that stage.

Small Electrical Panel

Ask the real estate agent to show you the panel where the electrical service comes into the home. There is usually a number on it to indicate the number of amps the home has. (Ask the agent if you don’t see it.) An older single-family home, especially, may not have adequate service. To power a small home without electric heating, 100 amps could be sufficient. But 200 amps is the standard for newer homes and updated ones. And even that may not be enough power for an electric heating system, depending on the size of the house. If you plan to add electric heat, a home workshop, or do an addition, you’ll probably need 300-amp service. The cost to upgrade the panel can range from $1,300 to $3,000.

While you are at the panel, look for signs of rust or rodents. Are circuit breakers corroded? If you see visible wiring, is it free from cracks or other damage?

Inadequate Outlets

Outlets in the kitchen or bath that are likely to be exposed to water should be ground fault circuit interrupter (GFCI) protected. (Look for “test” and “reset” buttons in the middle of the outlet.) Plugs that sit loosely in an outlet may indicate the outlets are old. Look for outlets with power strips or splitters plugged in, or with many electrical appliances crowded around them — all signs that the home doesn’t have adequate outlets for modern life.

5. The Functionality

Knowing whether a home would need costly upgrades, especially to the kitchen or baths, is important to your overall budget. If you’re in a hot real estate market and are likely to get into a bidding war, nailing down potential extra costs before you get into negotiations will be especially important.

Number of Bedrooms

Make sure the home has adequate sleeping space for your present needs, and don’t forget to think about the future (are kids in the plan?) as well as the occasional guest when you’re buying a house.

Kitchen Conditions

Kitchens are a big-ticket item, so survey the design and functionality of the kitchen, eyeballing the appliances and cabinetry especially. A major renovation, with new appliances, cabinets, and countertops, can run $14,000 to $40,000, according to home-improvement site Angi. To keep kitchen remodeling costs down, evaluate if the bones of a kitchen are good. Is there enough countertop space to do meal prep? Could you repaint or refinish the cabinets rather than rip them out?

Bathroom Basics

One homebuyer’s cute retro tile and toilet is another’s remodeling nightmare. And adding a bathroom or moving plumbing lines can get time-consuming and expensive. So check to see if the home has the right number of baths and think about how much work, if any, they might need to suit your style.

Whether your taste trends to luxurious rainfall showers or you’re happy with fixtures from the local home center, it’s unlikely to be a low-budget endeavor to redo a bathroom that’s dated or worn. The average bath remodel can cost approximately $11,000 before special fixtures or features.

The price tag heads farther north if you are planning to add a bath. Moving plumbing lines around a structure can get quite time-consuming and expensive. You’ll need permits, and ratcheting up the number of baths can also send your property taxes soaring. Home-improvement shows may make bathroom remodels and additions seem like no big deal, but it could actually wind up being a major endeavor.

Stairs

You probably already know whether a relaxed, one-floor ranch or a tall townhouse suits your style. But while you are touring a home, think about the number of stairs and how you might use the space in the house as you live there. Are the washer and dryer two flights down from the bedrooms, where most of the laundry originates? Is the main bedroom a flight below what would be the baby’s room?

Hardwood or Carpet?

You might tour a home that is fully carpeted and picture in your mind’s eye the gleaming hardwood floors you would reveal in a renovation. Don’t assume that hardwood hides under all carpets. Homes built in the 1950s and after may have carpet over plywood. Ask the real estate agent what is underneath the carpeting.

💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

6. The Aesthetic

Creating your homebuying wish list can help you zero in on the things that are important to you in a new home.

Views

There are as many ideal vistas as there are homebuyers, but as you look at a home’s views, think about the seasons. If trees lose their leaves, will the neighbor’s messy backyard be front and center? Especially in urban areas, think about who owns adjoining properties, what might be built there in the future, and how that could affect the view.

Natural Light

Take note of a home’s windows, and especially whether natural light is abundant in the rooms where you will spend the most time. You might love lots of natural light, but in the summer, it can mean high air-conditioning costs. Take window coverings into consideration in your budget.

Water Access

A water view or water access might be a priority for you. Normally, water views are a good thing — picturesque and calming. But in this era of “crazy weather,” a tranquil bay or babbling creek could soon swamp your home. According to a report by the National Oceanic and Atmospheric Administration, rising sea levels are accelerating instances of flooding.

