Oct
11
2023
Cost of Christmas Lights on Utility Bills

How Much Christmas Lights Cost to Run for a Month

By | Budgeting & Goals, Family Finances, money | Comments Off on How Much Christmas Lights Cost to Run for a Month

Many people love showing their holiday spirit with Christmas lights, whether just a strand of twinkle lights around a window or going all-out like the Griswolds.

While these lights are festive, it’s worth noting that they aren’t free. In fact, the cost of running holiday lights rose 13% last year, costing the average household $15.48 vs. $13.41 the prior year.

In this economy, every dollar can count, so if you want to learn how much it costs to run Christmas lights for a month and how to reduce that expense, read on.

Here, you’ll learn more about:

•   How much do Christmas lights cost to run?

•   How much does it cost to run Christmas lights for a month?

•   How can you save money on your holiday light electric bill?

Factors Affecting the Cost of Running Christmas Lights

Running Christmas lights uses energy, which can translate to higher utility bills. How much of an increase you see in your electric bill can depend on a number of factors, including:

•   How many strands of lights you use

•   The type of bulbs used in each strand

•   The number of hours you run your lights each day

•   How many days you run Christmas lights for

•   Where you live and what you pay per kilowatt hour for electricity.

All of these things can influence how large your Christmas lights electric bill turns out be once January rolls around. Understanding what you could wind up paying can help if affordably celebrating the holidays is your goal.

Keep in mind that other costs can drive up electric bills during the holidays, apart from Christmas lights. If you’re using the oven more often to prepare holiday meals, for example, that can result in a higher electric bill. You may also see a bigger bill if colder weather means the heat is kicking on more often or your kids are home all day using electronics more while school is out. Lowering your energy bill may require a multifaceted approach.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

How Much Electricity Do Christmas Lights Use?

The amount of energy used by Christmas lights can depend on the type of bulb and the number of bulbs per strand. The most popular options for Christmas lights include incandescent mini lights, mini LED lights, and ceramic C7 lights.

So which type of bulb uses the most energy?

The simplest answer is to look at the wattage of Christmas lights, based on bulb size and number of bulbs per strand. For example:

•   With C7 lights, for instance, you’re typically getting 25 lights per strand.

•   With mini LED lights, you’ll normally have 50 bulbs for a 14-foot strand and 100 bulbs per 32-foot strand.

•   With mini icicle lights, you often have 300 bulbs for a 26-foot strand.

Here’s how the average wattage for each one compares, though note that incandescent bulbs stopped being manufactured and sold in August 2023 (some people may still own and use strands of these, however):

•   C7 lights: 5 watts

•   C9 incandescent lights (2-¼” long): 7 watts

•   Mini incandescent lights: 0.4 watts

•   Mini LED lights: 0.07 watts

Between those three options, mini LED lights draw the least amount of energy per strand while C7 lights draw the most.

LEDs possibly lowering energy costs by up to 90% vs. the other options. Switching to LEDs could be a way to save money daily during the holidays.

Also note that you’d need four strands of C7 lights to equal the same number of bulbs in just one strand of incandescent or LED mini lights. This is important to understand because it can affect the number of kilowatt hours used and your overall energy costs.

Recommended: 23 Tips on Saving Money Daily

Cost of Running Christmas Lights

So how much do Christmas lights cost to run for a month? Or longer? Calculating your estimated cost of running Christmas lights matters when trying to lower your electric bill during the winter months. Again, what you’ll pay can depend on a variety of factors, including where you live and how much electricity costs.

The average household pays $0.17 cents per kilowatt hour for electricity, according to the U.S. Department of Energy, but prices may be significantly higher or lower in different parts of the country due to cost of living differences.

If you live in Connecticut, for example, you might pay an average of $0.21 cents per kilowatt hour. People living in Florida, however, might pay an average of $0.11 cents per kilowatt hour. Residents of Hawaii typically pay the most, currently spending $0.32 cents per kilowatt hour.

Here’s how to figure out how much you’ll pay for Christmas lighting:

•   Multiply the wattage of the lights by the hours per day the lights will be on, then divide by 1,000 to find kilowatt hours per day

•   Multiply kilowatt hours per day by your cost of electric usage to get the cost per day

•   Multiply the cost per day by the number of days your lights will be on

Calculating the Cost of Christmas Lights

Now, for how much does it cost to run Christmas lights? Here’s a look at what it would cost to run C7 lights, C9, and mini incandescent lights, and mini LED lights for six hours a day for 30 days, using a price of $0.14 cents per kilowatt hour. Here’s what you’d pay for each one:

Bulb Type

 Hourly Cost

 Daily Cost

 Monthly Cost
C7 (25 bulbs, 5 watts per bulb) $0.0175 $0.105 $3.15
C9 (25 bulbs, 7 watts per bulb) $0.025 $0.15 $4.50
Incandescent Mini Lights (100 bulbs, 0.45 watts per bulb) $0.0063 $0.0378 $1.13
Mini LED Lights (100 bulbs, 0.07 watts per bulb) $0.0042 $0.0252 $0.76

Keep in mind that these costs are for just one strand of lights, as noted. If you string together several strands on your tree, frame your windows with lights, and then drape your shrubs or street-facing windows outdoors with more, your costs will of course go up.

