Nov
19
2024

Can You Overdraft With a Debit Card? Understanding Your Options and Risks

By | Budgeting & Goals, money, Money & Life | Comments Off on Can You Overdraft With a Debit Card? Understanding Your Options and Risks

It’s possible to overdraft your account with a debit card if you have signed up for your bank’s overdraft coverage, which can enable a transaction to go through even when the account is short of the funds needed to cover it. However, you may wind up paying expensive overdraft fees on your purchase or withdrawal.

Overdraft fees have been around for so long now, many consumers may simply accept them as a cost of doing business with their bank or credit union. But you may not want to do so. Read on for a closer look at what opting into your bank’s overdraft service could mean specifically for debit card transactions.

Key Points

•  Overdrafting occurs when an account owner’s spending exceeds their account balance but the bank still covers it, leading to potential overdraft fees.

•  With standard overdraft coverage, a bank may (at its discretion) cover a transaction even if it overdraws an account, though it would typically charge an overdraft fee.

•  With debit cards and ATMs, a bank customer must opt-in to overdraft coverage, consenting to the related overdraft fees.

•  Overdraft protection programs allow account holders to link to a backup account, from which the bank can pull funds when the primary account is overdrawn.

•  Account holders may be able to reduce or avoid overdraft fees by linking accounts, using credit cards or other payment methods, or choosing low- or no-fee banks.

What Does It Mean to Overdraft With Your Debit Card?

Overdrafting with a debit card means that you may spend more money than you actually have in the account.

If you don’t have enough money in your bank account to cover a debit card transaction, you can expect one of two things to happen.

•  Your bank may decline your request, leaving you empty-handed at the cash register or ATM.

•  Your bank could allow the transaction to go through. Technically, you will have overdrawn your account, because your account balance will fall below zero. But you’ll get what you wanted — some cash, a latte, movie tickets, etc. And you’ll be saved from potential embarrassment in front of co-workers or friends.

The second outcome may seem more satisfying, at least for the short-term. But there’s a catch: Your bank may only let the transaction go through if you participate in its overdraft coverage or protection program, and you can be charged a fee for this service.

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What Is Overdraft Coverage vs. Overdraft Protection?

Many financial institutions offer overdraft programs that will let your transactions go through, at least temporarily, if you don’t have enough money in your account. But the rules — and fees — for this service can vary significantly from one bank and bank account to the next, so it’s important to understand what you’re signing up for.

Standard Overdraft Coverage

Many banks offer some type of standard overdraft coverage for their consumer checking accounts. Generally, if you overdraw your account with a check, automatic bill payments, or recurring debit card transactions, the bank may process the transaction anyway (at its discretion and usually up to a certain limit). But it will typically cost you: Your bank may charge an overdraft fee. And you’ll still have to get your account back in the black ASAP to avoid multiple fees. So while you can overdraft a debit card with no money in your account, it can get pricey.

Overdraft Protection

Overdraft protection services work a little bit differently. With this type of program, you can designate a backup account (a savings account, credit card, or line of credit, for example) to cover any shortfalls. The bank will automatically transfer money to your overdrawn checking account.

You’ll likely still be charged for this service, but this “transfer fee” may be lower than the bank’s overdraft fee. Before opting into any overdraft program, it’s important to understand the specific terms and fees.

How Are Debit Card Overdrafts Different?

You may not have a choice when it comes to paying fees when you overdraw your account with a check or automated clearing house (ACH) payments. If the bank approves the transaction, you can expect to pay an overdraft fee. If it declines the transaction, you’ll likely face a non-sufficient funds (NSF) fee. This charge means that even though the transaction wasn’t completed, you still will pay for the inconvenience the bank experienced due to the situation.

But your bank can’t charge you fees for overdrafts on most debit card transactions unless you have specifically opted in to those charges.

Opt-In vs. Opt-Out Policies

Deciding whether you want or don’t want to pay overdraft fees on debit card transactions can be a pretty complicated decision. Policymakers at the Federal Reserve decided in 2010 to change the previous process that involved having to opt out of overdraft coverage (that is, customers could be automatically enrolled in the service). Since then, bank customers have to opt in by signing paperwork that says they understand the fees and they want their bank to process their debit card transactions even when they’re short of funds.

•  If you opt in to debit card and ATM overdraft coverage, you can expect withdrawals and purchases to go through even if you don’t have enough funds in the bank at the time of the transaction. But you will likely be charged a fee in exchange for this service. (See below for pricing specifics.)

•  If you don’t opt in to debit card and ATM overdraft coverage, you may experience one-time ATM withdrawals and debit purchases being declined if you don’t have enough money in your account at the time of the transaction. You can avoid paying an overdraft fee for those transactions, but it will be up to you whether you want to use a credit card or some other method to complete the transaction.