So before you feel as if you’ve got to have a home that’s near a body of water, do your due diligence. Check the home’s flood factor; also find out if your lender would require flood insurance (which typically costs $700 a year but can go much higher) in addition to homeowners insurance before approving a loan.

Recommended: How Much of a House Can I Afford?

Noise

You’ll want to listen as well as look when you tour a property. Can you hear the sound of cars on the nearby road? How heavy is the traffic? Is the house near a train track or an airport, which could mean low-flying planes? In an urban setting, who are your neighbors? A bar or concert venue could mean late-night noise.

Essential Questions to Ask When Buying a House

Most real estate agents will offer some basic information about a house right upfront. By law, they are required to disclose the possible presence of lead hazards if a residence was built prior to 1978; some states also require disclosure of asbestos. Ask these questions to dig a little deeper. If there are already multiple offers on a house, you’ll want to choose priorities from this list — asking too many questions could work against you if you decide to throw your hat in the ring.

•   How old is the heating and air-conditioning system?

•   When was the water heater last replaced?

•   How old is the roof?

•   If there is a septic system, when was the tank last replaced or inspected?

•   What is the water source? Does the home have city water or rely on a well?

•   Does the home have any history of flooding or mold?

•   Is the seller aware of any materials containing asbestos on the property?

•   What comes with the house? (Sellers sometimes remove fixtures, appliances, sheds, or play equipment so don’t rely on things being left behind.)

•   Has the owner made any major improvements in the home since the last property tax assessment? (This could result in a tax hike on the next assessment.)

•   What do you know about the neighbors?

•   Are there any easements on the property? (For example, if power lines cross the property the local electrical supplier may have an easement which allows them to prune or remove trees.)

•   Is there a homeowners association? If so, what are the annual fees?

•   When touring a co-op or condominium, ask whether there are any special assessments currently in place or being discussed.

Becoming a Homeowner

Whether you’re a first-time homebuyer or a home-buying pro, you’ll want to be careful and comprehensive when buying a house. Keeping your eye out for potential problems can save you from falling in love with the wrong house.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

What are the five most important things to look for in a new home?

Make sure the home’s size, floor plan, and general aesthetic suit your lifestyle and budget. Then consider the amount of work a home might need. (Maintenance and repair costs are the top concern for homebuyers, with 47% of shoppers worried about these expenses according to an April 2024 SoFi survey of 500 adults.) Factor any big-ticket needs such as a bad roof or foundation, or a kitchen or bathroom that require remodeling, into your overall budget.

What should you look for in an initial walk-through of a new home?

Don’t just look at a home: Use all your senses. Listen for dripping water or traffic noises. Sniff the air — does it smell musty or moldy? Feel the floor underneath you. Does it slope or squeak? And listen to your gut as you will likely feel quickly whether a home is right for you.

What are must-haves when buying a new home?

Must-haves are unique to every buyer. For one person, a great view is essential while another may require a certain school district. The important thing is to talk about these early in your home search, and revisit the list as you begin to see properties.

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.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

SOHL-Q324-107

Credit union student loans are offered by member-owned financial institutions to help you cover college costs. While banks and online lenders also offer private student loans, credit unions often stand out by providing no-fee loans with competitive interest rates.

In this guide, we’ll walk you through how credit union student loans work, explore your options, weigh the pros and cons, and explain how to apply.

What Are Credit Union Student Loans?

Credit union student loans are private loans offered by credit unions to help students pay for college or other educational costs. Depending on your situation, they can be a good alternative to loans from big banks or once federal student loans have been exhausted.

Advantages of Credit Union Student Loans

Credit unions are all about putting their members first. Because they prioritize people over profits, they can offer perks like lower interest rates and fewer fees. Some credit unions even team up with others to share resources, making things more convenient and affordable for you.

Advantages include:

Lower costs: As nonprofits, credit unions don’t focus on making money for investors. This allows them to pass savings on to you through lower interest rates and fewer fees, helping you save on loans.

Member-focused: Credit unions are dedicated to helping their members. You’re likely to receive personalized attention and support from representatives who take the time to understand your needs and recommend the best services for you.

