Nov
13
2024

Gift Cards vs. Prepaid Debit Cards

By | money, Terminology | Comments Off on Gift Cards vs. Prepaid Debit Cards

Both gift cards and prepaid debit cards are spending cards that are preloaded with a set amount of money and can be used to make purchases either online or in-store. However, there are some key differences: A gift card is usually a one-time spending card, while a prepaid card is a reloadable payment tool that offers many of the features of a checking account. They also differ in terms of cost, with prepaid cards generally charging more fees. Here’s a closer look at gift cards vs. prepaid cards and why you might choose one over the other.

Key Points

•  Gift cards are typically one-time use and often store-specific, while prepaid debit cards are reloadable and accepted widely.

•  Prepaid debit cards offer some of the same features as bank accounts, such as bill payments and ATM withdrawals.

•  Prepaid cards charge a variety of fees, making them more expensive than gift cards.

•  Prepaid debit cards provide better protection against loss, theft, or fraud than gift cards.

•  Gift cards are ideal for gifting, while prepaid debit cards are better suited for personal use.

🛈 Currently, SoFi does not offer prepaid debit cards or gift cards.

6 Differences Between Gift Cards and Prepaid Debit Cards

While both gift cards and prepaid debit cards allow you to make purchases without carrying cash, they differ in terms of where and how they can be used. Here’s how they compare:

•  Purpose: Gift cards are commonly used as a way to give someone money without handing them cash or writing a personal check, while prepaid cards are generally better suited for personal use.

•  Acceptance: Gift cards are often limited to a single retailer or chain of stores (though there are general-purpose gift cards). Prepaid cards are typically accepted at any business that accepts debit or credit cards.

•  Reloadability: Gift cards are typically not reloadable. By contrast, prepaid debit cards usually allow users to repeatedly add funds to the card in a variety of ways, such as depositing checks, transfers from a bank account, and cash reloads at participating retail locations.

•  Fees: A general-use gift card may have a one-time purchase fee (often $2.95 to $5.95). Some will also charge inactivity fees after a certain period of non-use, while others don’t. Store-specific gift cards typically don’t come with any fees. Prepaid debit cards, on the other hand, often have a variety of fees, including activation, monthly maintenance, and transaction fees.

•  Uses beyond shopping: Gift cards are typically limited to making purchases at retailers or for specific services. Prepaid cards offer more versatility. They can be used for bill payments, recurring transactions, and even ATM withdrawals, much like a traditional debit card linked to a bank account.

•  Security: If a gift card is lost or stolen, recovering the funds can be difficult (though you may have success if you have the gift card number or registered the card at the issuer’s site when you received it). Prepaid cards offer the ability to freeze the card or report it lost or stolen. Many prepaid cards also offer fraud protection, making them safer for regular use.

What Is a Gift Card?

A gift card is a preloaded card that contains a specific amount of money and is often intended for use at a specific store, chain, restaurant, or brand. There are also open-loop gift cards, like Visa or Mastercard gift cards, that can be used at a wide range of retailers and businesses. Once the funds on a gift card are gone, the card has typically served its purpose and can be disposed of. While there are some reloadable gift cards, they are not common.

Recommended: Can You Buy Gift Cards With a Credit Card?

Pros of Using Gift Cards

Great for gifting: Gift cards can show more thoughtfulness than simply giving cash, as they allow you to show the recipient that you were thinking of a specific store or restaurant that they like.

•  Encourages controlled spending: Since the balance is fixed, gift cards can help people stick to a budget and avoid overspending. This makes them a useful tool for children or teens learning about financial management.

•  No credit check needed: Gift cards do not require credit approval or personal information to purchase, making them accessible to everyone.

•  Discounts: Sometimes you can get a discount at a particular store by purchasing a gift card. For example, you may be able to buy a $50 gift card for $40, providing more bank for your buck.

•  No ongoing fees: Gift cards don’t have monthly fees.

Cons of Using Gift Cards

•  Limited use: Many gift cards are store-specific, which limits where they can be used. Even general-purpose gift cards may not be accepted everywhere.

•  Inactivity fees: Some gift cards come with inactivity fees if not used within a certain period, and certain cards may expire, making it important to read the terms and conditions.

•  No reload option: Generally, once the funds on the gift card are depleted, the card cannot be used again.

•  Minimal fraud protection: If a gift card is lost or stolen, recovering the balance can be difficult unless the card is registered, and even then, it can be a cumbersome process.

•  Leftover funds: You’re spending may not align with the exact amount of the card, leading to wasted funds. For example if you have a $75 gift card to a restaurant you don’t normally go to and spend $66, you still have $9 left on the card, which you may simply lose (unless you decide to eat there again, mostly on your own dime).

What Is a Prepaid Debit Card?

