When it comes to your money, the more you know, the better equipped you are to make informed financial decisions. One piece of your overall financial picture that you may want to understand is how much you’re “worth.” This information can help you understand where you are with your finances now and what you need to do to reach your goals for the future.
Before we look at a net worth growth calculator table that shows you how you compare against other people your age, let’s dive a bit deeper into what net worth is and why it’s important.
• A net worth calculator helps determine your financial health by calculating your assets and liabilities.
• It provides insights into your overall financial picture and helps track progress over time.
• Factors such as age, income, and debt impact your net worth.
• Regularly updating and reviewing your net worth can help with financial planning and goal setting.
• Use the calculator to assess your financial situation and make informed decisions about saving and investing.
What Is Net Worth?
Net worth is simply a total of all your assets minus any debts you have.
Those assets can include cash, real estate, intellectual property, and other items like jewelry, stocks, insurance policies, and bonds. The cash may come from a job you have or from unearned income, such as your Social Security payment
Having multiple assets does not necessarily mean you have a high net worth, particularly if you also carry significant debt. For example, you may have a million-dollar mansion, but if you have debts of $500,000, your net worth dwindles rapidly.
💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.
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How Does a Net Worth Calculator Work?
There are many personal net worth calculators available online, though you don’t need one to calculate your net worth. Just take the total amount of all your assets and subtract the total amount of your liabilities:
Net Worth = Assets – Liabilities
Some calculators will also factor in future growth so you can understand what your net worth will be in the future, as the value of your assets grows.
As you can see, it’s fairly easy to calculate your net worth, though it may take time to gather the values of all your assets, such as the current value of a piece of high-end jewelry. But once you do, you can add up all your assets and then subtract your liabilities to calculate your net worth.
What Is the Average American Net Worth?
Knowing your own net worth is one thing, but where does it stand against other people in your age bracket? Generally, people see an increase in their net worth the older they get, and it can be helpful to use a net worth percentile calculator by age to see where you stand.
Here’s the average net worth by different age groups, according to the most recent data available from the Federal Reserve.
Age
Average Net Worth
Median Net Worth
Under 35
$183,380
$39,040
35-44
$548,070
$135,300
45-54
$971,270
$246,700
55-64
$1,564,070
$364,270
65-74
$1,780,720
$410,000
75+
$1,620,100
$334,700
Source: Federal Reserve’s 2022 Survey of Consumer Finances
Why Is Net Worth Important?
Calculating your net worth is smart because it can help you understand where you’re strong financially (maybe you have little debt) and where you’re weak (maybe you’ve overextended your credit to buy your home).
It may also help you make plans for the future. For example, if your net worth is high, you might explore strategies for reducing taxable income, such as contributing more to a tax-deductible retirement account. And if your net worth isn’t where you’d like it, you can take steps to improve it.
💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.
How to Increase Your Net Worth
If you’ve used a liquid net worth calculator, or compared your net worth to the table above and don’t feel like your numbers are as high as you’d like them to be, you can do a few things to increase your net worth.
If your debt levels are high, you can increase your net worth by decreasing that debt. Get a plan for paying off credit cards, student loans, car loans, and home mortgages. Consider increasing the amount you pay on each slightly to shorten your repayment period and decrease the amount of interest you pay on these loans and credit cards.
Creating a budget is one way to keep tabs on your finances as you’re paying off debt. A money tracker app can help make the job easier.
If you don’t have an abnormally high amount of debt but want to increase your assets, you might explore making more money. If you’re still in the workforce and have the ability to make a career change, you might consider cultivating potential high-income skills that could help you command a higher salary.
You may not be able to match the likes of Jay-Z and Beyoncé when it comes to net worth, but knowing yours can help you make smart financial decisions for the future. To figure out your net worth, you can subtract the total amount of your liabilities from the total amount of your assets. You can also use a personal net worth calculator; some will even factor in future growth.
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FAQ
How do I calculate your net worth?
Net worth can be calculated by subtracting all your liabilities from your assets. In other words, subtract everything you owe (debts, loans, credit card debts) from everything you have (cash, property, real estate, jewelry, stocks).
What is a good net worth by age?
A “good” net worth depends on your financial goals and age. For example, the average net worth for 35-44 year-olds is $548,070. Yours may be higher or lower than this.
What net worth is considered rich?
According to a 2025 survey conducted by Charles Schwab, Americans need an average net worth of at least $2.3 million to feel wealthy. However, that amount varies based on where you live.
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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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Losing your job can be emotionally painful and can throw your finances for a major curveball. How will you pay your bills? How long will this situation last?
