Oct
18
2023
What Is the Great Resignation?

The Great Resignation, Explained

By | Life & Career, money | Comments Off on The Great Resignation, Explained

The Great Resignation is a term used to describe an increase in the quit rate among U.S. employees that began in 2021. Millions of people began leaving their jobs citing various reasons, including low pay, poor working conditions, and negative lifestyle impacts associated with the COVID-19 pandemic.

While the Great Resignation created challenges for many employers, it also presented an opportunity for companies to fine-tune their hiring and retention policies.

Here, take a closer look, including:

•   What is the Great Resignation?

•   What are the reasons for the Great Resignation?

•   How can companies prevent employees from resigning?

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What Is the Great Resignation?

The Great Resignation refers to the fact that millions of people opted to quit their jobs during the height of the COVID-19 pandemic. Anthony Klotz, associate professor of management at Texas A&M University, is credited with coining the term.

Data suggests that the Great Resignation began in early 2021, reaching a peak of 4.5 million quits in November of that year, according to the Bureau of Labor Statistics (BLS). Altogether, the BLS estimates that nearly 48 million people quit their jobs in 2021.

The wave of quitting hasn’t entirely subsided, however. The Great Resignation trend persisted well into 2022, as more employees elected to leave their employers. For example, the quit rate was 4.1 million for September 2022, according to a recent Job Openings and Labor Turnover report.

Who’s Quitting Their Jobs?

The Great Resignation affected numerous industries but not always equally. According to an analysis by Zippia, for example, the industries affected most by the Great Resignation in 2021 include accommodation and food service, leisure and hospitality, and retail. Here are some other statistics on the Great Resignation and who’s quitting their jobs:

•   Employees aged 18 to 29 quit more than any other demographic, with a 37% quit rate in 2021.

•   Women were 11% more likely to quit their jobs than men, while Hispanics and Asians quit more often than Black or White Americans.

•   Those with less education, e.g., a high school diploma, were more likely to quit than employees with some college or a college degree.

•   Employees with lower incomes had a quit rate that was double that of those earning higher pay.

The range of people quitting is diverse, as are their reasons for doing so, as you’re about to learn.

Recommended: 5 Ways to Achieve Financial Security

Reasons for the Great Resignation

Now that you know what the Great Resignation is, you are likely wondering why so many people walked away from their work. There’s no single cause for the Great Resignation. Instead, employees began leaving their jobs in response to a combination of factors. Here are some of the top reasons employees chose to quit, according to Pew Research.

•   Low pay. Thirty-seven percent of employees said low wages were a major reason behind their decision to quit.

•   No room for advancement. Thirty-three percent of people who quit their jobs in 2021 said they did so due to a lack of opportunities to get ahead.

•   Felt disrespected. Interestingly, 35% of those who quit during the first wave of the Great Resignation said they felt disrespected by their employer.

•   Child care. The COVID-19 pandemic made child care a struggle for many parents as schools closed for months on end. According to Pew, 24% of quitters cited child care as a major reason for doing so.

•   Lack of flexibility. Being able to work flexible job hours or put in for time off as needed is important for many employees. Pew found that 24% of those who quit in 2021 cited lack of flexibility as a major motivator.

Other reasons for quitting included lack of benefits, working too many hours, wanting to relocate, or working too few hours. A small number of employees said they chose to quit over employer requirements to get a COVID-19 vaccine.

Here’s how the top 10 reasons for resigning look in chart form:

Reason for quitting

% who said it was a major reason

Low pay37%
Feel disrespected35%
Lack of advancement opportunities33%
Lack of child care24%
Lack of flexible schedule24%
Lack of benefits23%
Wanted to relocate22%
Too many hours of work20%
Roof few hours of work16%
COVID-19 vaccine requirement8%

Ways Companies Can Prevent Employees From Leaving

Building a resilient workforce is important, but employee retention can be tricky, especially if workers don’t feel motivated to stick around. The Great Resignation has turned up the pressure on companies to provide employees with a more favorable working environment. Some of the ways companies may be able to prevent workers from leaving include:

•   Offering flexible work schedules, including the chance to work remotely

•   Focusing on building connections with employees and creating a welcoming company culture

•   Getting input from employees on what’s working and what could be improved

•   Showing appreciation for employees and respecting them at all times

•   Offering opportunities for growth and advancement

•   Enhancing benefits packages to include things like wellness perks or student loan repayment. The Great Resignation may have a significant effect on employee benefits in this way.

Offering higher salaries may be a starting point, but it could take more than just a bigger paycheck to convince employees to stay put. Thinking creatively and putting oneself in the mindset of the employee can be helpful ways for employers to figure out what’s needed most.

Recommended: Pros and Cons of Raising the Minimum Wage

The Takeaway

The Great Resignation involved almost 48 million workers leaving their jobs in the wake of the COVID-19 crisis. This has taken a toll on many employers as they scramble to hire new workers to replace those who have quit. If you’re thinking of quitting, it’s important to get your financial ducks in a row first so you can maintain your standard of living during a job transition.

3 Money Tips

  1. 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.

  2. If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

  3. If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

What’s the Great Resignation?

The Great Resignation refers to the millions of Americans who have quit their jobs since early 2021. Almost 48 million people left their employment in 2021. Some of the most common causes for the Great Resignation include low wages, employee burnout, inflexible work schedules, and poor work-life balance.

Should you quit for a better paying job?

