May
30
2024

Guide to the Differences Between FDIC vs SIPC

By | Financial Independence, money, Money & Life | Comments Off on Guide to the Differences Between FDIC vs SIPC

If you have a significant amount of money in a bank or brokerage account, you may crave reassurance that your funds would be covered in the rare instance of a financial institution failing. The United States government has a couple of programs in place that help to protect savers and investors in the case of a bank failure. These programs help to ensure overall consumer confidence in the U.S. financial sector.

Two of these programs are run by government corporations known as the FDIC and SIPC. The Federal Deposit Insurance Corporation (FDIC) protects money that is held in a checking, savings, certificate of deposit (CD), or other deposit account at an insured bank. The Securities Investor Protection Corporation (SIPC) protects customers of SIPC-member broker-dealers if the firm fails financially.

While these two insurance programs have a lot of similarities, they also have a few key differences that you’ll want to be aware of.

What Is FDIC?

The Federal Deposit Insurance Corporation (FDIC) is an independent agency that was created by an act of Congress passed in 1933. During the Great Depression of the 1930s, many local and regional banks failed. Congress created the FDIC to help ensure that people would not lose their hard-earned money in the case of future bank failures.

The FDIC insures $250,000 per depositor, per insured bank, for each account category (such as single, trust, or joint accounts). Since FDIC insurance first went into effect in 1934, no depositor has lost any insured money that was held in an eligible bank.

While the FDIC offers insurance for deposits held at participating banks, the National Credit Union Administration (NCUA) insures deposits held at credit unions. It’s important to understand that key difference between the FDIC and NCUA.

Also worth noting is that some financial institutions offer programs which can insure excess deposits for more than the $250,000 limit with extended insurance coverage.1 This is typically accomplished by bank partnerships which ensure that no single financial institution holds more than the $250,000 FDIC limit for a client.

If you want to keep more than $250,000 on deposit, it can be worthwhile to look into these expanded FDIC insurance coverage offers.

What Is SIPC?

In addition to the FDIC and the NCUA, the SIPC is a nonprofit organization that is set up to protect U.S. consumers. The Securities Investor Protection Corporation (SIPC) was started when Congress passed the Securities Investor Protection Act of 1970. The SIPC protects the securities and cash in a brokerage account, up to a total amount of $500,000.

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SIPC vs FDIC

When comparing the SIPC to the. FDIC, you will learn that they are two different organizations. They share the goal of protecting accounts held in U.S. financial institutions and instilling consumer confidence.

Here’s a look at how the SIPC and FDIC are similar and different:

Securities Investor Protection Corporation (SIPC)

 Federal Deposit Insurance Corporation (FDIC)
Protects money invested in brokerage accounts Protects money invested in bank accounts
Protects the securities and cash in your brokerage account up to $500,000 Protects up to $250,000 per depositor, per ownership category, per bank
Founded in 1970 Founded in 1934
Applies if a brokerage firm becomes insolvent and/or goes bankrupt Applies when a bank fails

Similarities

The SIPC and FDIC share the same goal — ensuring that money and investments held in U.S. accounts remain in the hands of consumers. One isn’t necessarily better than the other, since they apply to different kinds of financial holdings. No matter where you are holding your money and/or investments, you’ll want to make sure that your investments are insured by either the FDIC, NCUA, or SIPC.

Differences

The biggest difference between the FDIC and the SIPC is when they apply. The FDIC covers deposits held at certain banks. The SIPC applies to investments at brokerage accounts.

Another difference is the amount of coverage. The FDIC protects up to $250,000 in a bank account, while the SIPC covers up to $500,000 in a brokerage account, including up to $250,000 protection for cash in your brokerage account.

Pros and Cons of FDIC vs SIPC

There aren’t really pros and cons when comparing the insurance offered by the FDIC and SIPC. It’s not a matter of, say, SIPC insurance vs. FDIC: They are not competitors. Each organization works in a slightly different way.

In terms of upsides, the FDIC covers deposits held by FDIC-insured banks. That means if you have money in a checking, savings, CD, or other kind of depositor account, held at an insured bank, you would be covered against loss in the very rare instance of the bank failing. The downside, if you want to look at it that way, is that this insurance doesn’t extend to brokerage accounts.

The SIPC covers the value of investments held in a brokerage account. As for positives, the reassurance of knowing your funds are covered is an excellent feature. However, the downsides could be seen as the limits of this coverage: up to $500,000 and only for funds held per SIPC guidelines.