A prepaid debit card is a financial tool that allows you to load money onto a card and use it wherever debit cards are accepted. Prepaid debit cards can also serve as an alternative to a bank account, since they typically allow you to pay bills, make recurring payments, withdraw cash at ATMs, and accept direct deposits.

Prepaid cards are usually reloadable, allowing you to add money to the card via cash, checks, direct deposit, or a transfer from another account, before paying for purchases or making other transactions. Some cards also let you make mobile check deposits from a smartphone.

Pros of Using Prepaid Debit Cards

•  Widespread acceptance: Prepaid debit cards can be used almost anywhere that accepts debit or credit cards, making them more versatile than store-specific gift cards.

•  Reloadable: Prepaid debit cards are reloadable, allowing users to add funds as needed, which can make them a good choice for ongoing use or budgeting.

•  Fraud protections: Many prepaid debit cards come with protections similar to regular debit or credit cards, such as the ability to report a lost or stolen card and limited liability for fraudulent charges.

•  No credit risk: Prepaid debit cards are not linked to a credit line, so they don’t carry the risk of accumulating debt. You can only spend the money that is loaded onto the card, which can be ideal for those who want to avoid credit cards.

•  Alternative to a checking account: Prepaid debit cards can be helpful for those who are unbanked — either by choice or because they are unable to open a bank account. These cards allow you to receive payments from employers, withdraw cash at ATMs, and spend without worrying about carrying cash.

Cons of Using Prepaid Debit Cards

•  Fees: Prepaid debit cards often come with a variety of fees, including activation fees, monthly maintenance fees, ATM withdrawal fees, and reload fees. These costs can add up, especially if the card is used frequently.

•  Limited features compared to bank accounts: While prepaid debit cards offer more flexibility than gift cards, they still lack many of the advantages of having a traditional bank account, such as interest earnings or extensive customer support.

•  Limited rewards: Though some prepaid cards offer cash back, they typically don’t offer as many rewards and perks compared to traditional debit cards and credit cards.

•  Won’t help your credit: Since prepaid debit cards are not linked to a credit line, they do not help build credit. If you’re looking to improve your credit profile, you may be better off with a secured credit card or traditional credit card.

•  Cash access can be costly: Some prepaid debit cards offer a network of fee-free ATMs, but others charge fees any time you make a withdrawal. Some cards also charge for balance inquiries or reloads, making cash access expensive over time.

Recommended: How to Deposit Cash at an ATM

The Takeaway

Understanding the differences between gift cards and prepaid debit cards can help you make the right choice. Gift cards can be a great choice for one-time use or gifting, offering simplicity and spending control. However, they may be limited in terms of where they can be used and usually cannot be reloaded. Prepaid debit cards offer greater flexibility, the ability to reload, and more security features. This makes them better suited for longer-term budgeting and everyday spending. However, their associated fees can be a drawback. And if you’re considering them as an alternative to a bank account, you might be missing out on some key perks.

FAQ

Can I use a gift card like a debit card?

Gift cards can be used like a debit card in some ways, but they have limitations. A general-purpose gift card (e.g., Visa or Mastercard) can be used wherever that card brand is accepted, similar to a debit card. Unlike a prepaid debit card, however, a gift card typically isn’t reloadable. You also can’t use a gift card to access cash at an ATM, pay recurring bills, or accept direct deposits.

Do prepaid debit cards have fees?

Yes, prepaid debit cards often come with various fees. Common fees include activation fees, monthly maintenance fees, ATM withdrawal fees, and reloading fees. Some cards may also charge for balance inquiries, declined transactions, or inactivity.

Some prepaid cards have lower fees if you meet certain conditions (such as setting up direct deposit) but generally, these cards come with more costs compared to traditional debit cards or gift cards.

Why do people prefer gift cards over cash?

There are a number of reasons why people might prefer gift cards over cash. Gift cards can feel more personalized than cash, especially if they are for a specific store or brand that the recipient enjoys. Gift cards can also be safer than giving cash, since they can sometimes be replaced if lost or stolen. In addition, some retailers offer gift card promotions, which make them a better value than paying cash.

How much money can you put on a prepaid card?

The amount of money you can load onto a prepaid debit card depends on the card issuer and specific card type. Generally, prepaid cards allow loads anywhere from $5,000 to $100,000. It’s important to check with the card issuer for specific rules regarding load amounts and any associated fees.

Photo credit: iStock/Drazen Zigic

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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 .

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Nov
08
2024

What Is a Bad Check?

By | Financial Topics, Terminology | Comments Off on What Is a Bad Check?

A bad check is a check that cannot be paid since it’s written on a non-existent account or there are insufficient funds to cover the amount.

When someone writes a check, they are making a promise to the recipient that they can present the check at a bank or other financial institution and withdraw the amount of money stated on the check’s face. A bad check can’t fulfill that obligation.

It is typically illegal and considered fraud to knowingly write a bad check. Even if done unintentionally, though, it can harm your personal finances and banking relationships. Learn more about this facet of personal banking here.

