May
05
2023

Which Number Is the Routing Number on a Check?

By | Family Finances, money, Money & Life, Terminology | Comments Off on Which Number Is the Routing Number on a Check?

If you’re wondering what those digits across the bottom of a check mean, the first one you see at the lower left is the routing number. Those three sets of numbers have different meanings and uses; they help financial transactions get processed swiftly and efficiently. They move funds from one place to another with precision.

Going from left to right, your checks are typically printed with the routing number, account number, and check number. It can be helpful to understand what a routing number represents in more detail. Those digits are useful when writing checks, signing up for direct deposit, and doing other banking activities.

Read on to learn about this important number and more, including:

•   What is a routing number?

•   Which number is the routing number on a check?

•   How is a routing number different from your bank account number?

•   When do you need to use a routing number?

What Is a Routing Number?

A routing number is a 9-digit identification number that’s been assigned to your bank or credit union by the American Bankers Association (ABA). It’s often referred to as an ABA number or a routing transit number (RTN). According to the ABA, a routing number can only be issued to a federal or state-chartered institution deemed to be eligible for a master account with the Federal Reserve.

The purpose of a routing number is to indicate which financial institution is responsible for processing a payment and to ensure the funds go to the correct place. Each bank has its own unique routing number to distinguish it from all of the other banks. This helps to avoid any confusion, mix-ups, or mistakes. For example, if your bank has a similar name to another one, it’s still distinguishable because of the financial institutions’ different routing numbers.

Routing numbers are only used in the U.S., but some large national and global banks may possess multiple routing numbers based on where the account is held or where you reside. A bank may also use more than one routing number for different transactions, such as one for wire transfers and another for processing checks.

Where to Find a Routing Number on a Check

Many of us, at one time or another, look at the digits on a check and wonder which one is the routing number. As previously mentioned, when you look at the bottom of a check, you’ll find three separate series of numbers. Typically, your routing number in the bottom left corner, your individual bank account number the second cluster of digits, and the check number can be found to the right of the account number. However, there are times when these numbers can appear in a different order, such as on an official bank check.

All of the numbers featured on the bottom of the check are printed with magnetic ink character recognition (MICR), an electric ink that makes the digits more machine-readable and helps banks process checks more quickly. The ink can’t be faked or copied, offering enhanced security for the account holder and the bank.

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Routing Number vs. Bank Account Number

Now that you know which is the routing number on a check, consider that the routing and bank account numbers are two distinct things.

•   As noted earlier, the routing number identifies the financial institution responsible for the transaction and makes sure the money deposited or debited goes to the right place.

•   Your bank account number on the other hand, is a series of numbers used to pinpoint a specific savings, checking, or business account. It’s created especially for you and pertains only to your individual funds. If you have a checking and savings account with the same bank, each account will have its own separate number but the routing number for both will remain identical.

While routing numbers contain 9 digits, bank account numbers can have anywhere between 5 and 17 numbers. Generally though, account numbers are within the 8 to 12 digit range.

A routing number is safe to share and is available to the public. Your own bank account number is best to keep private whenever possible and only supplied to trusted sources. The combination of your personal account number with a bank’s routing number, can in some cases give someone direct access to your money.

What Are Routing Numbers Used For?

Routing numbers are necessary because in a financial transaction, these digits help banks identify each other. This is key in the event where you need to transfer money from one account to another. For example, if you send a loved one a check for their birthday, the routing number on the bottom of the check indicates the funds come from your particular bank and account.

You will find some instances when accessing your routing number will be necessary. Here’s some of those situations:

Setting Up Direct Deposit

Getting your earnings directly deposited into your bank account has pretty much made paper paychecks obsolete. In fact, one survey by the American Payroll Association found 93% of people use direct deposit as their method of getting paid.

If your employer gives you the option of receiving your pay via direct deposit, signing up should be pretty seamless. You’ll most likely fill out a form giving your company’s HR or payroll department your bank’s routing number along with your personal account number so they know exactly where to deposit your paycheck. Once you set up a direct deposit, come pay day, your money will automatically show up in your account. (Of course, make sure to use the digits for a current account vs. sending direct deposit to a closed account.)

Direct deposit isn’t only for paychecks. It can also be implemented for receiving Social Security and other government payments, annuities, travel and expense reimbursements, and 401(k) disbursements, among others.