Also, in terms of what the average person spends on Christmas lights, it can vary by a state’s cost of living, as well as by what kind of bulbs are used. Louisiana residents who run LED lights, for example, would likely spend the least, since they are paying just over nine cents per kilowatt hour (currently the lowest rate in the US) and they would be using energy-saving bulbs. Meanwhile, Hawaiians who opt for incandescent bulbs would probably spend the most, since their bulbs use a considerable amount of power and they currently pay the highest national rate for energy of almost 33 cents per kilowatt hour.

💡 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.

Tips to Save on Your Christmas Lighting Bill

If you’re looking for ways to lower your energy bill when you start plugging in your holiday lights, follow this advice.

Embracing Energy-Efficient LEDs

As mentioned, the wattage of Christmas lights plays an important part in determining how much you pay for electric bills over the holidays. Between C7 lights, incandescent lights and LED lights, LED lights are highly energy-efficient. According to the Department of Energy, residential LEDs that are ENERGY STAR rated use up to 75% less energy and last 25 times longer than incandescent lights.

People who use LED Christmas lights tend to pay far less than those using incandescent bulbs or C7 lights. So it follows that an easy way to save money on your electric bill and reduce energy usage would be to use mini LED lights as often as possible. Aside from that, LED bulbs emit less light and are less likely to overload sockets, making them a potentially safer option for Christmas lighting compared to other types of bulbs.

So if you still have some incandescent bulbs in your box of Christmas decorations, you may want to think about swapping them out for LEDs. (You won’t find incandescents made or sold in the US anymore either.)

Benefits of Solar-Powered Outdoor Lights

You might consider using solar-powered outdoor lights on your house over the holidays. These strands depend upon energy collected by small panels that gather and hold energy from the sun during the day.

These strands don’t plug in and draw no electrical power. So they can be especially easy and economical to use over the holidays.

Battery-Operated Lights for Smaller Displays

If you like to create smaller displays, you might consider battery-powered strands of lights. There is a wide range of how long these lights will stay illuminated, but this can be a good unplugged option to try for small-scale displays. While you do have to pay for the batteries, it can be cheaper than plugging in lights for weeks on end.

Recommended: 18 Common Misconceptions About Money

The Takeaway

A higher-than-usual electric bill can put a damper on your holiday celebrations. Estimating your potential costs beforehand can help you manage utility expenses. And you can decide whether it’s worth it to invest a little money in upgrading your current Christmas lights to energy-efficient options.

Having the right banking partner, such as one with budgeting tools, can also help make tackling high utility bills after the holidays easier.

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


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

FAQ

Do LED Christmas lights use a lot of electricity?

Compared to C7 lights or incandescent mini lights, LED Christmas lights use the least amount of energy. Specifically, they can use up to 90% less energy while lasting longer. LED Christmas lights also emit less heat and can be easier to install than other types of holiday lighting.

Do Christmas lights raise your light bill?

Holiday lights can raise your electric bill during the winter months. How much it costs to run Christmas lights can depend on several things, including the type of bulbs used, how many light strands you’re running, how long you turn the lights on for, and the average cost of energy per kilowatt hour in your area. Using timers and switching to energy-efficient bulbs can be helpful for reducing your Christmas lights electric bill.

Do Christmas trees use a lot of electricity?

Christmas trees can use a lot of electricity, depending on the type of lights you use, the number of strands on the tree, and how long you leave your tree plugged in each day. Using mini LED lights can reduce electric costs for Christmas tree lighting, while using C7 bulbs to light your tree could result in a higher energy bill.

Photo credit: iStock/BanksPhotos

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

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

SOBK1023001

Read more
Oct
11
2023
Cost of Christmas Lights on Utility Bills

How Much Christmas Lights Cost to Run for a Month

By | Budgeting & Goals, Family Finances, money | Comments Off on How Much Christmas Lights Cost to Run for a Month

Many people love showing their holiday spirit with Christmas lights, whether just a strand of twinkle lights around a window or going all-out like the Griswolds.

While these lights are festive, it’s worth noting that they aren’t free. In fact, the cost of running holiday lights rose 13% last year, costing the average household $15.48 vs. $13.41 the prior year.

In this economy, every dollar can count, so if you want to learn how much it costs to run Christmas lights for a month and how to reduce that expense, read on.

