Mar
11
2025
percentage sign on pink background

How to Calculate Interest in a Savings Account

By | Budgeting & Goals, money | Comments Off on How to Calculate Interest in a Savings Account

In a world where it can seem hard to make and stretch a dollar (hello, inflation!), isn’t it nice to know that there’s a way to earn money without any effort? That would be by collecting interest on a savings account. Your financial institution pays you for the privilege of using the cash you have on deposit, pumping up your wealth without the least bit of work on your part.

Knowing how to calculate interest can help you more effectively compare savings accounts. It also helps you understand exactly how much money you can earn on your money over time by keeping it in the account. What follows is a simple guide to how interest on savings accounts works.

Key Points

•   Understanding interest helps individuals compare savings accounts and determine potential earnings, enhancing their financial decision-making process.

•   Simple interest is calculated using the formula: Simple Interest = Principal x Rate x Time, allowing for straightforward calculations of earnings.

•   Compound interest accelerates wealth growth by allowing interest to earn interest, thereby increasing the principal over time and enhancing overall returns.

•   The annual percentage yield (APY) simplifies the comparison of different savings accounts by incorporating both the interest rate and the effects of compounding into a single rate of return.

•   Various factors, including Federal Reserve rates and promotional offers, influence the interest rates banks provide, making it essential to shop around for the best savings account.

What Is Interest?

Interest is the amount of money that a bank pays a depositor for storing money at their institution. While the money you have on deposit remains accessible to you, the bank uses that money for other purposes, such as lending it out for a mortgage loan. One way banks can make money is via the differential between the interest they pay for money on deposit (say, 3%) and the interest they charge when someone else borrows it (say, 6% on a home loan).

Simple Interest Formula

Calculating interest on a savings account involves some not-too-complex math; in fact, it’s primarily multiplication you need to use. The formula for simple interest looks like this:

Simple Interest = P x R x T

Where:

•   P stands for the principal, or the amount on deposit.

•   R stands for the interest rate, expressed as an annual rate usually, in decimal form.

•   T stands for time, or how long the money is held by the bank.

How Do You Calculate Interest in a Savings Account?

Now, consider how this formula could be used to calculate the interest earned on savings you deposit at a financial institution.

If you deposited $5,000 in a bank for one year at a 3.00% interest rate, the simple interest after one year would be, using the PxRxT formula:

5,000 x .03 x 1 = $150

So, by calculating savings interest, you see that you’ve earned $150. To put it another way, at the end of one year, your $5,000 would have grown to $5,150.

This, of course, represents simple interest. When putting your money in the bank today, you may well earn compound interest.


Simple vs Compound Interest

When you earn interest on the principal amount alone, such as in the example above, it’s called “simple interest.”

But the reason savings accounts can be such an effective tool for growing money is that not only is interest earned on the amount deposited, but the interest also earns interest. This is called compounding.

Depending on the account, interest may be calculated and added (or compounded) daily, monthly, or quarterly. Each time this happens, the interest earned to date becomes part of the principal, and the interest earned moving forward will be based on both the principal plus the interest earned to date. You might think of it as accelerating your money’s growth as time passes.

Example

Here’s what compound interest looks like in action, using the same $5,000 initial deposit, but a 3.00% interest that compounds on a monthly basis.

•   After one month, the account would have $5,000 plus interest totalling one-twelfth of the 3.00% annual interest, or $12.50.

•   The next month, the interest would be calculated on $5,012.50 ($5,012.50 plus $12.53). The month after that, the interest would be calculated on $5,025.03, and so on.

•   At the end of one year, the account would have $5,152.08.

•   After 10 years, monthly compounding will grow that initial $5,000 to $6,746.77, without adding a single penny more to the account.

With simple interest, you would only earn 3.00% on the original amount ($5,000) each year, or $150. With compounding, you earn interest on your principal plus any interest you’ve already earned.

Here’s a chart showing the difference simple vs. compound interest can make at a rate of 3.00% on $5,000 deposit:

Time

 Simple Interest

 Interest Compounded Monthly
Account opened $5,000 $5,000
1 year $5,150 $5,152.08
5 years $5,750 $5,808.08
10 years $6,500 $6,746.77
20 years $8,000 $9,103.77

It may not seem like compounding could make a huge difference, but adding to the principal regularly can grow your money faster. In addition, seeking out a higher interest rate can of course boost your cash faster as well.

APY vs Monthly Interest Rate

Calculating compound interest can get complex; the equation involves more complicated math. But some banks simplify an account holder’s potential earnings into a single rate called the annual percentage yield, or APY. The APY factors in both the interest rate and the effect of compounding into an actual rate of return over the course of one year. To calculate how much interest will be earned on a savings account using the APY, simply multiply the principal by the APY.

This simplicity makes APY a more helpful rate to use when comparing interest rates for different accounts or banks, because it includes the effect of compounding. Banks will usually post this information because the APY is higher than the stated interest rate. A savings account interest calculator can be helpful when calculating how much interest you’ll earn over multiple years. It also allows you to see how adding to your savings account each month can impact your earnings.

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Understanding Interest Rates

In comparing savings accounts at different banks (or even within the same bank), consumers may notice that interest rates can vary with the type of account. What’s more, interest rates posted by the Federal Reserve (aka “the Fed”) may vary considerably from the interest rates banks offer their customers.

Tasked with maintaining economic stability, the Fed uses signals such as employment data and inflation to determine its rates. During economic slowdowns, the Fed typically lowers rates to reduce the cost of borrowing and incentivize individuals and businesses to spend more, stimulating the economy. Conversely, when the economy appears to be growing too quickly, the Fed may raise rates, increasing the cost of borrowing in order to slow spending.

How does this play into the interest rate consumers might earn on their own savings? There are a number of factors that determine the interest rate a bank posts:

•   The target federal funds rate, set by the Fed, is one such cue.

•   Banks, however, set their own interest rates and these may vary depending on factors such as promotions the bank may have in place to attract new customers or incentivize greater account balances, as well as how much work an account takes to administer.

This last factor is why checking accounts, which are often used for a higher volume of everyday transactions, often pay less interest than savings accounts, where customers are more likely to let their money sit and accrue.

•   Interest rates also change over time, so the posted rate when an account is opened may not remain the same.

•   Banks may also have tiered interest rates, where account holders earn different rates of interest depending how much they have in their account, or balance caps, in which an interest rate can only be earned up to a certain amount.