Take a deep breath, and arm yourself with knowledge for financially surviving a layoff. Whether you’re going through this situation right now or are worried it might occur, you can likely make adjustments and you can make and tap resources to weather this challenge. It’s a phase to move through but not to define you, so learn the details.
Key Points
• Losing a job can be emotionally and financially challenging.
• Build an emergency fund to cover expenses in a job loss situation.
• File for unemployment benefits if eligible.
• Consider starting a side hustle for extra income.
• Network on LinkedIn and prioritize debt payments.
Preparing Financially for a Layoff
Unfortunately, layoffs seem to be a part of modern life. According to a recent report by Challenger, Gray & Christmas, an executive outplacement firm, 946,426 jobs were cut in the year to date as of fall 2025. This represents a 55% increase versus the year prior. That’s not heartening, but it’s a way of saying that if you are laid off, you are not alone, and it can also be wise to prepare financially for a layoff if you are currently employed.
Not having a steady income probably means you’ll have to figure out how to pay your bills when laid off. Until you find another stream of income, it’s important to keep your budget in order and learn to live within your means. Being financially prepared means having a clear understanding of what your expenses are so you can stay on track, especially with debt, if you have it. There are also resources you can access that may help with your cash flow during this difficult time.
Steps to Take to Prepare for a Layoff
Here are some smart moves that can help you be prepared and not panic if you do get laid off.
Start an Emergency Fund
A common strategy is to build up an emergency fund prior to an event like job loss. It’s a way of preparing for a layoff before it happens. An emergency or rainy day fund is typically a savings account that you’ve been adding to on a weekly or monthly basis. A high-yield savings account can be a good interest-bearing but liquid place to keep the funds.
Having roughly three to six months’ (or more) worth of monthly expenses is helpful (you can use an emergency fund calculator to help you do the math). That sum can tide you over at a moment of job loss and give you peace of mind.
• You may want to automate your savings and have a small amount ($25 can get the ball rolling) transferred from checking to savings every payday. Or have that amount direct-deposited into savings.
• The emergency fund should only be accessed for emergencies, as its name suggests. (No fair dipping into this kind of savings account when there’s an amazing sale at your favorite store.)
• If you have the opportunity to contribute more than usual (say, you receive a financial windfall, like a bonus or a tax refund), do boost your emergency savings because you never know when you will need to tap into that account.
Budget, Budget, Budget
If you have an inkling that your company is preparing to lay off some employees or if you lose your job, it’s wise to double-check your weekly budget. This means separating your necessary spending from your discretionary spending.
• Necessary expenses include things like rent or a mortgage, utilities, food, and health insurance. Don’t forget about minimum debt payments, such as student loan and credit card payments.
• Discretionary spending may include traveling, dining out, new clothes, and entertainment.
It can be helpful to focus on how much you need to spend each month for necessary expenses (some people refer to this as their monthly “nut.”) Make a list of these basic living expenses and see what they total. Then, pre-layoff, you’ll also see how much you can allocate for activities that you want to do. It’s probably not the best idea to spend every penny each month. You want to have extra money at the end of the month to put toward savings.
If and when a layoff hits, you’ll focus on necessities and minimize your discretionary spending (more details below). You can also tweak your budget when unemployed to, say, cut back on some long-term savings to get you through this moment.
File Unemployment Benefits
If you do lose your job, you may be able to qualify for unemployment benefits. This can get some funds flowing your way to help tide you over.
• Read the eligibility requirements to see if your situation aligns with the rules for unemployment. The eligibility requirements are likely to vary from state to state and may be determined on a case by case basis; payment amounts will vary as well.
• If you qualify, filing for unemployment benefits will allow you to receive payments if you are out of a job without cause. (There is a possibility that those who are fired because they don’t meet job qualifications may receive funds as well.)
• Generally, to qualify for unemployment benefits, you should be able and available for work, as well as be looking for employment. Once you’ve determined your eligibility, you can file on your state’s official government office of unemployment compensation website. The site should give you guidance on when to expect benefits.
Ask About Severance Packages
Severance pay can be provided for employees after they are no longer employed at a company. Severance is based on the duration of employment, but your employer is not required to provide severance upon termination.
If you were terminated through no fault of your own, employers may pay, for example, two weeks of salary for each year of employment. Severance may also include health insurance benefits and even services to help you find a new job. These can be very helpful supports when you’ve lost your job.
Use Credit Cards Only for Emergencies
If you become unemployed, it’s wise to stop using credit cards to make purchases. Paying with your credit card creates debt that comes with high interest rates (currently more than 20%). At such high interest rates, debt can really snowball.