Not being able to make your budget work is one of the clearest signs that you’re not making enough money. If you believe a better paying job could help you reach your financial goals or, at the very least, make budgeting less stressful, then it could be worth moving on to a new employer. However, consider what you might be giving up in the way of benefits or other job perks to snag a higher salary.

Is it better to quit or be fired?

Quitting a job may look better on a resume than being fired. Additionally, if you’re putting in proper notice in advance, it may be easier to plan your budget as you countdown to your final paychecks. Your employer may also appreciate your giving notice that you plan to make a job transition so they have time to hire someone to replace you.

Photo credit: iStock/Prostock-Studio

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 4.00% 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 4.00% 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 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

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Oct
18
2023
13 Scams on the Elderly to Be Aware Of

13 Scams Targeting Seniors and Tips to Protect Yourself

By | Family Finances, money | Comments Off on 13 Scams Targeting Seniors and Tips to Protect Yourself

Scams targeting seniors are increasing at a frightening rate. Fraud victims over 60 reported roughly $1.7 billion in losses in 2021, according to the Federal Investigation Bureau (FBI). From government impersonation scams to tech support scams to lottery scams, it’s easy to be conned if you don’t know what to look for. Falling victim to a scam can leave you financially vulnerable and make recovering challenging.

Unfortunately, no one is immune to becoming a victim of fraud. While there is no antidote or way to guarantee you won’t be taken advantage of, becoming familiar with common scams and learning strategies to protect yourself can help you avoid becoming a fraud victim.

Read on to learn:

•   Why scams on elderly people are so common

•   What are the most popular kind of scams targeting seniors

•   How to protect yourself and loved ones from falling for these cons.

Why Are Elderly People Often Targeted for Scams

Fraudsters want money. Since older individuals are perceived to have more money in the bank, scammers assume seniors are easy targets. However, this doesn’t mean that you are not exempt from common money scams if you’re a low-income senior. You still must proceed with caution to protect your assets.

Other reasons swindlers target seniors with scams on elderly people includes:

•   Isolation. Loneliness can make seniors more vulnerable to elderly fraud scams since they strongly desire to build social relationships. This can make them more willing to engage with scammers by phone.

•   Overly trusting. According to the Federal Bureau of Investigation (FBI), elderly folks are more trusting than other generations, making them vulnerable to con artists.

•   Lowered cognition. Age can increase the probability of cognitive decline as well as conditions like dementia. As a result, it’s hard for these folks to remember things like the amount of money they have in the bank or differentiate between real and fake. This means a fraudster could impersonate a banker or someone close to an aging individual with dementia, and they may not know the difference.

•   Insecurities. Some scammers bully victims into doing what they want, like handing over their bank information. Or the fraudster plays on their insecurity about health care or Social Security. They may threaten that if they don’t pay a medical bill, their health coverage will be canceled. Cultivating this fear may motivate a senior to go with whatever the con artist requests.

•   Embarrassment. Many elderly folks are embarrassed after being scammed, so they choose not to report the crime. Because many of these crimes go unreported, cybercriminals know they can fly under the radar by targeting seniors.

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13 Scams Against the Elderly to Be Aware Of

Fraudsters use a variety of scams on the elderly. Here are some common old people scams you can watch out for.

1. Malware Scams

With this scam, the cybercriminal will send an email containing an innocent-looking malware link the recipient can download. Perhaps the link will supposedly download family photos from a relative or allow the user to update a compromised password. Once the recipient hits download, the link could install ransomware or other software that can harm the computer. Such software allows the scammer to access private information on your computers, such as tax files or other financial documents.

2. Lottery or Sweepstakes Scams

At first glance, receiving an email or phone call stating you’ve won the lottery or a sweepstake seems exciting. Unfortunately, fraudsters use this strategy as a scam on the elderly, cheating them out of hundreds or maybe thousands of dollars.

Here’s how it works: The scammer will tell you you’ve won a prize through a lottery or sweepstakes. But, to receive your winnings, you must pay the taxes upfront. Once you do so, they will send the remaining funds. But, unfortunately, your payday never comes, and the fraudster runs off with the victim’s cash that was sent as “taxes.”

Recommended: Budgeting for Elderly Family Members or Loved Ones

3. Robocall Scams

Robocalls automatically contact a large number of people across the world. While some robocalls contact people legally, others use robocalling as a gateway to scam many individuals efficiently. One example of a robocall scam targeting the elderly is the caller stating that there is an “impending lawsuit” that you’re involved in. The caller claims to be someone from a law enforcement agency or the government and tells the victim that a fine must be paid immediately to avoid litigation.

Another example is the “can you hear me” scam. This scam entails someone calling you and asking if they can hear you. Once you say “yes”, they record the call and hang up. They can use this signature voice recording to authorize purchase on your credit card.

4. Government Impersonation Scams

Government imposter scams targeting the elderly involve the fraudster contacting an elderly individual claiming to be someone from a government organization like Medicare, the Social Security Administration, or the IRS. The fraudster may say the victim owes back taxes that must be paid right away or they might be arrested or deported, depending on the situation.

The government impersonator will demand a specific type of payment such as a prepaid debit card or wire transfer. Usually, to make the call seem more legitimate, they will use a Washington D.C. area code, making the victim think the call is real.

5. Grandparent Scam

In the grandparent scam, a swindler will call an older adult impersonating one of their grandchildren. Once the senior picks up the phone, the fraudster will say, “Grandma, do you know who this is?” When the confused senior gives a response, guessing it’s a younger relative, the scammer will agree to secure their trust.