Recommended: Basics of a High-Yield Savings Account

What Is a Good Savings Account Interest Rate?

What is a good savings account interest rate will vary with the times. During the 1980s, the interest rates on savings accounts were around 8.00%, while from 2018 to 2021, the average was barely one-tenth of one percent, which could hardly keep pace with inflation.

As you shop around for the right account at the right rate, you may find that online banks offer some of the most competitive APYs. Since they don’t have brick-and-mortar locations, they can pass their savings on to their customers. Savings account rates are averaging 0.41% APY as of December 16, 2024, according to the FDIC. A high-yield account at an online bank, however, may pay 3.00% APY or higher.

Questions to Ask When Considering a Savings Account

It’s hard to dispute the appeal of earning money on savings. But in addition to knowing how to calculate interest on a savings account, there are other considerations that could affect the flexibility and ease with which that account will help you achieve your goals. Some account holders may find they need multiple bank accounts to meet both their everyday and long-term financial needs and goals.

Here are some things to consider.

Will You Be Penalized for Everyday Transactions?

Savings accounts typically provide higher interest rates than checking accounts because they require less work for the bank to administer since they’re not meant to be used for everyday transactions.

But savings accounts may limit the number of transactions you can make in a month, and charge a fee if you exceed the limit. The Federal Reserve’s Regulation D, which imposed a six-transaction-per-month limit, was loosened during the COVID-19 pandemic. Even so, some banks have opted to continue to impose limits on savings account transactions to six or, sometimes, nine per month. Inquire at a potential new home for your funds before opening a savings account.

Is There a Minimum Balance?

Some banks incentivize or penalize customers to encourage them to keep more money in their accounts. For example, an account may be subject to fees unless the balance is maintained above a certain amount. Tiered savings accounts provide a higher rate of interest on bank balances above certain levels.

Can the Money Be Accessed Easily?

Some types of savings accounts provide higher interest rates but limit access to your money for a predetermined earnings period. For example, a certificate of deposit (CD) is a savings vehicle that holds an investor’s money for a certain period of time. At the end of that term, the account holder is paid the original principal plus the interest earned. There may be penalties imposed on early withdrawals from a CD.

Can the Account Help Achieve Money Goals?

Earning interest is a key way a savings account can help you achieve your financial goals. If you’re saving for multiple goals at the same time — say building your emergency fund and saving for an upcoming vacation — it can be helpful to be able to know at a glance how much progress you’re making towards each goal. At some banks, you might need to open separate accounts to track each savings goal, while others may provide tools to organize your savings goals within a single account.

The Takeaway

The easiest way to calculate how much interest you’ll earn on a savings account is to multiply the account’s APY by your balance. This tells you what you’ll earn on your money over one year if you don’t make any withdrawals or deposits during that time. An online APY calculator makes it easy to calculate how much interest you’ll earn in a savings account over multiple years, taking your bank’s compounding frequency into account.

When shopping for a savings account, it’s important to not only compare APYs but also read the find print to find out if there are any balance requirements to earn the advertised APY and/or any fees that could eat into your earnings.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 3.80% 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 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s 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 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have 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.

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

*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.

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

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Mar
06
2025
woman with shopping bag

Are You a Shopaholic? Signs to Know

By | Budgeting & Goals, money | Comments Off on Are You a Shopaholic? Signs to Know

People shop for all kinds of reasons — to acquire the things they need or want, to browse stores for new and interesting finds, and (sometimes) for the little thrill that comes with snagging a great deal.

For some people, however, shopping crosses the line into unhealthy territory. If you tend to hit the stores every weekend, spend the majority of free time planning for and making purchases, and/or have have tallied up some major debt as a result of your frequent shopping, you may actually be addicted to shopping.

Read on to learn more about what it means to be a shopaholic, signs that you may be addicted to shopping, and ways to curb the habit.

Key Points

•   A preoccupation with shopping and buying to relieve stress are hallmarks of shopping addiction.

•   Spending beyond one’s budget and accumulating unopened goods are common.

•   Individuals often hide purchases and feel guilt and regret after shopping.

•   Shopping addiction can lead to financial strain and emotional distress.

•   Managing compulsive shopping involves tracking triggers, finding alternatives, and seeking professional help.

Definition of a Shopaholic

Known as oniomania or compulsive shopping, shopping addiction is a behavioral disorder that involves frequent, excessive buying as a way to feel good and temporarily relieve feelings of stress, anxiety, or boredom. Like other types of addictions, a shopping addiction can substantially harm a person’s life, including their relationships and financial well-being.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

4 Shopaholic Symptoms

People who are addicted to shopping often get a sense of emotional relief right after buying something. Shopaholics also tend to spend more time and money on shopping than they can afford, and many get into financial problems — such as large amounts of credit card debt — as a result of their overspending.

Below are four signs that you may be addicted to shopping.

1. Experiencing a Rush of Excitement When You Buy

Shopaholics generally shop not because they really need something but rather for the sense of euphoria they experience when they’re shopping.

Similar to a drug addiction, compulsive shoppers will often experience a “high” or an adrenaline rush from the act of purchasing something. The brain then associates shopping with this pleasure and the person wants to try and recreate that feeling over and over again. This pattern can be used by a shopaholic to fill an emotional need or override a negative emotion.

2. Experiencing Post-Shopping Regret

Unfortunately, the high shopaholics experience is typically short-lived and later gets replaced by negative feelings, including shame, remorse, and guilt.

Shopaholics will often feel guilty after spending money, whether they splurged on something expensive or snagged something on clearance. Despite any remorse that follows, though, they tend to be good at rationalizing any purchase if they’re challenged.

Buyer’s remorse can force a shopaholic back into a negative cycle, since they know shopping is a surefire way to chase away negative feelings, at least temporarily.

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3. Accumulating Unopened Goods

Though shopaholics enjoy shopping, they often don’t care all that much about their purchases when they get home or when their online orders arrive in the mail. In fact, the items they purchase often end up unopened and shoved in the closet or under the bed.

Those living with a shopping addiction can actually develop hoarding tendencies as they accumulate more goods than they need and yet continue buying.

Recommended: 9 Questions to Ask Before You Buy Something

4. Concealing Shopping Habits

Shopaholics will often try to conceal their shopping habits from their spouses, family members, coworkers, and friends. This is often due to feelings of shame and/or the fact that they are shopping and spending money at the expense of their job or loved ones.