Flexibility: Credit unions may be more flexible with loan eligibility requirements for members. They might be more willing to work with students who are considered high-risk or don’t have a cosigner.

Eligibility Requirements

To get a student loan from a credit union, you typically need to be a member. Each credit union usually has its own membership guidelines, which might require you to work in a specific industry, belong to a certain group, live in a particular area, or attend a specific school.

If you have a family member who’s already a member, you might be able to join through them. Many credit unions allow immediate family members to become members, which could give you access to a student loan.

Keep in mind, though, there might be a membership fee, typically between $5 and $25.

When it comes to getting a student loan, each credit union has its own criteria, just like banks and online lenders. While private lenders often look for a credit score of 670 or higher, you might still qualify even if your score is lower.

Recommended: Do Credit Unions Help You Build Your Credit Score?

Types of Credit Union Student Loans

Here’s a look at the types of student loans offered by credit unions. Keep in mind, though, that options vary by credit union.

Private Student Loans

Private student loans from credit unions are a way to help cover college costs. While it’s recommended to use federal financial aid first, a private student loan from a credit union may help bridge the gap. These loans often have competitive interest rates and flexible terms, making them an appealing option to finance higher education costs.

Unlike federal student loans, though, how much you can borrow and the interest rate you get usually depend on your credit and income.

Student Loan Refinancing

Some credit unions offer student loan refinancing options, which may help you streamline your student debt and potentially save you money. When you refinance with a credit union, you’re essentially getting a new loan to pay off your existing ones, whether your loans are federal or private.

In other words, credit union refinancing for student loans lets you consolidate your loans into one payment, potentially with a lower interest rate and better terms if you qualify. And with just one monthly payment to manage, handling your debt could become much less stressful.

Keep in mind, though, that refinancing federal student loans into private student loans makes it so you’re no longer eligible for federal benefits, such as student loan forgiveness programs and income-driven repayment plans.

Recommended: Pros and Cons of Student Loan Refinancing

How to Apply for a Credit Union Student Loan

Applying for a student loan from a credit union is a straightforward process, but it’s important to understand the eligibility requirements, necessary documentation, and application process.

Step 1: Check Eligibility

Before applying for a student loan from a credit union, you’ll typically need to become a member. Some credit unions will let nonmembers apply, but to receive a loan you must be a member. If you’re already a member, make sure you meet their lending requirements — like being enrolled at least half-time.

Also, double-check to see if your school qualifies for private student loans. If you’re attending a community college or trade school, not all schools may be eligible, so it’s important to confirm.

Step 2: Gather Required Documents

If you meet the eligibility requirements, you can typically apply online, by visiting a branch, or by reaching out to the credit union directly.

When you’re ready to apply, you’ll typically need to share some basic information, like your name, Social Security number, and proof of income. It’s a good idea to check your credit score first, as lenders typically look for borrowers with a solid credit history, a good credit score (670-739), and a certain level of income.

If you’re concerned you might not qualify on your own, think about getting a cosigner. A student loan cosigner could increase your chances of getting approved and might even help you get a lower interest rate and better terms.

Step 3: Compare Loan Options

You may want to compare lenders in order to get the best rate and terms for your situation. Some lenders let you get prequalified, which helps you explore your options. Since prequalifying only involves a soft credit check, it won’t affect your credit score and you can see potential rates and terms without any worries.

In addition to exploring credit unions, it’s worth checking out other lenders that might offer competitive rates and terms.

Step 4: Submit Your Application

Once you choose your credit union or another lender, you can submit your official application. The lender will then usually do a hard credit check, and you’ll get the final approval decision.

Repaying Your Credit Union Student Loan

With some private student loans, you’ll need to make payments during school, while others let you hold off until you’ve graduated. To find out which one applies to your loan, check with your loan servicer or take a look at your loan documents.

It’s also a good idea to ask if the interest that builds up during the time you’re in school will be added to your principal balance when repayment starts.

When it comes time to make your payments, where you pay depends on your loan servicer. Most servicers let you pay online, but it’s smart to confirm this before your payments begin.

Many servicers also offer automatic payments, which automatically deduct your monthly payment from your bank account. This can help you avoid missing payments or getting hit with late fees.