After the trust is built, the swindler will ask for money for a financial problem but beg them not to tell the rest of the family. They often request a money transfer or prepaid card since both may not require ID to access the funds.

6. Investment Scams

Investment scams involve someone illegally selling financial instruments with a promise of a guaranteed return and low risk. Or they might offer a get-rich-quick scheme. A common investment scam targeting seniors is when someone encourages an older adult to invest in digital assets such as Bitcoin.

In 2021, investment scams resulted in over $239 billion of loss for people over 60 years old.

7. Health Insurance and Medicare Scams

As a U.S. citizen or permanent resident, you’re eligible for Medicare once you reach age 65. Because swindlers know seniors usually have Medicare, it’s an easy way to target them. With this scam, the fraudsters will impersonate a Medicare representative and require personal information. Or they may offer fake services that the victim can purchase. However, these services never come to fruition, but the fraudsters do get the details they could use to commit identity theft or other ploys.

8. Sweetheart Scams

A sweetheart or romance scam is a scam on the elderly that plays on the victim’s emotions to entice them to hand over money. With this, the imposter will connect with a senior online and develop a relationship. Once they have the victim’s trust, they ask for money for financial issues such as debt.

Imposters usually prey on seniors who are isolated and crave human connection or widows/widowers who have just lost their spouses.

9. Phishing Scams

With a phishing scam, the imposter will send an email or text from what appears to be a legitimate source like your bank. They will request you verify personal information such as your Social Security number or log-in credentials. Once given this information, it’s difficult to keep a bank account safe online, and funds can be stolen.

10. Tech Support Scams

For victims over the age of 60, tech support scams are the most commonly reported type of fraud. Tech scams against the elderly typically involve a fraudster impersonating a recognizable tech company offering to fix an issue that doesn’t exist. They may also offer to renew fraudulent software. This imposter will then direct the victim to make a payment via wire transfer, overnight check, or prepaid credit card. They are then able to walk away with those funds.

Recommended: Tips to Keep Your Credit Card Safe from Hackers

11. Inheritance Scams

Similar to lottery or sweepstakes scams, imposters tell the victim that they have a distant relative who left them a large sum of money after their passing. All the victims need to do is pay the taxes and fees. Once that happens, the imposter says they will send the large sum of money to their account. But, the inheritance never comes, and the victim loses their money to fraud.

12. Credit Card Advance Scams

An elderly fraud scam involving a credit card advance works like this: An imposter will put a legitimate credit card company’s name (like Visa) on a credit card ad. The ad will offer an instant pre-approval of thousands of dollars of cash upfront. The catch is that you must pay the annual fee first, which usually requires the victim to provide their Social Security number and bank information. Remember, lenders and creditors usually need to know your credit score before loaning money.

Recommended: Identity Theft and Credit Card Fraud Statistics: 33 Eye-Openers

12. Caregiver Scams

Unfortunately, strangers are not the only ones trying to defraud the elderly. Caregivers or family members may also exploit and attempt to scam on elderly. They can do so by swiping cash from their wallet or requesting money for bogus expenses.

13. Home Repair Scams

Home repair scams involve a scammer showing up to your doorstep offering repair services like window replacement or a kitchen renovation. Then they will request an upfront payment or trick you into applying for a loan. After you make your payment, they never show up to do the work.

What Happens if You Are Victim to One of These Attacks?

It’s no surprise that victims of fraud suffer financial consequences. However, the severity depends on the exact crime. Unfortunately, many of these cons can wreak havoc with your checking and savings accounts and beyond. For example, if a fraudster steals your identity, the financial hardship could continue for months or even years. In addition, it can damage your credit, tamper with Social Security benefits, mess up tax returns, and compromise your bank and investment accounts. All of which can be an uphill battle to restore order.

Not only does falling victim to these crimes compromise your financial security, but it can take a toll on your emotional, physical, and social state. Therefore, that’s why protecting yourself or loved ones from elderly fraud scams is so important.

If you are a victim of an elderly fraud scam, here are a few steps to take:

•   Pay close attention to bank and investment accounts. Keep tabs on your bank activity so that you can spot suspicious transactions.

•   Change your passwords. If you think the scammer hacked your accounts, update your passwords.

•   Jot down every detail of the crime. Do your best to write as much information about the crime as possible. Information includes dates, times, email addresses, etc.

•   Report the crime. It’s best to report the incident to the Federal Trade Commission, the primary agency that collects scam reports. To report your scam, you can contact the FTC via phone at 1-877-382-4357 or online . Once you report the crime, the FTC will provide next steps for moving forward. It’s always wise to reach out to your bank or financial institution to make them aware of the incident.

Recommended: What Someone Can Do with Your Bank Account and Routing Number

Ways to Protect Yourself (And Loved Ones) From Elderly Scams

One of the best ways to protect yourself and loved ones from elderly scams is to avoid making quick financial decisions. Take a closer look at this point, along with several other ways you can protect yourself from scammers.

•   Take time to act if someone is trying to pressure you into making an immediate payment. Tell them you need to think about it. Legitimate businesses and government entities won’t force you to make a split-second decision.

•   Update your computer’s security software.

•   Avoid clicking on links or attachments from unknown senders.

•   Research domains to ensure they are legitimate before engaging in business online.

•   Make your social media account private.

•   Avoid sending wire transfers to someone you don’t know, even if you have a relationship with them online.