Making a Wire Transfer

A wire transfer is a fast way of sending money electronically from one bank account to another. Some details to note:

•   These accounts can be domestic (between two U.S accounts) or between an international and a U.S. account. Wire transfers can be sent through your bank branch or online bank account. You can also choose to go with a wire service entity such as Western Union.

•   In order to send money via a wire transfer, you’ll need to provide the account you’re using to complete the transfer, the recipient’s bank name and routing number, plus their bank account number. Additionally, you may also need to provide your bank’s routing number and your individual bank account number.

•   Many banks charge a wire transfer fee for sending or even receiving one. An incoming fee may be around $15 and an outgoing one can trigger a charge of $25 on domestic transactions.

•   If it’s not an urgent matter, it will cost less to send money electronically through an Automated Clearing House (ACH) transfer. An ACH transaction uses an electronic network system that represents more than 10,000 financial institutions in the U.S. You may wonder what ACH transaction fees are like? They are typically free for bank clients, which is a nice benefit. The downside of an ACH is it can take a couple of days to process, whereas a wire transfer can be processed the same day .

Recommended: ACH vs. Check: What Are the Differences?

Paying a Bill Online

Making a bill payment online and scheduling automatic payments for your recurring monthly bills can make life a lot easier. In order to make online bill payments, whether you arrange for it to be automatically deducted or log on to the biller, such as a utility or credit card company, those bill payees will need both your financial institution’s routing number along with your individual account digits.

You can also pay businesses or people electronically directly from your bank account through apps such as Venmo and PayPal. When you sign up for these apps, you can choose where you want your payments to come from, or go to, if someone is sending you money. One choice is to link to your bank account, in which case, those apps will need your routing and account numbers.

Recommended: Changing the Due Dates of Your Bills: Is it Possible?

Filing Your Taxes

Getting or expecting a refund this year? Direct deposit for your tax refund is the fastest and most reliable way to get your money. And, it’s also popular. According to the IRS, 80% of taxpayers choose direct deposit as the method in which they get their refund. If you choose this option, you’ll need to enter your bank name, routing number, and the bank account digits where you want to receive your refund.

Make sure you verify you’ve put in the correct routing and bank account numbers on your federal and, if applicable, state return before you sign and submit it. If not, the IRS will send you a paper check instead.

Looking Up a Bank

Nowadays with so many banks offering enticing reasons to open an account, such as a signup bonus , low-interest rates, and low-to-no monthly fees, it’s possible to have a checking account with one bank and a savings account with another. In this case, you’ll have a routing number for each bank. You’ll need to know both if you want to transfer money between accounts, for example.

Thanks to the internet, you may find the other bank’s routing number simply by going on their website. Some may list it on the home page or elsewhere, like the FAQ section. You can also use a search engine to type in the name of the bank and “What is their routing number?” to try to find out the information.

Finding a Routing Number Without a Check

Don’t have a check handy? No problem. There are definitely other ways you can easily get your routing number. Here’s how:

Monthly Bank Statement

Banks and credit unions make a monthly statement available to customers either online or on paper that’s sent through the mail. When you have your statement, you should find the bank’s routing number along with your account number on the top of the first page.

If you can’t locate it, try logging on to the bank’s website and do a search for your routing number or explore your account details to find those digits.

Checking your monthly bank statement frequently is a good way to keep on top of your transactions. Review your statement regularly to check for any bank errors or fraudulent activity such as incorrect debits from an altered check or a continued recurring charge from a long-ago canceled subscription. If you discover any type of errors, contact your bank right away.

Mobile Banking App

Having 24/7 online access to your bank account makes finding your routing number possible from your couch. Many banks have a mobile app these days. While these apps tend to differ in setup and layout depending on your bank, you should be able to find your routing number through the app by looking up your account details.

You can also access your bank statement through the app and as previously mentioned, generally find your routing number that way.

Your Local Bank Branch

If all else fails and you can’t easily find your bank’s routing number, visit your nearby branch in person to get the information. Sometimes the bank will have the routing number posted in the lobby area so you can simply jot it down or take a photo of it with your phone. Asking a teller or bank officer directly if it’s not displayed.

Can’t make it to the bank or have an account at an online vs. traditional bank? Call their customer service number. A representative can typically give you the bank’s routing number over the phone.

Look It up Through the ABA

The American Bankers Association has a routing number lookup tool called the ABA Routing Number Lookup. This mechanism allows you to locate the routing number for your bank or credit union. One thing to know when using the ABA Routing Number Lookup, users are limited to no more than two lookups a day and to 10 lookups a month. You’ll also have to agree to terms for access and use of the ABA’s tool.