Here, you’ll learn more about:

•   How much do Christmas lights cost to run?

•   How much does it cost to run Christmas lights for a month?

•   How can you save money on your holiday light electric bill?

Factors Affecting the Cost of Running Christmas Lights

Running Christmas lights uses energy, which can translate to higher utility bills. How much of an increase you see in your electric bill can depend on a number of factors, including:

•   How many strands of lights you use

•   The type of bulbs used in each strand

•   The number of hours you run your lights each day

•   How many days you run Christmas lights for

•   Where you live and what you pay per kilowatt hour for electricity.

All of these things can influence how large your Christmas lights electric bill turns out be once January rolls around. Understanding what you could wind up paying can help if affordably celebrating the holidays is your goal.

Keep in mind that other costs can drive up electric bills during the holidays, apart from Christmas lights. If you’re using the oven more often to prepare holiday meals, for example, that can result in a higher electric bill. You may also see a bigger bill if colder weather means the heat is kicking on more often or your kids are home all day using electronics more while school is out. Lowering your energy bill may require a multifaceted approach.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

How Much Electricity Do Christmas Lights Use?

The amount of energy used by Christmas lights can depend on the type of bulb and the number of bulbs per strand. The most popular options for Christmas lights include incandescent mini lights, mini LED lights, and ceramic C7 lights.

So which type of bulb uses the most energy?

The simplest answer is to look at the wattage of Christmas lights, based on bulb size and number of bulbs per strand. For example:

•   With C7 lights, for instance, you’re typically getting 25 lights per strand.

•   With mini LED lights, you’ll normally have 50 bulbs for a 14-foot strand and 100 bulbs per 32-foot strand.

•   With mini icicle lights, you often have 300 bulbs for a 26-foot strand.

Here’s how the average wattage for each one compares, though note that incandescent bulbs stopped being manufactured and sold in August 2023 (some people may still own and use strands of these, however):

•   C7 lights: 5 watts

•   C9 incandescent lights (2-¼” long): 7 watts

•   Mini incandescent lights: 0.4 watts

•   Mini LED lights: 0.07 watts

Between those three options, mini LED lights draw the least amount of energy per strand while C7 lights draw the most.

LEDs possibly lowering energy costs by up to 90% vs. the other options. Switching to LEDs could be a way to save money daily during the holidays.

Also note that you’d need four strands of C7 lights to equal the same number of bulbs in just one strand of incandescent or LED mini lights. This is important to understand because it can affect the number of kilowatt hours used and your overall energy costs.

Recommended: 23 Tips on Saving Money Daily

Cost of Running Christmas Lights

So how much do Christmas lights cost to run for a month? Or longer? Calculating your estimated cost of running Christmas lights matters when trying to lower your electric bill during the winter months. Again, what you’ll pay can depend on a variety of factors, including where you live and how much electricity costs.

The average household pays $0.17 cents per kilowatt hour for electricity, according to the U.S. Department of Energy, but prices may be significantly higher or lower in different parts of the country due to cost of living differences.

If you live in Connecticut, for example, you might pay an average of $0.21 cents per kilowatt hour. People living in Florida, however, might pay an average of $0.11 cents per kilowatt hour. Residents of Hawaii typically pay the most, currently spending $0.32 cents per kilowatt hour.

Here’s how to figure out how much you’ll pay for Christmas lighting:

•   Multiply the wattage of the lights by the hours per day the lights will be on, then divide by 1,000 to find kilowatt hours per day

•   Multiply kilowatt hours per day by your cost of electric usage to get the cost per day

•   Multiply the cost per day by the number of days your lights will be on

Calculating the Cost of Christmas Lights

Now, for how much does it cost to run Christmas lights? Here’s a look at what it would cost to run C7 lights, C9, and mini incandescent lights, and mini LED lights for six hours a day for 30 days, using a price of $0.14 cents per kilowatt hour. Here’s what you’d pay for each one:

Bulb Type

 Hourly Cost

 Daily Cost

 Monthly Cost
C7 (25 bulbs, 5 watts per bulb) $0.0175 $0.105 $3.15
C9 (25 bulbs, 7 watts per bulb) $0.025 $0.15 $4.50
Incandescent Mini Lights (100 bulbs, 0.45 watts per bulb) $0.0063 $0.0378 $1.13
Mini LED Lights (100 bulbs, 0.07 watts per bulb) $0.0042 $0.0252 $0.76

Keep in mind that these costs are for just one strand of lights, as noted. If you string together several strands on your tree, frame your windows with lights, and then drape your shrubs or street-facing windows outdoors with more, your costs will of course go up.