Recommended: 6 Strategies to Pay Off Student Loans Quickly

Tips for Managing Credit Union Student Loans

Here are a few tips for managing your credit union private student loans.

Make a budget. Knowing where your money goes each month is key to setting aside funds for loan payments. Review your income and expenses to see where you can cut back, and try to allocate more toward paying off your loans.

Compare repayment options. Unlike federal loans, repayment options with credit unions and other private lenders can vary. If you’re struggling to keep up with payments, check if your lender offers plans like interest-only repayments, which allow you to defer the principal.

Make extra payments. Whether it’s biweekly payments instead of monthly or tossing in extra cash when you can, paying a bit more here and there can help you pay off your loans faster. Just be sure to request that any extra funds go directly toward the principal balance.

Sign up for autopay. Many private lenders offer an automatic payment option. By enrolling in autopay, you can ensure you never miss a payment.

Focus on high-interest debt. If you have multiple student loans, paying off the one with the highest interest rate first could save you money in the long run.

Consider refinancing your loans. If managing your payments feels overwhelming, you can refinance your student loans. This allows you to combine multiple student loans into one, ideally with a lower interest rate or more favorable terms.

The Takeaway

Credit unions offer private student loans to help cover college expenses like tuition and books. Unlike federal student loans, these private loans don’t offer the same flexible repayment options or borrower protections. It’s best to use your federal aid first, and then turn to private student loans if needed.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Can you use a credit union for a student loan?

Yes, some credit unions offer private student loans to their members. These loans work similarly to those provided by banks or online lenders, often with competitive interest rates and additional member perks.

Are student loans from credit unions considered private?

Yes, student loans from credit unions are considered private since they’re funded by the credit union, not the government. While they don’t offer the same federal benefits and protections, they often come with competitive rates and special perks for members.

Is it more difficult to get a student loan from a credit union?

Getting a student loan from a credit union usually depends on your credit history and being a member. Membership might require living in a certain area or belonging to a specific group. But once you’re in, you could benefit from more personalized service and potentially better rates than what you may find with other lenders.

Photo credit: iStock/hobo_018

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

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.

SOISL-Q324-039

Saving money is a good thing, but it’s important to find the right kind of account for your cash. Both savings accounts and certificates of deposit (CDs) can be a safe spot to keep your money, but they have differences. A savings account can be more accessible, meaning you can typically withdraw funds at will, while with a CD, you are supposed to let your money sit for an agreed-upon period of time. Also, interest rates may vary. CDs typically offer higher rates than traditional savings accounts do. However, high-yield savings accounts may offer rates close to (or possibly even exceeding) those of CDs.

Depending on your needs and preferences, you may discover that one option is a better fit for you. Read on for details on what these accounts offer and how they differ. Once you know the pros and cons of each, you will likely be better prepared to make a decision.

Certificate of Deposit (CD) vs HYSA Savings Accounts

A certificate of deposit (CD) and savings account are both vehicles that can help you grow your money thanks to interest earned. A key difference, however, is that a savings account is more accessible, while, with a CD, you agree to keep the funds on deposit for a period of time. You may, however, be rewarded with a higher interest rate for doing so.

That said, high-yield savings accounts can offer competitive interest rates vs. CDs and provide more flexibility. You can withdraw funds as needed, without being hit with penalties.

To understand more about the difference between a CD and a savings account, it’s a good idea to first learn in depth how each type of account works.

What Is a Certificate of Deposit (CD)?

A certificate of deposit (CD) is a specific type of savings account that pays interest. You agree to keep the money on deposit for a specific term, which can range from a few months to several years, and you are promised a specific interest rate (usually, but not always, a fixed rate). CDs are also known as time deposits for this reason. A couple of points to note:

•   Generally, the longer the term you choose, the higher the interest rate may be. You may also find a promotional CD with a higher than usual rate.

•   You may find some variable-rate CDs offered. With these, the interest can fluctuate with the market.

•   Typically, you will pay a penalty if you withdraw funds before the end of the term. There are some no penalty CDs on the market that don’t involve a penalty for pulling money out early. They may, however, offer lower interest rates.