•   Reach out to your bank or financial institution if it seems they are attempting to communicate with you. You can find official numbers on the back of your credit card. Don’t assume that just because someone says they are calling “from your bank” that they are telling the truth.

•   Avoid unsolicited communication such as calls or emails that say you’ve won a prize.

•   Don’t make a deal with someone (say, a supposed tradesperson or utility-company representative) who shows up at your home. Request their contact information and tell them you will reach out at a later date.

•   Be skeptical of those who ask you to submit payment using a prepaid gift card.

Recommended: Helping Elderly Family Members Manage Their Finances

The Takeaway

As the world becomes more technologically advanced, so does the sophistication of scammers attempting to access your money and identity. Fraudsters are lurking around every corner in the hope that you will slip up and share your personal information. To keep you and your loved ones safe, avoid engaging in money activities with folks you don’t know and do your best to protect your personal information at all costs.

3 Money Tips

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

  2. When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.

  3. If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

How many elderly people fall victim to scams every year?

According to the Federal Bureau of Investigation, in 2021, over 92,000 elderly Americans reported being the victim of a financial scam, resulting in roughly $1.7 billion of losses.

What should I do if I have fallen victim to a scam on the elderly?

If you have fallen victim to a scam, consider contacting your bank (if your bank accounts were involved), the local police, the Federal Trade Commission (FTC) , and the Adult Protective Services division close to you. You can find your local Adult Protective Services contact information here .

What can a scammer do with my information?

When a scammer accesses your personal information like your Social Security number, they can claim Medicare on your behalf, open a credit card, take out loans in your name, or steal your tax refund. Likewise, when a fraudster has your bank account and routing number, they can potentially shop online, write fraudulent checks, and transfer money.

Photo credit: iStock/FG Trade

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 4.00% 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 4.00% 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 4.00% 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 12/3/24. 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.

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

SOBK1122016

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Oct
18
2023
How to Save Money on Furniture: 13 Helpful Tips

13 Money-Saving Tips When Buying Furniture

By | Budgeting & Goals, money | Comments Off on 13 Money-Saving Tips When Buying Furniture

Buying furniture can be a major expense, especially in this era of quickly rising prices. Some shoppers are holding off making purchases: Inflation is pinching consumers across all income levels, and home furnishings sales are falling.

Still, if you don’t have a bundle of cash earmarked for furniture shopping but need to decorate a space (hello, newlyweds, roomies, and downsizers), you can learn how to save money buying furniture and score great finds. Here, learn how to save money on furniture with surprising techniques, including:

•   Finding free pieces at the curb

•   Lucking out with returned or floor-model items

•   Getting the timing right for sales

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


How Much Do People Spend on Furniture a Year?

As of 2021, the average expenditure on furniture per family (or single person household) was about $716 in the United States. In more affluent households, the average annual spend was $1,490 in 2021.

Recommended: 10 Most Common Budgeting Mistakes

What Are Some Costs to Consider With Furniture?

When shopping for furniture, remember that it’s not just the cost of the table or chair you might be buying. You’ll also need to build in these extra expenses:

•   Taxes.

•   Shipping or delivery fees.

•   Extra costs for assembly or for getting a piece up the stairs or around the hall corner and into a room.

•   Possibly paying to have the old piece you are replacing (a bed or sofa, for example) removed.

•   Stain-resistant treatments on upholstered furniture, which generally add to the value and longevity of a sofa, chair, or headboard.

Recommended: Questions You Should Ask Before Making an Impulse Buy

Saving Money on Furniture: 13 Ways

Now, for the details of how to save money buying furniture. Here are some smart secrets to try.

1. Shopping Curb Discards

Many towns have bulky waste pickup days, and savvy people know to cruise curbs around town on those dates. You could find anything from still functional bookcases to an antique side table to patio furniture to a great lamp or two. It’s generally safer to avoid mattresses, box springs and upholstered furniture due to the possibility that bed bugs are lurking.

2. Signing Up at Sites You Love

Many online retailers are eager to get your email address and/or cell phone number as a “subscriber” so they can alert you to sales and special offers. In exchange for this information, they may dangle discount or free shipping codes for your first order. Yes, these messages can clog your inbox, but you can always unsubscribe once you score the furniture deals you want.

3. Buying Directly From the Manufacturer

Another idea for how to save money on furniture: Go straight to the source. For more than 50 years, shoppers have been buying well-made furniture from manufacturers at Hickory Furniture Mart in Hickory, North Carolina. The Mart unites local independent furniture retailers, including custom order showrooms, factory direct outlets, furniture outlets, and dedicated manufacturers’ galleries. Check their website to see the various vendors available.

Recommended: 15 Creative Ways to Save Money

4. Checking Out Furniture In Person Before Clicking Online

Many consumers are confident enough to order items online, but with big purchases like a sofa, it can help to see products up close (and sit on them) first. See if your local department store stocks the sofa you have seen online or other pieces made by that brand, so you can get a feel for the fabric, design, and construction. That could save you the time, effort, and cost of having to return an item.

5. Considering the Upcycling Option

Many things are upcycled now for a more sustainable planet with less of a carbon footprint. That means taking something that could have ended up in the trash and turning it into treasure. Paint a lamp and pop on a new shade, for example, or refinish a worn out table or dresser to refresh its good looks and perhaps pop on some new hardware, too.

6. Planning a Realistic Budget for Your New Home

Are you starting from scratch to furnish a home? Experts say a furnishing budget generally depends on the size of a new residence. You might make a budget based on a percentage of the total cost of your home. Your furniture/decorating budget might range from a low of 10% to a high of 50% of the home’s purchase price, depending on your finances. And certainly, with the shopping hacks listed here, you can whittle that down.