Also, when you are out of work, it can be challenging to pay an existing credit card balance. If you manage to pay the minimum balances of your credit card debt rather than paying in full every month, the credit card debt may cost you more over time since you also have to factor in added interest.
If you find yourself in this kind of a bind with credit card debt, take action. Consider a balance transfer credit card that offers no or very low interest rates for a period of time. Or speak with a debt counselor at a nonprofit organization like the National Foundation for Credit Counseling (NFCC).
Make Sure Emergency Funds Are in Order
Emergency funds, as mentioned above, are an important part of a financial plan and can be a lifesaver for someone who is unemployed. If you are in a situation where you unexpectedly don’t have a stream of income until you find another job, you’ll be more at ease if you have built up an emergency fund over time, as mentioned above.
In this case, you can dip into your emergency fund for mandatory expenses to fulfill your short-term needs. If you don’t have emergency funds, unemployment benefits become that much more important. Borrowing from a close friend or a family member might also be an option.
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Practical Tips for Saving Money After a Job Loss
Saving money after a layoff can certainly be difficult. You don’t have the usual cash infusion to pay your bills and buy groceries. That is why you need to proceed with caution and learn how to economize when you lose your job. Here are strategies for making ends meet during this difficult time.
Get Back on LinkedIn and Start Networking
If you’re job-hunting, Linkedin can be a great tool for networking. The platform is set up so you can find and interact with former colleagues, alumni from your college, and professionals at companies you aspire to work for.
• Start commenting on people’s Linkedin posts and have conversations with existing connections.
• Build up your profile so recruiters know your job history, your professional skills, and that you are looking for work. This can lead to job opportunities.
Prioritize and Negotiate Any Debts if Needed
Continuing to pay down debt while unemployed should still be a priority. One strategy to pursue is paying off debt that has the highest interest rate. Debt with higher interest rates cost more, so paying this off first will have you saving money in the long-term.
But if you’re wondering how to pay down debt if you don’t have any income, here’s one answer: Try to negotiate your debt. It can be possible to work with your credit card company to negotiate interest rates, payment amounts, and the terms on your credit card debt.
Avoid Luxuries Temporarily
Being unemployed can be a frightening experience. You no longer have a steady flow of income and may not feel financially prepared to weather short-term expenses. To ease this burden, work to eliminate spending on luxuries. Now might be a good moment to downsize streaming services and other subscriptions.
Also eyeball what expenses you have on the horizon: If you had booked a vacation house or a cruise for a few months down the line, it may make good financial sense to investigate getting a refund. That money could be allocated toward your everyday expenses as you job-hunt.
Look at Investments and Retirement
If you are temporarily out of a job, do your best to keep your hands off your retirement funds. You worked hard to save that money, and it’s there to fund a long-term financial goal. That said, some people do tap their retirement accounts as a last resort when unemployed.
When you withdraw from your retirement account before the age of 59 ½, you will incur a penalty tax. However, there are some cases where you may be able to withdraw funds when unemployed without paying this.
You may be able to set up what’s known as a substantially equal periodic payments (SEPP) over five years or until you hit age 59 ½, whichever is greater. However, if you do receive this kind of distribution, it will likely count as income and may therefore lower any unemployment benefits you may be receiving. Talk with your plan administrator to learn more.
Start a Side Hustle
You might consider starting a side hustle to bring in some extra cash while looking for full-time work. There are many ways to earn more money. You could rent out an extra bedroom in your home or apartment, sell unwanted items, drive for Uber or Lyft, or market your professional skills on online service platforms such as Fiverr or Upwork. These are viable avenues to get some money coming in until you lock down a new job.
The Takeaway
Figuring out how to manage your finances when you are in between jobs can be stressful, but there are ways to prepare and then actions that can help you get by. Building and then tapping an emergency fund, accessing unemployment, and budgeting are some actions to take.
Also make sure your banking partner is making it easy and profitable for you to do business with them.
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Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.
FAQ
How do you manage the emotional impact of getting laid off?
Getting laid off or fired from your job is a tough challenge. You may feel angry and ashamed. Acknowledge those feelings, and remind yourself that millions of others have navigated this situation. You are not alone. Also, taking action can foster feelings of control and personal agency. Updating your resume, networking, reworking your budget, and engaging in self care rituals (like exercise) may also be positive steps.
How do you recover after being laid off?
Recognize the shock and upsetting feelings that you are likely experiencing. Then, take steps to improve your situation: Seek unemployment benefits, apply for jobs, start a side hustle, cut some expenses, and perhaps volunteer to build new skills and fill free time. These moves can help you move forward from your job loss.
Is it better to be fired or laid off?