Normal Shopping vs Compulsive Shopping

If you enjoy shopping and make the occasional splurge, does that mean you are a shopaholic? Not necessarily. There are several distinct differences between normal shopping and compulsive shopping. Here’s a side-by-side comparison of normal shopping versus compulsive shopping.

Normal Shopping

 Compulsive Shopping
No addictive or compulsive component Resembles addictive behavior
Purchases are generally needed and used Purchases are often not needed and go unused
Isn’t followed by negative emotions Often followed by guilt, remorse, and shame
Does not lead to financial problems Continues despite negative financial consequences
No secrecy involved Secrecy is often involved
Occasional shopping sprees Frequent overbuying

Treating Compulsive Shopping

If you feel like shopping has become your main way of coping with stress, there’s a lot you can do to address the issue and regain control of your spending. Here are some strategies to try.

Understanding Your Triggers

Consider keeping a journal of how you feel when the shopping urge hits: Are you bored? Angry? Anxious? Do you feel the desire to buy new things after you hang out with a certain person, spend time on social media, scroll your email, or watch certain shows?

Tracking your triggers can provide insight into what drives you to want to shop and how you can better manage (or avoid) those triggers in the future. For example, you might seek out other friends, unsubscribe from marketing emails, and unfollow shopping-focused social media accounts.

Developing Other Coping Strategies

Overcoming any addiction typically requires learning alternative ways of handling the stress of everyday life. You might come up with a list of non-shopping activities you find relaxing and enjoyable, such as calling a friend, watching a movie, reading, going for a walk, listening to music, doing yoga, or engaging in a hobby. You can consult your list when you get the overwhelming urge to shop. This can help you break the cycle of using shopping as a way of trying to feel better about yourself.

Delaying Gratification

Another way to deal with impulsive or compulsive shopping is to establish a waiting time before you spend money on anything nonessential. “Combat the urge to impulse spend by instituting a holding period on all purchases,” suggests Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “Before hitting the buy button, wait 24 to 48 hours. After the holding period, come back to the shopping cart and reevaluate. In some cases, you might not even remember why you wanted it in the first place.”

Seeking Expert Help

If you think you may be addicted to shopping and can’t seem to get a handle on it on your own, it can be worth seeking professional help.
A mental health professional can help you understand the emotional roots and psychological factors contributing to your compulsive shopping. Addiction therapy, including cognitive behavioral therapy (CBT), can help you understand your triggers and come up with coping strategies that don’t involve shopping.

You might also benefit from financial counseling, particularly if your shopping behavior has left you in debt. A financial advisor can help you set up a spending budget that allows you to pay off expensive debt, while also building — or rebuilding — your savings.

💡 Quick Tip: Your money deserves a higher rate. You earned it! Consider opening a high-yield checking account online and earn 0.50% APY.

Financial Consequences of Compulsive Shopping

Many compulsive shoppers continue making purchases even when they struggle to pay bills, max out credit cards, or face financial hardship. This behavior can create a cycle of stress and anxiety, reinforcing their shopping addiction.

Key financial consequences of compulsive shopping include:

•   Excessive debt: Constant impulsive purchases can quickly accumulate, causing you to spend beyond what you can pay off at the end of the month and mounting overwhelming credit card debt.

•   Poor financial decisions: Compulsive shoppers may neglect essential financial planning, fall for scams, or buy unnecessary items instead of prioritizing needs.

•   Damaged credit score: High credit utilization and any missed payments can have a negative impact on your credit profile, making it difficult to secure loans, mortgages, or even rent an apartment.

•   Depleted savings: Continuous spending on nonessential items can drain your savings account, leaving little to no financial cushion for emergencies.

•   Bankruptcy risk: In extreme cases, uncontrolled debt from compulsive shopping may lead to bankruptcy, further complicating financial recovery.

How to Support a Loved One Struggling with Shopping Addiction

Supporting a loved one with a shopping addiction requires patience, empathy, and constructive action. You might start by having an open, non-judgmental conversation about their behavior, expressing concern without blame. You could also offer some helpful suggestions, such as tracking their spending habits, avoiding triggers, and (possibly) seeking professional help like therapy or support groups.

At the same time it’s important to set healthy boundaries and to avoid enabling their behavior by lending money or covering debts. Instead, you might offer alternatives like budgeting together or engaging in non-shopping-related activities. If they’re open to it, you could help them set financial goals and spending limits or offer to be their accountability partner.

Letting Your Savings Grow With SoFi

If your goal is to start saving more and spending less, you’ll want to choose a bank account that helps your money grow faster than it could in a traditional savings account and charges minimal or no fees.

When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

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

FAQ

What are the signs of being a shopaholic?

Signs of a shopping addiction include frequent impulsive purchases, spending beyond one’s budget, hiding purchases from family or friends, feeling guilt or regret after shopping, and using shopping as a way to cope with stress or emotions. Shopaholics may also experience financial strain, accumulate debt, and have difficulty controlling their shopping urges.

What is the root cause of shopping addiction?

Negative feelings, such as stress, anxiety, and loneliness, are often the underlying causes of shopping addiction. Shopping can provide a distraction from these unpleasant emotions and help you feel more in control. It can also elicit a kind of psychological “high,” which is why compulsive shoppers often seek this behavior out again and again.

How do you cure a shopping addiction?

People who are addicted to shopping often respond well to various treatments, including antidepressant medications, talk therapy, cognitive-behavioral therapy (CBT), self-help books, support groups, and financial counseling.

Are there support groups for compulsive shoppers?

Yes, support groups like Shopaholics Anonymous and Debtors Anonymous provide help for compulsive shoppers. These groups are available in-person and online and offer a safe space to share experiences, gain support, and learn coping strategies from others facing similar challenges. These groups can also help you determine when you might need additional help from a mental health professional.

How can I prevent relapse after overcoming shopping addiction?

Preventing relapse involves maintaining strong financial habits, avoiding triggers, and developing alternative coping mechanisms for stress or emotions. Some strategies that can help you stay on track include regularly reviewing your budget, using shopping lists, implementing a waiting period before making purchases to help control impulses, and engaging in non-shopping activities (like hobbies or volunteering). You might also seek out ongoing support from therapy, accountability partners, or support groups.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 3.80% 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 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s 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 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have 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.

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

*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.