Because they work in different ways, the FDIC and SIPC complement each other to work towards strengthening consumer confidence.

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Is Your Bank Account Insured?

No matter where you keep your money, you’ll want to make sure that the money in your account is insured by a program such as the FDIC or SIPC. Being insured by the FDIC is a component that can be used to rate banks against each other.

It is usually fairly straightforward to find out if your bank is insured by the FDIC. To find out if your bank is FDIC-insured, go to the BankFind Suite on the FDIC website.

It may be more complicated to find out if your brokerage account is held in an account covered by the SIPC. If you cannot find the answer on the broker’s website, contact them to make sure.

Opening a SoFi Savings Account

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Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

FAQ

Is SIPC as good as FDIC?

The Securities Investor Protection Corporation (SIPC) and Federal Deposit Insurance Corporation (FDIC) are not direct competitors. They insure investments and deposits at brokerage firms and banks, respectively.

Is it safe to keep more than $500,000 in a brokerage account?

Whether it’s safe to keep that much money in a brokerage account depends on your individual risk tolerance. Just keep in mind that the SIPC will only cover up to $500,000 in a brokerage account, which includes $250,000 in cash in your brokerage account.

What does SIPC not cover?

The SIPC covers what it defines as “securities” — stocks, bonds, Treasury securities, certificates of deposit, mutual funds, money market mutual funds, and certain other investments. SIPC does not protect most commodity futures contracts, foreign exchange trades, investment contracts and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.

Photo credit: iStock/AlexSecret

1SoFi Bank is a member FDIC and does not provide more than $250,000 of FDIC insurance per legal category of account ownership, as described in the FDIC’s regulations. Any additional FDIC insurance is provided by banks in the SoFi Insured Deposit Program. Deposits may be insured up to $2M through participation in the program. See full terms at SoFi.com/banking/fdic/terms. See list of participating banks at SoFi.com/banking/fdic/receivingbanks.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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May
20
2024

How to Locate the Routing and Account Number on a Check

By | money, Money & Life | Comments Off on How to Locate the Routing and Account Number on a Check

When setting up direct deposits, making electronic payments, or verifying your account for certain services, you typically need to provide your routing and account numbers. These numbers are crucial for identifying which bank and specific account to draw funds from or deposit money into.

If you’re unsure where to find these numbers on your check, don’t worry — we’ve got you covered. Here’s a quick guide to finding your account number and routing number on a check.

Key Points

•   The routing number is a unique nine-digit code found at the bottom left-hand corner of a check.

•   This number identifies the bank where the account is held.

•   The account number, typically eight to 12 digits long, is located to the right of the routing number on a check.

•   Account numbers are specific to individual bank accounts and are used for transactions.

•   Routing numbers can be found using various methods if no physical check is available, such as online banking, bank statements, or customer service.

Where Is the Routing Number on a Check?

The routing number on a check is a unique, nine-digit number that identifies the bank where your account is held. It’s typically located at the bottom left-hand corner of your check.

Look for a series of numbers printed along the bottom of you check. The routing number is usually the first set of numbers; it’s followed by your account number, and then the check number. The routing number will typically start with a 0, 1, 2, or 3. The symbols around the nine-digit number are not part of your routing number.

Some large financial institutions have multiple routing numbers to identify the state or area where your account is held. Banks also can have separate routing numbers for different types of transactions — such as one for processing paper checks and another for wire transfers.

Routing numbers are public, so you can also find this information on a bank’s website or by doing an internet search (more on this below).

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Where Is the Account Number on a Check?

On a check, the account number is typically located to the right of the routing number. It’s usually eight to 12 digits (though it can be longer) and may be followed by the check number.

Your account number is specific to your bank account and is used for transactions related to your account. If you have multiple accounts with the same bank, the account numbers will differ for each account.

The main purpose of an account number is to signal to the bank that’s processing the check which bank account to draw the funds from or, in the case of direct deposit, which account to deposit the money into.

Unlike routing numbers, bank account numbers aren’t public. If you don’t have a check handy, you can find your account number by logging into your account online or through your banking app. You may see something like this: XXXX-XXX-4567. Banks do this for privacy purposes (in case you’re accessing your account in a public place) but you can typically get the full account number by clicking on the partially hidden number. Your bank account number is also likely on your monthly statements.