Also, in terms of what the average person spends on Christmas lights, it can vary by a state’s cost of living, as well as by what kind of bulbs are used. Louisiana residents who run LED lights, for example, would likely spend the least, since they are paying just over nine cents per kilowatt hour (currently the lowest rate in the US) and they would be using energy-saving bulbs. Meanwhile, Hawaiians who opt for incandescent bulbs would probably spend the most, since their bulbs use a considerable amount of power and they currently pay the highest national rate for energy of almost 33 cents per kilowatt hour.

💡 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.

Tips to Save on Your Christmas Lighting Bill

If you’re looking for ways to lower your energy bill when you start plugging in your holiday lights, follow this advice.

Embracing Energy-Efficient LEDs

As mentioned, the wattage of Christmas lights plays an important part in determining how much you pay for electric bills over the holidays. Between C7 lights, incandescent lights and LED lights, LED lights are highly energy-efficient. According to the Department of Energy, residential LEDs that are ENERGY STAR rated use up to 75% less energy and last 25 times longer than incandescent lights.

People who use LED Christmas lights tend to pay far less than those using incandescent bulbs or C7 lights. So it follows that an easy way to save money on your electric bill and reduce energy usage would be to use mini LED lights as often as possible. Aside from that, LED bulbs emit less light and are less likely to overload sockets, making them a potentially safer option for Christmas lighting compared to other types of bulbs.

So if you still have some incandescent bulbs in your box of Christmas decorations, you may want to think about swapping them out for LEDs. (You won’t find incandescents made or sold in the US anymore either.)

Benefits of Solar-Powered Outdoor Lights

You might consider using solar-powered outdoor lights on your house over the holidays. These strands depend upon energy collected by small panels that gather and hold energy from the sun during the day.

These strands don’t plug in and draw no electrical power. So they can be especially easy and economical to use over the holidays.

Battery-Operated Lights for Smaller Displays

If you like to create smaller displays, you might consider battery-powered strands of lights. There is a wide range of how long these lights will stay illuminated, but this can be a good unplugged option to try for small-scale displays. While you do have to pay for the batteries, it can be cheaper than plugging in lights for weeks on end.

Recommended: 18 Common Misconceptions About Money

The Takeaway

A higher-than-usual electric bill can put a damper on your holiday celebrations. Estimating your potential costs beforehand can help you manage utility expenses. And you can decide whether it’s worth it to invest a little money in upgrading your current Christmas lights to energy-efficient options.

Having the right banking partner, such as one with budgeting tools, can also help make tackling high utility bills after the holidays easier.

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


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

FAQ

Do LED Christmas lights use a lot of electricity?

Compared to C7 lights or incandescent mini lights, LED Christmas lights use the least amount of energy. Specifically, they can use up to 90% less energy while lasting longer. LED Christmas lights also emit less heat and can be easier to install than other types of holiday lighting.

Do Christmas lights raise your light bill?

Holiday lights can raise your electric bill during the winter months. How much it costs to run Christmas lights can depend on several things, including the type of bulbs used, how many light strands you’re running, how long you turn the lights on for, and the average cost of energy per kilowatt hour in your area. Using timers and switching to energy-efficient bulbs can be helpful for reducing your Christmas lights electric bill.

Do Christmas trees use a lot of electricity?

Christmas trees can use a lot of electricity, depending on the type of lights you use, the number of strands on the tree, and how long you leave your tree plugged in each day. Using mini LED lights can reduce electric costs for Christmas tree lighting, while using C7 bulbs to light your tree could result in a higher energy bill.

Photo credit: iStock/BanksPhotos

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

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

SOBK1023001

Read more
Oct
08
2023
15 Psychological Pricing Tactics to Be Aware Of

15 Psychological Pricing Tactics to Be Aware Of

By | Budgeting & Goals, Financial Independence, money | Comments Off on 15 Psychological Pricing Tactics to Be Aware Of

Psychological pricing tactics are strategies that trigger emotions among consumers and can encourage them to shop and spend more.

For example, perhaps you’ve seen deals where prices are marked down to figures that end in .99 cents rather than a whole number. Or you’ve seen items at the supermarket that say you should compare the price to a different size package to see how much you’re saving.

The psychological impact of these maneuvers can lead you to think you are getting a great deal and head to the cashier. But you may not really be snagging a bargain and could wind up paying more than you need to.
Ready to boost your knowledge about these practices? Here, you’ll learn:

•   What is psychological pricing?

•   What does psychological pricing encourage you to spend more?

•   How can you avoid overspending due to psychological pricing?

What Is Psychological Pricing?

Psychological pricing is a sales strategy that focuses on how pricing can impact you, the shopper, emotionally and psychologically. As different prices will have different effects, these tactics can influence your spending and saving habits and get you to dole out more money. By understanding and dodging these moves, you may be able to quit spending money so freely.

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.20% APY, with no minimum balance required.

