Jan
13
2025

What Is a Regional Bank? A Comprehensive Guide

By | Family Finances, money, Money & Life | Comments Off on What Is a Regional Bank? A Comprehensive Guide

Regional banks are midsized financial institutions that typically serve a certain geographical area, such as a state or a particular region of the country. They occupy a middle ground between smaller community banks and large national banks and can offer a personalized approach, as well as a relatively large number of financial products and services.

While regional banks may not have a national footprint, they can offer a number of benefits that can make them an appealing option for both individuals and businesses, though they may not always have the services customers are looking for. Here are key things to know about regional banks.

Key Points

•   Midsized regional banks are those, per the Federal Reserve, that have between $10 billion and $100 billion in assets and typically serve specific geographic areas.

•   Regional banks tend to provide financial services like loans, credit cards, and investment products, with fewer branches than national banks.

•   They are typically FDIC-insured, ensuring deposit protection up to $250,000 per account owner and category at an insured institution.

•   Regional banks may face challenges from national and online banks, regulatory pressures, and economic vulnerabilities.

•   They can positively impact local economies by providing loans to small businesses and reinvesting in communities.

What Is a Regional Bank?

As defined by the Federal Reserve, regional banks are those that have between $10 billion and $100 billion in total assets. This makes them larger than community banks, which have assets under $10 billion, but smaller than national banks, which can have assets in the trillions.

Regional banks typically operate within a specific geographic region, which might be one or two states, several states, or a defined area like the Midwest or East Coast. For example, Prosperity Bank, headquartered in Houston, serves customers in two states (Texas and Oklahoma), while Zions Bank, based in Salt Lake City, serves what is known as the Intermountain West.

Unlike national banks, which often have a presence across the entire country, regional banks tend to focus on serving customers in their designated region or regions. They typically offer a variety of financial services, including checking accounts, savings accounts, personal and business loans, and sometimes investment products, and often serve as an important financial resource for local companies and industries.

Recommended: APY Calculator

Characteristics of Regional Banks

Regional banks have some distinct features that separate them from other types of banks:

•   Geographic focus: Regional banks often limit their operations to a specific geographic area. They may have branches across multiple states but generally do not extend their reach nationwide.

•   Asset size: Regional banks hold more assets than community banks but less than national and international banks, usually ranging from a few billion to one hundred billion dollars.

•   Range of services: Regional banks offer a broad array of financial services, including checking and savings accounts, loans, mortgages, credit cards, and business banking services. They may also provide investment products, though these offerings are usually not as extensive as those of larger banks.

•   Local expertise: Regional banks tend to have a strong understanding of the economic conditions and needs of the areas they serve. This allows them to offer financial solutions tailored to local businesses and customers.

•   Moderate branch networks: While regional banks have more branches than small community banks, their networks are usually less extensive than those of large national banks, averaging around 100. However, online and mobile banking allow customers to access their accounts from any location.

How They Differ From National and Community Banks

Banks generally fall into three size categories — community, regional, and national. While all three offer many of the same services, there are some key differences between them.

•   Community banks are the smallest, with assets under $10 billion. They are typically chartered at the state (rather than the national) level. These banks focus on serving local communities and have a limited geographic footprint compared to regional and national banks. In addition, their product offerings may be less extensive and digital banking capabilities might not be as advanced as larger banks. However, community banks are known for their strong commitment to customer service and local engagement.

•   Regional banks are larger than community banks, usually with between $10 billion and $100 billion in assets, and offer a broader array of products and services. They typically operate in multiple states but generally don’t have a national presence. Regional banks may be chartered at the state or federal level, depending on their size and operations.

•   National banks operate under a federal charter regulated by the Office of the Comptroller of the Currency and are generally the largest banks in the U.S. These financial institutions usually have more than $100 billion in assets. They typically have extensive networks of branches across the country and offer a wide range of services, enabling them to meet the diverse needs of individuals, businesses, and institutions. National banks tend to be well-known names like JPMorgan Chase, Wells Fargo, and Bank of America.

Recommended: How to Combine Bank Accounts

The Role of Regional Banks in the Financial System

Regional banks play a key role in the financial system by bridging the gap between community banks and large national institutions. They may provide a level of customized service that is often missing from big banks. At the same time, they offer a diverse range of financial products to meet the needs of individuals and businesses located within their region.

Crucially, regional banks often bring banking services to small towns and rural areas where larger financial institutions might not operate.

Services Offered by Regional Banks

Regional banks typically provide a variety of financial services for consumers and businesses and enable you to have multiple bank accounts under one roof. Here are some of products and services you can often find a regional bank:

•   Checking accounts

•   Savings accounts

•   Money market accounts

•   Credit cards

•   Personal loans/credit lines

•   Auto loans

•   Mortgages

•   Home equity loans

•   Business banking

•   Commercial loans

•   Individual retirement accounts (IRAs)

•   Taxable brokerage accounts

As you see, regional banks can offer a wide variety of financial products and services.

Advantages of Regional Banks

Regional banks can offer several benefits to their customers. Here are some to consider:

•   Local expertise: Regional banks tend to have a strong understanding of the economic conditions and financial needs of their communities. This local knowledge can allow them to make more informed lending decisions and offer products that are well-suited to the area.

