money Archives | Page 20 of 167

Oct

2024

Who Is the Payee of a Check?

By Jacqueline DeMarco | Family Finances, money, Terminology | Comments Off

A payee of a check is the person or business to whom the check is made out and who will receive funds.
While checks may not be used as often as they once were, they are still an important way to make payments, and one that can require a bit of knowledge to use properly.

Key Points

• A payee is the individual or business designated to receive funds from a check, clearly indicated on the payee line of the document.

• The payor, or payer, is the person writing the check, and they can also be the payee if they write a check to themselves.

• Payees can receive payments through various methods including cash, credit cards, electronic transfers, and mobile payments, each with distinct advantages.

• Identifying the payee on a check is straightforward, as it appears at the top where it states “pay to the order of.”

• To avoid fraud, individuals should handle checks securely by using a pen, verifying information, and avoiding mailing checks whenever possible.

What Is a Payee?

What is the payee? As briefly noted above, the payee is the individual who receives the payment. When a payment is made via a check, their name is written on the payee line.

A paper check is a form of payment that transfers money from one bank account to another. For a check to be valid, it has to have the recipient’s name (aka the payee), payment amount, and date written on it clearly. Checks can be a very convenient way to make a payment or to give someone a gift. They are also considered to be fairly secure forms of payment as only the person named on the check can cash the check.

It’s also possible to make a payment via an electronic check. The way an electronic check (which can also be called an e-check) works is essentially the same as a paper check minus the paper. It’s possible to send a check digitally and the payment will be transferred via an ACH (automated clearing house) network.

Payee vs Payor: What’s the Difference?

Who is the payee? Here’s the difference:

• The payee is the party receiving the payment when someone writes a check.

• The payor on the other hand is the party who is making the payment. It’s also common to hear the payor referred to as the payer. The individual who writes the check is the payer.

It is possible for the payor and the payee to be the same person. An individual can pay themselves via a check by writing their own name on the payee line. This is commonly done when transferring funds from one account to another or from one bank where the individual has an account to a second bank they have an account at.

Recommended: 7 Ways to Tackle Financial Stress

Ways That Payees Can Receive Money

What does payee mean? While one meaning is the recipient of a check, that’s not the only way a person or business can be paid. Payees can also receive funds by a variety of different payment methods, such as:

• Cash: Yes, dollar bills (and other denominations) still have a place around the world.

• Credit card: You can swipe, insert, or tap your way to pay for goods or services.

• Cashier’s check or certified check: These are secure forms of payment with additional assurances beyond a standard check.

• Money order: These are available for purchase at U.S. post offices and via services like Western Union

• Electronic transfer: Examples of this include when your paycheck is put into your checking account by direct deposit

• Mobile wallet payment: Say you have dinner with a friend, but you pay for it and your friend pays you back via Apple Pay/Apple Cash or a similar app.That’s an example of a mobile payment in action.

All of these payment formats have different advantages and disadvantages. So it’s important to research all options individually to see which one is the most convenient, costs the least, and is the most secure. Sometimes you aren’t given a choice about how to make a payment (such as a landlord having a specific preference for how they want to receive rent payments), but many individuals and vendors accept a handful of different payment methods.

How to Identify a Payee on a Check

Figuring out who a payee on a check is isn’t hard, especially since all checks follow the same format. If someone is reading a check and wants to know who the payee is, all they have to do is look at the top of the check where it says “pay to the order of.” This part of a check is known as the payee line, and it designates who can cash the check.

The payee can be an individual or a business when paying bills. When filling out a check, it’s important to write the individual or business’s full name (so if it’s Jane Smith Brown, don’t write J.S. Brown). The payee’s name must be spelled correctly, or they may not be able to cash the check.

Tips for Handling a Check Safely

Fraud can happen with a variety of payment formats, including check. When making a payment via check, it’s important to keep security top of mind to help avoid check fraud (which is notoriously difficult to resolve). These are some tips that can help consumers handle checks safely:

• Fill out the check using a pen so the payee’s name and the payment amount can’t be changed.

