Credit reports contain financial records of debts you owe and ones you’ve paid off. Positive information can remain on your credit reports indefinitely. Most negative information falls off your credit after seven years, though certain types of bankruptcy filings can remain longer.
Here’s a closer look at how financial records impact your credit reports.
How Long Do Inquiries Stay on a Credit Report?
When you apply for a loan, credit card, or line of credit the lender can perform what’s called a hard inquiry. This simply means that they pull copies of your credit reports, which they’ll use to make an approval decision.
Hard inquiries show up on a credit report and they’re included in your FICO® credit score calculations. Each new inquiry remains on your credit report for two years, according to FICO. However, they’re only considered in credit score calculations for the first 12 months.
Soft inquiries occur when you check your credit reports yourself or a company pulls your credit for the purposes of prequalifying or preapproving you for a loan. These inquiries won’t show up on a credit report, and they don’t have any impact on your credit score.
How Long Does Negative Information Remain on Your Credit Report?
Negative information on a credit report is any information that’s harmful to your credit score. What affects your credit score negatively? The list includes:
Generally, negative information can stay on your credit report for up to seven years. Chapter 7 and Chapter 11 bankruptcy, however, can stick around on your credit report for 10 years.
In terms of how negative items impact your credit score, age matters, according to FICO. Newer negative items, such as collections or late payments, have a more immediate impact on your scores than negative items that are several years old. A money tracker app makes it easy to track your credit and your money in real time so you can get ahead financially.
How Long Does Positive Information Remain on Your Credit Report?
Positive information can remain on credit reports indefinitely. Credit bureaus are not required to remove this information, though they may do so at the seven-year mark. Examples of positive information that can stay on a credit report, regardless of time, include:
• On-time payments
• Open accounts that have a $0 balance or a low balance, relative to your credit limit
• Closed accounts that you’ve paid in full
Positive items on a credit report are a good thing, since they help your credit scores. On-time payments and low balances on credit accounts have the biggest impact overall. Making biweekly payments or increasing your credit limits are two helpful ideas for how to lower credit utilization. Using a spending app to manage your budget and expenses can also help keep credit card balances low.
How to Remove Negative Information From Your Credit Report
Negative information that’s accurate cannot be removed from a credit report. For example, if you miss several payments on a loan but get caught up later, those late payments will stay on your credit reports until you hit the seven-year mark.
Inaccurate information, on the other hand, can be removed through the dispute process. Examples of inaccurate or incorrect items you could dispute on a credit report include:
• On-time payments that were not properly attributed to your account
• Credit accounts that don’t belong to you
• Paid-in-full accounts that still show a balance on your credit reports
• Account activity relating to fraudulent activity or identity theft
You’ll need to dispute the inaccurate information with the credit bureau that reports it. All three credit bureaus — Equifax, Experian, and TransUnion — allow you to initiate credit report disputes online. You’ll need to fill out a dispute form and provide some details about the dispute.
Once the credit bureau receives the dispute, it’s required to investigate your claim and return a decision to you promptly. If the credit bureau finds that there’s an error on your reports, it’s legally required to remove or update the information.
Your credit score updates monthly for the most part. Enrolling in credit score monitoring can make it easier to track changes, including changes to your score following a dispute.
Do You Still Have to Pay a Debt If It Fell Off Your Credit Report?
A debt can fall off your credit report if enough time passes. However, the amount owed doesn’t go away. Creditors and debt collectors could still attempt to get you to pay if the statute of limitations hasn’t passed.
The statute of limitations on debt allows creditors and debt collectors a set window of time in which to sue you for an unpaid balance. Each state determines how long the statute of limitations applies but in all states, its expiration doesn’t remove your legal obligation to pay what you owe.
Should you pay old debts? Ethically, yes. But if a debt falls off your credit report and the statute of limitations has expired, it would be very difficult for a creditor to force you to pay via a lawsuit.
The Takeaway
Reviewing your credit reports regularly is a good way to see what’s helping or hurting your score at any given time. If you have negative items on your credit report, you might see your score drop, but those points can come back with the passage of time.
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FAQ
What stays on a credit report forever?
Positive information can stay on a credit report forever, as credit bureaus are not required to remove any items that help your credit score. However, credit bureaus can choose to remove positive information after seven years.
Can credit information stay on my credit report for over 7 years?
Credit information can stay on your credit report for over seven years if it’s positive. Generally, negative information cannot stay on your report for more than seven years, unless you file for Chapter 7 or Chapter 11 bankruptcy. In that case, the bankruptcy filing could stay on your report for 10 years.
Do old accounts fall off a credit report?
Old accounts can fall off your credit report after seven years if they have negative information. Positive information from old accounts or newer ones can stay on your credit reports indefinitely.
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Medical debt can be a heavy burden for individuals and families. And knowing unpaid medical bills could impact your credit can make the worry even worse.
In an effort designed to relieve some of the stress on U.S. consumers, the way medical debt is treated by credit bureaus has changed in recent years. The timeline for unpaid health-care bills appearing on your credit reports is longer than it used to be. And some of those debts may not end up affecting your credit at all.
But make no mistake: There still can be consequences if a medical bill goes unpaid for too long.