Finding a Routing Number Without a Check

If you need to know your routing number but don’t have a physical check handy, don’t stress. Since a bank’s routing number is public information, there are several other easy ways to get it. Depending on the bank, you can typically find your routing number using one of these methods:

•   Log in to your account. Once you sign in to your account, go to “account information” or “account summary.” The routing number should be listed there.

•   Go to the bank’s website. Some banks post the routing number on the home page of their website. Or, they’ll put it elsewhere on the site, such as the FAQs.

•   Google it. You can do an online search of your bank’s name and the phrase “routing number.”

•   Check your bank statement. Some, though not all, banks will include the routing number on your monthly paper or electronic bank statements.

•   Call the bank. A customer service rep will be able to give you the bank’s routing number.

•   Visit a branch. Some banks display the routing number in the lobby. If not, you can simply ask a teller to give it to you.

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The Takeaway

Knowing where to find your routing and account numbers on a check is important for a variety of financial transactions. By familiarizing yourself with these numbers and how to locate them, you’ll be better equipped to manage your finances and complete transactions efficiently.

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 4.20% APY on SoFi Checking and Savings.

Photo credit: iStock/Rockaa

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

Our account fee policy is subject to change at any time.
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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May
20
2024

How to Read a Check

By | money, Money & Life | Comments Off on How to Read a Check

With the rise of online payments, checks aren’t nearly as ubiquitous as they used to be. But this form of payment hasn’t disappeared. You may get a government check with your tax refund, a rebate check from a company, or an expense reimbursement check from your employer. Plus, in order to make an online payment, you‘ll need to look at your own checks to determine what your routing and account numbers are.

The upshot: Even in the digital age, it’s important to know how to read a check. Here’s a simple guide to help you find any info you need on a check.

Key Points

•   Understanding check components is crucial, even in the digital age, for managing transactions like tax refunds or reimbursements.

•   The routing number, located on the lower left, identifies the bank holding the account.

•   The account number follows the routing number and is essential for identifying specific bank accounts.

•   The check number helps track and manage personal finances by recording transactions.

•   Writing the payment amount in both numbers and words ensures the check’s validity and banking compliance.

The Routing Number

Your routing number is the first series of nine digits listed on the lower left corner of a check. This number identifies the bank where your checking account is held and reduces the chances of miscommunication in financial transactions. Even if two banks have similar names, they’re distinct from one another because of their different routing numbers.

You’ll need to know your routing number to set up direct deposit at work, transfer money into your account, and make a bill payment.

The Account Number

Your bank account number can be found on the bottom of your checks and is the second set of numbers, just to the right of your routing number. It’s usually between eight and 12 digits long (though it can be longer).

Bank account numbers are used to identify a bank account. The one listed on your checks is the number assigned to your checking account. If you also have a savings account at the same bank, it will have a different number.

If you don’t have access to a check, you can find your bank account number on your statement or by logging into your account.

Check Number

The check number is typically located on the upper right-hand corner of a check, though it can sometimes be found at the bottom of the check after the symbol at the end of your account number. It’s usually three or four digits long.

Checks are numbered in ascending order, so you can easily keep track of checks that you’ve written. When you write a check, it’s a good idea to note the check number and the amount in your check register. This will help you keep the account balanced and avoid accidental overdrafts.

Pay to the Order Of — Payee Line

This line is located in the middle of the check and where the name of the person or business being paid is written. When endorsing a check you’ve received, it’s important to sign your name as it appears on the payee line.

It is possible to write a check to yourself. In that scenario, you would simply add your name in the payee line. This is one way to move money from one bank account to another. You can also write “cash” in the payee line. In this case, anyone can cash the check.

Date Line

The date line is usually located in the upper right area of a check. It’s where you add the date you wrote the check.

If your cash flow is tight, you might be tempted to write a future date in this line, so the recipient doesn’t cash the check until there are available funds in your account. However, know that as soon as you write and sign a check, the recipient can cash it immediately — even if you post-dated the check.

Payment Amount in Numbers

The payment box appears to the right of the “pay to the order of” line, and where you write the dollar amount the check is written for in numeric form, including both dollars and cents. For instance, if the check is for three hundred dollars, you would write “300.00.”

Payment Amount in Words

Below the payee line is a space for the check issuer to write the payment amount in word form. Cents, however, are written in numbers. For example, a check for “$500.25” it’s written out as “Five hundred dollars and 25/100.” If there are no cents, the issuer might write XX/100.