Key Points

•   A bad check is one that cannot be paid due to insufficient funds or its being drawn on a nonexistent account.

•   Writing a bad check knowingly is illegal and considered fraud.

•   Bad checks can lead to bank fees, other penalties, and legal consequences, in some cases.

•   Check depositors may wish to verify checks and use the issuing bank for cashing them to prevent bounced checks and ensure they’re not fraudulent.

•   Writing bad checks can harm banking relationships, trigger fees, and lead to an account being closed.

Defining a Bad Check

A bad check is one that is written against a nonexistent checking account or against one that does not have sufficient funds to make the check good.

Types of Bad Checks

There are two main types of bad checks:

•   A bad check can reference a nonexistent bank or bank account. This may be due to such scenarios as checks printed with an incorrect bank routing number, an incorrect account number, or both. Or it might indicate that the account information was once valid, but now the account is closed. Or this could be an intentional act of bank fraud, with invented account information.

•   A check may reference a valid account and routing number, but the bank account may not have enough money in the account to be processed (also known as making the check good).

How Banks Process Checks and Detect Bad Ones

When a bank processes a check, they may not make all of the funds available to the depositor immediately. Usually, a financial institution must make the first $225 available the next business day and often clears the rest on the following business day. But sometimes it can take longer for the rest to clear. This can be true especially when depositing a check to a new bank account or for a larger amount (specifically, more than $5,525). Instead, it may take a few business days or longer before the checks clear and the entirety of the check amount is available.

Banks take this time in order to make sure that the check will clear, meaning that there are sufficient funds in the account of the checkwriter.

Recommended: 7 Tips to Managing Your Money Better

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Reasons Why Checks Bounce

There are a few reasons why checks might bounce — here are a few of the most common:

Insufficient Funds in the Account

One of the most common reasons why a check might bounce is that there are insufficient funds in the checking account. You might have $1,000 in your account and think you have sufficient funds to write a check for $600. But if a $500 autopay posts to your account in the meantime, it will lower your available balance to $500, causing your $600 check to bounce when it is presented.

Errors in Check Writing

Another possible reason that a check might bounce is due to an error when writing the check. Knowing how to write a check may not be something many people (especially younger consumers) are familiar with. An error in the amount of a check can cause it to bounce due to incorrect information.

Typically, checks are preprinted with the account and routing details, but filling in the wrong amount or forgetting to sign a check (rendering it invalid) can cause problems.

Fraudulent Checks

Sometimes, bad checks occur in a premeditated way. There are criminals who intentionally write bad or fraudulent checks. They might write a check that they know will eventually bounce in order to access goods and services without actually paying for them.

Or they might have multiple bank accounts, and write a check to themselves, in the hopes of being able to cash it before the bank notices that it bounces. This kind of activity is often referred to as check kiting.

Bank Fees and Penalties

If you write a bad check and it is returned to your account for insufficient funds, your bank may assess a non-sufficient funds (NSF) fee to your account. These fees can be quite significant, up to around $35 per bad check. If this is the first time you have written a check that’s been returned and you’ve otherwise been a model bank customer, you may be able to contact your financial institution and request a one-time waiver of such a fee. In addition, if the check was, say, written to a merchant, they may charge you a returned check fee of $20 to $40 for the inconvenience.

Another possibility: The bank might cover the check for you (meaning they allow the check to clear, essentially loaning you funds so it doesn’t bounce) and charge you an overdraft fee.

Legal Implications and Potential Criminal Charges

It is unlikely that you will be criminally prosecuted for unintentionally writing a bad check. However, knowingly doing so is a crime, which might have legal implications. To avoid risking jail time or criminal or civil fines, do everything possible to avoid writing a bad check.

Impact on Your Banking Relationship and Credit Score

If your account balance is habitually low and you often find yourself unintentionally writing bad checks, your bank may terminate your checking or savings account.

Your bank may also report this information to consumer reporting services such as ChexSystems and/or Early Warning Services (EWS). These are similar to credit-reporting bureaus, but they keep tabs on banking behavior. Negative remarks on your banking history could mean you will have a difficult time accessing banking services in the future.

These agencies typically do not report to the credit bureaus so you should not see an impact on your credit score, however.

Worth noting: Depositing bad checks (vs.writing them) can also lead to consequences, such as a bank freezing or closing your account due to suspicious activity.

What to Do if You Write a Bad Check

If you unintentionally write a bad check, you’ll want to take some steps immediately or as soon as possible. If the check has not been cashed yet, contact the check recipient and request that they not try to deposit the check, and make alternate plans for them to receive their funds.

If, on the other hand, your check bounces without you realizing it, you may need to contact the recipient of the check after the fact to make amends.

Receiving a Bad Check: Steps and Precautions

There are a few things you can do if you receive a check that you suspect may bounce.