Read on for a look at when unpaid medical debt can go on your credit reports and some steps you can take to protect and improve your financial health.
Key Points
• Unpaid medical bills can appear on credit reports, but there is a 365-day grace period before they do.
• Medical debts under $500 don’t show up on credit reports.
• Medical collections can stay on credit reports for seven years if unpaid.
• Medical debts paid after they appear on credit reports are removed from the reports, improving credit scores.
• Disputing errors on credit reports can help remove incorrect medical debt information.
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Do Medical Bills Affect Your Credit?
Your medical bills shouldn’t have any effect on your credit, as long as they don’t go unpaid for too long. Most health-care providers don’t report payment activity to the credit bureaus. So unless your account goes unpaid for so long that your provider gives up and sells the debt to a debt collector, it’s unlikely your delinquent account will appear on your credit reports.
Even if the account goes to collections, it can take a year or longer to impact your credit. That’s because the three major credit bureaus (Equifax, Experian, and TransUnion) now give consumers a full 365 days to clear up a medical debt that’s gone to collections before it goes on their credit reports. This year-long grace period allows more time for medical bills to make their way through the insurance approval and payment process, and it gives consumers more time to report billing issues to their provider or the debt collector, negotiate a smaller payment, or set up a payment plan.
More good news: If the initial balance that’s gone to collections is less than $500, the debt won’t ever become part of your credit report, so it won’t affect your credit score.
How Does Medical Debt Impact Your Credit Scores?
Medical bills that you’ve paid shouldn’t appear on your credit reports at all or affect your credit scores — even if you paid the bill after it went to collections. Existing paid medical collections were erased from credit reports in 2022, and the credit bureaus no longer include this information on their reports.
If your bill in collections goes unpaid past the 365-day grace period, however, it could turn up on your credit reports, and possibly have a negative effect on your credit scores. The amount of damage can vary, depending on what scoring model you — or a potential lender — is looking at. But it’s important to note that failing to pay a bill can affect the most significant factor in determining your credit scores — your payment history. So if a medical bill with a starting balance of $500 or more lands on your credit report, you could see a serious dip in your credit scores.
How Long Do Medical Bill Collections Stay on Your Credit Report?
A typical collections account can stay on your credit reports for about seven years, whether or not you eventually pay the debt. But medical accounts are treated differently than other types of debt.
When the credit bureaus are notified that you’ve paid off a medical debt in collections, they’ll remove the account from your credit reports, and you can expect your credit scores to improve.
If you don’t pay the medical debt, however, the collections account could remain on your credit reports for a full seven years after it becomes delinquent.
Can Medical Bills Be Removed from My Credit Report?
If you believe a medical bill in collections is showing up on your credit report by mistake, you can dispute the error with the credit bureau and the debt collector who reported it. After all, it takes time to build credit, and you want to make sure your record represents you accurately.
If your debt has been in collections for less than a year, if the starting balance was less than $500, if the debt has been paid by you or your insurance company, or if you can show that the information is incorrect in some other way, you can take the necessary steps to have it removed from your credit reports.
How to Dispute a Medical Bill on Your Credit Report
To dispute a medical bill on your credit report, the Consumer Financial Protection Bureau (CFPB) recommends starting with the credit bureau that included the account. Explain in writing what you think is wrong and why — and be sure to include documentation that supports your claim. The credit bureaus can then begin an investigation. (The CFPB provides sample letters and addresses for the credit bureaus.)
You should also reach out in writing to the debt collector that furnished the information and ask that it be corrected.
Finally, if your dispute continues to go unresolved, you can submit a complaint to the CFPB.
How Can You Check for Medical Debt on Your Credit Reports?
There are a couple of ways you can check your credit report to see if a medical debt is showing up there.
• If you’re paying for credit monitoring, or if your financial institution or credit card company provides a free credit score and summary each month, the information you’re looking for may be available as part of this service. You may even receive an alert if your credit score updates and there’s a significant drop.
• You’re also entitled by federal law to receive free copies of your credit reports from the major credit bureaus at AnnualCreditReport.com.
Don’t panic if a debt collector tells you that your unpaid account will soon affect your credit scores. Remember that you have a year-long grace period to pay the debt or clear up any errors before the account will show up on your credit reports.
Does Paying Off Medical Collections Improve Your Credit?
The best way to keep medical debt from dragging down your credit scores is to make sure your bills are paid on time (by you or your health insurance company). Even if your account goes to collections, paying is still an option — and it can help push your credit scores back up.
Though the negative impact of having a collections account on your credit report diminishes with time, if the bill goes unpaid, it could sit on your record — where lenders can see it — for seven years.
Even though it may be tempting, the worst thing you can do if you have medical debt is ignore it. Here are some options to consider if you’re wondering how to pay medical bills you can’t afford.
Ask About a Repayment Plan
Many hospitals and health-care providers will let you set up a payment schedule that allows you to pay over time. Best-case scenario, the option provided is fee- and interest-free. If you’re asked to sign up for a financing plan that will cost extra, make sure the terms work for you and that it’s still manageable within your budget.