The payment amount in words needs to match the payment amount written in numerical form in the payment box. If these amounts don’t match up, the check can still be cashed, but the bank will only honor the amount that is written out in word form.

Fractional Bank Number

The fractional bank number often goes unnoticed, as it’s typically printed in a smaller font size and isn’t of much importance today. You can find this number towards the top right of your check and it’s listed in two parts — a numerator, then a slash, and a denominator, thus a “fraction.”

A fractional bank number identifies the bank where your checking account is held, but, since the same information is included in your routing and account numbers, it’s not used much anymore.

Your Information

If you’re writing a check, your personal information is located at the top left of the check. This includes your name on the first line, your address in the next few lines, followed, in some cases, by your phone number.

If your checks have an outdated address printed on them, don’t worry — you can still use them. Financial institutions use routing numbers and account numbers to identify where they should pull the money from, not your personal information written on the top left of your check.

Recommended: A Guide to Ordering Checks for Less

For/Memo

The memo box is housed at the bottom left corner of the check and typically begins with “for”. This space gives you an opportunity to briefly note the purpose of the payment, or maybe add a personalized message to the recipient. For instance, you might write “June rent” or “Happy Birthday Sally.”

Signature

The line on the lower right area of a check is where you sign your name. Your signature needs to match the one the bank has on file. If you accidentally sign with a shortened first name or nickname (such as Jon versus Jonathan) or with your maiden name versus your current last name, the bank might refuse to process the transaction.

Bank Name/Logo

The bank name and logo is usually located above the memo box. This tells where the checking account is held. It also adds an additional layer of security. If you receive a check where the logo looks slightly off, or you’ve never heard of the bank listed here, it’s a tipoff that the check might be counterfeit.

Endorsement Line

The endorsement line is located on the back of the check and is usually on the right side. This is where the check recipient, or payee, provides their signature. Without proper endorsement, the bank won’t process the check.

If you’re endorsing a check for a mobile deposit, you may need to write “For mobile deposit only” (or similar wording) under your signature, or check a box labeled “for mobile deposit.” Rules vary by bank.

The Takeaway

While checks aren’t as common as they used to be, you may still receive and write checks. You’ll also likely need to refer to your checks to find important details about your account, such as your routing and account numbers. You’ll need these numbers to sign up for direct deposit or set up an electronic payment or funds transfer.

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 4.20% APY on SoFi Checking and Savings.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Photo credit: iStock/AndreyPopov

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

SOBK0124063

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May
20
2024

What Happens if You Unknowingly Deposit a Fake Check?

By | money, Money & Life | Comments Off on What Happens if You Unknowingly Deposit a Fake Check?

There are many reasons why you might end up accidentally depositing a fake check into your bank account. Scammers often use fake checks as part of various schemes to steal money from unsuspecting victims. They may send you a fake check and ask you to deposit it, then request that you send them a portion of the funds back, claiming it’s for fees, taxes, or some other reason. By the time the bank realizes the check is fake, you’re left responsible for the full amount.

Why do these scams work? The fake checks generally look just like real checks, even to bank employees, with appropriate watermarks, and they may appear to be issued by legitimate financial institutions.

Here’s a closer look at what happens if you accidentally deposit a fake check, plus ways to spot counterfeit checks.

Key Points

•   Depositing a fake check can initially seem problem-free as funds often become available quickly.

•   Once a bank identifies a check as counterfeit, the depositor must cover the check’s amount.

•   Additional consequences include potential overdraft fees, late payment fees, and possible account closure.

•   A negative banking history, such as being reported to ChexSystems, may result from depositing fake checks.

•   Spotting fake checks involves checking for proper paper quality, bank details, and unusual amounts.

Consequences of Depositing Fake Checks

If you accidentally deposit a fake check, everything may be fine at first. By federal law, the bank must make the funds available to you within one or two business days. When the funds are made available in your account, the bank may say the check has “cleared,” but that doesn’t mean it’s a good check.

Fake checks can take weeks to be discovered and sorted out. When the bank realizes the check is fake (often after you’ve spent the money or given it to someone else), here is what happens:

•   You have to cover the cost of the check. The bank will typically debit your account for the amount of the fake check, and may also charge you a processing fee.

•   You’ll lose any money you sent to the scammer. While in some rare cases you may be able to request a chargeback on a fraudulent transaction, it’s unlikely that you will be able to get any money back once you’ve given it to a scammer.