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

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

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Opening a Foreign Currency Bank Account Online

What You Need to Know About Foreign Currency Bank Accounts

By | Financial Independence, Life & Career, money | Comments Off on What You Need to Know About Foreign Currency Bank Accounts

A foreign currency bank account, also known as a multicurrency account, can facilitate transactions made in foreign currencies; that is, not in U.S. dollars. This can be a significant benefit for businesses. They may use multicurrency (or foreign currency) bank accounts for international transactions as well as to support operations overseas. This can offer a major convenience because of the flexibility with different currencies.

But these multicurrency accounts aren’t just for businesses. Some individuals may also want to fund a bank account with foreign currency in certain situations. Read on for a closer look at what a foreign currency account is, how to open a multicurrency account, and the pros and cons of this type of bank account.

Key Points

•   Foreign currency accounts allow holding and sending funds in various currencies.

•   These accounts can be useful for individuals who make frequent international transactions.

•   Opening an account may require a valid ID, proof of income and employment, and a minimum initial deposit.

•   Benefits include avoiding transaction fees and competitive exchange rates.

•   Potential drawbacks include fees and high initial and ongoing balance requirements.

🛈 Currently, SoFi does not allow bank accounts to be opened in any currency other than USD.

What Is a Multicurrency Account?

A multicurrency account is a type of bank account that’s designed to hold money denominated in foreign currencies. It may also be referred to as a foreign currency account or borderless account. It is a simpler way to deal with regular deposits of foreign currencies.

The types of currencies accepted for deposit or used for withdrawals can be determined by the bank. Some of the currencies your bank may process include:

•   Australian dollars (AUD)

•   Canadian dollars (CAD)

•   Euros (EUR)

•   Great Britain pound sterling (GBP)

•   Japanese yen (JPY).

As mentioned, foreign currency accounts can be opened for business or personal reasons. Businesses that operate globally may require these accounts in order to send payments to vendors or receive payments from international clients.

You might open a foreign currency account for yourself, as an individual, in a few different circumstances. Perhaps you live or are working abroad. Or maybe you regularly make payments overseas or need to send money to friends and family internationally.

How Does a Multicurrency Account Work?

With a multicurrency account, you are able to deposit, hold, and send money in different currencies, just as the name implies. Depending on the financial institution, you may be able to earn interest on deposits, as well.

In addition, these accounts may allow you to convert funds back and forth into foreign currencies as needed without paying the usual fees associated with these operations.

A multicurrency bank account that’s set up as a savings account might follow typical savings account rules. For example, the bank may limit you to six withdrawals from the account per month (though these regulations have been loosened since the COVID-19 pandemic; check with your financial institution). If that limit applies and you exceed it, the bank may impose an excess withdrawal fee. Keep in mind that any fees assessed for a foreign currency account may be processed in U.S. dollars.

Multicurrency accounts at Federal Deposit Insurance Corporation (FDIC) member banks enjoy FDIC protection, up to the established limit. The FDIC insures banking customers up to $250,000 per depositor, per financial institution, per ownership category. This may well reassure you about the safety of your funds.

One thing to note is that foreign currency bank accounts aren’t used for forex trading. If you’re interested in trading foreign currency as an investment, you’d need to open a separate brokerage account for that. There are a number of online brokerages that offer the option to trade forex alongside other investments, such as stocks and exchange-traded funds (ETFs).

Typical Requirements to Apply for a Foreign Currency Bank Account

If you’re interested in opening a foreign currency account, it’s important to know what documents you’ll need. That way, you can gather the necessary materials and speed through the application process. The specifics can vary from bank to bank but generally, you must:

•   Be of minimum age to open an account, typically 18 or 19

•   Have a valid, government-issued form of identification

•   Provide identifying information, including your name, address, date of birth and Social Security number

•   Meet minimum deposit requirements

•   Provide proof of income and employment

The requirements to open a foreign currency account aren’t that different from those for a foreigner opening an account in the U.S. Whether you can apply for a foreign currency bank account online or not will depend on the bank. Some financial institutions allow you to complete the application online, while others require you to open an account over the phone or in-person at a branch. Check with yours to learn the exact protocol.

You may also need to already have at least one other account open with the bank before you can apply for a multicurrency account. If the bank imposes this requirement, you may also need to maintain a specific minimum balance in that account to qualify.

Pros of Foreign Currency Account

If you’re curious about multicurrency accounts, it may well be because you are tangled in some red tape as you try to bank in, say, both U.S. dollars and euros. A foreign currency bank account can help meet certain money management needs, like toggling back and forth between two kinds of currency.

Here, the pros of multicurrency accounts.

•   When you deposit funds into your account, you can hold it as multiple currencies, including leftover foreign currency from travel, in one place. You don’t have to exchange foreign currency before you can use it.

•   You typically avoid foreign transaction fees you might otherwise incur.

•   Being able to switch among different currencies could allow you to leverage the most favorable exchange rates.

•   You may be able to earn interest on your balances.

•   If the institution where your account is has FDIC insurance, you are covered up to $250,000 per depositor, per insured bank, for each account ownership category, in the rare event of a bank failure.

•   Multicurrency bank accounts can be used for personal or business purposes.

•   Sending payments or money in foreign currencies can be more convenient.

A foreign currency account could also come in handy if you travel. You can use a linked debit card to make purchases or withdraw cash in each country you visit, without having to get traveler’s checks from your bank.

Cons of Foreign Currency Account

While a multicurrency bank account might be appropriate in some situations, there are a few drawbacks to consider. Specifically:

•   Your financial institution might charge you account and minimum balance fees the same as you might pay for any other bank account.

•   Interest rates and annual percentage yields (APYs) may be low.

•   Initial deposit requirements or minimum balance requirements may be on the higher end.

•   Changing currency rates can affect the value of the money in your account.

Another drawback of foreign currency accounts is that not all banks offer them. And some banks may only offer these accounts for businesses, not individuals.

Multicurrency Account Fees

Foreign currency accounts can have fees, just as any other type of bank account may. Depending on the bank, some of the fees you might pay include:

•   Monthly maintenance fees

•   Excess withdrawal fees (for savings accounts)

•   Overdraft or non-sufficient funds (NSF) fees

•   Foreign transaction fees

•   Currency conversion fees

When comparing multicurrency bank accounts, take time to review the details thoroughly. It’s important to understand which currencies you can hold, which fees you might pay, and whether you’re required to maintain a minimum balance in the account.