Try Negotiating with Your Provider to Lower Your Bill
Sometimes, a health-care provider may be willing to accept a lower amount to avoid writing off the bill and selling the account to a debt buyer. (Even if the account has gone to collections, you may be able to settle for a lower payment. At that point, though, you’ll likely be negotiating with the debt collector, not the original creditor.)
See If You Qualify for Financial Assistance
Grants and other types of financial assistance are sometimes available for patients who are eligible based on their income, age, or other factors. A Google search may turn up some options, or your health-care provider or a support group may be able to pass along information.
Consider an Unsecured Personal Loan
If you can get manageable monthly payments and other terms that fit your needs, you may want to consider taking out a low-interest personal loan. Try to stay away from a loan that’s secured by your home or other assets, which could end up putting your financial well-being at greater risk if you default.
How Can You Keep Your Credit Scores Healthy Despite Challenging Medical Bills?
Small fluctuations in your credit scores are normal, but if you’re worried that an unpaid medical bill could cause a drastic drop, it’s important to keep your financial guard up. Here are some steps you can take to protect your scores:
Keep Paying Your Bills on Time
Your payment history is a big factor in determining your credit score, so do your best to stay on top of all your bills. If making timely payments is a struggle for you, you may find a spending app can help with budgeting, keeping track of billing due dates, and prioritizing payments.
Watch Your Credit Utilization
Lowering your credit card utilization ratio — the percentage of available credit that you’re using on your credit cards and other lines of credit — can help you get and keep your credit scores where you want them. If you’re relying heavily on credit to get by, and you’re close to maxing out your credit cards, you may need to reevaluate your spending and change up your budget. A money tracker app could help you stick to healthy financial habits.
Monitoring Your Credit Scores
Even if you’re on your best behavior, if an unpaid medical bill ends up on your credit report, it may take months before you see some improvement to your damaged credit scores. Credit score monitoring can help you better understand how certain actions can affect your creditworthiness.
The Takeaway
Watching your medical expenses pile up can be stressful — especially if you’re worried that your unpaid medical bills can go on your credit reports and lower your credit scores. Fortunately, the credit bureaus and credit score models have begun treating medical debt with a little more patience and consideration than other types of debt.
But an unpaid medical account still can be a problem if you let it go for too long. So it’s important to stay on top of your medical bills, along with all your other financial obligations.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
Can unpaid medical bills affect your credit?
A medical bill will likely only affect your credit if it’s been unpaid for so long that it ends up going to collections. Even then, consumers have a full year to clear up a medical collections account before it goes on their credit reports. But if the bill goes unpaid after that grace period is up, it could affect your credit scores.
How do I remove a medical collection from my credit report?
To have a medical collection removed from your credit report, you can either pay the amount you owe or — if you think it’s in error — you can try disputing the bill with the credit bureau and the debt collector that reported it.
Is it a HIPAA violation to send medical bills to collections?
Not necessarily. The Health Insurance Portability and Accountability Act (HIPAA) has strict standards for how health-care providers and their business associates, including third-party debt collectors, handle sensitive personal health information. Debt collectors can receive and disclose information but only to the extent that it is absolutely necessary to perform their job.
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Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
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Index investing is a passive investment strategy in which you buy shares of an index fund that mirrors the composition and performance of a market index like the S&P 500.
Index investing is considered passive because index funds are formulated to follow the index and thus deliver market returns. There is no portfolio manager to oversee the fund or execute trades as there is with actively managed funds. Index funds can include mutual funds as well as exchange-traded funds (ETFs).
While index funds were once considered somewhat unsophisticated, a growing number of investors have come to embrace passive strategies in the last several years: In 2010, about 19% of total assets under management with U.S. investment firms were in passive funds. By 2023, passive strategies accounted for 48%.
Although index funds are considered passive, that doesn’t mean they are risk free; there are specific concerns for investors to bear in mind when considering index investing.
Key Points
• Index funds are mutual funds that try to replicate the benchmark index for a market segment or sector.
• Because index funds are passively managed and have low turnover, which helps keep costs lower than an actively managed fund.
• Indexes — and the index funds that track them — may be weighted by market cap, price, or fundamentals.
• Passive investing in index funds may help restrain investors’ emotional impulses and improve long-term returns.
• Index investing offers diversification and cost efficiency, but lacks downside protection and flexibility.
What Are Index Funds?
An index fund is a type of mutual fund or exchange-traded fund (ETF) that tracks the performance of a market segment — like large-cap companies — or a sector like technology, by following the benchmark index for that sector.
Index funds typically hold a portfolio of securities — e.g., stocks, bonds, or other assets — that are identical or nearly identical to those in the relevant index. The idea is to try to replicate the chosen benchmark’s performance as closely as possible.
Unlike actively managed funds, which employ a portfolio manager that seeks to outperform the benchmark by actively trading securities within the fund, index funds aim to provide returns based solely on the performance of that particular market or sector.
There is an ongoing debate about the merits of pursuing active vs. passive strategies. In 2023, passive investments tended to outperform their active counterparts, according to industry data analyzed by Morningstar. That said, active strategies outperformed under certain conditions, and for specific markets.
There are index funds for the U.S. bond market, the U.S. stock market, international markets, and countless others represented by various market indexes like the Russell 2000 index of small-cap companies, the Nasdaq 100 index of tech companies, and so on.