In both scenarios, you don’t have a job, but if you are fired, it is typically due to a performance issue. With a layoff, you will likely be able to file for unemployment and you may receive severance pay from your employer. When you are fired, you may or may not be able to receive unemployment funds and you will probably not be eligible for severance.
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It can be challenging to save money for your financial goals, which is why automating your savings — meaning the endeavor is taken off your plate and happens like clockwork — can be a very helpful tactic.
Saving money is important on so many levels, from building up a healthy emergency fund to having a retirement nest egg. And it seems as if Americans could use some help in this pursuit. The personal savings rate in the U.S. was 4.60% as of September 2025, according to the Bureau of Economic Analysis, which is less than half what it was in 2021.
Learn more about automating your savings here.
Key Points
• Automating savings can simplify financial management and ensure consistent savings.
• Direct deposit into savings or separate accounts for different goals can enhance savings efficiency.
• High-interest accounts boost savings growth.
• Employer programs, like 401(k) matches, can increase retirement savings.
• Monitoring financial insights with apps can help track and optimize savings.
Why Automating Savings Makes Sense
When people say one thing and then do another, it’s called the value-action gap or intentional-behavior gap. Psychologists have lots of theories about why this disconnect exists.
When it comes to saving money, lots of things can get in the way: routine bills, an unexpected big night out with friends, a shopping splurge, or simply forgetting to move money into savings. But by taking some of the human element out of saving money and using an automatic savings technique, it may be possible to overcome some of the obstacles that make it hard for people to save. It can help you build your savings rate and manage your money better,
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9 Ways to Automate Savings
If you’re wondering how to automate savings, you can start by deciding which actions to automate and set them up with a lender (if they offer automated services).
Here are some good ways to get started.
1. Set Up Direct Deposit
A good first step to automating savings is setting up direct deposit for paychecks. This means that on payday, your paycheck goes directly into the bank account. People often plunk their full paycheck into their checking account, but a smart move can be to send some of those funds into a savings vehicle.
• Whether you fund a dedicated savings account or investment fund, this process will ensure a regular, ongoing flow of money to help you build a nest egg.
• If your employer doesn’t have a way for you to divide your automatic deposit, there’s a simple workaround: Have your paycheck go into your checking account and then have a sum automatically transferred to savings the following day on a recurring basis.
2. Earmark Money for Each Goal
There are a lot of things people can choose to do with their money. Most people have more than one savings goal, from accumulating cash for a vacation, a new car, or the down payment on a home.
If all of your money goes into a single savings account, it can be difficult to determine how effectively they are tracking for each individual goal. You can gain financial clarity by setting up separate savings accounts for each goal and then making regular automated deposits into each.
How much should go into each savings account? That depends on your goals and the immediacy of each. If you’re saving for a vacation a year from now, figure out the price tag for your trip, divide by 12, and that’s how much to stash away each month.
Saving can be hard work. But without the right savings account, those hard-earned dollars may not go as far as they potentially could. Instead of putting money in just any account, look for a high-interest savings account to increase the returns of your automated savings.
• Some lenders may reward automatic savers, helping them to reach their goals faster. For example, a recurring automated deposit of $100 may earn interest at a lower starting rate, but increasing that deposit to $500 each month may trigger a higher rate.
• Or look for an online bank which, since they don’t have to pay for brick-and-mortar locations and in-person staff, typically pay higher rates than traditional banks.
4. Take Advantage of Employer Programs
For those who have savings for retirement among their financial goals, employers can be a great savings partner. Those with a 401(k) may want to arrange automatic paycheck deductions, so the contribution comes out of your pay before it even lands in their bank account.
Some companies will also match 401(k) contributions up to a certain level each year. Aim to earmark at least enough to get that match; otherwise, it’s akin to leaving money on the table. It’s an easy way to increase retirement savings.
The late fees associated with missing a bill payment needlessly take a bite out of savings. So if you’re trying to save money, ensuring that all payments go out on time is an easy way to reduce losses that can derail a savings plan. A few pointers:
• Organizing your bills is important, but you don’t need a great memory to stay on top of rent, car, and utility payments — these can usually be done automatically. It makes sense to automate predictable billings that don’t fluctuate each month. Set them up in the payment system, and rest assured they’ll be paid by the due date as long as adequate funds are available.
• For credit card bills, it’s good to ensure that spending habits don’t exceed the amount flowing into the account from paychecks and other sources.
• If you spend more in a particular month, it’s wise to check in advance of the payment date that there are sufficient funds to cover the automatic payment.
• Setting up a calendar alert each month several days before the credit card payment date is a good reminder to make sure there’s enough money to cover the amount owed, particularly if your credit card spending habits are irregular.