•   Personalized service: Whether you need help opening a bank account or applying for a mortgage, regional banks often provide a level of personalized service that larger banks may lack. Customers can often build relationships with their bankers, who understand their financial history and needs.

•   Competitive rates: Regional banks may offer more favorable interest rates on loans and savings accounts to compete with national banks.

•   Digital and mobile banking: Like larger banks, regional banks typically provide digital and mobile banking options, allowing customers to manage their accounts, make payments, and transfer money between banks.

•   Support for local businesses: Regional banks can play a crucial role in financing small and mid-sized businesses, which are essential for local economic growth. They often provide loans, credit lines, and other financial services to help businesses expand and create jobs.

•   Community involvement: Many regional banks actively support local communities by sponsoring events, donating to charities, or offering financial education programs. This community involvement can help strengthen the bank’s relationship with its customers.

•   FDIC insurance: Regional banks can benefit from the same Federal Deposit Insurance Corporation (FDIC) insurance that protects cash deposits at larger banks. This means your money is insured up to $250,000 per depositor, per account category, per insured institution in the very rare event of bank failure.

Recommended: Does Switching Banks Affect Your Credit Score?

Challenges Faced by Regional Banks

Despite their advantages, regional banks also face several challenges:

•   Competition from national and online banks: Regional banks often compete with larger national banks that have more resources, larger branch networks, and a broader range of services. In addition, online banks are often able to offer better rates and fees, as well as more sophisticated digital banking options. This competition can make it difficult for regional banks to attract and retain customers.

•   Limited reach: Regional banks often only serve a specific geographic area. This can be limiting for people who travel often, have multiple residences, or are relocating (which could lead to someone closing a bank account at a regional institution).

•   Regulatory pressure: Due to the surprising recent failures of three regional banks (Silicon Valley Bank, Signature Bank, and First Republic Bank), U.S. bank regulators have stepped up their scrutiny and financial oversight of regional banks to help ensure that failures don’t happen again in the future. These occurrences are quite rare, and the government keeps a watchful eye to ensure the stability of U.S. banks.

•   Technological advances: As digital banking continues to grow, regional banks may struggle to keep up with the technological innovations of larger banks and fintech companies. Limited resources can make it difficult to invest in advanced digital platforms and services.

•   Economic vulnerability: Because they focus on specific regions, regional banks may be more vulnerable to economic downturns or sector-specific challenges within their service area. This can impact their financial stability. However, as noted, regional banks insured by the FDIC are safe places to keep your money up to the insurance limits.

The Impact of Regional Banks on Local Economies

Regional banks offer loans and credit to small and midsize businesses, helping to fuel local economic growth and job creation. In fact, regional banks serve as the source of nearly one-third of small business bank lending in the U.S, according to the Bank Policy Institute.

Many regional banks also reinvest in the communities they serve, whether through charitable donations, sponsorship of local events, or support for community development projects. This involvement helps strengthen local economies and fosters a sense of community that can help attract and retain both businesses and residents.

The Takeaway

Regional banks play an important role in the banking industry. They offer many, if not most, of the products and services you might find at a national bank but can provide a more personalized experience due to their midsize scale.

That said, regional banks may not offer every financial product or service you need. They also have smaller footprints than national banks, making them less practical if you travel frequently or may need to relocate in the near future.

If you’re considering opening a new bank account, also see what online banks offer.

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


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

FAQ

How large is a typical regional bank?

Regional banks are banks with $10 billion to $100 billion in assets, typically making them larger than community banks but smaller than national banks. Regional banks usually operate within a defined geographic area, covering multiple states or a particular region of the country. They may offer more products and services than a community bank but generally not as many as you would find at a national bank.

Are regional banks FDIC-insured?

Yes, regional banks are typically insured by the Federal Deposit Insurance Corporation (FDIC). This means your deposits are protected up to the legal limit, which is $250,000 per account owner (co-owners of joint accounts are each insured up to $250,000), per account category, per insured institution. If you have money in an FDIC-insured bank account and the bank fails (a very rare occurrence), the agency reimburses you for any losses you incur, up to the insured limit.

Can I use a regional bank if I move out of the area?

Yes, you can generally still use a regional bank if you move out of the area. Regional banks typically offer online and mobile banking services, allowing you to manage your accounts and make payments from any location. However, access to physical branches may be limited or unavailable outside the bank’s primary service area. If in-person banking is important to you, it might be challenging to continue using a regional bank after moving out of the area.

Photo credit: iStock/stocknshares

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

SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

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

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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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Jan
13
2025

5 Online Banking Myths & Realities

By | Budgeting & Goals, Growing Wealth, money, Terminology, Tools & Calculators | Comments Off on 5 Online Banking Myths & Realities

Online banking offers a convenient way to manage your money. Plus, online banks typically offer attractive perks like competitive rates on savings and no-fee checking accounts. Still, many consumers worry that online banks aren’t as safe, dependable, or customer-friendly as the big traditional players. Are they right to be concerned?