•   You may have to pay overdraft fees. If you spent the check amount before the bank realized it was fake and debited your account for the amount, it’s possible your account could get overdrawn. In that case, you could face overdraft fees, which can run $30 to $35 per transaction.

•   You may have to pay late fees. If you aren’t able to pay your bills because of insufficient funds after depositing a bad check, companies may charge you late fees.

•   Your bank could close or freeze your account. Banks will often freeze or close accounts for suspicious activity, including attempts to pass off bad checks. You’ll want to check your bank deposit account agreement to see in what scenarios your bank can close your account.

•   It could hurt your credit score. If you relied on the check to pay upcoming bills, you might miss their due dates. Because payment history is the biggest factor credit bureaus use to determine your credit score, missed payments can do damage to your credit.

•   Your banking history could be tarnished. The bank may report the fake check incident to the banking reporting agency ChexSystems. If so, the agency will then record that information in its files about your checking history. Banks and credit unions may use that information to determine whether to allow you to open a bank account in the future.

💡 Quick Tip: Make money easy. Enjoy the convenience of managing bills, deposits, and transfers from one online bank account with SoFi.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Can You Go to Jail for Depositing Fake Checks?

Whether or not you’ll face criminal charges (and potential jail time) for depositing a fake check will depend on whether or not you knowingly deposited a fake check, as well as the laws in your state. If you are simply the victim of a scam, you likely won’t face criminal charges or jail time.

Knowingly committing check fraud, however, is a serious crime that can result in significant fines and even jail time. In Indiana, for example, the lowest level of check fraud is a misdemeanor, which can lead to imprisonment for up to one year and a fine of $5,000. If the amount on the check was between $750 and $50,000, you will instead be charged with a felony. The potential sentence for this is six months to two- and-a-half years in jail, plus up to a $10,000 fine.

If you are convicted of a check fraud felony in New York State, on the other hand, it could mean up to seven years in prison.

Recommended: How Long Is a Check Good For?

6 Tips to Spot Fake Checks

Counterfeit checks can look incredibly real, making them difficult to spot without careful examination. To protect yourself from falling victim to check fraud, it’s important to know how to identify a counterfeit check. Here are six tips to help you spot a fake.

1. Feel the Edges of the Check.

If the check is legit, it should have one perforated edge (where it was ripped from a checkbook). A check that is smooth on all sides is a tipoff that it’s a fake.

2. Examine the Paper

Genuine checks are usually printed on high-quality paper with intricate designs that are hard to replicate. Hold the check up to the light to see if it has watermarks or security threads. Genuine checks often have these features, while counterfeit checks may appear flat and lack these security measures.

3. Check the Bank Information

Verify that the bank’s name and logo on the check match the ones used by the actual bank. You can do this by visiting the bank’s official website or calling their customer service hotline. You can use an online tool like BankFind to check if a bank is backed up by the Federal Deposit Insurance Corporation (FDIC).

4. Scrutinize the Check Amount

Be wary of checks that have unusually high or round amounts. Scammers often use these amounts to make the check look more appealing. If you receive a check for an unexpected amount, it’s a good idea to contact the issuer directly to verify its authenticity.

5. Look for Typos

Counterfeit checks often contain spelling mistakes, grammatical errors, or inconsistent fonts. Carefully review the check for any such errors, as they can indicate that the check is fake.

6. Be Wary of Pressure Tactics

deposit the check quickly. They may claim that the check is a limited-time offer or that you must act fast to receive a prize or reward. Take your time to verify the check’s authenticity before taking any action.

💡 Quick Tip: If your checking account doesn’t offer decent rates, why not apply for an online checking account with SoFi to earn 0.50% APY. That’s 7x the national checking account average.

What if Someone Else Deposits a Fake Check Into Your Account?

If someone else deposits a fake check into your account, the situation can be complex and you’ll want to take prompt action to mitigate any potential negative consequences.

As soon as you become aware of the fraudulent deposit, contact your bank to report the issue and give them all the relevant details, including the date of the deposit, the amount, and any other information you have about the check. It’s also a good idea to ask your bank to place a hold on your account to prevent any further transactions from occurring until the situation is resolved. This can help prevent additional fraudulent activity.

As your bank investigates the fraudulent deposit, they may request documentation to support your claim that the deposit was fraudulent, such as copies of the fake check, any communication you have had with the person who deposited the check, and any other relevant information.

Going forward, you’ll want to take steps to protect your account from further fraudulent activity. This may include changing your online banking passwords, setting up alerts for suspicious activity, and being cautious about sharing your account information.