6. Monitor Financial Insights
Setting — and sticking to — a budget is an important part of successful financial management. But it can be a lot of work to monitor spending in each category and to stay on the right side of all targets.
Here’s where technology can definitely give you a boost. Instead of crunching the numbers week after week and month after month, apps and other digital tools can improve the ease of fulfilling this important, but arguably boring, mathematical task.
Your bank may well offer an automated tool or dashboard that shows in real-time your spending and saving. This means you can see account balances and itemized spending category breakdowns to have a clear picture of where your money goes and where you might cut back.
Some banks also allow account holders to set up personal financial goals — such as monthly savings targets — and then automatically track their transactions against them. This can be helpful when you are trying to boost savings and your sense of financial security.
7. Increase Deposits Over Time
While learning how to automate savings can take the headache out of managing finances, it’s wise to revisit the amounts periodically. Cash flows change from time to time (you get a raise, you pay off a car loan, you have a baby), and there may be new opportunities to save.
Even if nothing of note has changed, some individuals may find that they have more room to contribute to savings than they estimated at the outset. Even increasing automated savings by 1% per paycheck can help savings grow faster.
Setting a periodic automatic calendar reminder to closely review finances (perhaps every quarter) can be a wise move.
8. Use a Cash-Back Card
If you have a cash-back credit card, you may typically use that 1% to 5% back on purchases to… purchase more. Instead, direct your cash-back rewards into a savings account. Whether you get $10, $100, or more in cash back per month, it will help your savings account grow.
9. Funnel Your Windfalls Wisely
If you get a tax refund or a bonus at work, send that money into savings (or at least some of it) versus checking. Sure, it’s fun to get an infusion of cash and go shopping or dining out, but you can hit those financial goals more quickly if you send the money straight to savings, where it can earn compound interest and grow.
The Takeaway
Automating your savings can help ease your path to reaching your financial goals, from saving for a wedding to nurturing a retirement nest egg. This process is quick and convenient, and doesn’t require you to remember regular money transfers nor break out the calculator to see where you stand financially. Finding a savings account with a competitive interest rate and low or no fees can help your savings grow even faster.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.
FAQ
What is the $27.40 rule?
The “$27.40 rule” is a method for saving about $10,000 a year. It advises that you save $27.40 a day to meet that goal. The idea is that a large savings goal can be a lot more manageable when you break it down into smaller, daily increments.
Why is automating savings a good idea?
Automating your savings can be a very good idea because it doesn’t require any effort on your part. Once you set up a recurring savings strategy, you don’t have to remember to save or find time to move money around. You don’t have the opportunity to think about using the money for, say, a concert ticket vs. for a future goal. It happens seamlessly.
What are ways to automate savings?
There are several ways to automate savings. You might send some of your direct-deposited paycheck into savings, or you might set up a recurring transfer from your checking account to savings. Another idea is to automatically contribute to retirement savings, such as having your employer deduct funds from your pay and have them go into a 401(k) plan.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
An interest checking account is, as the name suggests, a checking account that earns interest. Typically, checking accounts haven’t offered this feature, while savings accounts did. However, there are a number of interest-bearing checking accounts now available that can help your cash on deposit grow.
Typically more flexible than savings accounts, interest checking can give you a financial boost if they’re a good fit for you. In some cases, however, they may have minimum requirements and other aspects that may not sync up with your money style.
An interest checking account is, as the name suggests, a checking account that earns interest. Typically, checking accounts haven’t offered this feature, while savings accounts did. However, there are a number of interest-bearing checking accounts now available that can help your cash on deposit grow.
Typically more flexible than savings accounts, interest checking can give you a financial boost if they’re a good fit for you. In some cases, however, they may have minimum requirements and other aspects that may not sync up with your money style.
Here’s a closer look at these interest-bearing checking accounts, so you can decide if one might be right for you.
Key Points
• Interest checking accounts combine checking features with the ability to earn interest on your balance.
• They often require minimum balances and may have fees that affect earnings.
• Interest rates are generally lower than those of high-yield savings or money market accounts.
• These accounts typically offer unlimited transactions and debit card use for flexibility.
• Consider your financial goals and account terms before opening an interest checking account.
What Is an Interest Checking Account?
Whether it’s called an interest-bearing checking account, interest checking account, or high-yield checking, this is a type of checking account where the account holder can earn interest. The interest rate may not be amazingly high. According to the Federal Deposit Insurance Corporation (FDIC) as of October 2025, the rate averaged 0.07% APY, or annual percentage yield, which is the real rate one earns when compounding interest kicks in. (Occasionally, APYs of 1.00% to a few percentage points may pop up, sometimes on a promotional basis.) Even at the lower range, the interest accrued is better than nothing. Honestly, who doesn’t want to earn more interest?