While all types of banks have pros and cons, many fears about online banks are actually based on misinformation. Below, we debunk five common myths about online banks, and uncover some important truths about online vs. traditional banks.

Key Points

•   Like traditional banks, online banks use state-of-the-art security tools like encryption and multi-factor authentication to protect customer accounts.

•   Though online banks lack in-person customer service, you can get help from a human via phone, online chat, and email.

•   Online banks typically offer a wide network of fee-free ATMs, making it easy to access cash when you need it.

•   Deposits at online banks are protected by FDIC insurance up to $250,000 per depositor, per insured bank, for each account ownership category.

•   Online banks typically offer better rates on savings accounts, but may not offer as many products and services compared to traditional banks.

Myth: Online Banking Isn’t Safe

Security is often the largest concern about online banking, and in a world where we’re constantly hearing of data breaches, that’s a valid consideration. But online banks and traditional banks store your data digitally and both are susceptible to data breaches.

That said, both online banks and traditional brick-and-mortar banks go to great lengths to protect your personal and banking information, including the use of encryption software (which blocks your accounts to unauthorized parties) and multi-factoring authentication (which requires you to enter unique personal information in order to access your account). Many online, and some traditional, banks also offer 24/7 account monitoring, instant card freezes, and real-time alerts so you’re aware of any unusual account activity as soon as it happens.

There are also steps you can take on your own to keep your accounts safe (regardless of where you bank). These include choosing a unique user ID and password, not using public wifi when you access your accounts, and avoiding phishing attempts to get your banking information.

Myth: You Can’t Get Help From a Human

Many consumers like being able to walk into a physical location and speak to a real human when they need assistance. And that’s simply something online banks can’t offer. By nature, there are no brick-and-mortar locations; all customer service is virtual. But that doesn’t mean mobile banking doesn’t come with good customer service.

Online banks typically offer phone-based customer service, where you can easily speak with a live customer service representative when there’s an issue or you simply want someone to walk you through setting up bill pay or making an online transfer. In addition, many offer 24/7 customer service via live online chat (with a human not a bot on the other end), as well as help via email. A lack of physical locations doesn’t necessarily equate with a lack of good customer service.

Recommended: How to Deposit a Check

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

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Myth: It’s Hard to Access Money From an Online Bank

It’s true you can’t visit a bank branch and withdraw money at a teller window. But online banks typically partner with wide ATM networks to offer customers a convenient and free way to withdraw cash from their accounts. Some online banks will also reimburse for out-of-network ATM charges, though you may be capped to a certain max per month.

You can also access money in an online account by transferring it to an account at a different bank or using the bank’s bill pay function. If you have an online checking account, you can use your debit card for purchases and may be able to order checks. Some online banks also offer a peer-to-peer (P2P) payment service, so you can send money to friends and family directly from your bank account.

Myth: Online Banks Aren’t Insured

Like traditional banks, online banks are typically insured by the Federal Deposit Insurance Corporation (FDIC). This means your deposits are protected up to $250,000 (per depositor, per insured bank, per account ownership category) if the bank were to go out of business. Co-owners of joint accounts are each insured up to $250,000 for the total they have in joint accounts at an insured bank.

If you opt for an online credit union instead of an online bank, your money won’t be insured by the FDIC but it will still be protected. Credit unions are covered by the National Credit Union Association (NCUA), which offers similar insurance.

Before opening an account at an online (or brick-and-mortar) bank, it’s always a good idea to make sure it’s insured. You can do this by using the FDIC’s “Bank Find” tool or the NCUA’s Credit Union Locator tool.

Myth: The Big National Banks Offer Better Rates

You might assume big banks offer the best deals due to their size and scale. But it’s more likely to be the opposite: Online banks typically beat out the major national banks when it comes to annual percentage yields (APYs) on savings accounts, with some offering 9x the national average.

How do they do it? Online-only banks generally have lower overhead costs and can pass that savings to their customers in the form of higher-than-average yields. Many of these banks also offer better rates as a way to compete with the bigger players for customers.

In addition to better rates, online banks also tend to charge fewer and lower bank fees compared to the big traditional banks. Many online accounts don’t charge monthly service fees, for example, and some don’t charge overdraft fees, either.

Understanding Digital Banking Features and Limitations

Online banks offer several advantages over traditional banks, which often include higher APYs on checking and savings accounts and lower (or no) fees. They also tend to outshine traditional banks when it comes to technical innovation, offering state-of-the art banking platforms and apps.

That said, digital banking does have its limitations. Here are some downsides to consider:

  No branches: Since they lack physical locations, online banks aren’t able to provide customers a way to interact face-to-face with a teller or other bank representative. They also can’t offer services that require a physical location, such as getting a cashier’s check or renting a safe deposit box.

  Cash can be harder to deposit: It’s not always as straightforward to deposit cash into an online bank account. You may need, for example, to deposit cash at a participating retailer for a small fee rather than at an ATM or use another option, such as depositing your cash into a traditional bank account and transferring it to your online bank account.

  Fewer financial services: Unlike large traditional banks, online banks sometimes aren’t a one-stop shop. Some only specialize in a few types of accounts. While others offer a range of products and services, including credit cards and loans, they generally don’t have as many products and services as the biggest brick-and-mortar banks provide.