• Double-check that the payee’s name and the payment amount is correct.

• Print clearly when filling out a check; cursive writing can lead to mistakes.

• Don’t sign a blank check — ever. If you do, there’s the risk that a thief or the payee could fill in whatever amount they want.

• If possible, don’t send checks by mail since they can be stolen. This is especially true for checks for a large amount of money.

• If you must mail a check, try to use security envelopes, which are the kind that aren’t see-through, so a potential thief can’t tell there is a check inside.

• When mailing a check, mail it via the post office, versus leaving it in a residential mailbox to be picked up.

• If you are concerned about making a mistake when sending a check, you can always choose to do an ACH payment instead. When transferring money via ACH, it’s actually possible to reverse mistakes. Another option could be a wire transfer, which may be reversible if one acts quickly enough.

And what if you are receiving a check? Follow these pointers:

• It’s important to deposit it fairly soon. Otherwise it might get misplaced and expire. How long are checks good for? Typically, they are valid for six months.

• It’s wise to only cash a check from someone the payee is familiar with and that the check is for the correct amount. It’s best not to cash a check that is for more money than is owed. Here’s why: A common form of check fraud is to give someone a check for more money than they owe and then to ask for a refund. The victim sends the refund, only to discover the check they deposited bounced, meaning they have lost money on this transaction.

• You may be able to sign the check over to someone else (say, a friend you owe money to); make sure you follow the correct steps carefully to ensure a smooth transaction.

The Takeaway

Financial terminology isn’t necessarily complicated. Wondering who is the payee of a check? The payee is the individual receiving payment via check, and they are usually the only individual who can cash the check (unless it gets signed over). Making a payment via check is very convenient, but it’s important to keep safety top of mind when making a payment this way, especially if the payor plans to mail the check.

Whether you are receiving or writing checks or do most of your transactions electronically, opening an account with an online bank can simplify your financial life. For instance, with a SoFi Checking and Savings account, you can spend and save in one convenient place and have options like Vaults and Roundups to help your cash grow.
You’ll also earn a competitive annual percentage yield (APY), and pay no account fees, which is also part of our better-banking benefits. Another perk? Qualifying accounts with direct deposit can 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

What are payee requests?

If someone comes across a payee request, this is usually because they are filling out a form that is requesting the proper information to pay someone. Information such as their name, address, and bank account and routing numbers may be required, depending on the chosen form of payment.

Can you get scammed by a payee?

It is possible to get scammed by a payee. People can request payment for goods and services and may not deliver on their promise. It’s possible for payees to commit a variety of types of fraud.

Can the payee ever be the one who sends the payment?

In most cases, the payee is not the person to send a payment but rather the recipient of funds. The payor (or payer) is the individual who makes a payment. That said, there are instances when a person might make out a check to themself as a way to, say, transfer funds to a different account. In this case, they are both the payee and the payor.

Photo credit: iStock/AndreyPopov

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.

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.

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

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Oct

2024

What Is a Basis Point (BPS)? Definition & Use Cases

By Timothy Moore | Financial Independence, money, Terminology | Comments Off

A basis point is a unit of measure that is primarily used to precisely communicate a change in interest rate. You might hear “basis point” or “bps” (basis points) in reference to a Federal Reserve rate hike or a change in interest rate for a savings account, credit card, or mortgage. Basis points are also used to measure a difference in percentages in political polls and in scientific data.

Whether you want to better understand the news or you’re tracking rates on loans or bank accounts, it’s important to grasp the concept behind basis points. Here’s a simple guide to what basis points are, their uses, and how to quickly convert a bps into a percentage.

Key Points

• A basis point is a unit of measure equivalent to 0.01%, commonly used to describe changes in interest rates and financial metrics for clarity and precision.

• Financial institutions utilize basis points to communicate changes in interest rates, bond yields, investment fees, and spreads between different yields in the market.