The Takeaway

Check fraud is just one of the many ways that scammers con people into giving them money. If you unknowingly deposit a fake check into your account, the consequences include fees and, possibly, a negative mark on your banking history and the closing of your account. To avoid being scammed, look for the signs of a fraudulent check, and avoid cashing a check that you weren’t expecting, or for more than the agreed-upon amount.

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 4.20% APY on SoFi Checking and Savings.

FAQ

Can you get in trouble for accidentally depositing a fake check?

Yes, you can potentially get in trouble for accidentally depositing a fake check. While an accidental deposit may not lead to legal consequences, you may get hit with bank fees, you’ll need to repay any amount of the check you spent, and the bank may put a hold on your account. It’s crucial to cooperate with your bank’s investigation and take steps to rectify the situation promptly.

Is the bank responsible for cashing a fake check?

Generally, banks are not responsible for cashing a fake check if they can demonstrate that they followed proper procedures and exercised reasonable care in processing the check. However, if the bank is found to have been negligent or failed to detect obvious signs of fraud, they may be held liable for cashing a fake check. It’s important to review your bank’s policies and procedures regarding check deposits and fraud prevention.

Photo credit: iStock/AndreyPopov

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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

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May
20
2024

Avoiding Mobile Deposit Scams, Fakes, and Hacks

By | money, Money & Life | Comments Off on Avoiding Mobile Deposit Scams, Fakes, and Hacks

Sadly, mobile banking and check fraud are on the rise, as scammers come up with new ways to try to trick people out of their money. One such tactic is mobile deposit scams, which involves your unwittingly depositing a fake check through a mobile deposit. The scammer either convinces you to reveal personal information or to send them money from your account. By the time you realize what is happening, your money is gone or your sensitive information could be used for ill intent.

To protect yourself, read on.

Key Points

•   Mobile deposit scams involve depositing fake checks, leading to potential financial losses.

•   Scammers may trick individuals into sending money or sharing personal information.

•   Recognizing fake checks can prevent fraud; look for unusual amounts and verify bank details.

•   Common mobile deposit scams include fake job offers and bogus contest winnings.

•   If suspicious of a check, verify its legitimacy with the issuer before depositing.

What Happens if You Mobile-Deposit a Fake Check?

Before talking about fake checks, it’s important to first define what a mobile deposit is.

•   It’s a type of deposit can be done through your bank or credit union’s app.

•   You snap a photo of a paper check with your mobile device, upload it plus information about its amount and which deposit you want it submitted to.

•   Once the bank processes and approves it, the check will be deposited in your checking account.

With mobile deposit scams, however, one of two things might happen:

•   The scammer might convince you to deposit a fake check, often for more than the amount you were told would arrive. Then the fraudster might ask you to return the “extra” amount they said they accidentally sent you (which you do, not knowing the check they sent is bogus).

•   The scammer asks for your personal information so they can deposit money into your bank account (which they’ll never do).

If you deposit a fake check, whether through your bank’s mobile app or another means, there are several scenarios that can unfold.

•   The bank may deny the deposit and declare the check is fake.

•   The bank may clear the check, and there is a deposit in your account. However, that doesn’t mean the bank won’t come back around and discover the check is fake. In this case, the check bounces, and you’re responsible for paying the amount back to the bank.

In either case, you could be held liable for the fake check and any extra costs that the bank may have incurred because of this bank fraud. The authorities may even be involved if there is a criminal investigation for the fake check.

💡 Quick Tip: Typically, checking accounts don’t earn interest. However, some accounts do, and online banks are more likely than brick-and-mortar banks to offer you the best rates.

Tips for Spotting a Fake Mobile-Deposit Check

There are several ways you can use to spot a fake check or attempt to verify a check, such as:

•   Considering the sender: If you’re unsure who sent you the check, it’s best to double-check why you received the check. If, say, it’s from your bank or a company you do business with, you can contact their listed business number and find out why it was sent vs. just depositing the check.

•   Looking at the check amount: Fraudulent checks typically are for an amount that’s much larger than the payment you expect to receive. The idea is to get you to return the extra amount. For checks that have seemingly a larger amount than expected, contact the sender to correct it, which they should do if they are legitimate. (You may hear the practice of intentionally writing checks against insufficient funds referred to as check kiting.)