•  Keep in mind, though, that even if you don’t opt in to overdraft coverage for your debit card, you could still face fees. If you’re short of funds when the bank processes an automatic payment through your debit card — for a gym membership or subscription service, for example — you might face an overdraft fee if the bank chooses to complete the transaction. And if the payment is declined, you may be charged an NSF fee.

Recommended: How to Get a Debit Card

Costs and Fees Associated With Overdraft Services

Federal regulators have proposed lowering overdraft fees to as little as $3, but currently they average around $26 to $27. And though some banks don’t charge overdraft fees on checking accounts, 94% of accounts at financial institutions still have them, according to a recent survey. And they can run as high as $38 or so.

Some banks also may charge what are known as “continuous” overdraft fees, or daily overdraft fees. These are charges assessed every day the account remains overdrawn, and the fees can add up quickly.

Your bank may waive the fee on a smaller purchase. Also, if it’s the first time you’ve overdrawn your account — or it’s been a while since you did so — the bank might remove the fee if you call and ask.

Should You Overdraft With a Debit Card?

If you’ve opted in to debit card overdraft coverage, it may seem worth the risk of overdrafting if you need some quick cash or to fill your gas tank in a pinch when you’re low on funds. But if you have other resources (whether it’s a credit card or a piggy bank), you might want to tap those first. Keep potential fees in mind — not to mention the stress of knowing your checking account will have a negative balance — as you ponder this strategy.

Recommended: 10 Personal Finance Basics

How to Avoid Overdraft Fees

Understanding how opt-in overdraft coverage works is one way to avoid triggering unnecessary bank fees. But there are other proactive steps you may want to consider, as well, including the following:

Choose a Bank That Doesn’t Charge Overdraft Fees

Some banks don’t charge overdraft fees; often, they cover you up to a specific overdraft limit, such as $50. Others may offer one or two fee-free account options. (If bank fees overall are an issue for you, keep in mind that online banks often have lower costs than traditional brick-and-mortar institutions.)

Use Credit Cards for Emergency Expenses

If you have a relatively low-interest credit card or you’re able to pay off your credit card balance every month to avoid accruing interest, it may make sense to use your credit card for emergency expenses. Thinking about which card you’re going to use before an emergency comes up could help you make the best decision.

Link Accounts for Overdraft Protection

Linking your checking and savings accounts can allow your bank to quickly move funds to cover negative balances. Though you might pay a transfer fee, it’s usually less than an overdraft fee.

Build an Emergency Fund

Having an emergency fund that can cover three to six months’ worth of expenses is a good goal, but even a smaller amount of savings may allow you to deal with the kinds of unexpected expenses that can trigger debit card overdrafts. A high-yield savings account can help you grow your money while also keeping it accessible.

Steps to Help You Better Manage Your Debit Card

If the convenience of using a debit card has made it your go-to tool for accessing cash and making purchases throughout the day, there are steps you can take to prevent overdrafts.

Monitor Your Accounts

Using a tracking tool to monitor your checking account and other account balances, can help you avoid an overdraft.

Set Up Low Balance and Other Alerts

If your bank offers account alerts, consider setting up a notification so you know when your checking account balance is getting low.

Know When Your Bills Are Due

Putting together a budget can help you pay your bills on time and organize your payment dates. Then, you might also see if you can move some payment dates. For instance, you could ask your credit card issuer to shift your date. That way, your checking account won’t be drained due to having so many payments in the same pay week or pay period.

The Takeaway

You may be able to overdraft your debit card transactions if you have overdraft coverage. This means your bank will cover the transaction, but you will likely be charged a fee for this privilege. If you choose not to opt into your bank’s standard overdraft coverage, there’s a good chance that a debit card transaction that would take your account into a negative balance would be denied.

The rules and fees for overdrawing your account with a check, automatic payment, or debit card can vary significantly depending on where you bank, so it’s a good idea to read all the paperwork you receive when you sign up for an account.

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 I overdraw with my debit card without overdraft coverage?

Here’s what happens if you overdraft with a debit card: If you don’t have overdraft coverage and you don’t have enough money in your bank account to cover the transaction you’re trying to make, your bank will likely decline the purchase or withdrawal. You won’t overdraft your account and you won’t have to worry about paying an overdraft fee, but you will have to find another way to finance your transaction or skip it.

How much does overdraft coverage typically cost?

Overdraft fees can vary depending on the bank and other factors, including whether you have a backup account or credit card linked to your checking account. One recent survey found an average fee of around $26 or $27. That said, there is a movement afoot to lower these fees considerably which may or may not impact future charges.

Can I overdraft using my debit card at an ATM?