• Converting between basis points and percentages is straightforward; dividing by 100 converts basis points to percentages, while multiplying percentages by 100 converts them to basis points.

• Understanding basis points is essential for consumers and investors as even minor changes in interest rates can significantly impact financial decisions and investment outcomes.

• Basis points enhance transparency in finance, helping to ensure clear communication regarding fees, yields, and interest rates, which ultimately aids in informed decision-making.

Understanding Basis Points

A basis point is a unit of measure equal to one one-hundredth (1/100) of a percentage point, or 0.01%. That means that 100 basis points equal 1%. Sometimes abbreviated to “bp” or “bps,” basis points are often used to precisely express changes in interest rates, including rates for high-yield savings accounts, credit cards, and consumer loans.

Basis points offer a standardized way to discuss and quantify minor variations in percentages, and they help avoid confusion that might arise from using fractional percentages or decimal points. For example, if an interest rate increases from 4.00% to 4.25%, this change can be described as an increase of 25 basis points. Similarly, a decrease from 3.50% to 3.25% would be a reduction of 25 basis points. This level of precision is particularly useful in financial markets, where even the smallest changes can have substantial effects on investment returns and borrowing costs.

Converting Between Basis Points and Percentages

Calculating between basis points and percentages is simple once you know the formula.

To convert basis points to a percentage: Divide the number of basis points by 100. For example, 200 basis points is equal to 200 / 100 = 2%.

To convert a percentage to basis points: Multiply the percentage by 100. For example, 10% x 100 = 1,000 basis points.

The table below shows common basis point values and their corresponding percentages:

Basis Points	Percentage
25	0.25%
50	0.50%
75	0.75%
100	1.00%

Uses of Basis Points

Basis points are widely used in the world of finance. Understanding the meaning of basis points can help you in the following contexts:

• Interest rates Banks, central banks, and other financial institutions often use basis points to communicate changes in interest rates. For example, basis points may be used to communicate the change in the annual percentage yield (APY) on a savings account or the annual percentage rate (APR) on a loan product, such as a credit card or mortgage.

• Bond yields Investors and analysts use basis points to describe changes in bond yields. For example, if a bond has a yield of 2.10% and the yield increases to 2.35%, the yield has risen by 25 basis points. This precise description helps investors compare bonds and understand movements in the market.

• Spreads In the context of financial markets, spreads between different rates or yields are often expressed in basis points. For instance, the spread between corporate bond yields and government bond yields is commonly measured in basis points to provide a clear comparison.

• Investment fees Basis points are often used to express fees and expenses in the financial industry. For example, if a mutual fund has an investment management fee of 75 basis points, it has an annualized fee of 0.75%. This standardized way of expressing fees makes it easier for investors to compare costs across different funds

While basis points are popular in finance, they have other applications as well. You may hear talk of basis points when news outlets review the results of a political poll; basis points are also useful in scientific research papers.

Recommended: 5 Investment Strategies for Beginners

Examples of a Basis Point Application

Let’s take a look at two examples of how basis points might be used in the financial industry.

Federal Reserve Interest Rate Hike

The Federal Reserve’s Federal Open Market Committee meets eight times a year to discuss monetary policy, including whether or not to make changes in the federal funds target rate. This benchmark rate influences rates on everything from savings accounts to credit cards. The Fed may raise interest rates when the economy starts overheating and inflation is too high; it may cut rates when the economy is weakening and unemployment is rising. If the Fed decides to change the Federal Funds target rate, this change is described in terms of basis points.

For example, on July 26, 2023, the Fed increased the Federal Funds rate by +25 bps, which made the Federal Funds rate rise from 5.25% to 5.50%.

An Adjustable-Rate Mortgage

If you have an adjustable-rate mortgage, your interest rate can change during the term of the loan in response to changes in market rates. For example, suppose you learn your mortgage rate, which is currently 3.75%, is increasing by 25 basis points. That means the rate is increasing .25% (25 / 100). Your new interest rate will be 4.00%.