How Does Psychological Pricing Work?

One of the main reasons why psychological pricing is so effective is that consumers rarely know how much something should cost. Instead, they lean on cues, context, and the prices of similar items to clue them in on whether something is a bargain.

These tactics can fool your brain and often offer the illusion of a deal. Unless you are an expert in supply chain finance or are a human supercomputer who can assess the total costs and lifecycle of a product, it’s hard to gauge how much something should cost.

Marketers may count on that and use it to their advantage, tempting you to make an impulse buy, even when the price is perhaps not as appealing as it may seem.

15 Examples of Psychological Pricing Tricks

Here, you can learn some of the most common tactics that can be used to encourage consumers to overspend.

1. Charm Pricing

Ever wonder why the price of that shampoo is $4.99 and not $5.00? Enter charm pricing. This technique operates using the “left-digit” bias. This means that the digit that’s leftmost in a price will impact the consumer’s perceptions the most. In other words, the number that’s to the farthest left will “charm” you into thinking the price is lower than it actually is.

In turn, a retailer will use the numbers “5” and “9” instead of rounding up the price. For example: $495 versus $500 may make you believe the price is closer to $400 than $500. Another example: $8.99 versus $9 can make you think the price is closer to $8 and not $9. You might wind up overspending and feeling as if you are bad with money afterward.

2. Odd-Even Pricing

This kind of pricing, which favors using odd numbers, is along the same lines as charm pricing. The reasoning behind odd-even pricing is odd and even numbers affect one’s perception of the value of an item.

Interestingly, prices that end with odd numbers make the price of something seem less expensive. On the flip side, prices that end with an even number or that are rounded up to a whole number seem more expensive.

3. Decoy Pricing

With this pricing tactic, you’re led to a particular choice by being offered inferior options or ones that seem “not good enough” or “too pricey.” You can think of this as Goldilocks pricing, where the middle option seems the best deal or choice.

For example, you’re shopping online for dog biscuits for your furbaby Bailey. In doing a bit of comparison shopping, you find similar boxes of pumpkin doggie biscuits; in fact, there are three different options. The least-expensive option doesn’t seem like you’re getting the best quality or the most bang for your buck, and the most-expensive option seems like you’re going overboard. So you go for the mid-priced choice. If you hadn’t been offered those three options, you might have bought the lowest-price item and been perfectly satisfied. Now, you’ve wound up overspending.

4. Buying in Bulk

Warehouse membership clubs and discount retailers are filled to the brim with buying in bulk deals. For instance, “Buy 2, Get 1 Free” or “10 for $15.” Sure, you might be saving some dollars off of the manufacturer’s suggested price, but at the end of the day, you are spending more than if you just bought a single item.

Are you really saving on a $2.50 tube of toothpaste if you spent $40 and bought more than you need? Will you really be able to eat through that 24-pack of yogurts before they reach their expiration date?

5. Price Appearance

The design or look of prices can make a difference in how it’s perceived. For instance, prices that are in a smaller-sized font and don’t have the zeroes tacked onto the end may appear less expensive. For instance, “$40” can seem cheaper than “$40.00.” Longer prices can strike us as more expensive. Why’s that? Simply because it takes longer to read them.

6. Removing a Comma

Similar to the price appearance tactic, removing a comma from a higher-priced item can make the cost seem lower than if you included that little bit of punctuation. That’s because including a comma makes the price take longer to read. If you make something phonetically shorter (i.e., it takes less time for the brain to read and process), it may trick the brain to think the price is lower.

Recommended: 5 Ways to Achieve Financial Security

7. Fake Time Constraints

These limited time offers are set up by the retailer to create a sense of urgency — all so you act quickly and part with your money. For example, you may see an offer that says, “50% off for this weekend only!” These constructed time constraints can have you moving quickly, at times impulsively, and get you to spend more.

8. Emphasis on Emotion or Nostalgia

By tapping into the allure and pull of nostalgia — an item that reminds you of your childhood or is associated with happy memories from the past — retailers can get you to part with your money. Because you long to relive those fond, happy times, you might not worry as much as the cost of something.

Similarly, tapping into a strong emotion, such as joy, family, adventure, and general warm — happy vibes, either through packaging, marketing, or brand messaging, can urge you to spend money.

9. Innumeracy

This psychological pricing tactic draws on what you might call “being bad with numbers.” Many consumers don’t have a grasp on basic mathematical principles to figure out what is a better deal when shopping. For instance, “buy one, get one free” sounds better to most folks than “two items at 50% off,” and they’ll often be convinced to buy by the first phrase.

10. Removing the Dollar Sign

Prices with dollar signs can make you feel a bit of fear or anxiety that comes with having to spend money — especially if it’s money you don’t have. Retailers often know this, so sometimes they will remove or reduce the size of the dollar sign to nudge you towards shelling out some bucks.