If you’ve opted in to your bank’s overdraft coverage, your ATM withdrawal may go through, even if you withdraw more than you actually have in your account. You can expect to be charged an overdraft fee for this service. If you don’t opt in to overdraft coverage, the transaction will likely be declined, and you won’t be charged an overdraft fee, but you won’t be able to access the funds you’re seeking.

Photo credit: iStock/megaflopp

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.

*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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Nov
19
2024

What Do the Abbreviations on My Bank Statement Mean?

By | money, Money & Life, Terminology | Comments Off on What Do the Abbreviations on My Bank Statement Mean?

Abbreviations on bank statements typically help identify different types of transactions and share information about your balance. While much of the information on your bank statement is straightforward, occasionally your bank statement may contain abbreviations that you don’t understand.

There are a few common bank statement abbreviations that are good to know, since understanding all of the information on your bank statement may help you to make better financial decisions. The good news is that most of the most common bank statement abbreviations are fairly easy to understand. Once you know what each one stands for, it can help you get a better picture of the overall health of your bank account.

Key Points

•  Bank statement abbreviations help identify transaction types and balance information, aiding financial management.

•  Regularly reviewing bank statements may help you detect errors and fraudulent charges.

•  Common abbreviations include ACH, ATM, CHK, TLR, CR, DR, EFT, FEE, INT, OD, POS, and TFR.

•  Abbreviations on bank statements save space, enhance security, and standardize banking terms, making statements concise.

•  Contacting customer service to decode unfamiliar abbreviations is recommended to help verify information in your statement.

Understanding Common Bank Statement Abbreviations

If you have a checking or savings account, your bank almost certainly sends you a bank statement on a regular basis. This usually happens monthly, and you may receive your bank statement electronically or via a printed statement in the mail. Whether you keep your bank statements or not, it can be wise to review them carefully. Doing so can help you spot any errors or fraudulent charges and scan for bank fees.

As you review your bank statements, you may encounter abbreviations. Some of these may be familiar, but others may require clarification.

Why Banks Use an Abbreviation

There are a few reasons why banks might use an abbreviation for some items:

•  Technological requirement: Many banks rely on underlying financial systems that code certain types of information with abbreviations. These systems require shortened information for proper processing.

•  Saving space: Banks may need to display a lot of information in a relatively small space, and abbreviations can help with this.

•  Security and privacy: Sometimes, using an abbreviation can help conceal sensitive information that banks don’t want to state explicitly on a bank statement.

•  Standardization: Abbreviations can allow banks to use the commonly recognized terms for certain products and services in their records and communications. This uniformity can make organization and recognition easier for all parties involved in banking.

For these reasons, you may see shorter forms of banking terms as you conduct your personal finance business.

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Up to 4.20% APY on savings balances.

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List of Common Abbreviations in Bank Statements

Here are a few of the most common abbreviations you might find in bank statements relating to your checking account or other holdings:

ACH

An ACH payment is one that is processed through the Automated Clearing House. ACH transactions are usually transactions where money is sent to or received from another bank account via electronic networks.

ATM

ATM stands for automated teller machine, and it might signify a withdrawal of cash from or a deposit to your account at one of these devices.

CHK

CHK signifies a check transaction. When you write a check, you may see this abbreviation on your bank statement when the check is deposited and/or clears. Occasionally, this may be abbreviated as CHQ for financial institutions that prefer the spelling of “cheque” to “check.”

CR

CR — or sometimes CRE or CRED — is an abbreviation for a credit, which is usually an amount of money that is credited to your account at a traditional or online bank. This could reflect a direct deposit from a salary, a merchant refund, or any other form of account credit.

DR

DR indicates a debit to your account, such as when money is withdrawn, either from an electronic transfer, a debit card transaction, or a bill payment.

EFT

Similar to ACH transactions, EFT transactions are electronic fund transfers that usually come from another bank account.

However, take note not to confuse it with an ETF, which stands for exchange-traded fund, a type of pooled investment.

FEE

FEE is not actually an abbreviation at all, as this bank statement code just means a fee assessed to your account. This could be any number of bank fees, including maintenance fees, account fees, or non-sufficient funds fees.

INT

This bank statement abbreviation stands for interest that is credited to your account. Many checking or savings accounts pay interest to the account holder based on the total amount on deposit. When that interest is paid, it could be referenced on the bank statement with this abbreviation.

OD

OD typically stands for overdraft and means that your balance has dipped into negative territory. You might also see your balance expressed with a minus sign when you have overdrawn your account. In most cases, this means your account is accruing overdraft fees, so it’s wise to get your account back to positive as soon as you can.

POS

POS stands for point of sale, and usually represents a purchase made with a debit card or credit card at a physical retailer. Confused by the phrase “point of sale terminal”? Think of it as the common term “cash register” in daily conversation.