The Takeaway

Your bank’s routing number can be found at the bottom of your personal checks on the far left-hand side. If you don’t have a check at your fingertips, you may need to find your bank’s routing number another way. You might call your bank, get it from your bank statement, or find it through the bank’s mobile app.

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

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

FAQ

Is the routing number always first on a check?

Typically, yes, the routing number is the first set of digits at the bottom left-hand area of a check. But in some cases, it can be switched up and appear after the account number, such as on a bank check.

Are routing numbers 8 or 9 digits?

Routing numbers are always 9 digits. Your individual bank account number typically falls between 8 and 12 digits, but it can be anywhere between 5 and 17 numbers, depending on your financial institution.

Which is the account number on a check?

The account number on a personal check is the group of numbers that appears on the bottom, normally sandwiched between the routing number on the left and the check number on the right.

Photo credit: iStock/MicroStockHub

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.

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 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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May
04
2023

11 Tips for Cleaning Up Your Finances

By | Budgeting & Goals, money | Comments Off on 11 Tips for Cleaning Up Your Finances

If you’re feeling financially disorganized, making a few key moves can help you restore order and take charge of your money. You’ll learn to live within a budget, pay down debt, and start saving so you can work toward a successful financial future.

Here’s what you need to do to clean up your finances.

Ways to Clean Up Your Finances

1. Look at the Big Picture

The first step is to look at your entire financial situation. Review your bank statements, credit card statements, bills, and paychecks. It might feel a little overwhelming at first, but seeing your income and debt all at once, and comparing the two, can help you understand exactly what you own and what you owe.

Make the process easier with a money management tool that can help you track your accounts in one place.

2. Set a Practical Budget

Setting a budget can be a great way to organize your spending and saving. One way to do it is by using the 50/30/20 method. This process can help simplify your money by dividing it into three categories.

To start, 50% of your income goes to necessities, such as housing, utilities, groceries, and other essential bills. Next, 30% is for discretionary spending, like entertainment or eating out. The remaining 20% is for your financial goals, such as savings and retirement.

As a final step in the budgeting process, take a look at your savings account. You may want to consider opening a high-yield online bank account where your money could earn more for you.

3. Make Payments On-Time

One surefire way to make sure your bills are paid by the due date is to automate your finances by setting up autopay. Since payment history affects approximately 35% of your FICO® score, consistent on-time payments could potentially benefit your score.

Plus, many financial institutions may offer a discount for setting up automatic payments. You can also go paperless and get notifications delivered straight to your email inbox.

4. Cancel Unused Subscriptions

As you’re evaluating your spending habits and budget, be sure to look for subscription services you can cancel.

Whether it’s an unused Netflix subscription or an underused gym membership, canceling what you don’t use could save you a substantial sum over the course of a year.

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.

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5. Make a Plan for Your Debt

If you’re working on paying off multiple loans, you could explore the idea of consolidating your debt with a personal loan. If you have debt built up across multiple credit cards, for example, the different interest rates and due dates can lead to confusion and missed payments.

One possibility to help simplify things is a debt consolidation loan. You could choose a new repayment term, possibly with a lower interest rate, if you qualify.

If you have private student loans to repay, you might also want to consider refinancing your student loans. You may be able to get a lower interest rate that could help you save money. Evaluate the options to see what might work for you and what you can qualify for.

6. Review Your Current Investments

If you’ve had multiple jobs, you may want to consolidate your investment accounts, too. Having several 401(k) accounts from past jobs could be tough to keep track of and might not help you make the most of your money in the long run.

Rolling over your old 401(k) accounts and combining them into one IRA account, for example, could be one option to consider.

You can also check with your current employer to see if you can roll over your previous accounts to your new plan. Be sure to compare the different investment choices of each account to make an informed decision.

7. Commit to Regular Maintenance

Streamlining your finances in the present is just the first step. From now on, commit to doing a regular financial checkup. Review your finances monthly, and adjust your budget and financial strategies as needed.

8. Stay on Top of Your Credit Report

While you’re at it, check your credit report and review it to make sure it’s correct. If you spot any errors, notify the credit bureaus. You can get a free copy of your report from AnnualCreditReport.com.