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How Do Index Funds Work?
When you buy shares of an index fund — typically a mutual fund or ETF — your money is effectively invested in the many stocks or bonds that make up the particular index. This helps add some diversification to your portfolio, potentially more so than if you were buying individual securities.
In addition, index funds tend to be lower cost than active funds, because passive funds don’t require a live portfolio management team.
Passive investing comes with certain risks, however, chiefly the risk of being tied to the ups and downs of a specific market. Without an active manager at the helm, an index fund can only deliver market returns.
Why Index Funds Typically Cost Less
Because index funds are designed to track the securities in a given market index, an index fund’s portfolio is typically updated only when the constituents in the index itself change. Thus, there is typically low turnover in these funds, which helps keep overall costs low.
By contrast, actively managed funds typically employ a more frequent trading strategy in a quest for outperformance, which can add to the cost of the fund. In addition, active funds have a live portfolio manager and thus tend to charge higher fees.
Some indexes give more weight to companies with a bigger market capitalization; these are market-cap-weighted indexes. This means index funds that track a weighted index, like the S&P 500, likewise allocate a higher percentage to those bigger companies — and those companies influence the performance of the index.
Indexes can also be weighted by price (with higher priced companies making up a higher proportion of the index) or by company fundamentals. While the weighting structure of the index may not matter to individual investors at first, it ultimately influences the holdings of any related index funds or ETFs, and may be something to bear in mind when selecting an index fund.
Well-Known Big Market Indexes
There are thousands of indexes in the U.S. alone, each one designed to reflect how a certain aspect of the market is doing. Some of the biggest indexes include:
• S&P 500 Index — Standard & Poor’s 500 tracks the 500 largest companies in the U.S. by market capitalization.
• Dow Jones Industrial Average (DIJA) — The Dow tracks 30 blue-chip companies; this is a price-weighted index.
• Nasdaq Composite Index — The Nasdaq Composite tracks all of the tech companies listed in the Nasdaq stock exchange (one of the major U.S. exchanges); this is a price-weighted index.
• Wilshire 5000 Index — The Wilshire 5000 is a market-cap-weighted index, and it’s considered a total market index because it tracks all publicly traded companies with headquarters in the United States.
• Bloomberg Barclays Aggregate Bond Index — Nicknamed the “Agg,” this index tracks over $50 trillion in fixed-income securities, and is often considered an indicator of the economy’s health.
Top 10 Equity Index Funds
While the above list reflects some of the larger market indexes, these don’t dictate what the most popular index funds may be. Some index funds are more cost efficient or do a better job of tracking their benchmark than others.
Following are the top 10 low-cost U.S. equity index mutual funds and ETFs in 2024, according to Morningstar, Inc., the industry ratings and research company.
Investing in index funds requires as much due diligence as investing in any single security. Here’s how to start.
Step 1: Determine Your Goals, Time Horizon, and Risk Tolerance
You may want to consider some of the basic tenets of investing as you select your index fund or funds. Will you be adding an index fund to an existing portfolio? Are you starting a taxable account? Is this for retirement?
Knowing your goals, your time frame, and how much risk you feel comfortable with will inform the funds you choose.
Step 2: Choose an Index Fund
The name of a particular index fund may catch your eye, but it’s essential to examine what’s inside an index fund’s portfolio before investing in it. Some index funds track a larger market, such as the S&P 500 or Russell 3000. Others track a more narrow or even niche sector of the market.
Determine what your short- and long-term goals are, and what markets you are interested in. You may want to start with a broad market index fund focused on equities or bonds. Or you may want to target certain sectors like technology, sustainability, or health care.
Step 3: Open a Brokerage Account
Open and fund a brokerage account or online brokerage account, and explore the index fund options available. Be sure to check potential fees and trading costs, as well as account minimums and cost per share. The price per share can vary widely.
Step 4: Buy Shares of an Index Fund
Once you’ve selected the fund(s) you want, execute the trade. Decide whether to create an automatic investment (e.g. every month) to support your goals.
Step 5: Consider Your Index Strategy
While it’s possible to simply add one index fund to your portfolio, it’s also possible to populate your entire portfolio using only index funds. Again, bear in mind the pros and cons of index strategies in light of your current and long-term goals for this investment, as well as your risk tolerance.
Potential Advantages of Index Investing
Index investing has a number of merits to consider. As noted above, index investing tends to be cost efficient, and may offer some portfolio diversification. In addition, investors may benefit from other aspects of passive strategies.
Easier to Manage
It might seem as if active investors could have a better chance at seeing significant returns versus index investors, but this isn’t necessarily the case. Day trading and timing the market can be difficult, and may result in big losses or underperformance. After all, few individual investors have the time to master the ins and outs of financial markets.
Index investing offers a lower-cost, lower-maintenance alternative. Because index funds simply track different benchmarks, individual investors don’t have to concern themselves with the success or failure of an active portfolio manager. Also, index investing doesn’t necessarily require a wealth manager or advisor — you can assemble a portfolio of index funds on your own.
Behavioral Guardrails
Investors who pursue active strategies may succumb to emotional impulses, like timing the market, which can impact their portfolio’s performance. Investing in index funds, which takes a more hands-off approach, may help restrain investor behavior — which may help portfolio returns over time.