Once you’ve scoped those details out, see if the benefits of this kind of account will outweigh the fees. It could wind up being a good way to simplify your banking life if your financial life requires frequent foreign transactions.

The Takeaway

Foreign currency accounts can simplify money management if you regularly send or receive money in currencies other than U.S. dollars. Opening one of these multicurrency bank accounts is not that different from opening any other type of account. It can be a major convenience if your daily life involves receiving and/or sending funds overseas — and a good way to take control of your international financial life.

FAQ

What is the purpose of a multicurrency account?

A multicurrency or foreign currency bank account allows you to receive, hold, and send funds in more than one currency. This can be convenient for businesses and individuals who frequently make international transactions and would like to have an account that recognizes multiple currencies.

What types of banks offer multicurrency accounts?

Many but not all banks offer multicurrency accounts. Some of the U.S. banks that offer foreign currency accounts at press time include Citi and HSBC. Some financial technology companies like Wise and Revolut offer digital multicurrency accounts. For businesses, Wells Fargo and PNC offer foreign currency accounts. You can contact your current bank to find out if multicurrency accounts are available.

How does a multicurrency account work?

A multicurrency bank account allows you to deposit, keep, and send funds in more than one currency. You can decide if you keep the funds in different currencies or convert them. This kind of account can help you conduct international transactions without necessarily paying all the usual fees involved.

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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 3.80% 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 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s 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 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have 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.

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

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
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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04
2025
couple laptop budgeting

How to Make a Budget in Excel

By | Budgeting & Goals, Financial Independence, money | Comments Off on How to Make a Budget in Excel

Budgeting is an essential part of money management. Without any kind of plan, you can end up living paycheck to paycheck, accumulate debt, and miss opportunities to save. Excel can be a powerful budgeting tool that allows you to track your income and expenses and plan for future financial goals.

Below, we’ll walk through the process of creating a budget in Excel, either from scratch or using a template, plus offer tips on how to track your spending, set financial goals, and avoid common budgeting mistakes.

Key Points

•   To create a budget in Excel, you can start with a blank workbook or download a premade budget template.

•   When starting from scratch, you’ll need to list income sources, expense categories, and months.

•   Once you add data, you can calculate totals using the SUM function.

•   Customization options include adding financial goals, charts, and graphs.

•   Using a premade budget template offers a ready-made structure, saving time and allowing you to focus on entering financial information right away.

How to Use Excel to Make a Budget From Scratch

The steps below will help you use Excel to create a basic budget that tracks monthly income and expenses over one year on a single spreadsheet. Once you nail the basics using Excel for budgeting, you can customize your spreadsheet to create all different kinds of budgets from scratch. Here’s how to get started.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

Step 1: Opening a Workbook

Opening a workbook

To begin creating a budget in Excel, you’ll need to open Microsoft Excel and create a new workbook. This blank spreadsheet will serve as your budgeting tool. Note that the columns are letters (A, B, C, D, etc) and the rows are numbers (1, 2, 3, 4, etc). We’ll refer to each box in the spreadsheet, such as A1, B2, C3, as a “cell.”

Step 2: Adding Income

Adding Income

To start your budget, add your sources of income. Skip a row from cell 1A and label box 2A “Income.” After Income, you’ll want to list down all sources of income (in cells 3A, 4A, etc.). You might only have one or two sources of income (such as “Salary” and “Tutoring”). Or, you might have several if you earn a paycheck plus extra money through another side gig and/or you have passive income streams like real estate income or investment dividends.

Label the final box in your income list “Total.”

Step 3: Adding Expenses

Adding Expenses

Skip a space under the Total cell in column A and write “Expenses.” Next, you’ll want to list your regular expenses down column A in the same way you did Income, with the final box labeled “Total.”

Step 4: Adding the Months of the Year

Adding the Months of the Year

In row 1, column B (which is cell B1), you’ll want to enter “Jan.” To have Excel add the rest of the months for you, simply select cell B1, click the lower right corner of the cell, and drag it across 12 cells to column M (or cell M1). Excel will fill in all the other months.

Step 5: Entering Data to Start Budgeting

Entering Data to Start Budgeting

Now it’s time to start entering income and expense data for each month that you have available. In the cells labeled Total, you’ll need to enter the SUM function. To do this, select the cell and type “=SUM” followed by the cell range you want added together in parentheses, then press Enter.

For example, if you only have two sources of income listed in column B (cells B3 and B4), you’d type “=SUM(B3:B4).” To add the SUM function for each month, simply click the lower right corner of the cell and drag it across all the rows through to the “Dec.” column.

Note: You can also add a “Year” column after Dec. to get your totals for the year. To do this, you’ll need to add the SUM function to the first cell under “Year,” then drag it down so you can get year-end totals for each source of income and each expense category.

Step 6: How to Track Spending and Stick to a Budget

Entering Data to Start Budgeting

An Excel budget allows you to quickly see how your income and spending line up. To do this, you can add a “Balance” heading in column A, under your Expenses section, to subtract your expenses from your income. (You might skip a row for a cleaner look.) Next, use the SUM function and input the cells you want subtracted from each other, such as “=SUM(B5-B12).”

Ideally, you’ll end up with a positive (rather than a negative) number in your Balance cell.

Step 7: Adding Some Goals

To take your budget to the next level, you’ll want to think about your goals and how much you need to save each month to achieve them. Short-term goals might include building an emergency fund, paying off credit card debt, or saving for a vacation. Long-term goals might include funding your retirement and saving for a child’s future college education.

If your Excel budget shows that your monthly expenses are close to or higher than your monthly income, you’ll want to comb through your regular expenses and find areas where you can cut back. Any money you free up can then be redirected towards saving for your goals.

To help ensure you make progress towards your goals, you might add them as line items in your budget. This allows you to allocate money towards saving each month, just as you earmark money for expenses. Once you know how much you want to save each month, consider setting up an automated monthly transfer from your checking account to a high-yield savings account for that amount.

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Customizing a Pre-Made Excel Budget Template

A quicker way to create a budget in Excel is use one of their many premade budget templates. Simply go to File>New, then search for the term “budget.” You’ll see a library of budget template options, including a personal monthly budget, household budget, college budget, and vacation budget.

Using one of these templates may allow you to create a more detailed budget. For instance, a template might include “Projected” and “Actual” income and expenses and tabulate the differences.