Importance of Basis Points in Finance

Basis points are an important term in finance because they eliminate ambiguity and provide clarity and precision, which is essential for analysts and policymakers.

Basis points are also important for consumers and investors. Since even minor changes in interest rates or spreads can have significant impacts, understanding bps can help people make informed decisions about where to put their money and manage risk.

Basis points also enhance transparency in finance, since financial institutions often use bps to disclose fees, expenses, and performance metrics. This transparency helps investors make better choices and understand the costs associated with their investments.

The Takeaway

Basis points are a useful way to talk about how percentages have changed or will change. If you’re confused by bps, some quick math can help: Simply divide basis points by 100 to convert them into percentages, or multiply a percentage by 100 to get the basis point equivalent.

Using basis points helps to ensure more transparent discussions, allowing all parties to have a clear understanding of how a change in interest rate or yield will affect their finances.

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

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

FAQ

What is the definition of a basis point?

A basis point (bp) is a unit of measure that represents one one-hundredth of a percent. Thus, 1 basis point is equal to 0.01%.

In finance, basis points (bps) are used to precisely express small changes in interest rates, yields, and other financial percentages. BPS helps avoid confusion that might arise from using fractional percentages or decimals. For instance, a change from 3.00% to 3.25% is a 25 basis point increase.

How do you convert basis points to percentages?

To convert basis points to a percentage, divide the number of basis points by 100. For instance, 1,000 basis points = 1,000 / 100 = 10%.

Conversely, to convert percentages to basis points, multiply the percentage by 100. For instance, 0.75% is equal to 0.75 x 100 = 75 basis points.

In what financial contexts are basis points commonly used?

Basis points are used in a variety of financial contexts to ensure precision and clarity. Key areas include:

• Interest rates Banks and central banks will often use basis points to communicate changes in interest rates.

• Bond yields Investors and analysts typically describe changes in bond yields in basis points.

• Spreads The difference between interest rates or yields, such as the spread between corporate and government bond yields, is often expressed in basis points.

• Fees and expenses Financial institutions often use basis points to describe fees, such as mutual fund expense ratios and advisory fees. This provides a standardized way to compare costs.

Photo credit: iStock/eclipse_images

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.

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.

*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.

SOBK-Q224-1891703-V1

Oct

2024

Safe Deposit Box: Key Things to Know

By Alice Garbarini Hurley | Family Finances, money, Terminology | Comments Off

Safe deposit boxes are storage units located in banks that offer a secure way to store important items you may not want to keep at home, such as critical documents, collectibles, and family heirlooms.

Due to the growth of online banking and digital storage, safe deposit boxes aren’t as popular as they once were. However, there are some situations where these boxes can be useful. Here are key things to know about safe deposit boxes.

Key Points

• Safe deposit boxes are secure storage units in banks, ideal for safeguarding important documents and valuables from theft or environmental damage.

• Items like birth certificates, jewelry, and stock certificates are suitable for storage, while cash and original wills should generally be avoided.

• Renting a safe deposit box involves fees, which vary by size and institution, typically ranging from $15 to $350 annually.

• Access to safe deposit boxes is limited to bank hours, which can be inconvenient, especially in emergencies, and their contents are not insured by the bank.

• Alternatives to safe deposit boxes include personal home safes, digital storage options, and attorney offices for legal documents, each with its own advantages and disadvantages.

What Is a Safe Deposit Box?

A safe deposit box (also called a safety deposit box) is a secure locked box, usually made of metal, that stays in the safe or vault of a federally insured bank or credit union. They are typically used to keep valuables, important documents, and sentimental keepsakes protected from theft or damage.

Safe deposit boxes often come in two different sizes, usually 3” by 5” or 10” by 10,” and can be rented for an annual fee. In exchange for the fee, banks provide security measures to protect your valuables, such as alarms and surveillance cameras. In addition, the safe deposit boxes are stored in vaults that are designed to withstand natural disasters such as fires, floods, hurricanes, and tornadoes.