TFR

TFR stands for transfer. When money moves between your bank accounts, you may see these three letters indicating that money has been transferred.

TLR

TLR indicates that a transaction was conducted with a bank teller at a branch. Those who have accounts at traditional vs. online banks are more likely to see this code.

Importance of Knowing Bank Statement Abbreviations

While some bank statement abbreviations may seem obvious and others obscure, it can be important to understand these terms. They help you keep tabs on the money in your bank account and your financial progress.

It can be a good idea to regularly review your bank statements as they are received. That way, you can check for unexpected or possibly fraudulent transactions. Ideally, you should be able to recognize the transactions on your statement as ones that you initiated and/or authorized. If you see a transaction on your statement that you don’t recognize, you should contact your bank’s customer service department; you may be referred to their fraud protection team if necessary. This may help protect against having your account compromised by bank fraud and from risking identity theft.

Recommended: How to Write a Check

The Takeaway

Financial institutions regularly send bank account statements to their customers, usually on a monthly basis. These statements typically communicate a large amount of information, and they may include abbreviations that shorten and standardize details. By understanding these abbreviations (such as ACH, ETF, and OD), you can enjoy deeper knowledge of your account information and keep tabs on 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

How can you identify an unknown retailer abbreviation on your statement?

While many transactions on your bank statement include the name or other identifying information of the merchant in question, some transactions may not be identifiable. One way to identify an unknown retailer is by doing an Internet search for the information that appears on your statement. Another may be to look for the same transaction on past statements of yours. Or contact your bank’s customer service department to see if they can help you with more information about the merchant.

What is included in a bank statement entry?

A bank statement usually includes a list of transactions made during the statement period. Each of these transactions is sometimes called a bank statement entry. A bank statement entry can contain the date of the transaction, the type of transaction, the amount involved, and a brief description of the retailer, merchant, or other party to the transaction, among other details.

Can your bank help decode bank statement transaction abbreviations?

Many bank statement abbreviations are straightforward, but there are some that may not be easy to decipher. If you’re unable to understand what a bank statement abbreviation means by reviewing your statement or doing an Internet search, you may want to talk to your bank’s customer service department. They can likely help you decode the information on your statement.

Photo credit: iStock/PIKSEL

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.

*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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Nov
08
2024

What to Know About Debit Card PINs: Security, Usage, and Best Practices

By | money, Money & Life | Comments Off on What to Know About Debit Card PINs: Security, Usage, and Best Practices

A debit card PIN is its personal identification number or code that allows you to securely conduct transactions, such as ATM withdrawals and purchases at retail locations.

A debit card is tied directly to a bank account. When you make a transaction with your debit card, the money is withdrawn from your account’s available balance. Read on to learn more about how PINs are used, how they can help keep your money safe, and other important details.

Key Points

•  A debit card PIN is a short numeric code used for secure transactions, such as ATM withdrawals and retail purchases.

•  Debit cards can be used without a PIN on credit networks, typically requiring a signature instead.

•  You can create or change your PIN through your bank’s website, app, or branch.

•  Protect your PIN to prevent unauthorized access to your bank account, and report any suspicious activity immediately.

•  If someone knows your PIN, change it promptly to safeguard your account.

Understanding Debit Card PINs

A debit card is a card that is tied to a traditional or online bank account, usually a checking account, that allows you to conduct transactions in person and online.

When you use a debit card, you will usually be required to enter a numeric PIN, usually four digits long. PIN stands for personal identification number, and it is used as an extra level of security for making transactions with your debit card. Because the “n” in PIN stands for “number,” it is technically incorrect to talk about your debit card PIN number, since that would be “personal identification number number,” though many people still commonly refer to a PIN as a “PIN number.”

What Is a PIN and Why It’s Important

A PIN, again, is typically a four-digit number that is used when processing a debit card transaction through the debit network. A PIN helps to ensure the security of transactions used with your debit card. If you lose your debit card, nobody will be able to withdraw money from an ATM without also having your PIN.

How PINs Work With Debit Cards

As noted above, it’s possible to use most debit cards as either a debit card or a credit card, the latter of which can typically be processed without a PIN.

•  If you use your debit card at an ATM, you will need to enter your PIN to withdraw money, check your balance or access your account.

•  When you are using your debit card at a brick-and-mortar merchant, you typically need to enter your PIN. Many locations simply ask you to sign, as detailed below, but others will require you to enter your pin. If you want to get cashback as part of your transaction, you’ll also need to enter your PIN.

•  It’s possible to use your debit card without a PIN, processed through the credit card processing network associated with your card — usually either Mastercard or Visa. While you don’t need to enter your PIN, you will probably be required to sign to complete the transaction if you’re at a brick-and-mortar retailer. Or you might need to type in your address information if you are conducting an online transaction.