Recommended: Pros and Cons of Online Banking

🛈 SoFi only offers ATM withdrawals at this time. For members looking to deposit cash into their SoFi Checking & Savings account, you can follow these instructions.

The Takeaway

Online banks work very similarly to traditional banks. They just lack physical locations to conduct in-person services. They typically offer the same kinds of checking and savings accounts that you may find at brick-and-mortar banks. And since online banks don’t need to maintain and staff physical locations, they can often offer higher interest rates on both checking and savings. While some people are concerned about the safety and security of online banks, you can feel confident that online financial institutions are just as secure as brick-and-mortar options.

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


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

FAQ

Is online banking safer than traditional banking?

Online banking and traditional banking are considered equally safe. Both online and traditional banks generally use robust security measures like encryption, multi-factor authentication, and fraud monitoring to protect customer accounts. In addition, both types of banks are usually insured by the Federal Deposit Insurance Corporation (FDIC), which means your funds will be covered (up to the insured limits) even if the bank were to go out of business.

Can I do everything online that I can do in a physical bank?

You can do nearly everything online that you can do in a physical bank. This includes opening an account, making transfers, paying bills, depositing checks, and managing your account. Many banks also offer one-on-one customer service via phone or online chat. However, certain services like obtaining cashier’s checks, notary services, or large cash withdrawals generally require visiting a physical bank.

How does online banking affect my privacy?

Information that is stored digitally (by an online or traditional bank) could potentially have an impact on your privacy, as online information is susceptible to cyber attacks. However, reputable banks use strong encryption and cybersecurity practices to protect customer data. There are also steps you can take on your own to protect your accounts. These include choosing a unique user ID and password, not using public wifi when accessing your accounts, and logging out of your account after every session.

Photo credits: iStock/AleksandarNakic

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

SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

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

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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

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

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Jan
13
2025

How to Budget on a Fixed Income

By | Budgeting & Goals, money, Money & Life | Comments Off on How to Budget on a Fixed Income

Budgeting on a fixed income can involve carefully reviewing your income and expenses and managing spending to stretch your dollars.

Typically, older adults are the ones living on a fixed income, meaning they receive Social Security payments and/or a pension or rely on retirement savings. They generally receive the same amount each month, though payments may fluctuate slightly due to benefit adjustments or other changes. If you’re living on a fixed income, budgeting can help you avoid overspending and prepare for unexpected expenses. Here are smart strategies to consider.

Key Points

•   Budgeting on a fixed income can involve tracking income and expenses to better understand finances.

•   A detailed budget should include all essential and discretionary expenses, utilizing methods like the 50/30/20 rule.

•   Cost-cutting measures, such as downsizing or limiting discretionary spending, can improve financial stability.

•   Building an emergency fund can provide a cushion for unexpected expenses and enhance financial security when living on a fixed income.

•   Exploring additional income sources, like part-time work, can supplement fixed incomes effectively.

Understanding Fixed Income Budgeting

Living on a fixed income means you know exactly how much money you’re bringing in each month. While your income may be predictable, expenses can be unexpected. You might need, say, a roof repair or want to help with a grandchild’s summer camp costs one year. That’s why a budget for seniors on fixed income can be so important.

Creating a budget will give you a comprehensive understanding of the money you have coming in and going out of your checking account. You can track your spending, set aside money for emergencies, and monitor your monthly bills.

You might also identify areas where you can cut back to cover an unforeseen expense or keep up with inflation.

Assessing Your Financial Situation

Making a budget allows you to assess your financial situation. Along with tracking your income, you’ll want to make a record of all your expenses.

This component of your budget might include:

•  Housing costs (rent or mortgage)

•  Utilities

•  House, car, and health insurance

•  Medical costs

•  Transportation

•  Groceries and dining out

•  Debt payments

•  Subscriptions and services

•  Clothing

•  Travel

•  Savings

•  Gifts and charitable donations

Some of these expenses may fall into the essential category (housing, food, and health insurance, for example), while others may be considered discretionary (such as clothing and travel). If you’ve found yourself financially overextended, consider whether there are any areas where you could cut back.

You might also explore specific types of budgeting methods, such as the 50/30/20 approach to budgeting. This strategy involves allocating 50% of your after-tax income to needs, 30% to wants, and the remaining 20% to savings or additional debt payments.

To help you with this budgeting technique or another one, you could use a spreadsheet, work with an online calculator, download a budgeting app, or create your own budget planner to track your expenses.

Recommended: 50/30/20 Budget Calculator

Creating a Detailed Income Statement

An important step in this budgeting process is delving into your monthly income. Your sources of fixed income could include:

•  Social Security benefits (you may sometimes hear this referred to as OASDI, or Old-Age, Survivors, and Disability Insurance payments)

•  Supplemental Security Income

•  Pension benefits

•  Withdrawals from a 401(k) or 403(b) account

•  Withdrawals from a traditional or Roth IRA

•  Withdrawals from brokerage or other investment accounts

•  Interest and/or dividends from assets

•  Passive income from a rental property or another source

In addition, you may have some earnings from work you do, such as a seasonal or part-time job. Factor that in, too.