Unlike a bank account, however, the contents of a safe deposit box are not protected by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA). As a result, there is still a small risk that you could lose the items in your container due to theft or damage.

What You Should and Shouldn’t Keep in a Safe Deposit Box

Safe deposit boxes can be a good place to keep hard-to-replace documents and small valuables that you won’t need to access frequently. However, you generally don’t want to keep any items that you may need to grab in a hurry in the box, and certain items are prohibited.

Here’s a breakdown of things to keep — and not to keep — in a safe deposit box.

Items Typically Kept in a Safe Deposit Box

• Important documents: Documents that are difficult to replace and often needed for legal purposes are commonly stored in safe deposit boxes. These include: birth certificates, marriage licenses, car titles, divorce records, citizenship papers, property deeds, and mortgage documents.

• Valuables: Jewelry, rare coins, stamps, and other valuable collectibles can be safely stored away from potential theft.

• Financial Instruments: Stock certificates, bonds, and other financial instruments that require safekeeping can be securely stored in a safe deposit box.

• Backup data: You might store external hard drives or USB drives containing sensitive personal or business information here to protect against data loss.

• Personal keepsakes: Irreplaceable items like family heirlooms, photos, and memorabilia can be stored to ensure they don’t get lost or damaged.

Items to Avoid Putting in a Safe Deposit Box

• Cash: While you may be tempted to store some cash in your safe deposit box, you’re likely better off putting the money in a high-yield savings account at a bank or credit union, which will allow your money to grow. The cash will also be insured (up to certain limits) by the FDIC or NCUA.

• Original copies of wills: Original wills should not be stored in a safe deposit box because they may be difficult to access immediately after the owner’s death, delaying probate. You might instead store a copy of a will.

• Durable power of attorney: Similar to wills, these documents might be needed quickly in emergencies, and delays could cause significant issues. Consider storing a copy.

• Passport: If you need to travel urgently, accessing your passport from a bank vault could be problematic due to limited bank hours.

• Frequently used items: Any items you need regular access to should not be kept in a safe deposit box due to limited accessibility.

• Prohibited items: Banks and credit unions generally prohibit the storage of firearms, explosives, weapons, hazardous materials, illegal substances (such as drugs), alcohol, perishable items, and cremated remains.

How Much Does a Safe Deposit Box Cost?

Rental fees vary by the box’s size and financial institution. The average cost to rent a box at a commercial U.S. bank runs between $15 and $350 per year. Additional costs may include fees for lost keys or late payments.

Some banks and credit unions will offer discounts on a safe deposit box cost if you have a relationship with the bank. In some cases, an institution may offer free access to a safe deposit box as a perk to their customers.

How to Get a Safe Deposit Box

To rent a safe deposit box, you’ll generally need to follow these steps:

1. Research your options. Not all banks and credit unions offer safe deposit boxes. You’ll want to find an institution that both provides this service and is conveniently located.

2. Meet the requirements. Many banks require you to be an existing customer with a checking or savings account. However, some banks may allow noncustomers to rent boxes for an additional fee.

3. Provide identification. You’ll need to bring valid identification, such as a driver’s license or passport, to verify your identity. If you plan to allow another person access to your safe deposit box, they will need to be present and show ID as well.

4. Sign a rental agreement. You (and, if applicable, your corenter) will need to sign a rental agreement outlining the terms and conditions of the box rental.

5. Make a payment. You generally need to pay the initial rental fee upfront. Some banks may offer discounts for long-term rentals or automatic payments.

6. Get your key. Upon completing the paperwork, you will receive a key to your safe deposit box. The bank retains a second key. Both keys are required to access the box. If the bank offers keyless access, they will likely scan your finger or hand.

Keep in mind that every time you wish to access your safe deposit box, you’ll need to present your photo ID, as well as your key (if it’s not keyless). The bank may also require your signature before allowing you to open your box.

How Safe Is a Safe Deposit Box?