•  An important debit card fact: Choosing the “credit” option for your debit card transaction doesn’t mean that you are making a credit card purchase and potentially accruing interest. The transaction is just “put through” in a different way that may take a bit longer to clear. The funds still come straight out of your bank account.

•  However, the fact debit transactions can be processed as credit does mean that if you lose your debit card, you will want to contact your bank to report it lost as soon as possible. That can prevent someone from making unauthorized transactions simply by signing your name.

As you see, how PINs are used with debit cards can vary depending on the location and kind of transaction you are completing.

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Creating and Managing Your PIN

You’ll usually create the PIN for your debit card when you first open your bank account.

•  Sometimes you will choose your own PIN, and in other cases the bank will assign you a PIN. If the bank sends you your PIN, it will often come in an unmarked envelope separate from your debit card. This reduces the risk that both your card and PIN will be intercepted in the mail on their way to you.

•  While you may create or be assigned a debit card PIN when your account is created, you typically have the ability to change your PIN at any time (often via the financial institution’s website or app). When you create or change your PIN, you’ll want to make sure to choose a secure PIN. Don’t choose common PINs like repeated numbers (such as 8888), alternating numbers (as in 2424), your birthdate or anniversary, or the last four digits of your account or card number.

•  If you forget your debit card PIN (yes, it happens), your bank may offer a way to access it via their website or app. If not, you could call customer service for assistance or visit a branch, if your financial institution has them.

One last note about PINs: You should avoid choosing the same PIN for multiple different accounts.

Recommended: How to Deposit a Check

PIN Safety and Security Measures

If someone has access to both your debit card and your PIN, they can access your bank account. That’s why protecting your PIN is one of the most important things that you can do to keep your bank account safe to avoid unauthorized transactions and bank fraud. Follow these guidelines:

•  Never give your PIN out to anyone (or if you have to, quickly change it afterwards).

•  When you’re at an ATM, make sure you physically block anyone that happens to be nearby from being able to see your PIN.

•  If you do think that someone may have access to your PIN or you suspect fraudulent activity, you should change your PIN and contact your bank immediately.

•  If you experience the loss of your card or any unauthorized transactions using your debit card, notify your bank as soon as possible. If you alert them within two business days, you are only responsible for the amount of unauthorized transactions or $50, whichever is less. If you notify your financial institution after those two business days, you could be responsible for up to $500. If you notice unauthorized transactions on your statement, it’s important to contact your bank within 60 days, or you could be liable for the transactions.

These steps can help you to keep your debit card and PIN secure and to avoid loss.

Using Your PIN: ATMs, Point-of-Sale, and Online Transactions

There are different scenarios where your PIN may or may not be required.

•  If you are using a debit card as a credit card, your PIN may not be required. This is because most online transactions are processed using the credit processing network associated with your card (such as Visa or Mastercard). You may be required to sign or, if conducting an online transaction, add other personal details, such as your address.

•  At an ATM, your PIN will be required before you can use your debit card to withdraw cash, check your balance or access your account.

•  If you are making a cardless withdrawal, however, you may or may not need your PIN; the app you are using may have you, say, scan a QR code to get cash at the ATM.

•  If you are using your debit card at a physical point-of-sale terminal at a merchant, your debit card PIN may or may not be required. If you enter your PIN, your transaction will be processed as a debit card, and you likely will not be required to sign the receipt.

•  If you bypass the PIN, your transaction could be processed over the credit network, and you may be asked to sign the receipt to verify the transaction. (A reminder: This doesn’t mean it’s added to your credit card bill; the funds still come from your bank account.)

Understanding the different kinds of transactions you can make with a debit card and its PIN can help you manage your money better and optimize its security.

Recommended: Emergency Fund Calculator: How Much Should You Save?

The Takeaway

A debit card PIN is usually a 4-digit number that helps to ensure the security of your account. In most cases, you can either use a debit card with your PIN (say, at retail locations or to withdraw funds from an ATM) or possibly by signing. Your PIN helps to keep your account secure. If you forgot your debit card PIN or suspect someone else has access to it, contact your bank’s customer service department immediately.

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 I use my debit card without a PIN?

Yes, you can often use your debit card without a PIN. Most debit cards are part of a credit card processing network (such as Visa or Mastercard). That means that you can “run” your card on these networks, without having to enter your PIN. You may be required to sign if completing a transaction in person or, if online, you might have to enter other details, such as your address.

How often should I change my debit card PIN?

One of the main purposes of having a debit card PIN is to help make sure that no unauthorized purchases are made to your account. You’ll typically change your debit card PIN if you lose your card or if you think someone might know your PIN.