Take note of how your income might change, as well. A couple of points to consider:

•  Government benefits like Social Security, for example, undergo an annual cost-of-living adjustment. Also, if you are claiming Social Security benefits but are younger than full retirement age, you might also receive a lower benefit if you’re earning income above the yearly limit (in 2024, it was set at $22,320).

•  If you’re withdrawing money from investment accounts, the amount may fluctuate depending on the performance of the stock market. Although these changes are unpredictable, they’re worth tracking and recording in your budget plan so you can respond as needed.

One of the most common budgeting mistakes is not adjusting the cost of your expenses, so make sure to update your budget as you go. Rent, health insurance premiums, food costs, and more can shift, and it can be important to stay attuned to that.

Cutting Costs and Saving Money

About 40% of older Americans receive income solely from Social Security in retirement, and the average benefit is currently $1,784 per month. This amount can be challenging to live off of, especially when costs are rising due to inflation.

If you’re looking to reduce your spending, here are a few steps you can take:

•  Downsize your home: About half of seniors move into smaller homes after they retire. Downsizing could significantly decrease your housing costs and utility bills.

•  Reevaluate your transportation needs: If you’re spending a lot on car payments and insurance, consider whether you can switch to a less expensive vehicle or swap your car for public transportation.

•  Limit discretionary spending: Shopping, travel, eating out, and streaming services can add up. Review your discretionary expenses to see if you can limit your spending or cut out some costs entirely.

•  Seek out senior discounts: From groceries to movies to museums, find out if you can save with a senior discount. You may be pleasantly surprised to find that some discounts begin well before age 65.

•  Look for assistance programs: If you’re facing financial hardship, you might qualify for assistance. The government may help cover medical costs via Medicaid, for instance, while patient assistance programs can help out with prescription medications. The Supplemental Nutrition Assistance Program (SNAP) program offers assistance for groceries. This BenefitsCheckUp tool from the National Council on Aging can help you find other programs that offer assistance and benefits.

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Building an Emergency Fund

After years of saving for retirement, you might think your savings days are behind you. However, having an emergency fund can be a crucial lifeline if you run into a big surprise expense, especially when you’re living on a fixed income.

Consider setting up a high-yield savings account and automating the deposit of a portion of your income into it each month. With a high-yield bank account, your savings will be accessible when you need to withdraw them and earn a competitive interest rate when you don’t.

Planning for the Future

Although you may be living on a fixed income, it’s wise to keep an eye on how your financial needs can shift. Those who are retired or semi-retired may want to consider the following:

•  Long-term financial planning: The specific amount of income you receive could rise or fall in the years ahead. Consider how adjustments to your cost of living might impact your Social Security benefits, for example, or how much longer you plan to work if you have a part-time job.

•  Healthcare considerations: If your expenses increase due to healthcare needs or other factors, consider whether you can take larger withdrawals from your retirement account or set up another income source. Investors may look into rebalancing their portfolios to ride out a volatile stock market.

•  Estate planning basics: Estate planning may also be top of mind as you get important documents in order and consider how your assets will be handled in future years. All of this planning can become complex, so you might consider working with a financial advisor.

The Takeaway

Budgeting on a fixed income can help you stabilize your finances and achieve peace of mind. By tracking your income and expenses, you’ll have a clear understanding of the money you have coming in and going out each month. You might also identify areas where you can cut costs, as well as monitor your progress toward building an emergency fund, paying off debt, or reaching another financial goal.

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


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

FAQ

How can I save money on a fixed income?

Learning how to make a budget can help you save money when living on a fixed income. You can use your budget to identify your recurring expenses and cut any non-essentials you find. You might also consider downsizing your home, swapping out your car for a less expensive vehicle or public transportation, and seeking out senior discounts and deals.

What if my fixed income doesn’t cover all my expenses?

If your fixed income doesn’t cover all your expenses, you can try reducing your spending, increasing your income, or both. You might also explore assistance programs from the federal government, your state, or a local organization.

Are there government assistance programs for fixed income individuals?

There are government assistance programs for fixed income individuals on both the federal and state level. The Supplemental Security Income program provides payments to disabled, blind, or elderly individuals, for example, while the Low Income Home Energy Assistance Program (LIHEAP) can help low-income individuals pay for heating and cooling their homes. The SNAP program offers grocery assistance to low-income individuals.

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

SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

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

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

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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Jan
13
2025

How to Find and Hire a Financial Coach

By | Financial Independence, money, Money & Life | Comments Off on How to Find and Hire a Financial Coach

If you’re looking for help with your finances, such as creating a budget or paying down debt, a financial coach could help you learn these money management skills. A financial coach teaches clients the fundamentals of finance and helps them develop good money habits that they can use now and in the future.

Read on to learn about the benefits of working with these professionals and how to find and hire a financial coach.

Key Points

•   A financial coach assists clients in learning money management skills, such as budgeting and debt repayment, and in developing good financial habits.

•   Financial coaches are not licensed to offer investment advice but can help with financial goal setting and planning.

•   Coaches tailor their approach to individual needs, offering personalized strategies for things like debt repayment and budgeting.