Recommended: Tips for Furnishing a New Home

7. Turning Down Store Credit Cards

Department or furniture store credit cards can often run up staggering interest rates, something you definitely do not want when buying furniture. If at all possible, save enough money to pay for furniture in full and with cash or debit card.

8. Building Your Own Furniture

Could you DIY something, like a bookshelf, wood bench, or Shaker-style dresser? Good old YouTube has videos to teach you.

Recommended: Why Saving Money Is Important

9. Buying Secondhand

Another idea for how to save on furniture: Buy used vs. new. For starters, check Facebook Marketplace or Craigslist for deals. Many people are paring back or moving and want to get rid of things without adding them to a landfill. You can also look for bargains at antique stores, flea markets, garage sales, and thrift shops.

Recommended: Tips for Buying Furniture on a Budget

10. Staying Tuned In to Sales Seasons

To cut costs, know when prices are likely to be lower. Desk chairs and office furniture are often on sale in the fall. Cyber Monday can be a huge opportunity for savings of all kinds. Ask the salesperson when prices will dip to make way for new merchandise on the sales floor.

Recommended: Best Time to Purchase Furniture

11. Creating a Gift Registry

You might be able to get loved ones to help a bit with the cost of furniture; group gifting options on your wishlist items could allow several people to chip in. This is, as you might guess, especially popular for couples starting their lives together. Crate & Barrel, for example, often offers perks, such as free shipping (at a certain spend threshold) and 15% discounts on wedding registry purchases.

12. Finding a Local Auction

Here’s another way to save on furniture: Check out local auctions. You might be able to find old treasures, from sideboards to headboards, that make great statement pieces at an affordable price. Estate sales are also good sources for items like these.

13. Shopping for Returned or Slightly Damaged Items

If you can live with furniture that isn’t brand new and untouched by anyone else, you could score some great deals. On the Pottery Barn website, for instance, search for Open Box Deals, which are returned items that sell at discounted prices. Sometimes it’s just that someone didn’t like the color. In furniture showrooms, inquire about slightly damaged items (perhaps a table has a scratch you barely notice) and also ask about floor models.

The Takeaway

With the right shopping skills in your toolkit, you can save money on buying furniture. By employing smart strategies, such as scouring estate sales and thrift shops, buying returned items, and negotiating on the sales floor, you can save a bundle on great-looking as you furnish your home.

3 Money Tips

  1. 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.

  2. If you’re creating a budget, try the 50/30/20 budget rule. Allocate 50% of your after-tax income to the “needs” of life, like living expenses and debt. Spend 30% on wants, and then save the remaining 20% towards saving for your long-term goals.

  3. When you overdraft your checking account, you’ll likely pay a non-sufficient fund fee of, say, $35. Look into linking a savings account to your checking account as a backup to avoid that, or shop around for a bank that doesn’t charge you for overdrafting.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Is it better to buy used or new furniture?

This is not a question of better or worse. Some shoppers prefer snagging deals on used furniture and enjoy hunting for pieces such as a vintage oak dresser at a thrift shop. Others want new pieces, either because they prefer the style or they like the idea of owning something that has no wear. It’s a matter of personal taste, though buying used pieces, in addition to costing less, may help keep pieces out of landfill and sync with eco values.

What should I look out for when purchasing furniture?

Search for styles, colors, and lines you love, as well as comfort and function. A desk won’t help you out if it doesn’t have the drawer space you need, and a sofa is a fail if it’s not comfy and solidly made. Also look for solid wood, not composites or laminates, if you want a long-lasting quality piece. Some pieces (such as an upholstered chair) may come with warranties against wear and tear and stains.

Where can I purchase used furniture?

As more people strive for sustainability and resist tossing away furniture, options abound for finding used pieces. Check thrift shops, donation centers, secondhand stores, estate sales, garage sales, Craigslist, and Facebook Marketplace.

Photo credit: iStock/Vanit Janthra

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 4.00% 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 4.00% 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 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

SOBK1022015

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Oct
18
2023
What Are Multi-Level Marketing Schemes?

Tips to Avoid Schemes Disguised as Multi-Level Marketing Companies

By | Family Finances, Life & Career, money | Comments Off on Tips to Avoid Schemes Disguised as Multi-Level Marketing Companies

Multi-level marketing businesses— also called direct sales, direct marketing, or network marketing — are legitimate enterprises that involve selling products or services to a network of peers (i.e., friends and family) and recruiting more salespeople.

The problem? According to the Federal Trade Commission (FTC), many illegal pyramid schemes disguise themselves as legal multi-level marketing (MLM) companies. Even legal MLMs can be bad news; most people make little or no money with MLMs, and some even lose money.

Read on to learn:

•   What’s an MLM?

•   What are the differences between MLMs and pyramid schemes?

•   How can you avoid multi-level marketing companies?

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


What Is a Multi-Level Marketing (MLM) Company?

A multi-level marketing business, or MLM for short, is a legitimate business that sells products and services through independent distributors. These companies rely on such distributors to sell to networks of peers, typically friends and families. The distributors, often called “participants” and “contractors,” must also recruit new distributors for the program.

The companies are found in a variety of categories. They might be selling supplements, personal-care products, kitchen utensils, or any other number of items.

Recommended: Common Credit Card Scams

How Do Multi-Level Marketing Companies Work?