According to the 30th annual Quantitative Analysis of Investor Behavior (QAIB) report by DALBAR, the market research firm, equity investors typically underperform the S&P 500 over time.
The QAIB report is based on data from Bloomberg Barclays indices, the Investment Company Institute (ICI), and Standard and Poor’s, as well as proprietary sources. The study examined mutual fund sales, redemptions, and exchanges each month, from Jan. 1, 1985 to December 31, 2023, in order to measure investor behavior, and then compared investor returns to a relevant set of indices.
In 2023, the average equity investor earned 5.50% less than the return of the S&P 500 for that year — a common pattern, as DALBAR research shows.
Potential Disadvantages of Index Investing
The potential upsides of passive strategies have to be weighed against the potential risks.
No Downside Protection
Index funds track the market they’re based on, whether that’s small-cap stocks or corporate bonds. So, if the market drops, so does the index fund that’s trying to replicate that market’s performance. There is no live manager who can try to offset losses; index investors have to ride out any volatility on their own.
No Choice About Investments
Individual investors themselves typically can’t change the securities in any mutual fund or ETF, whether passive or active. But whereas active strategies are based on trading securities within the fund, index funds rarely change up their portfolios — unless the index itself changes constituents (which does happen).
Index Investing: a Long-Term Strategy
Some investors may try to time the market: meaning, they try to buy high and sell low. Investing in index funds tends to work when you hold your money in the fund for a longer period of time; or if you rely on dollar-cost averaging.
Dollar-cost averaging is a method of investing the same amount consistently over time to take advantage of both high and low points in market prices. Generally speaking, this strategy tends to lower the average cost of your investments over time, which may support returns. But dollar-cost averaging can be inflexible, and limit an investor’s ability to respond to certain market conditions.
The Takeaway
Index investing is considered a passive strategy because index funds track a benchmark that reflects a certain part of the market: e.g. large-cap stocks or tech stocks or green bonds. Indexing is considered a low-cost way to gain broad market exposure. But index funds are not without risks, and it’s wise to consider index funds in light of your long-term goals.
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FAQ
What happens when you invest in an index?
You can’t invest in an index, per se, but you can invest in a fund that tracks a specific market index. When you invest in an index fund, you’re investing in not one stock, but in numerous stocks (or other securities, like bonds) that match that benchmark. A large-cap index fund would track big U.S. companies; an emerging market index fund would track emerging markets.
How much do index funds cost?
Index funds tend to have a lower annual expense ratio than actively managed funds, often under 0.05%. That said, investment fees can vary widely, and it’s essential to check a fund’s all-in costs.
Are index funds safe?
Investing in the capital markets always entails risk — no investment is 100% safe. That said, investing in an index fund may involve less risk than owning a single stock, because the range of securities in the fund’s portfolio provide some diversification. That doesn’t mean you can’t lose money. Index funds are only as stable as their underlying index.
Is it smart to put all your money in an index fund?
It’s possible to use an index investing strategy for your entire portfolio. Whether this makes sense for you is determined by your goals and risk tolerance. Index investing offers some potential advantages in terms of cost efficiency and broader market exposure, but comes with the risk of being tied to market returns, with no ability to adjust the portfolio allocation.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at https://sofi.app.link/investchat. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
When searching for a good interest rate on a savings account, you’ll typically find that the rates banks offer vary widely. You may see the terms “interest rate” and “APY” (annual percentage yield) used, but these two things are not the same and it’s important to understand the difference.
The interest rate on a savings account is the rate you earn from keeping your money in the account. Essentially, you’re earning interest for lending your money to the bank or financial institution.
Here’s how it works: Say you have a savings account that earns simple interest, paid annually. In this case, if you have $1,000 and earn 1.00% interest, you would have $1,010 at the end of the first year, $1,020 after the second year, and so on. However, savings accounts usually pay compound interest. With compound interest, you earn interest on the entire balance, including previous interest payments. Interest may compound daily, monthly, or annually, depending on the bank.
APY is how much you will earn on the money in your savings account over the course of a year, taking compound interest into account. APY is higher than the interest rate because it includes the effect of compounding
When you’re looking for the interest rate on a savings account, you’ll usually see the APY listed, which tells you how much you’ll earn on your money over the course of a year. For most traditional savings accounts, the APY is currently below 1.00%. To get the best possible rate, you may want to consider a high-yield bank account, which may offer 3.00% APY or higher.
National Average Savings Account Rate for 2024
The national savings account rate is 0.45% APY as of October 21, 2024 as of August 19, 2024, according to the Federal Deposit Insurance Corporation (FDIC).That’s more than the average checking account rate of 0.08%. By comparison, money market accounts have a rate of 0.68%.
If you’re wondering, “what is a good interest rate on a savings account,” keep in mind that the rate can change. For instance, rates were even lower in 2021 and 2022.
Now that you know what the typical rate is currently for a traditional savings account, when you’re choosing a savings account, you may want to look for one that pays as high of a rate as possible while delivering the features that are most important to you.