11. Bundling

This pricing tactic involves grouping a couple of items that go together and offering a slightly discounted price. For instance, you might see a men’s grooming kit that ends up being 25% less expensive than bought separately.

This strategy makes you feel as if you’re saving money, when in fact, you’re spending more than you need to — especially if you really only need one of the products included in the bundle. You may wind up walking out of the store with more than you intended to buy vs. using your credit card responsibly.

Recommended: 10 Signs You’re Living Beyond Your Means

12. Limits Per Customer

When limits are placed as to how much you can buy of a certain item, it tricks you into believing that the product is scarce and you’d better hurry and buy it. Or it might lead you to think the price is so low that the retailer can only offer so many at that price before they start losing money. Because of this, you might buy up to the limit so you don’t forgo a great bargain.

However, you have no proof that any of these assumptions are correct. It could just be clever marketing at work.

13. Showing the Real Price Next to the Sale Price

Also known as anchoring, this process involves showing the retail price next to a sale price to make it seem like a real bargain. For instance, seeing the sale price of $14.99 next to the full price of $19.99 can make you feel as if you are saving big (or perhaps bigger than you actually are).

By “anchoring” your decision based on the full price, the sale price will appear to be a great deal. You often see this tactic at discount grocery stores and off-price department retailers.

14. Showing the Daily Equivalence

You’ve probably come across this tactic. A company will break down the cost of a product or service per day, which makes the cost seem negligible. For instance, a $60 a month cloud storage service breaks down to $2 a day. Or a $15 a monthly streaming services subscription equates to a mere 50 cents a day.

By highlighting these daily costs, it can seem like you’re spending very little each day on a product or service. This might convince you to throw down some cash…and then regret making a bad financial decision.

15. Using Fake Reviews or User Generated Content

While there are obviously some ethical questions around this, using fake reviews can create the appearance that a product or service is getting a lot of buzz. And if something is popular, you might be enticed to jump on the bandwagon and see what everyone is talking about. It could make you buy something you don’t need, that’s overpriced, or that’s lower quality.

An influencer making a plug on a social media platform, along with viewer comments also raving about something, can also make an item seem valuable. Or some companies may reward customers with discounts if they share how great an item is. It gives you the impression that you must buy or will experience FOMO (fear of missing out), which can in turn lead to FOMO spending.

It’s wise to ask questions before making an impulse buy in this situation and to do your own research on trusted sites to evaluate products.

Can You Do Anything About Psychological Pricing Tricks?

While psychological pricing tricks are pervasive and can certainly dupe you into spending more, there are ways you can avert them:

•   Try the 30 day rule. What is the 30 day rule? If you see a pricey item you are tempted to buy but hadn’t budgeted for, make a note in your calendar for 30 days later. Write down what it is, its price, and where you saw it . Then wait 30 days. Chances are, the initial urge to purchase the items will have fizzled. If not, then you can feel reassured that it’s something you truly want and budget for it.

•   Consider the personal value of an item. Instead of fixating on the price tag of something, consider the value it would bring to your life. Is it something you would get a lot of joy from? Or something you could really use? Let that guide you vs. buying an item because it seems like a bargain or everyone else has it.

•   Figure out the number of uses of an item. If you plan on wearing a pair of jeans at least 30 times and they cost $90, that’s $3 per use. Is that something you can afford and would enjoy having? Then it might be worthwhile. But if it’s a $20 item and chances are it will most likely get shoved into the closet and ignored, that might end up being a waste of money.

•   Stick to a weekly budget. It’s no fun having to get your finances back on track after blowing your budget. Avoid that by keeping a weekly number in mind for your discretionary spending — think clothing, entertainment, eating out, hobby-related spending, and sundry items (vanilla lattes, a new conditioner, etc.). This can help you stay within your means. It could be helpful to have a separate bank account where you park your discretionary funds. It’s far easier to see exactly where your money is going that way.

The Takeaway

Psychological pricing tricks can certainly sway you to dole out more cash. That being said, if you are aware of them, you can use good judgment about these marketing tactics. That, in turn, can allow you to stay within your means, make the best financial decisions for your situation, and stay in control of your cash.

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

FAQ

Is psychological pricing illegal?

Psychological pricing typically isn’t illegal, though in some cases, the tactic could veer into some other murky territory that might not be legal. But for the most part, these pricing tricks are acceptable ways of getting consumers to believe they are getting a deal or that an item is in high demand.

Is psychological pricing immoral?

There are some instances where pricing tricks border on unethical territory. For instance, using fake reviews to make a product seem more popular than it really is and to generate hype is considered unethical.

Why is psychological pricing effective?