What should I do if I think someone knows my PIN?

If you think that someone else knows your debit card PIN, it’s a good idea to change your PIN right away. You may be able to change your PIN through your bank’s website, app, or, if your account is at a brick-and-mortar bank, at a branch. In some situations, your bank may also send you a new debit card with new card numbers to safeguard your account.

Photo credit: iStock/PKpix

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.

*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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Nov
08
2024

Venmo vs PayPal

By | money, Money & Life | Comments Off on Venmo vs PayPal

Payment apps can make sending money to others, buying things online, or splitting the cost of a meal out with friends quicker and easier. There’s no need to enter your credit card details or deal with the hassles that cash and checks can present. That said, you may wonder about the difference between two popular options, Venmo vs. PayPal, and which one better suits your needs at a given moment.

Perhaps surprisingly, Venmo is owned by PayPal, so these apps share many convenient features. Learn how they differ and which one may be right for your financial needs.

Key Points

•   Venmo enables peer-to-peer transactions within the U.S. and features social elements to share transaction details.

•   PayPal supports both personal and business transactions globally, available to both U.S. and international users.

•   PayPal also offers certain social features, such as a “Sell on Social” option that allows users to share items for sale with their social network.

•   Both Venmo and PayPal impose fees on credit card transactions and instant bank transfers.

•   Security measures include encryption and fraud protection, among others, though users should remain vigilant against phishing scams.

Key Features Comparison

Here are a few of the key features of Venmo and PayPal, and how they compare to each other:

Venmo

 PayPal
Transactions must be initiated through the mobile app Transactions can be initiated through the mobile app or PayPal’s website
Primarily used for peer-to-peer payments, though can be used for business as well Can be used either for peer-to-peer or business transactions
Can both send and request money Can both send and request money
No fee to pay with a savings or checking account or debit card; currently a 3% fee for using a credit card No fee to pay with a bank account; currently 2.99% plus a fixed fee to use either debit and credit cards
Spending limit of $7,000 a week and sending limit of $60,000 a week for verified accounts No limit on spending or sending, though potentially up to $60,000 per single transaction for verified accounts
Domestic transactions only Domestic and international transactions

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.


Fee Structures

Both PayPal and Venmo charge fees for sending and receiving money in many different situations.

•   Personal transfers with both Venmo and PayPal are free, though there are some limitations to the amount and frequency you can send money to or from friends for free (see general guidelines above). These limits can vary depending on whether your account has been identity-verified or not.

◦   If you are transferring money from the app to your bank account/debit card, both payment services will do that for free within a few days. If you want to have that transaction completed instantly, comparing Venmo vs. PayPal fees again find they are equal (at the time of publication). Each charges 1.75% of the transaction amount, with a minimum of $0.25 and maximum of $25. PayPal may add currency conversions for international transactions.

◦   Note that there may be limits on how much you can transfer in this way in a single transaction or specific time period.

•   Business transactions may also come with a fee for the business that is accepting payments as well as for consumers (as noted above) who pay with a credit card. Venmo doesn’t charge a fee when you pay with a debit card, but PayPal typically does.

•   International transactions are not currently supported by Venmo. If you use PayPal to send payments to someone in another country, there is an international fee of 5% of the transaction, in addition to possible currency conversion and other fees.

Costs to Be Aware of

While both PayPal and Venmo are upfront about their fee structures, there are still a few costs that may seem unexpected if you are new to these platforms. A couple of common fees to note:

•   Both platforms will charge you if you send money using a credit card. You can avoid this fee by sending money from a checking or savings account or your existing balance. (As mentioned previously, PayPal often charges a fee if you use your debit card as well.)

•   Another cost to watch out for is that both PayPal and Venmo charge a 1.75% fee for instant transfers from your account in the app to your bank. To avoid this fee, select a normal bank transfer, which generally takes a few days to process.

Recommended: 10 Personal Finance Basics

Security and Fraud Protection

Both PayPal and Venmo work to protect their users. A few points to consider:

•   Encryption: Both PayPal and Venmo use encryption to protect their users’ data. It’s important, however, to understand that there are many phishing scams where criminals pretend to be reaching out on behalf of either Venmo or PayPal. Be vigilant about any communication you receive that says they are from either PayPal or Venmo, and check the payment app itself to see if you are being contacted by the providers.

•   Fraud protection: Venmo and PayPal both offer purchase protection for certain transactions which can help prevent fraud when you shop. You may be able to get refunded in the event that a purchase does not arrive or is not as described.

•   Dispute resolution: PayPal has a Resolution Center where you can flag any transaction you don’t recognize and otherwise dispute charges. Venmo allows users to open a dispute about a transaction within the app.