What is an MLM company, and how does it operate? In a multi-level marketing business, distributors must first buy the products wholesale from the company. They then make commissions off the products that they sell at retail prices.

Distributors also earn a commission from their recruits’ sales, which incentivizes distributors to recruit more people into the business. Those at the top of the company, with multiple levels of distributors beneath them, thus earn the most money without even needing to purchase more products to sell.

Multi-Level Marketing vs. Pyramid Schemes: What’s the Difference?

Though sometimes questionable, multi-level marketing programs are legal. Pyramid schemes, however, are illegal types of money scams. Unfortunately, many pyramid schemes disguise themselves as legitimate MLMs. Here are key differences:

•   Pyramid schemes are more focused on recruiting than actually selling the products. While MLMs do ask you to recruit more distributors, the focus is on sales.

•   Pyramid schemes may also require distributors to buy more products at regular intervals, even if they have not sold all the products they already have. Sometimes, in a pyramid scheme, you have to buy more products just to get paid or earn a bonus. This is a major red flag.

In the end, most people who are swindled into pyramid schemes run out of money, are stuck with products that they can’t sell, and quit — meaning they lose everything they invested in the business.

Recommended: Are You Bad With Money? Here’s How to Get Better

Real-Life Examples of Multi-Level Marketing Companies

Some products marketed and sold through network marketing companies are from legitimate MLM businesses — and you can feel comfortable purchasing them. In other cases, recognizable products can emerge from pyramid schemes.

Here are some real-life examples of legal, established MLMs. You may be surprised to learn that what is an MLM can be a familiar and trusted brand:

•   Amway

•   Avon

•   Herbalife

•   Vorwerk

•   Mary Kay

•   Infinitus

•   Perfect

•   Quanjian

•   Natura

•   Tupperware

•   Nu Skin

•   Primerica.

Recommended: 9 High-Paying Jobs That Don’t Require a Degree

Why Is Multi-Level Marketing Legal?

Multi-level marketing businesses must adhere to strict FTC guidelines to be considered legal. The FTC regularly goes after suspicious MLM companies that may actually be pyramid schemes.

Though sometimes seemingly predatory, MLM is just a form of direct sales. When adhering to FTC guidelines, these businesses aren’t breaking any laws.

Recommended: What’s a Pump-and-Dump Scheme?

What Is the 70% Rule?

Though not technically a law, the 70% rule is a common term in MLM discussions. It arose in a 1979 case against Amway.

In analyzing the business structure of Amway, the FTC determined that, because Amway required distributors to sell at least 70% of the products they bought in a given month to earn a bonus, Amway was attempting to operate as a legitimate MLM. Their business model involved profited from sales, not shady recruiting tactics.

Now, the 70% rule is a loose term that means an MLM is focused on sales, rather than requiring distributors to buy more products or recruit more people to earn bonuses. The trouble with this rule is that it is difficult to enforce: MLMs typically trust their distributors to tell the truth about how much product they’ve sold but cannot always verify the numbers.

Are the Products That MLMs Sell Legitimate?

The products and services that MLMs and even pyramid schemes sell can be completely legitimate. Just think of that trusty Tupperware in your kitchen cabinet or your favorite lipstick from Mary Kay.

But even if a product is good, the distributor requirements of a legitimate MLM or shady pyramid scheme can still cause the seller to lose money.

Recommended: A Guide to Credit Card Protection

Can You Create Financial Freedom by Joining an MLM?

Multi-level marketing companies require a lot of entrepreneurial hustle from distributors to make money. As contracted sellers, distributors don’t earn a salary but instead make commissions.

While someone with a true sales spirit may make some money in an MLM, most do not make enough money to achieve any kind of financial freedom without another source of income. In fact, the FTC says some people even lose money from legitimate MLMs.

Pyramid schemes are worse, having left some people in economic ruin.

Tips for Recognizing Predatory MLMs and Pyramid Schemes

While MLMs are legitimate, they may not be worth the effort and could also cause you to lose money. Illegal pyramid schemes, however, are usually designed to hurt the low-level distributor.

So how can you spot a predatory MLM or pyramid scheme? Here are a few warning signs:

•   Hyperbolic claims of excess income: If a brand promoter is promising outlandish amounts of income — even saying you can quit your day job and retire early — that’s typically a red flag.

•   “Act fast” pressure: You should be able to think about any financial decision and be given the time to talk it over with friends and family. Brand promoters of pyramid schemes and predatory MLMs may use high-pressure tactics, like telling you that you must act now or you’ll lose out on the opportunity.

•   An emphasis on recruiting: In a true MLM where you at least have the potential to earn money, the emphasis should be on sales. If during initial conversations with a promoter, the emphasis is on recruiting other members, this is likely an indicator of a pyramid scheme.

Recommended: How to Verify a Check

Tips for Avoiding Predatory MLMs and Pyramid Schemes

The first step to avoiding a shady MLM or full-on pyramid scheme and protecting your finances is recognizing them when you see them.

Here’s what you can distinguish what are MLMs from pyramid schemes and avoid the latter:

•   Researching the company: Take the time to conduct research online. The FTC recommends googling the name of the company with terms like “scam” or “complaint” and then analyzing the results. The FTC even suggests reaching out to your state attorney general to inquire about complaints for a specific company. Uncovering evidence of lawsuits during your research is often a tell-tale sign.