Psychological pricing is effective because it relies on your brain making snap judgments in spending situations. These tactics can steer you toward choosing a particular product or buying more that you may truly need.

Photo credit: iStock/recep-bg

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

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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03
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Questions to Ask Before You Buy Something

9 Questions To Ask Yourself To Prevent Impulse Purchase

By | Budgeting & Goals, Financial Independence, money | Comments Off on 9 Questions To Ask Yourself To Prevent Impulse Purchase

You’ve likely made some impulse purchases in your life — or at least purchases you later realized weren’t all that wise or well thought out. It can be easy to get caught up in the excitement of buying something new or “just marked down,” that you lose sight of your better instincts — not to mention your budget.

One way to avoid making impulsive or bad buying decisions is to hit pause just before you make a purchase to ask yourself a series of simple questions. This extra step forces you to step back and honestly consider how the potential purchase fits into your life. You might ultimately decide you don’t want the item after all. And, if you do decide to buy it, you can feel confident that you’re doing it for the right reasons.

9 Questions To Ask Yourself Before Buying Something

Knowing some key questions to ask yourself before you buy something can help ensure that you spend according to your values and cut down on purchases you’ll regret later. After all, the last thing you want is to spend money on things that don’t really enhance your life — and may add to your debt (especially if you’re already paying off some debt).

Here are some key pre-purchase questions to consider.

💡 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.

1. Is This a Want or a Need?

A great first question to ask is whether your prospective purchase fulfills a need or is just something you want. If it’s an item you need — and you can afford it — then you might just go ahead and buy it. If, on the other hand, it fills a want, it’s a good idea to continue vetting the purchase with the questions that follow.

2. What Do You Gain From Buying This?

Consider what you hope to gain from making the purchase. Is it the admiration or approval from other people? Does someone you know or follow on social media have it? Is this something that will genuinely improve your quality of life?

Research suggests that people feel more satisfied when they spend money on things or experiences that mean something to them and reflect their values.

Recommended: What Is FOMO Spending?

3. Is This Something That Will Actually Sell Out?

Though retailers will often make you think you need to act quickly (due to low stock), there’s a good chance that the items that you’re thinking of buying will still be available at a later date. If you’re feeling pressured to buy due to a limited-time sale, keep in mind that sales pop up all the time. Waiting for the next one could save you even more money, as you may decide you don’t really want it that much.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

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4. Can You Get It Used or for a Better Price

If you’re thinking of pulling the trigger on a full-price item you don’t need right away, consider whether you may be able to find a better deal. For example, you might:

Buy Used

If you’re looking at a piece of equipment (like sports, exercise, or baby gear) or furniture, keep in mind that you may be able to find it in great condition on a second-hand marketplace online or even a yard sale.

Find Discounts

While buying used is not everyone’s cup of tea, buying on sale should be. These days, there are websites and apps that can help you do quick price comparisons to find the best deals. Some apps will even alert you when the price for a wanted item drops.

5. Do You Own Something Similar?

If you were to look at what you already own, you might be surprised to find how often you purchase nearly the same items over and over again. Buying similar items is totally understandable. We all know what makes us comfortable and what we tend to wear or like, so we gravitate to similar-looking clothes, shoes, home decor, and so on.

If you already have several coffee mugs, jean jackets, baskets, whatever that are similar to your prospective purchase, you may want to pass.

Recommended: 7 Strategies to Stop Spending Money

6. Why Do You Want to Buy This Now?

Sometimes there is a clearcut reason to make a purchase, even an impulse purchase. You might be at a store and remember you need hand soap or a certain tool to make a repair. But if there isn’t a clear reason for making this purchase right now, you may want to pass.

Recommended: How to Stop Overspending: 9 Tips

7. How Often Will You Use It, Really?

If you will only use or wear the item you’re thinking about buying once, or even a handful of times, you may want to rethink the purchase. It’s possible you can get by with something you have, can rent the item, or can borrow it from a friend or neighbor. This can end up saving you money — and potential buyer’s remorse.

8. If the Item Was Full Price Would You Still Buy It?

A sale price can make an item look particularly appealing. You might even think you’d be a fool to pass it by. But it’s important to put the price tag to the side for a moment and consider whether or not you really want and love the item. Would you even be considering it if it were full price? If the answer is no, it’s likely you can forgo it.

9. Would It Be Better To Put the Money Elsewhere?

If you can ask yourself this question, then you’ve arrived. You’re thinking of the big picture and wondering whether there may be other things that are more important than what’s in front of you. This involves delaying gratification and knowing how to control your spending habits.

The Psychology Behind Reflecting Before Purchasing

One common reason why we shop for new (and often similar) things is because we don’t fully appreciate the things we already possess. But there is a way you can turn this psychology around.