CDs are considered to be a very safe savings option, provided they are held at a bank with Federal Deposit Insurance Corporation (FDIC) insurance. If so, you will be covered up to $250,000 per depositor, per account category, per insured institution. That means even in the very rare instance of the bank failing, you wouldn’t lose funds up to that amount. (If you open a CD at a credit union, you would likely be insured by the National Credit Union Administration, or NCUA, in a similar way.)

How Does a CD Work?

Here’s how a certificate of deposit works:

•   When you open a CD, you typically commit to leaving the money in the account for a set period of time such as six months or three years. In exchange for locking up your funds in this way, the bank issuing the CD will pay out a certain amount of interest.

•   Many financial institutions give account holders the option to collect interest at intervals during the term of the CD or at the end of the term.

•   However, if you withdraw funds from the CD before its term is over (also known as its maturation date), you will likely be charged a penalty.

•   When the agreed upon period of time is over, you can get your original deposit back, along with the interest earned and not yet paid out, or you can roll it over into a new CD.

What Is an HYSA Savings Account?

A savings account, which you can open at a bank, credit union, or other financial institution, is a place where you can save money without locking it away for an extended period of time. Opt for a high-yield savings account to help your money grow even faster.

•   A savings account is a good fit for money you want to protect and grow while still being able to access it — say, for an emergency fund or a down payment for a car you plan to buy in the coming months.

•   The funds in your account are accessible when you want them, without a penalty, though some financial institutions do limit the number of transactions per month.

•   Similar to CDs, savings accounts generate interest, but traditional savings accounts may offer a lower rate. A high-yield savings account, or HYSA (most often found at online banks), can come with a higher interest rate, sometimes a multiple of what traditional accounts offer. For example, as of September 2024, the average interest rate for traditional savings accounts was 0.46% and the rate for high-yield savings accounts could be several times that.

Most savings accounts at major banks offer FDIC insurance. If the savings account is held at a credit union instead of a bank, then the NCUA vs FDIC insures the money with similar guidelines.

How Does an HYSA Savings Account Work?

High-yield savings accounts, like traditional savings accounts, work by putting money in your account, where it earns interest. You can then withdraw funds as needed (though some financial institutions may put a limit on how many transactions they allow per month). The difference is, however, that you’ll earn a more robust interest rate.

Someone might put money in savings to:

•   Earn interest and help their money grow

•   Save money for a short-term financial goal

•   Create an emergency fund

•   Keep their money safe vs. having cash at home

•   Separate the money they want to save from the money they want to spend

Recommended: Savings Account Calculator

3 Similarities Between a CD and HYSA Savings Account

If you’ve ever thought of a CD and a savings account being almost the same thing, there’s a good reason why: There are a few similarities between them.

1. Insured

Typically, a CD or savings account is insured by either the FDIC or the National Credit Union Administration (NCUA) which helps protect the money in these savings vehicles.

2. Earns Interest

Both CDs and savings accounts earn interest on the money deposited into them, unlike checking accounts which often offer no interest. While CDs may earn a higher interest rate than traditional savings accounts, a HYSA may offer a competitive interest rate vs. a CD, but it won’t charge you an early-withdrawal penalty.

3. Good Ways to Save Money

You know the saying: Out of sight, out of mind. By putting money into a CD or savings account, you may find it easier to save money and resist the temptation to spend it.

Differences Between a CD and HYSA Savings Account/2>

Of course, there are some key differences between these accounts worth understanding. Knowing these points could help you decide between a high-yield savings account vs. a CD.

1. Accessibility

With a CD, you can’t remove your money until the date of maturity without being penalized. With a high-yield savings account and traditional ones as well, you can usually make either up to six withdrawals a month or unlimited withdrawals. (Check with your financial institution for specifics.)

2. Amount of Interest Earned

Traditional savings accounts generally earn less interest than CDs. However, a high-yield savings account may offer a rate that’s competitive with a CD. Comparison-shop to see what’s offered.

When to Use a CD Instead of an HYSA Savings Account

Here’s some guidance on when you might opt for a CD vs. a savings account.

•   A CD is a good fit if you don’t need to access your money in the near future. If you can agree to leave the money untouched for a number of months or years in a CD, you could earn a higher interest rate vs. a savings account.