•   Analyzing the products: Legitimate MLMs can sell good products. Pyramid schemes might even have products that you recognize. But if any company has poor-quality products that they expect you to sell, there’s a good chance it’s a pyramid scheme. Watch for products that are priced too high, claim to have “miracle” ingredients, or “guarantee” results.

•   Asking good questions: If the promoter is unwilling to answer very basic questions, like how refunds work or what happens if you can’t sell the product, they are likely hiding something.

•   Not making decisions in a vacuum: It’s a good idea to discuss all major financial and business decisions with a trusted friend or family member. If you have paperwork for an MLM that you’re unsure about, you can even have a personal accountant or lawyer review it before you sign.

Recommended: Jobs That Pay for Your College Degree

The Takeaway

Multi-level marketing companies are legitimate and legal direct-sales businesses, but they rarely enable a distributor to make good money; some distributors may even lose money. Pyramid schemes are typically disguised as MLMs and can lead to financial ruin. Such schemes are illegal. In general, it’s a good idea to avoid any kind of MLM company if you are unsure of their trustworthiness.

Looking for other ways to grow your finances? Open an online banking account with SoFi to take advantage of our super competitive APY and the fact that we don’t charge account fees, which can help your money grow faster.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Is it legal to join an MLM?

Yes, it is legal to join an MLM. However, very few people earn enough money from multi-level marketing companies to make them worth the effort. In fact, some people lose money in MLMs.

What makes an MLM illegal?

MLMs are legal, but pyramid schemes are not. Pyramid schemes often disguise themselves as legitimate MLMs. However, with pyramid schemes, the emphasis is on recruiting new members and forcing distributors to buy more products, rather than focusing on empowering distributors to successfully sell to customers.

Are MLMs the same as pyramid schemes?

No, MLMs are not the same as pyramid schemes, but pyramid schemes often disguise themselves as MLMs. Multi-level marketing companies are legitimate businesses that require distributors to buy products and earn commissions by selling them to a network of peers. Pyramid schemes are more focused on recruiting new distributors and forcing them to buy products than empowering distributors to sell the products.

Photo credit: iStock/Makhbubakhon Ismatova

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.

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.

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 4.00% 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 4.00% 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 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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Oct
18
2023
What Is Budget Billing?

Guide to Budget Billing

By | Budgeting & Goals, Family Finances, money | Comments Off on Guide to Budget Billing

When your home energy usage peaks in the summer and winter, you could be surprised by a higher energy bill — and might have to scramble to cover the cost. Signing up for budget billing with your utility providers can eliminate these unexpected cost surges and make it easier for you to plan your monthly expenses.

But what exactly does budget billing mean, and is it right for everyone? Here, you’ll learn:

•   What is budget billing?

•   How does budget billing work on a monthly basis?

•   What are the pros and cons of budget billing?

•   Does budget billing save you money?

•   Can you start budget billing on your own, without the utility provider’s help?

What Is Budget Billing?

Budget billing is an alternative, optional payment program for utilities like gas and electric. By opting into budget billing, you will pay the same predictable amount each billing cycle, regardless of how much or how little energy you actually used.

With budget billing, you can avoid the roller coaster-like highs and lows of utility billing — where costs skyrocket during sweltering summers and frigid winters. For many, this makes building a monthly budget much easier.

To opt into budget billing, call your utility provider or check out the website for information about what is available.

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Recommended: How to Organize Your Bills

How Does Budget Billing Work?

Energy prices and usage fluctuate throughout the year. This can make it difficult to anticipate what your gas and electric bills will be each month. Depending on where you live and how harsh the seasons are, you might be in for a surprise on a few bills each year.

Budget billing eliminates those bill fluctuations. Instead, your utility provider analyzes past energy usage for your residence (usually over the prior 12 or 24 months) to estimate an annual total. The company then divides that total into 12 identical payments for the upcoming year.

Of course, it’s unlikely that your energy consumption will be exactly the same as it was the previous year. And with increased inflation and unpredictable weather events, the price of electricity and natural gas could increase over time. To account for this, your utility provider will track your actual energy usage throughout the year and calculate what you would owe (sometimes called a “true-up amount”).

•   If you overpaid for the year, the provider will issue you a credit on an upcoming bill.

•   If you underpaid for the year, you’ll have to pay the outstanding balance.

Either way, the utility provider will use this year’s worth of data to calculate a new monthly payment for the year ahead.

Note: While annual plans are common for budget billing, some providers may also offer a quarterly (three-month) plan.

Recommended: Automating Your Finances

Does Budget Billing Save You Money?

Budget billing does not save money on utility bills. Instead, it just makes your monthly payments more predictable. Some months, you will likely pay less than what you actually owe. In others, you could be paying more than what you would owe.

Having a predictable line-item budget may make it easier for you to handle other monthly expenses or keep you from needing to dip into your emergency fund to cover an especially high energy bill.

Advantages of Budget Billing

So what are the pros of budget billing? For many families, budget billing can add some stability to their finances. Here’s how it may help you out:

Easier Budget Management

Not knowing how much you’ll owe your utility providers each month can make it tough to build a budget. With predictable bills, you’ll know how much money to set aside each month for utilities. You’ll also know how much is left for other expenses, as well as for savings and retirement contributions, debt repayments, and investments.

Less Financial Stress

If seeing an unusually high total on an email statement or paper bill can send you into a panic, you may appreciate the stability afforded by budget billing. Budget billing won’t save you money, but when you know what to expect each month, you might rest a little easier.