You can also customize an Excel budget template to make it suit your needs. For example, you can add rows or columns by selecting where you want to add a column or row, right-click, then scroll down to “Insert.” You’ll then have the option to add to “Table Columns to the Left” or to “Table Rows Above.”

In addition, you can get rid of sections that aren’t relevant to you. For example, if you don’t have any loans, you can delete the “Loans” row under the Monthly Expenses tab by right clicking the tab, select “Delete” and “Table Rows.”

How to Track Spending and Stick to a Budget

Once you prepare an Excel budget, you’ll have a sense of your average monthly earnings and spending and how they line up. You may also have a clearer idea of your goals, and how you want to tweak your spending to help you achieve them.

To better manage your money and stick to your spending targets, it’s a good idea to track your spending — at least for a month or two. You can do this by carrying around a small notebook and pen and making it a habit to record every transaction you make (or, you could use the Notes app on your phone). A higher-tech option is to use a budgeting app that links to your credit and debit cards directly. These tools automatically record and categorize your transactions for you (though you may still have to track cash payments).

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

Tips for Maintaining Your Excel Budget

To make sure your budget is effective over time, consider these tips:

•   Review your budget monthly: This can help you assess spending patterns and determine if you need to make adjustments in your budget or spending moving forward.

•   Refine categories: As you track spending, you may find that you need to adjust spending categories listed on your budget. You may also decide to change your savings goals based on changes in your habits or financial priorities.

•   Use charts and graphs: Excel allows you to create graphic representations of your data. These charts and graphs can help you visualize where money is going, analyze spending trends, and identify any problem areas.

Recommended: Savings Goal Calculator

Common Mistakes to Avoid When Budgeting in Excel

Excel can be a highly effective budgeting tool when consistently and correctly. Here are some common pitfalls to avoid.

•   Ignoring small expenses: Minor purchases — like a latte here, a bagel sandwich there — can add up to a sizable sum and impact your budget.

•   Overcomplicating the spreadsheet: Keeping your Excel budget layout simple can make it easier to manage. If it becomes too time consuming to fill in your data, you might simply give up on budgeting after a few months.

•   Not accounting for irregular expenses: When listing expenses, it’s important to factor in irregular costs like quarterly bills and annual fees. You can do this by estimating the annual cost, then dividing that sum by 12 to come up with a monthly cost.

Excel Budget Template Examples

Here are some examples of different Excel budget templates you can use:

•   Personal Budget: This offers a simple layout for tracking income and expenses. Monthly and yearly totals are calculated and the spreadsheet is fully customizable.

•   Personal Monthly Budget: This template allows you to hone in on one month at a time. You can also set expected income and expenses, then input your actual income and expenses and see how they line up.

•   Holiday Shopping Budget: This Excel budget template makes it easy to organize your holiday shopping. You can track what you want to purchase, what you have purchased, how much it all cost, and even if it’s been wrapped or not.

•   Wedding Budget: You can use this template to track spending on flowers, reception, photography, and more. It also records estimated versus actual costs and calculates the difference.

The Takeaway

An Excel budget can be a simple and effective way to manage your money. Whether you build one from scratch or use a premade template, Excel allows you to organize your income and expenses, use built-in calculators for accuracy, and create visuals that highlight trends and offer insights into your financial health.

Once you have a clear picture of what’s coming into your bank account each month and where that money is going, you can take better control over your finances, start siphoning more into savings, and get closer to your goals.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


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

FAQ

How often should I update my Excel budget?

It’s a good idea to update your Excel budget monthly, as this can help you identify overspending, adjust for unexpected expenses, and keep your financial goals on track. It’s also a good idea to check in on your budget whenever there are significant changes to your income or expenses. This can help ensure your budget stays aligned with your financial situation.

Can I use Excel for both personal and business budgeting?

Yes, Excel can be a good tool for both personal and business budgeting. Personal budgets focus on tracking income, expenses, and savings, while business budgets typically include additional elements like cash flow, profit and loss statements, and financial forecasting. Excel allows for multiple sheets within a single workbook, making it easy to manage different aspects of your financial life separately.

How do I handle irregular income in my Excel budget?

To handle irregular income when budgeting, you’ll want to come up with a monthly average based on historical data. For example, if you’re expecting to earn at least $12,000 for the year from freelance work, you would allocate $2,000 a month to income, and use that money to offset monthly expenses.

What are some advanced Excel features that can enhance my budget?

Excel offers a number of advanced features that make budgeting more effective. For example, you might tap advanced charting options to turn your data into pie charts and line charts or use Conditional Formatting to highlight all negative numbers in red and positive numbers in green. Another helpful feature is PivotTables, which allows you to extract data from a larger spreadsheet and put it into a smaller table and even reorganize the data.

How can I visualize my budget data in Excel?

Visualizing budget data in Excel can be a great way to track spending and identify trends. For example, you might create a pie chart to show the proportion of your income you allocate to each spending category. This quickly highlights where the majority of your money is going and can uncover areas where you may be overspending. Or you might create a bar graph that illustrates your spending in different categories for each month of the year. This can help you to see patterns and seasonal fluctuations.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 3.80% 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 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s 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 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have 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.

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

*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.

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

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

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31 Things to Do With a Windfall

Financial Windfall: Definition and Ideas on Use

By | Budgeting & Goals, Growing Wealth, money | Comments Off on Financial Windfall: Definition and Ideas on Use

You just came into a cash windfall. You’re happy about this, but you aren’t exactly sure about what to do with it. Should you spend it? Save it? Invest it?

The answer will depend on the size of the windfall and your current financial situation and goals. Here are some ideas for things you can do with a financial windfall to ensure that you are handling it in the smartest way possible.

Key Points

•   A good way to use a windfall is to pay down high-interest debts, such as credit card balances.

•   It’s also wise to build an emergency fund with at least three to six months of living expenses.

•   Consider putting the funds in a high-yield savings account or investing in stocks or bonds for future growth.

•   You might allocate funds to personal goals like professional development, starting a side business, or home improvements.

•   Another good use for a windfall is donating to a charity for a potential tax deduction and to support causes you care about.

What Is a Financial Windfall

While there’s no one specific definition for a financial windfall, it typically means that you’ve received some unexpected money of a significant amount. For some people, a windfall could be a few hundred dollars; for others, it could be millions.