Before you make a purchase, consider whether or not you already own something that can fulfill the same purpose. If you do, next think about whether there is a reason you need something similar. If you can’t, you can probably easily pass on the purchase. The process of reflection not only avoids an unneeded expense but allows you to re-focus on the item you already have and appreciate it more.

How Budgeting Can Curb Compulsive Spending

Creating a budget involves looking at where your money is currently going and making sure that your spending aligns with your priorities. There are many different kinds of budgets but one simple framework is the 50/30/20 rule.

The idea is to divide your monthly income into three categories, spending 50% on needs, 30% on wants, and 20% on savings (and debt payments beyond the minimum). This set-up helps curb compulsive spending because you only have so much “fun” money to spend each month. It also allows you to spend money without feeling guilty, since it’s baked into the budget.

💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Budgeting and Saving With SoFi

If you like the idea of managing both your spending and saving all in one account, take a look at SoFi.

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.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How do you determine if you should buy something?

A good first step is to determine whether a prospective purchase fulfills a need or is simply something you want. If it fills a need, you can go ahead buy it, as long as you can afford it. If it’s a want, you might next consider why you want to buy it. Also think about whether you may already have something similar, and whether the money might be better spent on something else.

Should a budget include flexibility for impulse purchases?

Yes. A budget will typically allot a certain amount of money just for “fun” each month. This frees you up to make the occasional impulse purchase without feeling guilty or worrying that it will hurt your long-term financial health. In fact, building in flexibility to your spending plan can help you stick with it.

What questions should you ask yourself before buying something?

Some key questions to ask yourself before you make a purchase include:

•  Do I need it?

•  What do I gain from buying this?

•  Do I own something similar?

•  If the item was full price would I still buy it?

•  How often will I use it, really?

•  Could I get it used or for a better price elsewhere?

•  Is there a better way I could use this money?

How do you stop impulse buying psychology?

One effective strategy is to establish a waiting time before you make any discretionary purchases. If you see something you want to buy, put the purchase on pause for a week (or more). Tell yourself that if, at the end of the waiting period, you still want the item and can afford it, then you can go ahead and buy it. You may find, however, that by delaying gratification (and the purchase), you lose interest in the item and opt not to buy it after all.

Photo credit: iStock/Talaj

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

SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

SOBK0923034

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Oct
03
2023
woman with shopping bag

Are You a Shopaholic? Signs to Know

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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.

Known as oniomania or Compulsive Buying Disorder (CBD), shopping addiction is a behavioral disorder that involves compulsive buying as a way to feel good and avoid negative feelings like stress and anxiety. Like other types of addictions, a shopping addiction can take over as a preoccupation that leads to problems in other areas of your life.

Read on to learn some of the signs of being a shopaholic and ways to curb the habit.

4 Shopaholic Symptoms

People who are addicted to shopping often get a sense of emotional relief right after buying something. They 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.

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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.

Recommended: 7 Strategies to Stop Spending Money

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.

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 componentResembles addictive behavior
Purchases are needed and usedPurchases are often not needed and go unused
Typically isn’t followed by negative emotionsOften followed by guilt, remorse, and shame
Does not lead to financial problemsContinues despite negative financial consequences
No secrecy involvedSecrecy is often involved
Occasional splurgesFrequent overbuying

Treating Compulsive Shopping

If you feel you have a shopping problem, don’t despair. It’s never too late 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 spend time with a certain person, spend time on social media, or watch certain shows on TV?

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.

Recommended: Getting Back on Track After Going Over Budget

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, 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.

Recommended: How to Track Your Monthly Expenses: Step-by-Step Guide

Delaying Gratification

Another way to deal with impulsive or compulsive shopping is to establish a waiting time before you make any purchases. If you see an item you want to buy, put the purchase on pause for a week (a 30-day pause is even better). Tell yourself that If, at the end of the waiting period, you still want the item, and can afford it, then you can go ahead and buy it. You may find, however, that by delaying the purchase, you lose interest in the item and opt not to buy it after all.

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 may be able to help you understand the emotional roots of your compulsive shopping and offer strategies to help you overcome the problem. In some cases, medications like selective serotonin reuptake inhibitors (SSRIs) can help alleviate underlying mental health problems that could be contributing to a shopping addiction.

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.

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FAQ

What are the signs of being a shopaholic?

Signs that your shopping habit has crossed the line into an addictive behavior include:

•   You shop primarily to feel happy or to relieve stress.

•   You often buy things you don’t need or can’t afford.

•   You’re always thinking about things you plan to purchase.

•   You often obsess or stress over shopping for a specific item.

•   You often feel regret or guilt about things you’ve purchased.

•   You have a closet full of unopened or unused items from previous shopping sprees.

•   You hide your shopping habits from others.

•   Your financial situation is suffering because of your shopping.

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

•   Financial counseling

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