In addition, you may be able to check your credit score for free through your credit card or bank. You can see how your score changes over time and what may be impacting it the most. Then you’ll know what you need to work on to strengthen your score.

9. Review Insurance Policies

If you have life insurance policies or other benefits with beneficiaries, review those designations at least once a year. With big life changes, you’ll want to make sure your beneficiaries are up to date.

If you get married or remarried and change your name (or your spouse’s name changes), you’ll need to add that information to the policies as well.

10. Update Your Tax Withholding

Take a look at your most recent tax return. Did you end up with a big refund? Or maybe you owed way more than you planned for. Your withholding may be too much or not enough.

Discuss your withholding information with a tax professional to make sure you’re having the correct amount taken out of your paychecks for taxes.

The goal is to free up more of your money month to month as you earn it so you can put it toward savings or paying off debt.

11. Maximize Account Benefits

Finally, as part of your financial cleanup, you should review the benefits and features of your bank accounts and see if a new account might benefit you more.

If you’re thinking about a high-yield savings account, for instance, check out SoFi Checking and Savings. You’ll earn a competitive APY, pay no account fees, and there’s no minimum balance.

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.

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.

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.

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May
04
2023

How to Split Bills With Roommates

By | Budgeting & Goals, money | Comments Off on How to Split Bills With Roommates

Having a roommate can be great; you have companionship and someone to split the bills with. But that sharing of expenses can sometimes get challenging and tense even. Roomies can wind up arguing over who is using up all the toilet paper or sending the electricity bill through the roof.

To help keep the peace and control costs, there are smart tactics you can use. Try some or all of these tips to keep your household as fun and argument-free as ever.

Creating Clear Guidelines on Which Bills to Split

One of the easiest ways to ensure everyone feels satisfied with how the household bills are handled is to be direct and upfront with financial expectations. And this means being straightforward about what those expectations are before anyone moves in.

When negotiating moving into a new home, consider asking how bills are handled now and how it will change when you or someone else moves in. Additional questions to wrangle can include:

•   Whose name is currently on the utilities?

•   Will I be expected to put my name on any utilities?

•   When is money collected to split the bills?

•   Are the bills divided equally, or by room size?

These can be helpful, because everyone can understand what’s expected. It also sets ground rules moving forward.

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.


Deciding How Everyone Wants to Split Bills

As for the best way to split bills, that may depend on the household situation. For example, if the home has two evenly-sized rooms and a shared bathroom, kitchen, and living area, it may be easiest to simply split the bills down the middle as everyone has an equal space. But, if one room is exponentially larger than the other and has its own en suite bath, the bills could be split proportionally to reflect the extra space for one roommate versus the other.

It is a good idea to tackle the grocery issue head on. For instance, address such questions as:

•   Is the house going to split groceries?

•   Is everyone going to enjoy one shared meal together at night?

•   Are the roommates going to split common goods like cleaner and toilet paper?

•   Or is each person going to fend for themselves?

Any way you choose to go about it is fine, as long as it’s all out in the open — before someone accidentally finishes someone else’s ice cream without asking.

Picking Who Is Responsible for Which Bill

Once it’s decided how a bill will be divided, one other idea may be assigning each roommate ownership of bills for things like the electricity, heating, gas, water, trash, cable and internet, and more, depending on the rental agreement. Perhaps you’re able to get a better deal based on a roommate’s existing account with a certain biller. That may be one way to decide and to lower expenses.

Or, another common method is to have the roommates divide up the bills evenly in order to distribute the responsibility. Doing things this way may also ensure everyone pays bills on time. Being late with bills can lead to fellow roommates being surprised with a service being interrupted and their credit being dinged if they are listed on the account that’s unpaid.

You might also look into changing the due date on bills; this can sometimes be accomplished and can ease cash flow.

Creating a Roommate Bills Contract

Once the lease has been negotiated, the bills have all been cleared up, and everyone is in agreement, you may be considering some sort of “roommate contract” spelling out exactly what was decided upon, which everyone reads and signs.

That way, no one can ever claim they were confused about the household budget and how bills are split, when money is owed, and who is responsible for what. It is recommended to share the fully executed contract electronically and then a printed out copy for all to review and retain.

Recommended: How to Rent an Apartment With No Credit

Sharing a Spreadsheet of Expenses

Settling into a new home and arrangement might be a good time to finish up the admin work by creating and sharing a monthly spreadsheet of expenses.