The key component of a windfall is the element of surprise — you may be surprised by receiving any money at all, the amount of the money, or both. Generally, a windfall isn’t money you’ve factored into your regular income and budget. This can make it a major plus, but it can also lead to some financial challenges, along with some major decisions to make.

Examples of Financial Windfalls

Financial windfalls can come from a variety of sources. Here are some common examples of windfalls:

•   Lottery or prize winnings

•   Employee bonus

•   Tax refund

•   Inheritance or life insurance payout

•   Major successes in investing

•   Profit from selling a property or business

•   Injury or lawsuit settlement

💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.

3 Tips to Help You Make the Most of Your Money Windfall

If you are fortunate enough to have a windfall land in your lap, you’ll need to decide if you’re going to spend, save, invest, donate the money, or some combination of the above. The following steps can help you come up with a plan that makes the most of your newfound cash.

•  Get professional advice: Depending on the size and source of your windfall, you might owe taxes on it and it might push you into a different tax bracket. Consulting with an accountant or financial planner can help you identify the implications.

•  Take it slow: While it’s exciting to have cash coming your way, it’s wise to take some time and reflect on how the money would be best spent versus deciding “Dinner’s on me!” for you and your 10 best pals to celebrate. For instance, could your windfall lower or wipe out some debt? Could it be invested? Don’t let the adrenaline rush drive you to make too quick a decision. Take some time to clarify your goals.

•  Think long-term: If you’ve received a sizable sum, it may be tempting to quit your day job to travel or take on a passion project. Again, it could be wise to seek financial counseling before you make that type of leap. What sounds like a major sum may not actually be enough to fully finance your dreams. It’s important to look at the financial implications of a major life change carefully.

Remember That Taxes May Be Due on Your Windfall

Depending on the source of your windfall, it may be subject to income taxes. Tax law regarding windfalls is complicated, however, so it’s a good idea to consult an accountant or other tax professional to make sure you understand how much your windfall is actually yours to keep.

Understanding Tax Implications Based on the Source of the Windfall

Whether or not you owe taxes on a windfall will depend on where your windfall is coming from. Here’s a look at some examples:

•   Inheritance: In general, any inheritance you receive does not need to be reported to the IRS. However, you may owe state taxes if the amount exceeds a certain threshold.

•   Life insurance payout: Proceeds you receive as a beneficiary of a life insurance policy typically aren’t taxable, but if the proceeds have accumulated interest, taxes may be due on that interest.

•   Lottery/prize winnings or large bonus: If your windfall is from a lottery, other prize, or large bonus, you are typically taxed at your ordinary income tax rate. This means you will pay taxes on your windfall based upon your tax bracket.

•   Sale of property or a business: Profits from selling real estate or a business are generally taxed at the long-term capital gains rate, depending how long you owned the asset.

•   A large cash gift: You typically do not have to pay taxes on a windfall that was given to you as a gift; the giver is responsible for paying any gift taxes.

What to Do With a $500 Windfall

Let’s say the amount of money you received was $500. While it isn’t a ton of money, it’s still significant enough that you should figure out what to do with it. Here are a few ideas for what to do with a small windfall.

1. Investing in Real Estate

Did you know that you can become a real estate investor with just $500? Real estate investment trusts (REITs) allow you to invest in real estate on a small scale. Similar to mutual funds, REITs are companies that own a mix of properties and typically pay dividends to investors. Although there is risk involved in investing in REITs, it might be a good way to get your feet wet if you’re interested in real estate investing.

2. Meeting With a Financial Advisor

Hiring a financial advisor to help you learn how to plan for your financial future might be a good use of this money. Financial advisor fees vary: Some charge a flat fee, some charge hourly, some are commission-based. If this professional will be managing a portfolio for you, they may charge 1% to 2% of the portfolio’s value.

3. Buying a New Wardrobe

You could refresh your wardrobe with your new supply of cash. Upgrading your clothes could give you the confidence to go after your professional goals. Or you might splurge on some clothes you’ve been eyeing that give you a self-esteem boost.

4. Traveling Somewhere Cheap

You might plan a weekend getaway or road trip for only $500. Throw in your credit card points or rewards you’ve accumulated to bump up your budget.

5. Investing in a Certificate of Deposit

Another thing you can do with a $500 financial windfall is put it into a certificate of deposit (CD). This is a type of savings account that holds a fixed amount of money for a set period of time and generally pays more than a regular savings account.

6. Getting Your Car Fixed

Have you been putting off car repairs because they’re too expensive? Now that you have $500, it might be time to invest in your vehicle so it’s less likely to break down when you’re on the road.

7. Buying Renter’s Insurance

If you’re a renter, your personal property is not covered under your landlord’s homeowners insurance policy. If you don’t have renter’s insurance, you might use your windfall to buy yourself some peace of mind. The average renter’s insurance cost in the U.S. is $148 per year, which means your windfall could insure your possessions for at least the next three years.

8. Purchasing a Life Insurance Policy

If your family depends on your income, life insurance helps protect them in the event that you pass away. The average cost of a life insurance policy is $26 per month. That means you could pay for the whole year up front with your $500 windfall. Typically, life insurance rates increase as you age and your risk of dying increases. So it’s likely to be less expensive to purchase life insurance while you’re young, rather than waiting until you feel like you can afford it.

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9. Taking a Professional Development Class

While private colleges and universities might be too pricey, you may be able to find a class online or at your local community college for less than $500. Finding something that is relevant to your career may even help you move up the ladder at your job.

What to Do With a $1,000 Windfall

Did you receive a $1,000 financial windfall? Here are some ideas for how you might use this sudden influx of cash.

10. Getting Started on Your Emergency Fund

An emergency fund is a separate savings account that you can tap to cover or offset the expense of an unexpected expense or loss of income. If you haven’t started building your emergency fund, or it’s not as robust as it should be, your $1,000 windful could boost your safety net.

11. Hiring an Estate Planning Lawyer

Another important thing you could do with a $1,000 cash windfall is meet with an estate planning lawyer to write your will, establish a trust, and determine your power of attorney. You may feel some peace knowing your family will be protected and your assets will be distributed according to your wishes.

12. Opening a 529 Plan

A 529 plan offers a way to save for your child’s college education. With $1,000, you can get a nice head start on college savings. Your money will grow tax-free and if you withdraw the money for qualified educational expenses, you won’t pay any taxes on those withdrawals.