How to Verify a Check’s Validity

One thing that you can do when receiving a check is to verify the check. This can mean inspecting the check for any obvious irregularities. For instance, routing numbers are nine digits long. If a check has a longer or shorter one, the document could be fraudulent. There should be no signs of tampering with the signature or the amount on the face of the check. Most checks have the bank’s logo featured, and they may spell out security features on the back.

If the check is written against a bank that has physical branches near where you live, you can usually go into the branch and ask the teller if the account has sufficient funds to clear the check. That way, you’ll know that the check can clear before attempting to deposit or cash it. You may also be able to phone the issuing bank’s customer service for verification. (Tip: If a phone number for the bank is printed on the check, don’t use it. Instead, search online for the official phone number for the bank, just in case the check is fraudulent.)

Protecting Yourself From Check Fraud

As you read a check, one thing you can do to protect yourself from potential check fraud is to only cash a check at the bank that it is written against. The issuing bank would be able to see the available balance in the check writer’s account and know whether the check will bounce.

If you’re not able to cash the check at the issuing bank, another option is to contact the issuing bank’s customer service department, as noted above, to see if the check will clear. While banks will not typically give you the account balance of a customer, they may be able to tell you if a check will clear.

Recommended: APY Interest Calculator

The Takeaway

A bad check (sometimes also known as a hot check or a fraudulent check) is a check that is unable to be cashed or deposited. This might be due to incorrect information on the check or due to there being insufficient funds in the issuing account, which can make it bounce. If you write or receive bad checks, your bank may assess you fees and/or even close your account. If you regularly or intentionally write bad checks, you may also be subject to civil litigation and/or criminal prosecution.

If you’re looking for a secure bank account that helps you manage your money better, see what SoFi offers.

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 3.80% APY on SoFi Checking and Savings.

FAQ

Can I go to jail for writing a bad check?

Yes, intentionally writing a bad check is a crime, typically a misdemeanor, but in some cases, it can be a felony. Depending on the circumstances, it is possible to go to jail for writing a bad check. However, if you have never written a bad check before and/or it was not intentional, you are probably unlikely to go to jail for writing a bad check, although your bank may assess you a fee and/or close your account.

How long does a bad check stay on your record?

If your bank reports negative account information to ChexSystems and/or Early Warning Systems (EWS), writing a bad check can stay on your record for five years. This is another reason to do everything you can to avoid writing bad checks, even unintentionally.

What’s the difference between a bad check and a fraudulent check?

A bad check and a fraudulent check can refer to the same thing. Both can describe a check that is drawn on a nonexistent account or on one with insufficient funds to cover the check’s amount. However, a bad check could refer to one that’s unintentional while a fraudulent check could be written on purpose and therefore be considered criminal activity and have consequences. Another term for this type of check is a hot check.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.


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.

This article is not intended to be legal advice. Please consult an attorney for advice.

photocredit: iStock/bluestocking
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2024

AI Budgeting Tools: Personal Finance Management

By | Budgeting & Goals, Terminology | Comments Off on AI Budgeting Tools: Personal Finance Management

As artificial intelligence (AI) has become more and more prevalent, people are finding increasingly innovative ways to use the power of AI in their daily lives. That includes personal finance: AI is now being used in tools that can help with budgeting by tracking earnings, spending, and saving; noticing patterns; and finding ways to help users manage their money better.

AI budgeting tools may help some people create and stick to a budget. Learn more about how this kind of financial help might benefit you, but remember that AI is only one of many tools available. Ultimately, you are in charge of your budget and your financial future.

Key Points

•  AI budgeting tools provide personalized tracking and insights by analyzing spending patterns and offering recommendations to help users manage their finances effectively.

•  These tools automate transaction categorization and utilize predictive analysis to assist users in achieving their financial goals.

•  AI budgeting tools cater to all income levels, offering perspective and guidelines for effective financial management.

•  Popular apps like Rocket Money, YNAB, Buddy, Cleo, and Copilot Money use AI to enhance budgeting features.

•  Privacy and security are essential when using AI budgeting tools; users should understand data usage and opt for multi-factor authentication.

What Are AI Budgeting Tools?

An AI budgeting tool can mean several different things. Many existing budgeting apps have started using artificial intelligence (AI) to enhance their offerings. This can include helping users to automatically categorize transactions or manage cash flow. AI can also use predictive analysis to help you see the path you are on for hitting certain financial goals, such as saving for a down payment on a house perhaps or eliminating credit card debt.

How AI Enhances Traditional Budgeting Methods

There are many different components of a budget, and AI tools can help with many of them. AI can look at your past spending history, analyze it, and provide insights on your upcoming monthly cash flow. AI can also give you personalized recommendations on how your spending compares to other people in similar situations. That can help you identify areas where you can improve your monthly savings.

Recommended: How to Make Money From Home

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $3M of additional
FDIC insurance.