•   Financial coaches typically charge hourly rates, generally ranging from $100 to $300 per hour, and work on a fee-only basis.

•   Finding a coach involves checking credentials, asking about their training, specialties, and working process, and ensuring a good personality fit.

What Is a Financial Coach?

There are different kinds of financial professionals, including financial advisors and planners. So what is a financial coach exactly? A financial coach is a professional who helps clients learn about the basics of sound financial management. This includes saving money, paying off debt, creating a financial plan, and learning good money habits overall.

A financial coach can also help you prioritize your financial goals — such as buying a house or a car, putting money away for your child’s education, or saving for retirement — and then work with you to map out a plan to make it happen. This professional might even help you choose the best type of bank account for your needs.

A financial coach will typically meet with you over a series of weeks or months to help you improve your money management skills. In addition to concrete action plans like coming up with a budget or developing a debt repayment strategy, a coach can also help you understand the underlying feelings you have about money. These sentiments may impact your behavior, and the coach can then work with you to enhance your attitude toward your finances.

Rather than managing your money for you, a financial coach teaches you the strategies to do it yourself. This can help instill in you confidence in your abilities, so that you can make your own informed financial decisions.

Benefits of Working With a Financial Coach

If you’re struggling to save money or pay off debt or if you’re new to managing your money — for instance, maybe you’re a recent grad who’s living on your own for the first time — working with a financial coach can be helpful. This professional can assist you with putting together a plan to reach your financial goals, improve your relationship with money, or teach you the fundamentals of finances, depending on what you need.

Here are some of the specific ways a financial coach can help you.

Setting Financial Goals

After speaking with you and reviewing your financial situation, a financial coach can help you establish clear financial goals. These might include:

•  Starting an emergency fund with at least three to six months’ worth of living expenses to tide you over in the event of a large unexpected bill or a job loss

•  Setting up a budget

•  Paying down debt, such as credit card debt

•  Saving money in a type of account that maximizes the amount of interest you earn, like a high-yield savings account

•  Creating a financial plan to help you buy a house or save for your children’s education

It’s worth noting that if you’re interested in learning about investing, a financial coach can help you understand the basics about different investment options, but a coach is not licensed to offer investment advice or recommend specific financial products. If you’re looking for investment advice and recommendations, you may need a financial advisor instead.

Creating Personalized Strategies

When you work with a financial coach, they will typically tailor their approach to your individual needs. Rather than a one-size-fits-all treatment, you’ll get techniques suited to your particular goals, personality, and financial situation.

For instance, if your number-one priority is to pay down the high-interest credit card debt you owe, a financial coach will help identify the debt repayment strategy that resonates most strongly with you. If you’re the type of person that needs small steady successes to stay motivated, they might recommend the snowball debt repayment approach. With this method, you pay off your smallest debts first. The idea is that each time you cross a debt off your list, you feel a sense of accomplishment and get a burst of momentum that can keep you going.

On the other hand, if your priority is to minimize the interest you’ll pay, the financial coach might recommend the debt avalanche method, which focuses on paying off the debts with the highest interest first. This approach can potentially save you money in the long term.

Recommended: Emergency Fund Calculator: How Much Should You Save?

Where to Find a Financial Coach

Financial coaches, also sometimes referred to as financial counselors, are not required to be trained or licensed. However, the Association for Financial Counseling and Planning Education (AFCPE) does offer formal training and financial counselor accreditation. You can find an accredited financial counselor (AFC) by checking the AFCPE website for trained professionals in your area.

In addition, ask family and friends for recommendations for any financial coaches they’ve worked with. You can also consult other financial professionals you deal with, such as your accountant or financial advisor, to see if they might have suggestions for a good financial coach.

Questions to Ask When Hiring a Coach

Once you have the names of several financial coaches, reach out to each one to find out about their background and style of coaching. You can also get a feel for whether their personality and approach is a good fit for you.

As you’re preparing to hire a financial coach, similar to choosing a financial advisor, you can ask them a series of questions, including:

•  What kind of training do you have? To learn about a coach’s qualifications, find out if they have had any formal training or accreditation, and if they do, ask what their training consisted of. Also, inquire how many years of experience they have as a coach.

•  Do you have a specialty? Financial coaches may focus on particular areas such as debt management or credit-related issues. Sometimes they specialize in working with certain types of individuals, including small business owners and military service members.

•  Over how long a period do you typically work with clients? Does the coach tend to work with clients for a certain number of weeks? Or is it more likely to take a few months?

•  How often will we meet ,and how long is each session? Find out if they typically meet with clients weekly, for instance, and for generally how long per meeting. Also, some coaches offer virtual meetings as well as in-person meetings, so consider asking about that option as well.

•  What is your working process like, and what kinds of methods do you use? Briefly explain to the coach what you’re hoping to get out of coaching and then ask what their approach might be to help you realize your goals.

•  How much do you charge? Financial coaches typically charge hourly rates and work on a fee-only basis. While their rates can vary widely, $100 to $300 an hour is typical, with $257 as the average hourly rate for a financial coach, according to the National Financial Educators Council. By comparison, the cost of a financial advisor is more likely to be based on a percentage of the value of a client’s portfolio.