For instance, say you got a bonus at work and aren’t quite sure what you want to do with it. Putting it in a CD will keep it safe and earning interest while you decide how you might want to use it.

•   Another scenario in which a CD could be a wise move is if interest rates are expected to fall. Locking in your rate with a CD before that happens could help your money grow.

When to Use an HYSA Savings Account Instead of a CD

A savings account can be a better option if you need your money to be easily accessible in the near future.

•   A savings account can be a good place to store an emergency fund (since you never know when you might need to withdraw some funds) or when saving up for a short-term financial goal.

•   Putting money in a savings account can be a wise move if interest rates are expected to rise. That way, you can enjoy higher earnings as rates climb. That wouldn’t be the case if you locked in to a fixed-rate CD.

How to Open a CD

To open a CD, you can choose a financial institution, and pick the type and term of CD you want. This can mean deciding between a no-penalty or traditional CD. You’ll also determine how often you want to collect your interest payments (say, monthly or when the CD matures, meaning when it reaches the end of its term).

You can likely open a CD in person or online. The process also typically involves sharing your government-issued photo ID, personal details (name, address, Social Security number, and so forth), and other credentials.

The final step will be to fund the CD: That happens by transferring the money online, via a phone transfer, handing over cash if you’re at a branch, or by using a check.

How to Open an HYSA Savings Account

The first step for opening a savings account, including a high-interest savings account, is to compare financial institutions and account options and make your decision.

You may find options depending on minimum opening deposits and minimum balances; interest rates will likely vary between standard and high-yield accounts. You may also find a variety of fees relating to the accounts available, so consider how those might impact your savings.

Next, you will likely have to provide personal information (such as name, address, and SSN), government-issued photo ID, and other details in order to complete the process. This holds true whether you are opening an account in person at a brick-and-mortar location or online.

Lastly, you’ll need to add cash to open the account, whether by handing over money in person or otherwise transferring funds. A typical deposit requirement for a basic savings account might be $25 to $100; you might find some that don’t need any deposit. For a HYSA, you could see minimums ranging from similar levels to thousands of dollars in some cases.

Recommended: Different Types of High-Interest Accounts to Know

The Takeaway

Both certificates of deposit and savings accounts are secure, low-risk places to keep money and earn interest. With a CD, you may earn higher interest than with a standard savings account, but you agree to keep your money on deposit for a specific term or else be penalized for an early withdrawal. With a savings account, your funds are accessible without that kind of penalty, so you can dip in as needed. With a high-yield savings account, you might earn as high an interest rate as a CD. Which financial product is the right choice will depend on your particular needs and goals.

If a savings account seems like a good option to you, SoFi might be the right bank.

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.

FAQ

Is a certificate of deposit the same as a savings account?

No, a certificate of deposit (CD) is not the same thing as a savings account. Money placed in a CD is not easily accessible like a savings account; you agree not to touch it for a period of time, usually from six months to a few years. CDs are also known as term deposits.

Is a high-yield savings or CD account better?

Whether a high-yield savings account or CD is better for you depends on your unique financial needs. If you have money you don’t need to access anytime soon and can find a higher interest rate for a CD vs. a savings account, then a CD is likely a better fit. If, however, you need to be able to access your money and make withdrawals, a savings account will probably better suit you. And you might find a HYSA that has a rate that’s as good as a CD’s.

Does a certificate of deposit give you better interest than a savings account?

In general, a CD can provide a better interest rate than a traditional savings account, but it pays to research exactly what is being offered. It’s possible that a CD’s interest rate might not be high enough to outweigh the downside of not being able to access your funds the way you can with a savings account. Or you might find that a high-yield savings account offers an interest rate on a par with that of a CD, plus greater accessibility.

Is a certificate of deposit safer than a savings account?

CDs and savings accounts can be equally safe. Most major banks and credit unions are insured by either the FDIC or NCUA, protecting consumers in the very unlikely event of the financial institution

What is the biggest negative of putting your money in a CD?

The biggest negative of a CD is lack of access. You are locking up your money for a set period of time, or term. If you withdraw funds before the CD’s term of deposit is up, you typically face financial penalties.

Photo credit: iStock/Moyo Studio

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.

*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.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.