Key Benefits of AI Budgeting Tools

There are also many different ways to make a budget, and an AI budget maker can help with the process. Here are four of the top benefits of AI budgeting tools:

•  Real-time tracking — You can connect your bank accounts, credit card, and other financial accounts, allowing AI to analyze your spending. This can give you real-time insights into how your money is coming and going.

•  Automated categorization — Along with tracking your spending in real time, AI can categorize your spending, which can be helpful if you, say, think in terms of a 50/30/20 budget rule. In this case, that means keeping your needs to 50% of your take-home pay and wants to 30%, while saving accounts for the remaining 20%.

•  Personalized insights — In addition to categorizing your spending and tracking your ongoing cash flow, AI can help with personalized insights about your spending. As the AI assistant learns about your spending, it can provide you with actionable information to help you improve your budget. This can be a valuable way to see if certain behaviors (such as getting take-out meals) are shifting and blowing your budget.

•  Predictive analysis — One of the biggest benefits of using an AI budget creator is that it can help predict events before they happen. This might include when you’re at risk of going over budget in a particular category or when you might need to deposit or transfer additional money to not overdraft your account.

In these ways, AI can add both tracking and insights to your financial oversight, allowing you to make the most of your money and help it grow.

Popular AI Budgeting Tools in the Market

Many budgeting and personal finance websites and apps are starting to include AI budgeting tools as part of their platform. Your bank may offer such tools as well. Just as there are various types of budgets, there are an array of apps to choose among. Here are a few apps that include some level of AI in their offerings:

•  Buddy: With the goal of financial peace of mind, this app aims to help you budget, lower bills, increase savings, and otherwise maximize your money. It offers both a free and a premium paid version.

•  Cleo: Using chatbots, emojis, and gifs to bond with users, Cleo offers a range of tools to take control of your money, including budgets, saving strategies, and credit-building options. Cleo is free, with an array of paid subscription options to access more features.

•  Copilot Money: This app uses AI as it tracks your spending, budgeting, investments, and net worth. This is a paid subscription app but often offers the first month for free.

•  Rocket Money: This app focuses on saving you money by identifying and dropping unwanted subscriptions; it can also help your wallet thanks to its tracking tools. The basic version is free; paid premium versions are available.

•  YNAB: Short for “you need a budget,” YNAB is based on the envelope system, a budgeting method in which every dollar has a job and is assigned to a specific spending or saving category. YNAB is a paid subscription service, but it often offers a free trial up front.

It may be a good idea to experiment with a few different apps to find one that has the features that you’re looking for at a price that you’re comfortable with. When it comes to living on a budget, some of these tools may suit your lifestyle and financial needs better than others.

Privacy and Security Considerations

It’s important to be thoughtful about sharing your personal data as you consider these apps. One common mistake when budgeting can be sharing your sensitive financial information with the wrong (or too many) people. While AI and other tools can help you with your budget, understand that once you share your financial information with any company or service, you have given up some control over your data.

The vast majority of popular companies have industry-standard security and privacy policies, but that doesn’t mean that they are immune to security breaches that can lead to bank fraud. Opting into multi-factor authentication (MFA) is often a smart move.

Make sure you read the privacy policies and terms and conditions of any service that you use, so you understand how your data is being used and stored. Make sure that you are comfortable with these privacy and security considerations before sharing your financial data with any company.

Recommended: 39 Passive Income Ideas

The Takeaway

Artificial Intelligence (AI) is increasingly being used in personal finance, including budgeting apps. These tools can help you with money management by providing personalized insights, real-time tracking, automated categorization, and predictive analysis. Some of these apps are free, often with paid premium features, and others charge a subscription fee. While AI may not be able to completely replace or automate your budget, using it as a tool may help you strengthen your overall financial picture.

In addition to third-party budgeting apps, consider what SoFi offers to help you manage your money better.

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 3.80% APY on SoFi Checking and Savings.

FAQ

How accurate are AI budgeting predictions?

AI budgeting predictions are only as good as the programming of the AI as well as the data that is fed into it. If you only have a few weeks of financial transaction data, an AI tool may not be able to give you particularly useful information. On the other hand, if you have months or years of financial information to input into an AI, it may be able to provide you with useful tips for living on a budget

Can AI budgeting tools replace financial advisors?

There are an array of budgeting methods, and AI can help with many of them. However, AI budgeting tools operate very differently vs. financial advisors. At this point, they are a form of technology that are unlikely to offer the insights of a finance professional. A financial advisor is someone you can forge an ongoing personal relationship with. You can plan your longer-term strategic goals and discuss any changes and obstacles you encounter along the road. AI budgeting tools may be better suited for helping you with your day-to-day budget.

Are AI budgeting tools suitable for all income levels?

AI budgeting tools can be used for people of all income levels. It’s important to understand that these tools, like budgeting itself, are only a technique that can help give you perspective on and guidelines for your money. You are still in charge of your budget and overall financial picture, and it can be a good idea to use AI as well as other tools to help you improve your finances.