Along with gathering all of the information above, carefully consider the coach’s personality based on your conversation. Is this a person you would feel comfortable working with? That’s also an important component of finding and hiring a financial coach.

Recommended: What Is a Fiduciary Financial Advisor?

The Takeaway

Hiring a financial coach can be beneficial if you need help creating a budget, paying down debt, or honing your money management skills. This kind of professional can help you create a structured plan to build your bank account, save for the future, and reach your goals, but they do not directly manage your money. Carefully screening financial coach candidates and understanding their fees are important steps in the selection process.

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

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

FAQ

What’s the difference between a financial coach and advisor?

A financial coach provides clients with information about the fundamentals of finances and teaches them the basic skills of money management, including budgeting, saving, and strategies for paying off debt. A financial advisor can provide clients with a more comprehensive financial plan for their future, give them investment recommendations, and help them manage their investment portfolio.

How often should I meet with my financial coach?

Financial coaches typically meet with clients weekly or every other week to provide information and check in on their progress. Talk to your coach to see what type of meeting schedule makes the most sense for your situation and goals.

Can I find a financial coach who specializes in my situation?

Yes, you should be able to find a coach that specializes in your situation. Financial coaches specialize in many different areas, including debt management, credit, budgeting, and saving. If you search for a coach on the Association for Financial Counseling and Planning Education (AFCPE) website you can read about their background and see exactly what their specialty is.

Photo credit: iStock/Hiraman

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

SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

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

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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

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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Jan
13
2025

Regional Banks vs. National Banks

By | Family Finances, money, Money & Life | Comments Off on Regional Banks vs. National Banks

Regional banks generally offer a more localized banking experience vs. national banks and, often, more competitive rates and fees. However, national banks generally have a larger footprint and provide a wider array of products and services, which could make it the more practical option.

If you are trying to choose which one best suits your needs, read on. Here’s a closer look at regional vs. national banks to help you decide which type of bank is the right fit for your money needs.

Key Points

•   Regional banks can offer localized banking with competitive rates and fees, while national banks have a broader product range.

•   Regional banks have assets between $10 billion and $100 billion; national banks often exceed $100 billion.

•   Regional banks may provide more flexible lending to locals and small businesses than national banks.

•   National banks may feature advanced technology, closer to what online banks offer vs. regional banks.

•   Regional banks typically focus on personalized service and community involvement while national banks may prioritize uniform experience and nationwide access.

Understanding Regional Banks

Regional banks can be an important financial services option that fills the gap between small, local banks and larger national networks.

Defining Regional Banks

Regional banks are financial institutions that tend to operate within a specific geographical area, which might be one state or multiple neighboring states (such as, say, the Southwest) or even multiple regions. As defined by the Federal Reserve, however, regional banks are those with total assets between $10 billion and $100 billion. This makes them larger than community banks (with under $10 billion in assets) but smaller than the largest national institutions, which often hold trillions of dollars in assets.

Regional banks usually offer a wide variety of banking products, including checking accounts, savings accounts, certificates of deposit (CDs), personal and business loans, and sometimes investment products. They often tailor their products and services to meet the needs of the local populations in the areas they serve, and are known for their personalized customer service and strong ties to the community.

Depending on their size and operations, a regional bank may hold a state or a national bank charter. Either way, they are typically insured by the Federal Deposit Insurance Corporation (FDIC). This means your money is protected up to $250,000 per depositor, per account category, per insured financial institution, in the very rare event of bank failure. Co-owners of joint accounts at the same bank are each insured up to $250,000 for the combined amount they have across joint accounts at that financial institution.

Recommended: Traditional Banking Compared to Online Banking

Geographic Footprint and Reach

As mentioned above, the footprint of a regional bank can range from one or two states to many different states in a specific region of the country, such as the Midwest or Northeast. This means that their branches and ATMs are primarily located within the bank’s operational region.

Their often limited footprint might pose some inconveniences if you travel frequently or anticipate moving. However, these banks typically offer online and mobile banking, enabling you to access and manage your accounts remotely. Some regional banks will also partner with a national ATM network to offer customers fee-free cash withdrawals nationally.

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Understanding National Banks

National banks are typically larger networks, with greater assets and potentially a broader array of services.

Defining National Banks

National banks are large financial institutions that, as the name implies, operate on a nationwide scale. They aim to serve the diverse needs of individuals, businesses, and government entities by offering a broad array of services. These can include personal and business banking, consumer and commercial loans, and investment services. National banks tend to be household names, like JPMorgan Chase, Wells Fargo, and Bank of America.

National banks have a national bank charter, which means they are regulated at the federal level. They are chartered and regulated specifically by the Office of the Comptroller of the Currency. You can tell a bank is a national bank if it has an “N.A.” (short for National Association) as part of its legal name. An online bank can be a national bank. Like most regional banks, national banks are insured by the FDIC.

Nationwide Presence and Scale

With assets typically in the hundreds of billions or even trillions of dollars, national banks dominate the financial industry and hold a major share of the market. They usually have extensive networks of branches and ATMs throughout the country, offering customers convenient access to banking services regardless of location. To compete with online banks, national banks also offer an array of online and mobile banking services, enabling customers to manage their accounts from any location.