This spreadsheet could be kept in a common gathering area for easy reference and shared online as well. In the spreadsheet, each roommate can keep track of the expenses they are responsible for, as well as who has paid and what is outstanding.

This spreadsheet may also come in handy for adding in shared groceries and necessities like milk, eggs, toilet paper, and paper towels. That way, everyone can keep track of who bought the last batch to avoid an argument later. You’ll also see how much your household is spending on groceries per month and other expenses.

Recommended: Different Types of Budgeting Techniques

Sitting Down Together at the End of Each Month

It is said that one of the quickest ways to ruin a roommate relationship is for one person to get passive-aggressive about the bills. That’s why it’s recommended to avoid leaving little notes around the house about who owes what (or who hasn’t done the dishes in far too long) and instead face those issues head on.

At a good time for everyone, perhaps toward the end of each month, schedule a 10-minute roommate check-in. In this meeting, everyone can share household happenings, announcements, and any updates on household bills.

By sitting down in person, no one can avoid possible uncomfortable questions about money. You all can figure out potential sticky situations together.

As a bonus, roommates can also use this time to go over any other to-dos around the house. You might also discuss ways to economize, such as saving money on water bills.

Keeping Some Personal Purchases Separate

Though some may be tempted to fully invest in a roommate relationship by sharing the financial burden on just about everything, there are some items that are better left in a budget’s personal spending category.

That includes the purchase of any big-ticket items you’d like to take with you if you ever move out. These might include such items as a TV, couch, tables, glasses, or an expensive Crockpot purchased on a whim.

It may also be helpful to distinguish an area in cabinets and the fridge for each individual roommate to place specialty or expensive food items they do not want to share.

If one roommate has a pet they adopted on their own, it is a good idea to keep those bills completely separate.

Recommended: How to Save Money on Pets

Another common recommendation is for everyone to invest in their own renters insurance. This will protect all their items in case of a fire, flood, burglary, or more. This type of insurance could save everyone a lot of money and heartache if disaster strikes.

Using Modern Technology to Split Bills with Roommates

Fortunately, splitting bills with roommates is easier than ever, thanks to the advent of P2P transfers. You might all pay bills via PayPal, Venmo, or Zelle, and then one person transfers the appropriate amount to the payee. Your bank may also have tools you can use to quickly send funds to others.

It can be fast and free to transfer money this way and can make the bill-paying routine quick and simple.

The Takeaway

If you need flexible banking (whether or not you have roommates), consider what SoFi offers. With an online checking and savings account, you can not only access your money at any time from anywhere but also transfer money to pay bills directly online. Plus, you can complete peer-to-peer transfers between SoFi Checking and Savings members and non-members.

More perks: No account fees and a competitive annual percentage yield (APY) to help your money grow faster.

SoFi Checking and Savings: The smart, simple way to manage your money.

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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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02
2023
father and young daughter reviewing finances

How Often Should You Review Your Personal Finances?

By | Budgeting & Goals, Financial Independence, money | Comments Off on How Often Should You Review Your Personal Finances?

If the money in your bank account always seems to be low, you may need to review your personal finances on a more regular basis.

Keeping a close eye on your spending, saving, and investing can provide a more accurate picture of where your money is going. It could help you understand what you’re doing right and what you might want to change, and keep you on track with short- and long-term financial goals.

That doesn’t mean a full-on personal financial review every day. And some categories (spending vs. saving, for example) might require more attention than others. Here’s a breakdown of how often a review might make sense.

Ways to Review Your Personal Finances

1. Tracking Spending

When the money from your paycheck seems to slip away, it’s often because there’s no household budget in place. That means there’s no priorities set for where the money should go and no guidelines to follow.

Before putting together a budget, it can help to track what you spend money on. That includes everything from rent to groceries to prescriptions and subscriptions. To simplify the process you can use a budget and spending tracker.

Once you see how much you spend and on what, you can use that information to set up a budget. During this time you may want to keep checking your spending daily, or at least weekly, to see if your expectations were realistic and if you’re staying on target.

If you want quick feedback on your spending, you may choose to do frequent spot checks using a mobile app. If you make reconciling bank and credit card statements a monthly routine, you may have a better chance of catching any errors, possible fraud, or forgotten subscriptions.

You also may find that there are accounts you can consolidate — including credit cards and other debts — to manage your money better.