There may, however, be a catch:
• Although the account will pay an APY, account holders may be required to pay monthly maintenance fees or maintain a certain account balance (say, $500 or more).
• In addition, you may be required to receive a certain number of or dollar amount of direct deposits per month or meet other criteria, such as relating to debit card usage.
• You might also have to pay a monthly account fee; again, it depends on the bank you choose. Recent research found that checking accounts had an average monthly fee of $10.95 to $16.35; where an interest account will fall can vary with the financial institution.
• One more point: In many cases, interest checking accounts earn less interest compared to savings accounts.Yes, a checking account has added flexibility that may be beneficial (say, unlimited transactions and debit-card and check-writing features), but it’s worth noting. You might consider a combined checking and savings account to get the best of both worlds.
How Do Interest-Bearing Checking Accounts Work?
These types of accounts work in a similar way to other kinds of checking accounts. Account holders can make deposits at ATMs, online, by direct deposit, or at branch locations depending on the financial institution.
As for withdrawals, account holders can make bank transfers, withdraw cash from an ATM, write a check, use bill pay, or pay for purchases with a debit card. The only difference is that, instead of earning no money on your balance, you will accrue some interest, usually on a monthly basis.
How Are Interest Checking Accounts Different Than Other Checking Accounts?
The truth is, checking account interest rates will vary depending on the type of account and the financial institution. On average, as noted above, banks offer an APY of 0.07%. There are high-yield checking accounts that could pay more, but these rates are generally still lower than what you could earn with a savings account. That said, with a little research, you might find an interest checking APY of 0.50% to 1.00% or higher at this time, especially at online banks. Those couple of extra points of interest may well be worthwhile as part of your plan to grow your wealth.
Just be sure to note the account requirements, as mentioned above. If you have to keep more money in the account that is comfortable for your budget and cash flow, you could wind up incurring late fees elsewhere in your financial life.
Here’s an example:
• Perhaps you decide to pay your credit card bill late because you didn’t want your checking account balance to dip below the minimum to earn interest.
• You opt to wait for your next paycheck to hit before you send your payment to your card issuer.
• The credit card fee for the late payment is likely more than the interest you’re earning on the money in your checking account.
So in this situation, keeping your money in an interest checking account might not be a win-win for you.
Common Account Requirements for Interest Checking Accounts
When it comes to opening an interest-bearing checking account, there may be some requirements to wrangle. Keep the following factors in mind:
• Minimum-balance and other account requirements: When you open an account, some financial institutions may require a minimum initial deposit. Current offers for interest-bearing checking range from zero dollars to $500 and occasionally significantly higher amounts as a minimum deposit. Shop around to find the right account for your needs.
Plus, as mentioned above, you may need to maintain a certain balance in order to avoid fees. There may also be other rules such as the amount of transactions you can make on your debit card.
• Fees: Some interest checking accounts may charge monthly fees, as described earlier in this article, which could eat into the interest you earn. You may have to keep a higher balance in your account to avoid fees. Other fees to consider are overdraft fees, and whether you’ll need to pay third-party network fees to access certain ATMs.
• Application requirements: Depending on the financial institution, you may be required to submit documents such as your Social Security number, proof of address, and government-issued photo ID. If you want to open a checking account with a credit union, you’ll most likely need to become a member.
Increase your savings with a limited-time APY boost.*
*Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.30% APY as of 12/23/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 3/30/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.
Advantages and Disadvantages of Interest Checking Accounts
An interest checking account may not be the best option for you. Consider the following advantages and disadvantages before opening an account.
Advantages of Interest Checking Accounts
Here, the upsides of interest checking:
• You’ll earn interest Most traditional checking accounts won’t pay you any interest, but with an interest-bearing one, you’ll earn high interest. That means your money will help you earn some money while it’s sitting in the account. Typical APYs can range from 0.50% to 3.00% or higher.
• You’ll have more flexibility Checking accounts tend not to have transaction limits as you may with savings accounts or money market accounts. Plus, you can use checks and a debit card, offering you more flexibility to access your money.
Disadvantages of Interest Checking Accounts
Next, the downsides:
• You may have to meet certain requirements Though there are some interest checking accounts that don’t have minimum balance requirements or monthly fees, some do. That means you could be on the hook for a monthly fee if you can’t meet account requirements. In some cases, these fees could negate the amount you earn in interest.