Photo credit: iStock/VioletaStoimenova

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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2024

How Long Does a Debit Card Refund Take?

By | Life & Career, Terminology | Comments Off on How Long Does a Debit Card Refund Take?

While it only takes a moment to swipe or tap a debit card when making a purchase, debit card refunds are not as fast: They typically take between one and 10 business days or even longer.

Debit card refunds can be a common occurrence: Perhaps you used your card to buy laundry detergent but you bought the wrong variety. Or maybe you purchased an item online that arrived damaged.

There are a number of different factors that impact how debit card refunds work. Understanding the debit card refund process can help you know what to expect, and most importantly, when to expect the money to go back into your bank account.

Key Points

•  A refund on a debit card typically takes one to 10 business days, influenced by merchant and bank processing times.

•  Accurate information expedites refunds; incorrect details can cause delays or processing issues.

•  Delays can occur due to merchant processing, incorrect information, and technical difficulties.

•  Contact the merchant first if a refund is delayed, then check with your bank.

•  International debit card refunds can take longer due to multiple processing networks and potential fraud checks.

Understanding the Debit Card Refund Process

One important debit card fact is that refunds don’t usually go through instantly, despite how quick purchase transactions can be with these cards. If you expect the money to be credited to your account immediately (as it could be with a cash refund), you may be disappointed. And depending on how you are managing your cash flow, you could risk overdraft fees if you expect the funds to quickly land back in your bank account.

The most important thing to understand is that your financial institution (whether you do online banking or the traditional kind) cannot issue an immediate refund to your account. Instead, they must wait for the merchant to initiate the refund. Generally, once you request a refund, the merchant will approve it, and then they will alert their bank to issue a refund to your bank.

Each one of these steps can take a few business days, which is why the overall debit card refund process can take up to 10 business days or longer.

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No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

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Factors Affecting Refund Processing Time

There are several factors that can affect how long it takes for a refund on a debit card to arrive at your checking account.

•  Merchant delays: Depending on how you request your refund and which merchant is processing the refund, it may take a couple of business days for your refund to even be initiated. There may also be delays in the processing between the merchant’s bank and your bank.

•  Debit card processing: Your debit card processing network (such as Visa or Mastercard) will have its own schedule and system for refunds. This could potentially slow down your refund. There also could be a slowdown with the merchant’s network.

•  Incorrect information: One of the biggest factors that can delay your debit card refund is if you provide incorrect information to the merchant. Make sure that your refund request has your proper name and bank account details to facilitate a prompt refund.

•  Technical difficulties: There could be technical delays or difficulties. For instance, there might be an abnormally large number of refund requests at a given time. This can increase debit card refund processing time.

•  Payment authorization: It’s important to understand that when you make a purchase, it may take a few business days for the merchant to actually receive your money. If you make a refund request before the merchant has obtained your money, your refund will likely have to wait until after that initial charge has been posted.

•  Fraud checks: A refund request for an unusually large charge may be delayed while the bank checks to make sure that both the charge and the refund request are valid and not a kind of bank fraud. This process can also affect international debit card refund requests, which may take a bit longer than domestic refunds.

Understanding these forces can help explain how long a debit card refund takes to be completed.

Recommended: APY (Annual Percentage Yield) Calculator

Tips to Expedite Your Debit Card Refund

Here are a few ways you may be able to speed up a debit card refund:

•  Be accurate. One of the most important things that you can do to expedite your debit card refund is to provide accurate information to the merchant when you request the refund. This may include your name, address, contact information as well as your bank account routing and account information. If you provide incorrect information, that can delay your refund or even cause the merchant to not be able to process your refund.

•  Follow up. If several business days have passed and you have not received an expected refund, a good next step can be to check in with the merchant again and request information on where the transaction stands. You may be able to track the status of your refund request online, or you may have to call the merchant directly.

•  Check with your bank. If the merchant says that your refund has been processed but you still haven’t seen it post to your account, contact your financial institution to see if they can track the status of your refund. They may help move the transaction forward; they might contact the payment processor for details on the debit card refund’s status.

By following this sequence of steps, you may be able to speed up a debit card refund.

What to Do If Your Refund Is Delayed

As noted above, if your refund is delayed, the first step is to reach out to the merchant. They may be able to verify your refund information and update your refund status. You can also reach out to your bank to see if they can track your debit card refund.

It’s also good to understand that international debit card refunds can take longer still than domestic, due to cross-border processing times.

Though delays in debit card refunds can undoubtedly be frustrating, know that sometimes security measures are the root of the slowdown. The silver lining is that your personal finances are being protected as your refund makes its way back to you.