2. Reviewing the Budget

When you’re trying to get your finances under control, you might decide to check your budget every day to be sure you’re following through on the plan or if it needs adjusting. This can also help you avoid budgeting mistakes. But there may come a time when you feel as though you’ve got a solid, doable strategy, and you can cut back on how often you check your stats.

Some people do an annual budget review using information from the past year to adjust for the year ahead. They might also do a quarterly or annual review as part of a larger financial evaluation that includes checking their credit report.

Others are more comfortable with a monthly checkup so they can nimbly make changes as new expenses and life changes come up. Decide what time frame works best for you.

3. Monitoring Savings

It can be tough to stay motivated to reach a savings goal, whether it’s putting aside money for a vacation, building an emergency fund, investing for the future in an IRA, or all of the above.

Just as reviewing your spending regularly may help you stay on track, checking our savings monthly, or even weekly or daily, can reinforce the effort. It can be satisfying and rewarding to watch your bank balance increase. You might also want to look into opening a high-yield online bank account so that your savings can grow and earn even more for you.

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.

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4. Following Investments

How often you check your investments depends on your personal preferences and what you’re comfortable with.

If your money is in an IRA or 401(k), it’s meant for the long haul — a retirement that could be decades away. A monthly, quarterly or twice-a-year check-in could be enough to spot any disturbing trends.

That regular check-in could be a good time to do some rebalancing, either by selling investments or redirecting future investments if necessary to stay on target for your goals.

5. Attending to Taxes

It’s easy to put off thinking about income taxes until it’s time to file, but this is another slice of financial planning that can benefit from a little more evaluation. And if you wait until you’re filling out tax forms, you may miss out on some savings.

Taxpayers usually have until the April 15 filing deadline to make tax-deductible contributions to a traditional IRA or 401(k) for the prior tax year.

But many tax strategies must be implemented by the end of the calendar year to have an impact on federal taxes, so November can be a good time to take a look at charitable contributions, converting money from a traditional IRA to a Roth account, making health savings account contributions, and using the money left in health savings and flexible savings accounts.

6. Evaluating Goals

When it comes to goal setting, it may help to think in terms of big goals and little goals.

Big goals might be things like sending your kids to college, buying a home, or retiring to a beach house. Smaller goals might include paying down credit card debt or taking a special vacation.

Both types of goals may require regular evaluations and financial checkups — to see if you’re on track and determine if it’s still something you want. After all, circumstances and personal priorities can change.

But the check-in schedule might be different for big goals (once or twice a year could be enough) and small goals (monthly, combined with your budget once-over, may be more appropriate).

Life events — a new job or job loss, a baby, a move — also may trigger the need to reevaluate some goals, big and small. And you might want to do a review of all your goals whenever you achieve something on your list. Rejoice and then refocus!

Wrapping It All Up

If you’re doing lots of small check-ins throughout the year, it might not seem necessary to do one big annual personal finance review.

But a yearly evaluation offers the opportunity to pull everything together — all those separate slices — to see what’s working and what isn’t. It also may be a good time to make any necessary updates to insurance policies and other documents and to gather up the paperwork you’ll need to file your taxes.

And if you do your review in November or December, you can make some financial resolutions to keep you motivated through the new year.

You also can examine if the way you’re managing your money suits your needs, or if it’s time to make some changes and perhaps update, consolidate, and automate some facets of your finances, or open new investment or banking accounts.

If you’re considering a high-yield savings account, check out SoFi Checking and Savings. You’ll earn a competitive APY and pay no account fees.

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.

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.

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May
02
2023
Different Types of Bank Account Fraud to Look out for

Different Types of Bank Account Fraud to Look Out For

By | money | Comments Off on Different Types of Bank Account Fraud to Look Out For

According to the Federal Trade Commission (FTC), consumers reported losing close to $8.8 billion to fraud in 2022, a 30% jump over the previous year. Many of people’s losses were the result of various types of bank account fraud.

Crooks are getting ever more sophisticated in the ways they steal money from financial institutions or their account holders. There are few things as upsetting as seeing your bank account emptied or your credit card used for thousands of dollars in purchases by a scammer.

So if you have a financial life, you’ll want to be on alert and do what you can to protect yourself and your hard-earned money. Here, we’ll help you by sharing:

•   What bank fraud is

•   Types of bank fraud

•   How banks respond to fraud

•   Penalties for bank fraud

•   How to avoid bank fraud

What Is Bank Fraud?