• You may not get a high interest rate The interest you earn on a checking account tends to be lower compared to ones you earn from a high-yield savings account or money market account. But there are definitely exceptions to the rule: Some banks have offered as much as 3.00% APY or higher on interest checking accounts, so it can truly pay to shop around and see if you can snag one of those deals.
Where Can I Get an Interest Checking Account?
You can open an interest checking account at most financial institutions, including traditional and online banks, as well as credit unions. As mentioned before, you may be required to become a member of the credit union you want to open a checking account with.
When shopping around, look beyond interest rates. Other equally important factors to consider are:
• Account features (access to your funds, for instance; when the interest accrues)
• Account-holder benefits (are there other perks to being an account-holder, such as a sign-up bonus?)
• ATM, overdraft, and other fees
• Minimum opening deposit and account balance requirements to earn interest.
Is It Worth It to Get an Interest Checking Account?
Thinking carefully about your financial situation and goals should help you determine whether it’s worth getting an interest bearing checking account.
• For those who want to keep a decent amount of money in a checking account to ensure bills and daily transactions are taken care of, it might be worth considering. Why not earn a bit of interest if you can find an account that doesn’t charge fees?
• However, if you’re interested in having a stash of cash available for short-term or medium-term savings goals — as in, you’re not planning on making frequent withdrawals — then a high-yield savings or a checking and savings account might be the better choice.
• If your goal is to save for long-term goals like retirement or a college fund for your child, then an investment account could be the way to go.
An interest-bearing checking account may be a good fit if you’re looking for an account for daily transactions that can grow your money a bit. It’s important to check the fine print to see if there are any minimum balance requirements and what the fees are. Comparing the potential interest to be earned with any fees that may be charged is a vital step before applying for an interest checking account.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.
FAQ
How does an interest-based checking account work?
Interest-based checking accounts, or interest checking accounts, work like standard checking accounts and provide a good way to deposit and spend money. They offer some interest earnings, typically a fairly low percentage, which is a way to help your money on deposit grow.
Why am I getting interest on my checking account?
Not all financial institutions offer interest on checking accounts; many offer none at all. If your bank offers interest, it is a way to incentivize you to keep money on deposit with them. You might think of it as a reward, and you may typically find this perk at online banks.
What are the cons of interest accounts?
Interest accounts can have downsides as well as upsides. Disadvantages can include fluctuating interest rates and possible account requirements, such as a minimum initial balance or ongoing balance threshold to earn interest.
Photo credit: iStock/FG Trade
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®
Fundraiser bank accounts offer a way to hold funds that will be used for those in need. They can keep funds safe until they are transferred to, say, a neighbor rebuilding a flooded house or paying medical bills when facing a tough diagnosis.
If you are planning to raise money on someone else’s (or a cause’s) behalf, opening a fundraising bank account could be a good option. But how you do so will depend on what the account is for. Here’s a closer look at what a fundraising bank account is and how it operates.
Key Points
• Identifying information like Social Security number, name, and address is required to set up a fundraising bank account.
• Donations are generally not taxable for the beneficiary, but interest earned may be.
• For minors, accounts should be established by legal guardians or through a trust fund.
• For deceased beneficiaries, an EIN is needed, and the account must be set up for specific purposes.
• Setting up a trust can provide added security and ensure funds are used for intended purposes.
What Is a Fundraising Bank Account?
A fundraiser bank account is one set up specifically to hold donations. For most of us, that means donations to a small cause, be it ourselves, another individual, or a small group of people. A fundraising bank account sets aside the money specifically for the beneficiary (or beneficiaries), though it may not be opened by the individual who will benefit. Some points to consider:
• Keep in mind that opening a bank account for fundraising is different from donating to a charity. These are bank accounts people set up to hold donations to an individual or family as opposed to starting a full-on charity of their own.
• A fundraising bank account is not the only way to capture donations. Most major crowdfunding platforms make it easy to accept donations through the platform itself, or you may also be able to take donations via peer-to-peer transfer services. The money could then be transferred directly to an individual’s personal checking or savings account.
• Unless you’re offering something in return for the money or the total donations, it’s not considered taxable income, though the crowdfunding platform may report the transactions to the IRS, or Internal Revenue Service. The IRS website provides guidance on how to handle money raised as part of crowdfunding and possible tax implications.
Opening a fundraising bank account can still be the best option for some situations. It can provide more formal protections for beneficiaries and assure the donated monies are separate from other funds.
Increase your savings with a limited-time APY boost.*
*Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.30% APY as of 12/23/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 3/30/26. Rates variable, subject to change. Terms apply here. SoFi Bank, N.A. Member FDIC.
What Is Needed to Set Up a Fundraising Account?