Recommended: 7 Tips to Managing Your Money Better

The Takeaway

The time frame for how long a debit card refund takes is usually anywhere from one to 10 business days, depending on a number of factors. These include the amount of time it takes for the merchant to process the refund and for both your bank and the merchant’s bank to move the money. There can also be delays due to technical issues and a high volume of transactions. If it’s been several business days and you haven’t seen an expected refund, first check with the merchant. If you don’t get a satisfactory response, check with your bank to see if they can track and expedite your debit card refund.

If you’re looking for a bank account with a debit card and loads of other great features, see what SoFi can offer.

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 3.80% APY on SoFi Checking and Savings.

FAQ

Do credit card refunds process faster than debit card refunds?

No, actually credit card refunds usually take longer to process than returns with cash or debit cards. They typically take between five and 14 business days, versus one to 10 for a debit card refund. However, purchases that you make with a credit card may afford you more protections (such as protection against unauthorized charges) than those made with debit cards.

Can I track my debit card refund status?

It can sometimes be difficult to accurately track the status of your debit card refund. You may be able to track your refund on the merchant’s website (if they provide that service). However, that may only show when the merchant authorized the return. Another option would be to look at your online banking account or talk to your bank’s customer service department. If your debit card refund is delayed, you might reach out to the merchant and then your bank for updates.

How do international refunds differ from domestic ones?

International debit card refunds work in a similar fashion to domestic debit card refunds and may take the same amount of time: up to 10 business days. However, they may take considerably longer; international banking transactions may have to route through multiple processing networks. Additionally, some banks may flag international debit card refunds as potentially fraudulent, leading to further delays as they ascertain if they are valid.

Photo credit: iStock/Hispanolistic

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.


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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08
2024

What Are Uncollected Funds (UCF)?

By | Terminology | Comments Off on What Are Uncollected Funds (UCF)?

Uncollected funds are checks or other deposits made to an account that have not yet been paid by the issuing bank. These funds may show up in your account, but usually as pending. That lets you know that the check has been received by your bank but has not fully cleared. Your bank must make sure that the money is received from the issuing bank before you can access it.

If you deposit a large check, your bank may make some of those funds available immediately, while holding onto the remainder of the amount of the check. If you try to access funds from a recent deposit that are still pending, you may be assessed an uncollected funds (UCF) fee. Learn more about how uncollected or pending funds work.

Key Points

•   Uncollected funds are deposits not yet paid by the issuing bank, appearing as pending in your account.

•   Banks may hold a deposit to ensure the issuing account has sufficient funds to cover it.

•   UCF fees are charged for accessing pending funds and, similar to NSF fees, may be about $30 to $40.

•   While deposits typically clear on the second business day, Regulation CC allows banks to extend their hold on deposits in certain cases.

•   To avoid UCF fees, consider maintaining a cash cushion, setting balance alerts, and scheduling payments strategically.

What Does an Uncollected Funds Hold Mean?

When you deposit checks to your bank account, the entire amount of the check may not be available to you immediately. This is especially true if the check is large or if you don’t have an established relationship with your bank. (Say, you opened your account less than a month ago.)

Because it usually takes a couple days for a check to clear, banks typically hold onto at least some of the funds for a brief period of time. This makes sure that the account on which your check is drawn has sufficient funds to pay the check.

The Expedited Funds Availability Act (also referred to as Regulation CC) specifies the details of these uncollected funds holds. Here are typical timelines for checks to clear:

•  Checks issued by the government, drawn on the same financial institution as the payee’s account, cashier’s checks, and certified checks typically clear by the next business day.

•  Most other checks take two business days to clear.

•  Some checks, such as ones deposited to a relatively new bank account, could take up to five business days to clear, or longer in some cases (such as if there’s reason to believe the check might be uncollectible from the paying bank or if the check has been redeposited).

Worth noting: Typically, a financial institution must make at least the first $225 of a check available the next business day.

If you write a check or use your debit card to access pending money in your account, you may be charged an uncollected funds (UCF) fee. Here’s why: The money is not yet part of your available balance. This may occur even if the check is valid and eventually clears. The timing lag reflects how financial institutions operate.

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Advantages of Uncollected Funds

Here are some important ways that uncollected funds could benefit you.

Protection Against Fraud

While the delay in being able to access your money may seem frustrating at times, one advantage is that it can help prevent mobile banking check fraud and other forms of fraud. Having a delay between the time a check is presented to a bank and when the funds are made gives banks the time to verify and process checks.

Keeping the Banking System Safe and Affordable

In addition to helping protect individuals against fraud, this period of time also helps strengthen the overall banking system. If funds from presented checks were immediately available for withdrawal, it would likely increase the amount of people writing bad checks (which may be known as check kiting), which would drive up overall banking costs for everyone.

Helping You Manage Your Money

Knowing that you may be assessed an uncollected funds charge if you try to use pending funds may help you manage your money better. It’s a good idea to keep a small cushion of money in your checking account if possible. This can help ensure that you don’t need to rely on recently deposited money to pay your bills or make your usual transactions.