Bank fraud is the use of deceptive, often illegal means to steal money, assets, or other property owned or held by a financial institution. It also entails stealing money from people just like you, who keep money on deposit or use other financial products at banks.

Bank fraud also includes being defrauded of money by criminals who pose as employees of a financial institution.

Bank fraud is different from bank robbery; with fraud, thieves use schemes or deception to snag funds illegally, versus perpetrating outright theft.

Types of Bank Fraud

Unfortunately, bank fraud comes in many varieties, all the better to fool financial institutions and consumers. The law provides a broad definition of bank fraud, and several of these actions can be considered for federal prosecution.

Let’s take a look at the six most common types of fraud in banks. Money scams are all too common today; knowledge can help protect you and your funds.

1. Forgery

Forgery includes all forms of using a false signature or other details on financial documents. This includes when a person changes the name, signature, or other information on a check, including the amount (think adding a zero — or two or three). Forgery is also the term used for filling out a blank check or printing fraudulent checks with another person’s account number or a number for a non-existent account.

2. Fraudulent Loans

It is a crime when someone uses a false identity to obtain a loan. This can happen when, say, identity thieves take out loans using victims’ personal and financial information. Another type of fraudulent loan: When a person takes out a loan with the intention of filing for bankruptcy soon thereafter. This can happen when a dishonest business person works with a complicit bank officer to get a loan. The borrower then declares bankruptcy, often leaving the bank on the hook for the money borrowed.

Fraudulent loans also occur when someone falsifies answers on a personal or business loan application, usually in an effort to improve their chances of qualifying for the loan. An individual may try to hide a blemished credit history, for example, or a business may use accounting fraud to paint a more positive financial picture. As you might guess, this is criminal activity and can leave the lending bank in a bad situation.

3. Bank Impersonation and Internet Bank Fraud

When a person or group of people set up a fake financial institution, that’s known as bank impersonation. When such thieves hack into your account and steal money, whether by impersonation or otherwise, that’s internet bank fraud. Typically, this kind of crime is usually committed by creating a website designed to lure people into depositing funds.

Fake websites like this can also trick you into downloading computer viruses that can steal your personal information. These details are then used to rob you of your hard-earned money

Many phishing schemes also come under the umbrella of bank impersonation or internet bank fraud. In these crimes, consumers receive forged emails impersonating an online bank; they then direct the unwitting recipient to a forged website that looks like a legitimate bank site. From there, the bogus site will ask the user to update personal information. That information can be used for identity theft and other crimes.

4. Stolen Checks

Stealing checks is a crime that plays out just as it sounds. Someone at, say, the post office, a company’s payroll department, or anybody else with access to checks may steal those checks. From there, they can open a false bank account, write checks (depleting the account holder’s cash), and deposit them. The cash is then available for them to use as they desire.

5. Money Laundering

This term is used to describe the process criminals use to hide an illegal (or “dirty”) source of income — say from illegal drug smuggling or gambling operations — through a complex series of transfers. These transactions are designed to make the “dirty” money look legitimate, or “clean,” hence the term money laundering. A bit of trivia: Many people believe the term money laundering comes from gangster Al Capone’s habit of using his chain of laundromats to “launder” his illegal cash. This tale however probably isn’t true.

Now, here’s how the crime of money laundering can work: Often the “dirty” money is first deposited into a bank through a restaurant or other legitimate business. Let’s say that business actually did $1,000 worth of sales in a single day but they say they did $2,000. They then deposit the “real” $1,000 they earned plus the same amount of “dirty” money.

Next, to avoid taxes and detection, the money is distributed to other legitimate businesses or complicit companies, or is otherwise subjected to bookkeeping trickery. Multiple transactions can make the money hard to trace, and so it becomes “clean” enough to be used as the fraudster likes.

Banks may unwittingly or possibly complicitly play a role in many stages of money laundering, which is a severe form of fraud.

6. Credit Card Fraud

This term covers a slew of crimes; it refers to all fraudulent payments made with a credit or debit card. The bogus payments may be used to purchase goods and services, to withdraw funds from the account, or to make payments to another account controlled by a criminal. Fraud may happen by stealing the actual credit or debit card or by illegally obtaining the cardholder’s account and personal information.

The latter has become more common as online shopping and bill paying has soared, since there is no longer a need to have a physical card to make purchases. This is why you can still be in possession of your plastic, but be having all sorts of false charges turn up on your statement. As long as criminals can obtain enough personal information about an individual, they can use that information to open new credit card accounts or tamper with existing accounts.