Reducing Late Payment Penalties

If you receive a high energy bill that you can’t afford to pay, you may have to take on unwanted credit card debt with a high interest rate, dip into emergency savings, or even just pay the bill late. The latter could result in late payment penalties.

With budget billing, you won’t have to worry about a spike in your monthly energy bills. This may help you avoid late payments altogether.

Drawbacks of Budget Billing

As helpful as budget billing can be for some families, there are also some cons to consider:

Potential Fees

Some utility providers charge a fee to enroll in budget billing. On top of the startup fee, the provider may charge ongoing fees for the service. If that’s the case, budget billing will actually cost you more money than a traditional billing program. It’s a good idea to ask about fees before signing up for any new program.

Recommended: Can You Change the Due Date of Your Bills?

Chance You Could Underpay

At the end of the program — usually a year after it kicks off — the gas or electric company will calculate what you actually owed for the year, based on your energy consumption. If you overpaid, you’ll get a credit on a future bill (nice!).

But if you didn’t pay enough each month, you’ll owe whatever remains. If it’s a sizable amount, you may have to rely on a credit card to cover other expenses or take money out of savings to pay off the bill. Many people enroll in budget billing to avoid such surprises to begin with, so this can be counter-productive.

Complacency

When you’re on a budget billing plan, you might get used to a low electric bill in the summer and be tempted to blast the AC. Similarly in the winter, it could be tempting to get all toasty by cranking up the heat. You won’t feel the financial repercussions of those decisions until much later, when your provider calculates your true-up amount and determines that you owe more money.

If you don’t think you can be responsible with energy consumption without the threat of a high bill looming over you each month, budget billing may not be the right fit for you.

Recommended: How to Pay Bills with a Credit Card

What Happens If You Are Billed Incorrectly?

Mistakes can happen. When you opt in to budget billing, it’s a good idea to read the agreement and understand how your monthly total is calculated. You want to be sure you understand how bill pay works. Even if you have your bill set to autopay, you may want to review your statement each month to ensure it’s what you expected. If it’s not, you can call your utility provider to discuss.

Recommended: Pros and Cons of Automatic Bill Payment

Can You Make Your Own Budget Billing System?

You don’t have to opt into a utility provider’s system to take advantage of budget billing. In fact, you can make your own budget billing system if you’re willing to do some math.

Just analyze what you spent on utilities over the previous 12 months to figure out an average monthly total. Use this amount when building your monthly budget.

If your first bill comes in and is less than your monthly budgeted amount, pay the bill and hang on to the leftover funds. Stash them somewhere safe, where you won’t spend them. When your bill is eventually higher than what you’ve budgeted, you can dip into that leftover money to cover the difference.

By handling budget billing yourself, you can avoid any potential fees the utility provider might have charged you. Plus, you can store leftover budgeted funds in a high-interest savings account. While this approach requires discipline, it can be well worth the effort.

Alternatives to Budget Billing

Budget billing may not be for everyone. Some alternatives include:

•   Traditional bill programs: You’ll pay what you owe each month, but that means some bills might be high in the summer and winter. In other months, you may enjoy lower-than-average bill totals.

•   DIY budget billing: If you don’t mind doing some math to figure out an average monthly payment, you may be able to do budget billing without the fees and hassle of going through a provider. You’ll still pay what you owe each month, but by planning ahead and setting money aside in savings, you can make a more predictable budget.

•   Low Income Home Energy Assistance Program (LIHEAP): Depending on your income level, you may qualify for government assistance with your home energy bills. Qualifying for the program does not guarantee assistance; roughly 20% of households that qualify actually receive help through LIHEAP.

Recommended: What to Do If You’re Bad With Money

The Takeaway

Budget billing allows utility customers to pay a set amount each month for electricity and gas, based on past usage patterns. You won’t save any money with budget billing, but it can make monthly budgeting more predictable. Before enrolling in a budget billing program, it’s a good idea to review the pros and cons and understand how it can affect your finances each year.

3 Money Tips

1.    Typically, checking accounts don’t earn interest. However, some accounts will pay you a bit and help your money grow. Online banks are more likely than brick-and-mortar banks to offer you the best rates.

2.    An emergency fund or rainy day fund is an important financial safety net. Aim to have at least three to six months’ worth of basic living expenses saved in case you get a major unexpected bill or lose income.

3.    If you’re faced with debt and wondering which kind to pay off first, it can be smart to prioritize high-interest debt first. For many people, this means their credit card debt; rates have recently been climbing into the double-digit range, so try to eliminate that ASAP.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.

FAQ

Do all utility companies offer budget billing?

Not every utility company offers budget billing. Your state may have a network of regulated electric and gas providers that are required to offer this program, but unregulated suppliers may not offer budget billing.

Am I better off budget billing or not?

Budget billing can be helpful if you like a predictable utility bill each month. Knowing what you’ll spend may make it easier to budget for other expenses. However, budget billing does have its drawbacks, especially if the utility provider charges a fee for the service.

Can I budget bill for other areas of my budget besides utilities?

Outside of utilities, most recurring monthly bills are predictable — rent or mortgage, internet, phone, student loan payments, etc. But if you like the predictability offered by budget billing for utilities, you might benefit from creating your own budget billing program for other unpredictable monthly totals, like groceries and fuel for your car. To do so, just calculate your expenses from the last year and divide by 12 to determine your average monthly total. You may want to account for inflation when estimating expenses like food and gas.

Photo credit: iStock/Milan_Jovic

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.

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 4.00% 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 4.00% 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 4.00% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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