How the National Average Savings Rate Is Calculated
The national average savings account rate is the national average that includes all banks insured by the FDIC. The average is weighted by each bank’s share of domestic deposits. This matters because some of the country’s largest banks have savings account rates that are even lower than the current national average.
It’s also important to note that savings account interest rates usually rise and fall with rates set by the Federal Reserve. Generally, when the Fed slashes interest rates, APYs on savings accounts fall. When the Fed raises interest rates, savings accounts tend to have higher yields.
Earn up to 4.00% APY with a high-yield savings account from SoFi.
No account or monthly fees. No minimum balance.
9x the national average savings account rate.
Up to $2M of additional FDIC insurance.
Sort savings into Vaults, auto save with Roundups.
APYs at Big Banks
Here are the APYs for traditional savings accounts at some big banks in the U.S. as of May 7, 2024.
Bank*
APY
Capital One
4.25%
TD Bank
0.02%
Chase
0.01%
Bank of America
0.01%
Wells Fargo
0.01%
U.S. Bank
0.01%
*May not reflect regional variances or balance tier options.
Recommended: Plug in the APY percentages above into the APY calculator below to see how they compare.
How to Get a Higher Interest Rate for a Savings Account
There are two main ways to earn a higher interest rate on a savings account: with a high-yield savings account or by linking your checking and savings accounts.
High-yield Savings Accounts
High-yield savings accounts offer interest rates that are considerably higher than the national average. These accounts are usually available at online banks as well as some traditional banks and credit unions. However, the online savings account typical interest rate is generally higher than the rates at bricks and mortar institutions.
The benefit of these types of high-yield accounts for savings is that you can generally earn more than 3.00% APY on your money, which is a good rate for a savings account in comparison to the national average rate.
Money held in a high-yield savings account is usually FDIC-insured, meaning your money is protected in the event of a bank failure up to $250,000 per depositor and per ownership category. This generally makes them a good place to set aside extra cash for an emergency fund or to meet short-term savings goals.
If you have a checking account at a bank, you might be able to increase your interest rate by opening a savings account at the same institution. Some banks will offer a higher interest rate if you have both a checking and a savings account with them and link the two.
Although savings rates on linked accounts are typically higher, everything is relative. Opening a linked account might allow you to increase your savings APY from 0.01% to 0.02% or 0.03%. Banks might also increase the rate a bit more with higher account balances.
Common Requirements to Receive a Higher Interest Rate
• Account minimums: You may need to make a high initial deposit in order to open a high-yield savings account. Additionally, you might be required to keep a certain balance in the account.
• Direct deposit: You may have to set up direct deposit for a high-yield savings account. In many cases, you can only deposit money by electronic bank transfer.
• Limited withdrawals: Some banks impose a monthly withdrawal limit on savings accounts. For instance, they might not allow you to make more than six withdrawals a month, otherwise they may charge you a penalty. Inquire at your bank to find out their specific policy.
How Will Savings Rates Change Throughout 2024?
It’s impossible to know exactly how the savings rate might change during the rest of 2024. That will depend in part on whether inflation rises and how the Federal Reserve responds to keep inflation in check. In general, if the Fed cuts interest rates, savings rates may be reduced as well. If the Fed raises rates, the savings rates might go up.
Currently, many high-yield savings accounts offer rates above 3.00% APY. By taking time to shop around and find the right fit, you may be able to find the right savings vehicle to help you save for the future — and earn money while doing so.
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 is the interest rate on a traditional savings account?
According to the FDIC, as of August 19, 2024, the current national average deposit rate for savings accounts is 0.45% APY as of October 21, 2024.
What is considered a high-interest savings account?
High-interest savings accounts typically offer interest rates many times the national average. For instance, currently, these accounts generally offer 3.00% APY or higher. While high-yield savings accounts may be offered at traditional banks and credit unions, the highest rates are often offered at online banks.
Is 5.00% a good savings rate?
Yes, 5.00% is a good savings rate. It’s much higher than the current national average deposit rate for savings accounts, which is 0.45% APY as of October 21, 2024.
How much interest does $10,000 earn a year?
How much interest $10,000 earns in a year will vary depending on several factors, such as the interest rate and how often interest is compounded. Assuming a 3.00% APY, $10,000 compounded annually earns $300 in interest in a year. Compounded daily, the same interest rate earns approximately $304 in a year.
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4.00% APY
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Life can be unpredictable, and financial setbacks can crop up at any time — whether that’s a job loss, medical or dental bills, a fender bender, or a major appliance that suddenly stops working.
That’s why it’s important to have an emergency fund. An emergency savings fund is a lump sum of cash set aside to cover any unanticipated expenses or financial emergencies that may come your way.
Besides offering peace of mind, an emergency fund can help save you from having to rely on high-interest debt options. These include credit cards or unsecured loans which can snowball. Not having rainy-day savings can also threaten to undermine your future security if you wind up tapping into retirement funds to get by.
Key Points
• An emergency fund is a financial safety net that can be used for unexpected expenses, for financial emergencies, or in the event of income loss.
• Financial professionals generally advise having three to six months’ worth of living expenses in your savings account.
• An emergency fund may prevent you from going into debt, provide funds during unemployment, give you the space needed to make better financial decisions, and provide peace of mind.
• To begin building an emergency fund, it can help to start with a smaller goal, such as $1,000.