What you need to set up a fundraising bank account will vary depending on the bank you choose and even the local laws in your area. A good first step: Explain the purpose of your account to the bank when you open it. This way, they will have a full picture of what your goal is and be able to guide you.
Your Identification Information
Just like when you open a new bank account, you’ll need identifying information such as a Social Security number, name, and address — but whose identifying information you need will vary. If the fundraising account is for donations to you as an individual, your own information will be needed.
The Beneficiaries’ Identification Information
But if you’re opening an account for a someone else to benefit from, it may make more sense to open the account with their credentials. In fact, if you can, bring them to the bank with you and have them open the account in their own name. A bank may or may not allow you to open an account for another person if they’re not present or haven’t provided signed and notarized forms.
If the beneficiary doesn’t have a Social Security number or you’re opening the account for multiple beneficiaries, you may need to obtain an Employer Identification Number, or EIN, from the IRS for the account. (This is simply a way for the IRS, or Internal Revenue Service, to keep tabs on the money for tax-reporting purposes — it doesn’t, in this case, have anything to do with being someone’s employer.)
What to Do With the Money While It Is Being Raised
When you are gathering funds to support a charity or help a person in need, it’s vital to keep it safe. A smart way to do that: Make sure that money gets into the bank account ASAP. Depositing it directly will protect it from possible loss. As other deposits come in, the balance will grow until the happy day you are able to distribute it to the individual or charity that will benefit from your kindness.
Things to Consider With a Fundraising Bank Account
There are some complications that can arise when opening a bank account for fundraising. Some examples:
Fundraising Accounts for Deceased Beneficiaries
In some cases, you may be raising money to pay for a deceased person’s funeral costs or to provide living expenses for loved ones left behind. Of course, if someone has passed away, you can’t use their Social Security number to open an account — so you’ll need to obtain an EIN, as mentioned above, and again, let the bank know explicitly the purpose of the account.
Fundraising Accounts for Minor Beneficiaries
Perhaps you want to help collect money for a child who needs cash for medical or educational expenses. Be forewarned that raising money for minors can come with a variety of complications — including the problem of ensuring the minor uses the money for what it’s being set aside for.
• Establishing the account by or for the child’s legal guardian is a good way of safeguarding the funds and making sure they’re being used for the intended purpose.
• If that option is unavailable, you might consider setting up a trust fund — which involves putting the legal responsibility for the money into a third party’s hands, with the added option of specifying certain ways the money can be used. An attorney can guide you through the process of setting up a trust.
Tax Consequences
As mentioned above, gift funds received in a fundraising bank account may not be taxable as income — although there are exceptions, and you should always consult a tax professional to be sure you understand the tax liabilities of your planned actions. For example, if the account the donations are being held in earns interest, taxes may be assessed on those earnings.
In addition, keep in mind that these kinds of donations are not considered charitable donations, and so will not be tax deductible for the donor.
Can the Bank Be Held Liable If Funds Are Misused?
Unfortunately, scammers do exist — and it’s possible that some people who set up fundraising bank accounts may end up using the monies for a purpose other than what was promised to the donors. If you’re setting up an account in good faith for someone else’s use, it’s worth checking with the bank about who’d be liable if the beneficiary misused the funds.
It’s not unheard of for banks to request that they be indemnified if this should happen and the money isn’t used according to the fund’s original intention.
It’s upsetting to think about, but yes, fraud does happen. People have been known to take advantage of the compassion of do-gooders and use the money raised to pay for things other than to fund’s intention.
• Setting up a formal trust is one way to ensure the funds can only be used within the proper parameters.
• You can also check with the bank to learn if there are any other safeguards in place in case of bank fraud.
The Takeaway
Opening a fundraising bank account is one way to set aside money being gathered for an individual or small group. The funds will be protected and can accumulate to help the beneficiary. When acting on good intentions, though, it’s important for the account’s creator to understand how these accounts function, what’s required to open one, and that they don’t afford any tax deductions for donors. With these steps taken, you can be well on your way to helping those in need or a cause that moves you.
On the topic of bank accounts, how are your own accounts doing?
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.
FAQ
How do I set up a charity account?
To set up a fundraising bank account, you’ll need to explain to the bank the purpose of your account and ensure you have all the information they need, likely including the beneficiary’s Social Security number.
Do I need a tax ID for a fundraiser?
Depending on the type of account you set up and whether or not the beneficiary’s Social Security number can be used, you may need to get a tax ID number (such as an Employer Identification Number, or EIN) in order to open the account.
How do you account for donations?
All donations should be tracked for tax reporting purposes — and keeping them in a separate account makes it easy to see which funds are personal and which are gifts.
SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet
Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.
See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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.