Fortunately, thanks to the Fair Credit Billing Act, your liability should be capped at $50.

How Do Banks Recover Money That Was Fraudulently Taken?

When bank security personnel notice unusual transactions or a customer reports suspicious account activity, banks will typically conduct an investigation. Their goal: To confirm whether fraud exists and, if so, to uncover its details and take legal action against the perpetrators. Once a bank has determined fraud has taken place, most banks will refund stolen funds to customers. This happens as long as it is clear the customer is not an accessory to the crime or was not negligent with account security. In addition, you may want to report the crime to the authorities so they can work on finding and prosecuting those who stole your money. Some banks may require this, in fact, as a step towards catching the criminals.

What to do if you, the consumer, is defrauded of funds? Contact your financial institution’s fraud department and share what has happened. The representative will walk you through the steps required. Remember, the more quickly you alert your bank to any issues or report identity theft, the more likely you are not to lose any money.

Prosecuting fraud is complicated, time-consuming, and unfortunately sometimes impossible. As a result, many banks put extensive efforts into technological security solutions. These card fraud protection measures can help identify fraud quickly to avoid large losses as well as ward off many types of criminal activity in the first place.

Penalties for Bank Fraud

Bank fraud is a serious crime with serious penalties. How serious depends on how much money was stolen and what type of illegal activity was used to steal the money. It must also be proven that a person charged with bank fraud willfully and knowingly committed the crime. A money laundering conviction could result in:

•   A fine of up to $500,000 or twice the value of the property involved in the transaction, whichever amount is greater.

•   A sentence of up to 20 years in prison.

When bank fraud of other sorts is involved, the penalties can be worse still, according to the FDIC :

•   A fine up to one million dollars

•   A prison sentence of as long as 30 years

How to Avoid Bank Fraud

There are several steps you can take to avoid having money stolen from your accounts in a bank fraud scheme. Here are some of the most important.

•   Check your account activity regularly. With online banking, this is easy to do. It’s a good idea to log in at least once a week so you evaluate your bank accounts and your debit card and credit card histories. Report any unexpected or suspicious transactions. While you’re at it, why not make sure your bank offers debit card fraud protection, too? It’s important to secure that aspect of your banking.

•   Keep your PIN and passwords secret. Do not give them to anyone and never write them down in an email or text message that could be easily intercepted. Avoid using public wifi networks for any banking, from checking your balance to paying bills. You could be leaving yourself vulnerable.

•   Use a strong password for online banking. And everything else for that matter. Remember to use numbers, capital letters and symbols. Change passwords regularly, and please: Don’t reuse passwords.

•   Beware phishing schemes. Do not give out your account information over the phone or through email. Anyone legitimate would not be asking for account information by either means. Don’t click links embedded in emails either; they could lead to a fraudulent website posing as your bank. If you receive an email that looks as if it is legitimately from your bank, it’s still better to visit your bank’s website and proceed from any message you receive there.

•   Keep your computer protected. Use anti-virus protection software, firewalls, and spyware blockers to protect your electronic information. Make sure you keep your computer updated with the most recent security upgrades.

The Takeaway

Bank fraud is a criminal activity that can leave you with a big mess to clean up: It can put you at risk for losing money and facing identity theft. Understanding the different types of bank fraud is one important step; knowing how to secure your personal financial information is another one. These moves can help protect you from being a victim.

When you open a bank account with SoFi, we work overtime to protect your money. Sign up for our Checking and Savings account with direct deposit, and you’ll earn a competitive APY. What’s more, you won’t pay any of the usual charges like account, monthly, and minimum balance fees.

Bank better and smarter with SoFi.

FAQ

How does bank fraud happen?

Bank fraud happens when criminals use deceptive means to steal money, assets, or property owned or held by a financial institution, including banks. It is also considered bank fraud when thieves steal money from customer accounts by posing as a bank or other financial institution or by using personal financial information obtained through identity theft.

How do banks recover money from a scammer?

It is challenging for banks to recover money from a scammer. They can seek to unravel who committed the crime and, with the help of law enforcement, prosecute those individuals. Because this is often so difficult, though, banks also are implementing new, technologically advanced ways of preventing and detecting fraud. This allows them to better protect their account holders.

Photo credit: iStock/Damir Khabirov

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.

This article is not intended to be legal advice. Please consult an attorney for 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.

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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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