Many national banks also have a global presence, offering physical branches in multiple countries around the world.

Key Differences Between Regional and National Banks

Next, compare the ways in which a regional bank vs. national bank can vary.

Size and Asset Base

Local banks vs. national banks differ significantly in terms of size and asset base.

Regional banks have assets of $10 billion to $100 billion, while national banks can typically claim $100 billion and up in this realm. For this reason, regional banks may be limited in their capacity to handle large-scale corporate banking needs or massive infrastructure projects. While some regional banks may have assets in the tens of billions, the largest national banks often hold assets in the trillions of dollars.

In terms of geographical footprint, national banks tend to operate on a much larger scale, with upwards of 1000 branches per bank across the country, compared to around 100 branches for each regional bank.

Lending Practices and Products

While both regional and national banks offer consumer and business loans, there are some key differences in their lending policies and products.

•   Regional banks tend to have more flexible lending practices, particularly for local residents and small businesses. Due to their knowledge of the local market, they may be willing to offer financing to local businesses and startups that might not qualify for a business loan with a national bank. Some regional banks also specialize in niche loans that serve the needs of their local clientele. For example, a regional bank in a coastal area might offer boat loans or financing targeted to the fishing industry.

•   National banks, on the other hand, typically offer a wider array of lending products, including large commercial loans. They also tend to have standardized lending practices, with more stringent requirements. This can make it harder for individuals and businesses that lack a substantial credit history or sufficient collateral to qualify for loans.

Customer Service and Community Involvement

Another facet to consider when comparing a regional bank vs. national bank:

•   Regional banks tend to offer a more personalized customer service compared to national banks. Due to their smaller scale of operations, bank staff often build close relationships with customers and are able to provide tailored advice and more customized solutions to banking issues. Regional banks may also play an active role in supporting local communities through sponsorships, charity events, and financial literacy programs.

•   National banks generally offer customer service through a variety of channels (such as in-person, by phone, and via online chat) but may have a more standardized approach due to their size. This can lead to a more uniform but less personalized customer experience. Many national banks also engage in corporate social responsibility programs, supporting nationwide charities and offering public education programs on budgeting and money management.

Recommended: Savings Account Calculator

Advantages of Regional Banks

Regional banks offer a number of benefits that can make them a good choice for many individuals and businesses. Here are some perks to consider:

•   Attractive rate and fees: Regional banks may offer more favorable interest rates on savings accounts and loans to compete with national banks. They also tend to charge lower fees for ATM usage, account maintenance, and overdrafts.

•   Personalized service: Regional banks generally prioritize building long-term customer relationships and can often tailor their services to the needs of residents and businesses in the area.

•   Flexible lending criteria: These banks may be more inclined to work with local residents and businesses and offer loans to those who may not qualify under the stricter guidelines of national banks.

•   Community focus: Regional banks often prioritize community involvement and reinvest in the local area through loans, sponsorships, and other initiatives.

Advantages of National Banks

National banks also come with a host of benefits. Here are some to keep in mind:

•   Convenient nationwide access: National banks typically have branches and ATMs across the country, making it easy to access banking services wherever you are, even while traveling or relocating to a new area.

•   Diverse product offerings: From basic checking accounts to sophisticated investment and wealth management services, the breadth of services at national banks allow customers to meet all of the banking needs in one place.

•   Advanced technology: National banks may have more resources to invest in the latest technology than smaller regional banks.

•   Stability and reputation: The large asset base and established reputation of national banks can provide a sense of security, particularly during periods of economic volatility.

Recommended: How to Deposit a Check

The Takeaway

When choosing between a regional and a national bank, you may want to consider what matters most to you. If you value personalized customer service, lower fees, and flexible lending criteria, a regional bank may be the better choice. If, on the other hand, you want nationwide access to branches, a broad range of financial products, and advanced digital services, a national bank could be a better fit.

If you are shopping for a new bank, in addition to thinking about national vs. regional banking, you may want to consider online banks as well.

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


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

FAQ

Are regional banks considered community banks?

While they share similarities, regional banks and community banks are different types of banks. Community banks are smaller, with assets under $10 billion, and they focus on serving local neighborhoods. Regional banks, by contrast, have assets between $10 billion and $100 billion, and typically operate across multiple states or regions, though not nationwide. While both types of banks emphasize local involvement and customer service, regional banks tend to have a broader geographic footprint and tend to offer more services than community banks. Community banks, on the other hand, may offer a more localized experience.

Which type of bank typically offers better interest rates?

Regional banks often provide better interest rates on savings accounts and loans compared to national banks. One reason is their lower overhead costs. Another is that they tend to take a more community-oriented and flexible approach in setting rates. Conversely, national banks, with higher operational expenses and a more standardized approach to rates, may not be as competitive on this front.

Can national banks lend across state lines more easily?

Both national and state-chartered banks can make loans across state lines. Interest rates can vary, however, so it’s a good idea to compare offers from both national and local lenders to find the best rates and terms on a loan.

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SoFi members with direct deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

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

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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