Disadvantages of UCF

Next, consider the potential downsides of uncollected funds.

Delay In Accessing Your Money

Probably the biggest disadvantage or frustration with the process of clearing a check is that it delays when you have access to your money. Say, a check representing passive income arrives or you receive a rebate, and you wonder when the funds will be available. This can be an especially challenging situation when you are counting on the money to make a different transaction.

Uncertain Delays

Pending funds may be frustrating to bank customers, and one of the biggest disadvantages is the potentially uncertain length of the delay. Again, checks will typically clear within two business days, and some may clear on the same business day, such as those that are a cashier’s check or a check written on a different account at the same bank.

Other checks may take several days or longer, depending on the bank and/or the amount of the check. For instance, certain ATM deposits and checks that raise reasonable causes for concern can take a longer period of time.

While typically no more than five business days should pass between when a check is deposited and when it’s made available, there are exceptions. If there’s a weekend in the middle of those days, that can mean a more significant wait. In addition, there can be cases in which Regulation CC permits financial institutions to add a “reasonable delay” (which could mean additional business days) for checks.

This can make it difficult to plan for when and how to cover your other expenses. Few people would want to have pending funds in their bank account when they need to pay their rent or go grocery shopping.

Fees for Uncollected Funds

Say you do try to spend against pending funds. In addition to the transaction not going through, there could be a steep fee. The amount of a UCF fee can vary depending on the bank, but they generally are around $30 to $40, similar to the amount of a non-sufficient funds (NSF) fee.

You might want to check what your bank charges, and be vigilant about not spending funds until you are sure the money is available. That can help you avoid incurring fees.

Recommended: Guide to Check Verification

Difference Between Insufficient and Uncollected Funds

Another kind of fee that many banks charge for accessing funds is called a non-sufficient funds fee, often referred to as an NSF fee. (An NSF fee is similar to, but slightly different from, an overdraft fee. With an NSF fee, the transaction doesn’t go through; with an overdraft fee, the bank covers the shortfall so the transaction can be completed.)

While UCF fees and NSF fees are similar (and usually a similar amount), there are a few key differences:

•  Non-sufficient funds (NSF) fee: A fee charged for accessing funds greater than your total balance. For example, if your checking account balance is $300 and you write a check for $500, you may be charged an NSF fee.

•  Uncollected funds (UCF) fee: This uncollected funds charge is assessed for trying to use funds that are still pending, usually from a recent check deposit. If your checking account balance is $300 and you deposit a check for $600, your available balance may still only be $300, until the check clears. If you write a check for $500, it may not go through and you may be assessed a UCF fee.

How to Avoid UCF Fees

Just like avoiding overdraft fees, there are a few simple ways to avoid UCF fees.

•  One is to maintain a small cash cushion in your account. This helps ensure that even if you don’t have access to the full amount of recently deposited checks, you can still pay your bills.

•  Another strategy involves setting up balance alerts or regularly checking your balances to make sure you can cover withdrawals or payments without risking UCF fees.

•  You might also schedule your payment dates strategically. For instance, your credit card company might be willing to move your payment due date to better sync with your payday schedule, so you aren’t sitting and worrying about situations with pending funds.

Recommended: What Happens If a Check Bounces?

The Takeaway

When you deposit a check to your bank account, the entire amount of the check is usually not available right away. Instead, it generally takes a couple of business days for checks to clear and the money to be deposited to your account, and could take longer in some cases. While this process is going on, the funds may show up in your account in a pending status. If you try to access these funds, via writing a check or using your debit card, your bank may not complete the transaction. What’s more, it may charge you an uncollected funds (UCF) fee.

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Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Can banks remove the check hold upon request?

It may be possible for a bank to remove the hold on a check, depending on their policy. Banks are not required to remove check holds, but it doesn’t hurt to ask. You can call the bank’s customer service line, or, if your bank has physical branches nearby, stop in and talk to the branch manager. Depending on the bank’s policy, the amount of the check, and your history with the bank, they may remove all or part of the hold at your request.

How long can a bank legally put a hold on uncollected funds?

Regulation CC governs the availability of funds deposited in checking accounts and allows financial institutions to put a hold on recently deposited funds for a “reasonable period of time.” This is generally considered to be two to five business days, but may go longer in some situations (say, depending on such factors as whether deposited by ATM or another method, or in situations in which a bank believes the funds may be uncollectible from the paying bank).

How is check kiting related to uncollected funds?

Without allowing time or uncollected funds to clear, check kiting could occur. This means a criminal could write a check on an account with insufficient funds, present it at another bank, withdraw the cash that would have instantly become available, and then skip town before the bank realized there were insufficient funds. Now, most banks classify recently deposited funds as uncollected funds for a period of time so they can verify that there are funds clear. This can lower the risk of check kiting.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
*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.

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