Recommended: APY Calculator

Social Features

Like many payment apps, PayPal and Venmo encourage interaction with friends, family, and others in your social network. PayPal has a “Sell on Social” feature that allows people to easily share items for sale with their social networks.

Venmo is widely seen as having robust social features. (Using emojis is popular on the platform, for instance.) Depending on your privacy settings, you may be able to see the purchases and other transactions of your friends on Venmo. Make sure that you adjust your privacy settings to reflect what you feel comfortable sharing.

International Capabilities

When it comes to PayPal vs. Venmo and international capabilities, there are major differences.

•   Supported countries: Currently, Venmo is only supported in the U.S. If you have moved outside the U.S. and need to access any funds you have in your Venmo account, you’ll need to contact Venmo support. PayPal, on the other hand, is supported in more than 200 countries and regions. In this way, in a Venmo vs. PayPal comparison, PayPal would be the better option if you want to conduct international transactions.

•   Currency conversion: PayPal typically charges the retail rate of exchange, plus a currency conversion fee of 4.5% of the transaction.

•   Cross-border fees: If you send or receive payments internationally with PayPal, you will likely pay a cross-border fee. This will vary depending on the location involved, but is typically a percentage of the total transaction.

Recommended: How to Wire Money in 5 Steps

The Takeaway

Venmo and PayPal are two of the largest companies that help people send and receive money, both for purchases as well as between friends and family. There are some significant differences between PayPal and Venmo (such as Venmo only being supported in the U.S.). While there are ways to use these apps to send money for free, charges with certain types of transactions — such as those where you use a debit card — and fees may vary. Educating yourself about PayPal vs. Venmo can help you decide when to use which payment apps.

Another way to send funds is using tools that your bank account 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 4.20% APY on SoFi Checking and Savings.

FAQ

Can businesses use both Venmo and PayPal?

Businesses can use Venmo and PayPal to receive or send money online. A business needs to set up either a Venmo Business or PayPal for Business account, which may come with additional processing fees. You’ll also want to make sure that you are aware of the different refund policies before accepting Venmo or PayPal for business transactions.

Are there transaction limits on Venmo and PayPal?

Yes, both Venmo and PayPal have transaction limits in place. Venmo has a weekly spending limit of $299.99 if you have not verified your account. If you have verified, you can send up to $60,000 per week and also spend a combined $7,000 a week on purchases with Venmo. If you have a verified PayPal account, there is generally no limit to the total amount of money that you can send, however PayPal may limit the amount that you can send in one transaction. Without verification, you can make a one-time payment of up to $4,000.

How do refunds work on each platform?

With PayPal, you can request a refund, which will be returned to your original payment form (say, credit card or bank account). Keep in mind with PayPal is that if you send money via “Friends & Family” instead of as “Goods & Services,” your transaction is not covered by PayPal’s Purchase Protection, so you may not be able to get a refund if the seller chooses not to issue one. Refunds on Venmo work similarly: The Purchase Protection program covers certain transactions. You must contact the vendor you sent money to, who can refund you via your original form of payment.

Photo credit: iStock/MStudioImages

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.

*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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Nov
08
2024

What Is a Cardholder Name?

By | Financial Independence, money, Terminology | Comments Off on What Is a Cardholder Name?

A cardholder name is the name of the account holder or authorized user, printed or embossed on a debit or credit card. It helps ensure that transactions are linked to the correct account. However, it may not be the same as the individual’s legal name.

While it is typically no longer common for a merchant to verify a cardholder name with a person’s identification, many merchants do reserve the right to refuse a purchase if the name on the card does not match a person’s actual name. Learn more about cardholder names and the role they play in your financial life.

Key Points

•   A cardholder name is the name of the account holder or authorized user embossed or printed on a debit or credit card, linking transactions to the correct account.

•   It may differ from the legal name due to typos or name variations, but it can be important to have that corrected.

•   Merchants can refuse purchases if the cardholder name doesn’t match the ID.

•   Cardholder names are crucial for aligning transactions with accounts.

•   Name changes or misspellings can be corrected by contacting the bank for a new card.

Definition and Importance of Cardholder Name

When you open a bank account, you will enter your personal information, including your legal name, as part of the account opening process. Depending on the type of account that you open, your bank may send you a credit or debit card to more easily make transactions on your account. In most cases, the name on your account will be embossed or printed on your card — this is referred to as your cardholder name.

While most of the time, your cardholder name is also your full and legal name, that is not always the case.

•   You may use a nickname (say, Jon Smith vs. Jonathan F. Smith) or other variation of your name. For instance, people with a hyphenated last name may not use both of those names.

•   In some cases, you may change your name after opening the account (often in cases of a marriage or divorce).