• Using a high-yield savings account and automating contributions to the account can help you gradually build up your emergency fund to the amount that’s best for your circumstances.
What Is an Emergency Fund?
An emergency fund is essentially a savings fund earmarked for emergency expenses—aka unplanned expenses or financial emergencies. A major home repair, like a leaking roof, is an example of an unplanned expense that needs to be dealt with right away. Losing a job is an example of a financial emergency that can cause a lot of stress if you don’t have an emergency fund to dip into to pay for necessities and bills.
If someone doesn’t have an emergency fund and experiences financial difficulties, they may turn to high-interest debt. For instance, they may use credit cards or personal loans to cover expenses, which can lead to struggling to pay down the debt that’s left in its wake.
You may be wondering just how much to keep in an emergency fund. Financial experts often recommend having at least three to six months’ worth of basic living expenses set aside in an emergency fund. That can be a lofty goal considering that one recent study showed that about half of all Americans would struggle to come up with $400 in an emergency scenario. And in SoFi’s April 2024 Banking Survey of 500 U.S. adults, 45% of respondents said they have less than $500 set aside in an emergency fund. It’s wise not to be caught short and to prioritize saving an emergency fund.
Recommended: Take the guesswork out of saving for emergencies with our user-friendly emergency fund calculator.
Earn up to 4.00% APY with a high-yield savings account from SoFi.
No account or monthly fees. No minimum balance.
9x the national average savings account rate.
Up to $2M of additional FDIC insurance.
Sort savings into Vaults, auto save with Roundups.
Why Do You Need an Emergency Fund?
With all of the bills that a person typically has to pay, you may wonder, “Why should creating an emergency fund be a top priority?” Here’s why: An emergency fund can be a kind of self-funded insurance policy. Instead of paying an insurance company to back you up if something goes wrong, you’re paying yourself by setting aside these funds for the future. Building this cushion into your budget can be a vital step in better money management.
How you invest emergency funds is of course up to you, but keeping the money in a high-yield savings account typically gives you the liquidity you need while earning some interest.
Having this kind of financial safety net comes with a range of benefits. Below are some of the key perks of having an ample emergency fund.
Preventing You From Going into Debt
Yes, there may be other ways to quickly access cash to cover the cost of an emergency, such as credit cards, unsecured loans, home equity lines of credit, or pulling from other sayings, like retirement funds.
Preventing debt is one of the most important reasons to have an emergency fund.
But these options typically come with high interest fees or penalties. Though there are many reasons for having an emergency fund, preventing debt is among the most important and enticing.
Providing Peace of Mind
Here’s another reason why it is important to have an emergency fund: Living without a safety net and simply hoping to get by can cause you to stress. Thoughts about what would happen if you got hit with a large, unanticipated expense could keep you up at night.
Being prepared with an emergency fund, on the other hand, can give you a sense of confidence that you can tackle any of life’s unexpected events without experiencing financial hardship.
Providing Finances During Unemployment
Applying for unemployment benefits, if you are entitled to them, can help you afford some of your daily expenses. Unfortunately, these payments are generally not enough to cover your entire cost of living.
If you have an emergency fund, you can tap into it to cover the cost of everyday expenses — like utility bills, groceries, and insurance payments — while you’re unemployed.
Starting an emergency fund also gives you the freedom to leave a job you dislike, without having to secure a new job first. Sometimes this can be the best move if you are stuck in a toxic situation.
Making Better Financial Decisions
Having extra cash set aside in an emergency fund helps keep that money out of sight and out of mind. Having money out of your immediate reach can make you less likely to spend it on a whim, no matter how much you’d like to.
Also by having a separate emergency account, you’ll know exactly how much you have — and how much you may still need to save. This can be preferable to keeping a cash cushion in your checking account and hoping it will be enough. In fact, 77% of the SoFi survey respondents who have a savings account said they use it specifically to save for emergencies.
Curious about how much other people have in their emergency funds? Or what percentage of Americans actually have a rainy-day account? Here are some recent research numbers to know:
• About 50% of people report having emergency savings.
• 23% have enough money to cover six months’ worth of expenses.
• 56% of Americans say they couldn’t cover a $1,000 emergency expense. And just 19% of people in SoFi’s report said they have between $1,000 and $5,000 in emergency savings.
• 26% of people overall have no emergency savings at all.
• 37% of those who earn less than $50,000 per year have no emergency savings at all.
• Less than half of people earning between $50,000 and $99,999 per year are comfortable with how much they have saved for a rainy day.
• More than half of Americans are concerned about the amount of their emergency savings.
How Do You Build an Emergency Fund?
One of the basic steps of how to start a financial plan is saving for emergencies. Stashing money aside for a rainy day is a vital part of financial health.
The good news is that starting an emergency fund doesn’t have to be complicated. These tips can help you get your emergency fund off to a good start.
• Set your savings target. The first step in building an emergency fund is deciding how much to save. The easiest way to do that is to add up your monthly expenses, then multiply that by the number of months you’d like to save (typically, at least three to six months). If the amount seems overwhelming, you can start smaller and aim to save $1,000 first, then build up your emergency fund from there.