•   Check the financial institution: Fake checks may look legitimate but have a bank or credit union name that doesn’t exist. You can do a simple online search to find the name of the financial institution, or contact the FDIC to determine if the bank is real.

•   Determine the quality of the check: Look at the check to see if there are any watermarks or other indicators of security features typical of a real check. Feel the paper as well, as real checks are typically printed on thicker paper than bogus ones.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


4 Mobile-Deposit Scams to Avoid

Unfortunately, there are many tactics that scammers try to use to get you to part with your money. Four common mobile check-deposit scams include fake jobs, bogus contests, fraudulent sales, and dating scams.

Fake Jobs

Here’s how this typically goes:

•   You answer an advertisement for a job, like a mystery shopper, personal shopper, or some other form of employment.

•   You apply, are hired, and are sent a check — an upfront payment for work, for example — for a larger amount than you were promised and are asked to send the excess amount back.

•   You deposit the check, send the excess back, and then find out that the check you were sent has bounced. You are liable for that “excess” you sent back.

•   Or you’re asked to review, say, a company that sells money orders or wire transfer services. You receive a check from the scammer to be used to purchase money orders and/or send a wire transfer.

•   You deposit the check, make the purchase as directed, and send a money order or wire transfer to someone else’s savings account. Then, guess what? The check winds up bouncing, and you’re out of cash.

Fake Contests

This scam usually unfolds as follows:

•   Someone posing as a representative of a company or lottery contacts you to let you know that you’ve won a contest.

•   You may not remember entering the contest (because, as it turns out, you didn’t), but you give the rep some personal details so they can send the check.

•   Once you receive the check, the scammer tells you they sent too much money and asks that you send the excess amount back to them. You deposit the check and return the overage.

•   The check turns out to be fake (how long for mobile deposit or in-person checks to bounce? It can be a couple of days or longer). That means the alleged excess that you returned is your cash that’s now disappeared.

Auction or Online Marketplaces

Selling your stuff on websites or in-person can lead to scams:

•   You’re selling some items on an online marketplace (say, eBay, Craigslist, or Facebook Marketplace), and the scammer purchases it from you.

•   The scammer gives you a check for an amount that’s higher than your item’s listed price and asks you for the overpayment back. You send the money back, and later find out that the check is fake. Meanwhile, the scam has made off with your money.

Dating Scams

These types of scams can take a long time to unfold:

•   The scammer creates a fake profile on a dating app or social media and strikes up a conversation.

•   Over time, this person may win your trust and then face an emergency or some other situation for which they need to borrow money. (Maybe they need funds to buy a plane ticket to eventually visit you.)

•   You agree to lend them some money, which they say they will soon return via check. Yes, you receive the check from them, but it ends up being a fake one, and the money you “loaned” the fraudster is gone.

What to Do if You Receive a Fake Mobile Deposit From a Stranger

If you believe you’ve received a fake check and are unsure whether to deposit it via your mobile app, pause.

•   Double-check with the sender if possible whether the payment is legitimate.

•   If you were expecting a payment and they send more than the anticipated amount, ask the sender to void the check and send you the correct amount. If there’s no response or a refusal, don’t deposit it.

•   Don’t draw against the potentially fake check until you are sure that it’s fully cleared. Don’t assume that just because the amount shows up immediately in your bank account that you can go ahead and spend it.

•   You can also contact the Federal Trade Commission (FTC) if you believe someone is targeting you for a fake mobile deposit scam.

The Takeaway

You can’t control what scammers do, but you can control how you respond to them. By learning how to spot signs of fraud, including mobile deposit fake checks, you can protect yourself from romance, job, and other ploys. By educating yourself and being wary, you may prevent someone from taking advantage of you and your money.

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 4.20% APY on SoFi Checking and Savings.

FAQ

What happens if you mobile-deposit a fake check?

If you submit a fake check through mobile deposit, the bank may either reject it right away or accept the form of payment. However, even if the bank accepts it and conditionally credits it to your account, when the check is later found to be fraudulent, the amount will be debited from your account.

How do you know if a mobile deposit check is real?

You can inspect a check by seeing if there are certain security features like watermarks and seals. You can also see if it has heavy paper (like most checks you have deposited) or whether it’s on thinner stock. Also double-check online if the bank the check is drawn on is real.

Can you go to jail for mobile-depositing a fake check?

If you knowingly, intentionally mobile-deposit a fake check in an attempt to deceive a bank, you may face criminal consequences.

Photo credit: iStock/RyanJLane

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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