•   It may be that you made a typo or misspelled your name when you opened the account. (You can typically correct that and have a new corrected card issued to avoid problems.)

In most cases, with bank accounts and credit card accounts, you must use your legal name. This is part of efforts to prevent bank fraud and money laundering. That said, in some instances, you may be able to use, say, a preferred first name vs. your legal first name.

What’s more, merchants do reserve the right to deny a purchase if there’s a mismatch between the name on the card and a person’s name (say, on their ID) when they are using a debit card or a credit card.

For these reasons, it can be a wise move to make sure your cardholder name matches your legal name.

Cardholder names are important because they help align the transactions made with your card and your account, whether that may be your checking account (in the case of a debit card) or your line of credit (with a credit card).

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.


Where to Find Your Cardholder Name

The most obvious place to find your cardholder name is on the front of your credit or debit card itself. It is often embossed (or raised), but many cards today show the cardholder name with the letters printed vs. being raised.

If you have lost your card or don’t have immediate access to it and want to check your cardholder name, you may also be able to find it in your online banking account.

Common Issues With Cardholder Names

While it’s common for a cardholder’s legal name to be their cardholder name, there are a few times when this might not be the case.

Misspellings and Variations

Occasionally you may apply for a new credit or debit card with a variation of your full legal name. You may also make a typo on your application, causing the bank to send you a card with a misspelling of your name. While technically you may be able to use your debit or credit card with a name that is not your full and legal name, it’s wise to contact your bank or financial institution to get a replacement card with your correct name.

Married Names and Name Changes

Legally changing your name (such as when you get married or divorced) may cause your cardholder name to be different from your new legal name. While it is common for people to contact their financial institution to update the name on their account (and debit or credit card), it may not be required.

It can be a smart idea to have your cardholder name updated to match your new legal name at your earliest convenience. To update the name on your account as well as your cardholder name, contact your bank or credit union (or your credit card issuer). They can usually change the name on your account as well as ship you a new card with your updated name.

Recommended: Savings Account Interest Calculator

Cardholder Name vs. Authorized User

Many credit card and other financial accounts allow the primary account holder to add authorized users to their account. A fact about debit cards and credit cards is that an authorized user is someone who can use the card to make purchases but ultimately is not responsible for the account or the debt.

Here are some points to know about this arrangement:

•   Generally, each authorized user who is added to an account will receive their own card with their own cardholder name.

•   In some cases, an authorized user’s card will have the same card number as the primary account holder, while other times each authorized user has a different credit or debit card number.

Regardless, when adding an authorized user to an account, be sure you trust the person to use the card responsibly as it’s your personal finances on the line.

Protecting Your Identity: Best Practices

Identity theft is a real and growing concern, with the Federal Trade Commission (FTC) receiving more than one million reports of this problem via its website in 2023. It’s smart to take precautions to safeguard your personal details to avoid this scenario and related bank fraud.

One best practice for protecting your identity is to make sure to shield your credit or debit card from unauthorized use. Avoid giving out your debit card’s personal identification number, or PIN, and don’t lend your cards to people.

If you’re a frequent online shopper or place orders by phone, you might look into using what are known as virtual card numbers to further protect your account. Many credit cards offer the ability to generate these virtual card numbers which are good for a one-time use. They are typically created via a browser extension or an app.

Recommended: How to Write a Check

The Takeaway

Most credit and debit cards have the name of the account holder or authorized user embossed or printed on the card, as a way to ensure that only the correct person with privileges uses the card. While often the cardholder name is the full and legal name of the account holder, that is not always the case if, say, you have recently changed your name or you use a variation of your name. In these instances, you may want to update your card so it reflects your legal name.

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FAQ

Can my cardholder name be different from my legal name?

Yes, the name on your card may differ from your full and legal name and you may be able to still use your card to make purchases or withdraw money. However, it can be wise to have your card updated if, say, you changed your name when you got married or if your name was accidentally misspelled. Your bank or card issuer can revise your account information and send you a new card with an updated cardholder name.

What should I do if my cardholder name is incorrect?

While you may be able to make purchases with the card and be legally liable for any purchases made to your account, even if the name is not your full and legal name, it’s wise to update it. You can contact your bank, credit union, or other financial institution. They will be able to send you an updated card, usually at no cost to you.

How does my cardholder name affect online purchases?

When using a debit card or a credit card online, you will usually be asked to enter your cardholder name during checkout. You may also need to enter your name to register as a customer. While in most cases your legal name and your cardholder name match, if not, you’ll want to make sure to type in the name that is actually printed on your credit or debit card when you are entering your payment information. If the name on your card differs from your legal name, you may want to have your cardholder name updated to align with it.

Photo credit: iStock/Ridofranz

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.

*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.

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

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