• Decide where to keep it. The next step is deciding where to hold your emergency savings. Opening a bank account online could be a good fit, since you can earn a competitive APY (annual percentage yield) on balances while maintaining convenient access to your money. You could also choose to open a traditional bank account and use its online banking features. Forty-eight percent of people say they use online banking daily, according to SoFi’s data.
• Automate contributions. Once you set up an online bank account for your emergency fund, you can schedule automatic transfers from checking. This way, you can easily grow your emergency fund without having to worry about accidentally spending down that money.
One of the most frequently asked emergency fund questions is whether a savings account is really the best place to keep your savings. After all, you could put the money into a certificate of deposit (CD) account instead or invest it in the market. But there are issues with those options.
A CD is a time deposit, meaning you agree to leave your savings in the account for a set maturity period. If you need to withdraw money from a CD in an emergency before maturity, your bank may charge you an early withdrawal penalty.
So, should emergency funds be invested instead? Not so fast. Investing your emergency fund money in the stock market could help you to earn a higher rate of return compared to a savings account. But you’re also taking more risk with that money, since a downturn could reduce your investment’s value. Proceed with caution before taking this step.
How Long Does It Take to Grow an Emergency Fund?
Emergency funds don’t necessarily come together overnight. Saving after-tax dollars to equal six months’ worth of typical living expenses can take some work and time. Here’s an example to consider: If your monthly costs are $3,000, you would want to have between $9,000 and $18,000 set aside for an emergency, such as being laid-off.
• If your goal is $9,000 and you can set aside $200 per month, that would take you 45 months, or almost four years, to accumulate the funds.
• If you can put aside $300 a month, you’d hit your goal in 30 months, or two and a half years.
• If you can stash $500 a month, you’d have $9,000 saved in one and a half years.
A terrific way to grow your emergency fund is to set up automatic transfers from your checking account into your rainy-day savings. That way, you won’t see the money sitting in your checking and feel as if it’s available to be spent.
Next, we’ll take a look at how to accelerate saving for an emergency fund.
How Can You Grow It Faster?
You’ve just seen how gradually saving can build a cash cushion should an emergency hit. Here are some ways to save even faster:
• Put a windfall into your emergency fund. This could be a tax refund, a bonus at work, or gift money from a relative perhaps.
• Sell items you don’t need or use. If you have gently used clothing, electronics, jewelry, or furniture, you might sell it on a local site, such a Facebook group or Craigslist, or, if small in size, on eBay or Etsy.
• Start a side hustle. One of the benefits of a side hustle is bringing in extra cash; it can also be a fun way to explore new directions, build your skills, and fill free time.
These techniques can help you ramp up your savings even faster and be prepared for an emergency that much sooner.
Prioritizing Your Emergency Fund When You Have Other Financial Obligations
Most of us have competing financial goals: paying down student debt or a credit card balance; accumulating enough money for a down payment on a house; saving for college for kids; and socking away money for retirement. In many cases, you’ll see variability in financial goals by age, but there are often several needs vying for your dollars at any given time.
Here’s advice on how to allocate funds:
• Definitely start or continue saving towards your emergency fund. Even if you can only spare $25 per month right now, do it! It will get you on the road to hitting your goal and earning you compound interest. Otherwise, if an emergency were to strike, you’ll likely have to resort to credit cards or tapping any retirement savings, which probably involves a penalty.
• Continue to pay down high-interest debt, like credit card debt. You want to get this kind of debt out of your life, given the interest rates that currently sit between 15% and 19%. You might explore balance transfer offers that let you pay no or very low interest for a period of time (say, 18 months) which can help you pay down your debt.
• Steadily stick to your schedule for low-interest debt, which typically includes student loans and mortgages.
• Fund your retirement savings as much as you can. As with an emergency fund, even a small amount will be worthwhile, especially with the benefit of compound interest. Make sure to contribute enough to take advantage of the company match if your employer offers that as part of a 401(k) plan; that is akin to free money.
Banking with SoFi
If you’re looking for ways to save for an emergency and want your money to grow fast, why not open an online banking account with SoFi? When you start a Checking and Savings account with direct deposit, you’ll have automatic savings features at your fingertips, earn a super competitive APY, and pay zero fees. That’s what we call banking smarter.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.
FAQ
What is the purpose of an emergency fund?
An emergency fund is a financial safety net. It’s money set aside that you can use if you are hit with a big, urgent, unexpected bill (like a medical expense or car repair) or endure a loss of income. In these situations, an emergency fund can help you avoid using your credit cards and taking on high-interest debt or hurting your credit score by paying bills late. How to invest an emergency fund is up to you, but a high-interest savings account is one good, liquid option.
Can I use an emergency fund for a non-emergency expense?
Technically, you can use an emergency fund for a non-emergency expense. After all, it’s your money. But it’s not wise to do so and defeats the whole purpose of saving this cash. If you use your emergency funds to pay for a vacation or new clothes, then if a true emergency arises, you won’t be prepared.
How difficult is it to rebuild an emergency fund?
It can be difficult to rebuild an emergency fund, just as it was to accumulate the money in the first place. But even if it takes years to achieve your goal, it is worth it. Putting away money gradually for an emergency is an important step towards being financially fit.
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.
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