13. Doing Home Improvements

With $1,000, you could do a small home improvement project like replacing your curtains, painting a room or two, putting down a new kitchen floor, or sprucing up your backyard. If you do the work yourself, you may be able to stretch your financial windfall money even further.

14. Donating It

If there’s a nonprofit you’ve always wanted to support, you might consider using your $1,000 windfall to make a donation. Your money could make a big difference. Plus, you may also be able to deduct the contribution on your taxes (if you itemize).

15. Opening a High-Yield Savings Account

Savings accounts rates are averaging 0.41% APY as of December 16, 2024, according to the FDIC. A high-yield savings account, however, may pay 3.00% APY or higher. Plus, savings accounts are typically insured by the FDIC up to $250,000 per depositor, per insured bank, for each account ownership category, in the event of bank failure.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.

16. Saving for Retirement

If you have a 401(k) but haven’t contributed much so far, your windfall could help you increase your savings rate. Or, if you’re eligible to contribute to a traditional or Roth individual retirement account (IRA), you might open one with your $1,000 windfall to boost your retirement savings.

17. Investing in Your Side Hustle

To make money on your $1,000 financial windfall, you might use it to start a low-cost side hustle. Maybe you’re a freelance graphic designer but you need to buy some software to be able to do more detailed work. Or, perhaps you need to purchase a domain name and hire a developer to create a business website. With this initial investment, you may be able to bring in much more money and improve your finances.

What to Do With a $5,000 Windfall

You just got a cash windfall of $5,000. Now what? Here are some ideas.

18. Saving Up for a Down Payment

In some cases, you only need to put 3% to 5% down on a home. That means you could conceivably buy a $150,000 home using your $5,000 financial windfall money as your down payment. More realistically, you could use your windfall to add to money you’ve already saved for your down payment.

19. Paying Off Credit Card Debt

The average consumer credit card debt balance is $6,730. A $5,000 windfall could pay most of that bill off in one fell swoop and could save you a significant amount of money in interest.

20. Investing Via Robo-Advisors

Do you want to invest your $5,000 cash windfall, but you don’t know where to start? Robo advisors create a diversified investment portfolio based on your investment goals and the level of risk you’re willing to take.

21. Investing in Blue-Chip Stocks

You might also consider using your windfall to invest in blue-chip stocks. These stocks are from well-established and financially stable companies that typically pay dividends to investors.

22. Investing in Bonds

Though they carry some risks, bonds are considered relatively safe and stable investments. When you purchase a bond, you’re lending money to an entity like a government or corporation. In return, you receive the interest payments at regular intervals. At the end of the repayment period, you get your original investment amount back.

23. Taking a Vacation

With $5,000, you and your family could potentially take a great vacation within the U.S. For example, your windfall might be enough to fund an RV excursion, urban getaway, visit to a theme park, or a beach retreat. Check out sites like Expedia, Costco Travel, and Booking.com for deals.

What to Do With a $10,000+ Windfall

If you received a cash windfall of $10,000 or more (lucky you!), here are some things you could do with it.

24. Opening a Money Market Account

You could use your $10,000 to open a money market account, which typically earns a higher interest rate than a regular savings account.

25. Paying Off Student Loan Debt

The average federal student loan debt in the U.S. is $37,853 per borrower. If you have a $10,000 financial windfall, you could put a nice dent in your student loan balance.

26. Trying Peer-to-Peer Lending

Using a peer-to-peer lending platform, you could lend your financial windfall money to someone who is looking for a loan and potentially earn a good return. Just keep in mind that this type of lending involves risks.

27. Making Mortgage Payments

You could make a large principal-only payment toward your mortgage loan with a $10,000 cash windfall. This can help you pay off your loan off sooner and save a significant amount of interest. First, verify that there are no prepayment penalties tied to your loan.

28. Going to College

While $10,000 won’t cover a bachelor’s degree unless you also get grants or scholarships, you may be able to earn your associate’s degree at your local community college with your financial windfall money. Or it might cover several classes at a public university that could lead to career advancement.

29. Starting Your Business

Let’s say you want to do more than start a side hustle, and you’re ready to open a small business. A $10,000 windfall could help you get the ball rolling on your business without needing to borrow money. You might consult with a successful business owner in your industry for guidance on how best to allocate your money.

30. Increase Contributions to Your Retirement Account

This can help you build your nest egg, while also reducing your taxable income, which could help offset taxes owed on your windfall (if applicable).

31. Make a Move

If you’re looking to be closer to work or simply want to live in a quieter — or busier — location, a $10,000 financial windfall could be enough to cover the cost of hiring movers.

The Takeaway

Receiving a financial windfall opens up all kinds of possibilities. You might pay down debt, take a vacation, invest the funds, pursue higher education…or even do a little of each. Though it’s tempting to spend your windfall right away, it’s a good idea to step back and think through the wisest way to use your newfound cash. In the meantime, you might park the money in a high-yield savings account. This allows you to earn an above-average interest on your windfall but still keeps the money accessible.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


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

FAQ

What amount of money is considered a windfall?

The amount that’s considered a windfall can vary from person to person. For some, it could be a few hundred dollars. For others, a windfall might be thousands or even millions of dollars.

What to do with a $50,000 windfall?

There are many ways to use a $50,000 windfall. You could pay down debt, put a down payment on a home, pump up your retirement account, start or add to a college savings account, do a home renovation, or use it as seed money to start a business.

What can you do with a $100K windfall?

With a $100,000 windfall, you might pay off your mortgage, put a down payment on a home, build your retirement or college savings fund, invest the money for long-term growth, or a combination of the above.

Should you save or invest a windfall?

It depends on your financial situation and goals. If you have high-interest debt, a good use of a windfall is to pay it off. Next, you might start or top off your emergency fund. Whether to save or invest the rest will depend on your goals. For short-term goals, like saving for a vacation, wedding, or new car, consider putting the funds in a high-yield savings account. For goals that are at least five years off (like retirement, buying a house, or a child’s college education) investing may be a better choice.

How can you avoid common mistakes with a windfall?

To avoid common mistakes with a windfall, it’s important to pause and make a plan for how to use the money, rather than spend impulsively. Smart ways to use a windfall include paying off high-interest debt, building an emergency fund, and investing for long-term goals like retirement or a child’s college education.

About the author

Kylie Ora Lobell

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa. Read full bio.

Photo credit: iStock/TARIK KIZILKAYA

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 3.80% 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 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s 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 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have 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.

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

*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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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

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

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✝ 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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