Safe deposit boxes are generally very secure. They are housed in a bank vault, which offers robust protection against theft, fire, flood, and other disasters. Banks employ multiple layers of security, including surveillance cameras, alarms, and restricted access to the vault area.

When you rent a safe deposit box, the bank typically gives you a key to use. The bank also retains a second “guard key” which must be used by a bank employee in tandem with your key. Some banks now use a keyless biometric entry system, where you scan your finger or hand instead.

However, it’s important to note that the contents of a safe deposit box are not insured by the bank or the FDIC. As a result, you may need to obtain separate insurance or add a rider to your homeowners or renters insurance for coverage.

Recommended: Are Online Savings Accounts Safe?

Pros and Cons of Safe Deposit Boxes

Safe deposit boxes can be a good way to protect your valuables. Here are some of the upsides of renting one:

• Security: Safe deposit boxes offer a high level of security, since they are stored in areas with limited access and stepped-up surveillance.

• Environmental protection: They can protect your valuables from environmental damage, such as a flood or fire.

• Privacy: The contents of a safe deposit box are known only to the renter, offering a high degree of privacy.

• Organization: Safe deposit boxes help keep important documents and valuables in one secure location, making it less likely you will misplace them.

But safe deposit boxes also come with downsides. Here are some to consider:

• Limited access: Access is restricted to bank hours, which can be inconvenient, especially in an emergency.

• Cost: There is an ongoing rental fee, which varies based on the size of the box.

• Not insured: Contents are not insured by the bank or FDIC. Separate insurance may be needed for valuable items.

• Delayed access for loved ones: In the event of the renter’s death, accessing the box may require legal processes that could delay access to important documents.

The Takeaway

If you’re looking for a safe place to stash vital papers or valuable possessions, you might consider renting a safe deposit back at a brick-and-mortar bank or credit union. Items stored in these containers are protected against theft, loss, or damage due to a flood, fire, or other disaster.

But the protection has limits: Unlike regular bank accounts, safe deposit boxes are not insured by the FDIC. Also keep in mind that safe deposit boxes aren’t ideal for items you may need to grab in a hurry, since access is limited to banking hours.

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

FAQ

What can I use instead of a safe deposit box?

Alternatives to a safe deposit box include:

• A fire-rated personal home safe: This can offer protection from environmental damage (such as fire or flood). However, a thief could potentially steal the whole safe.

• Digital storage solutions: Cloud services can securely store important documents and data backups.

• An attorney’s office: For legal documents, a trusted lawyer’s office may offer secure storage.

• Private vault facility: These are a viable alternative to a safe deposit box but tend to cost more.

Can safe deposit boxes be jointly shared?

Yes. When you open a safe deposit box, you can designate one or more corenters who will have equal access to the box. This is useful for couples, business partners, or family members who need shared access to important documents and valuables. Each renter typically receives a key, and all corenters’ signatures are required on the rental agreement.

Is it safe to keep money in a safe deposit box?

While it is physically safe to keep money in a safe deposit box, it is not recommended. Cash stored in a safe deposit box does not earn interest and is not insured by the Federal Deposit Insurance Corporation (FDIC). You’re generally better off keeping cash in a high-yield savings account or other insured financial instrument that offers safety, liquidity, and interest earnings.

Do banks know what you put in a safety deposit box?

No. The contents of a safe deposit box are private, and bank employees do not have access to the items stored inside. When you rent a safe deposit box, you receive a key, and the bank retains a second key. Both keys are required to open the box, but only you can open it and see its contents. This ensures privacy and confidentiality.

Photo credit: iStock/AlexSecret

Oct

2024

How to Stop Automatic Payments on Your Debit Card

By Emily Greenhill Pierce | Credit, Family Finances, money | Comments Off

Automatic payments from your bank account can be a convenient way to pay your bills and subscription charges on time. But the day may come when you need to know how to stop automatic payments on a debit card. This could involve changing your account settings, revoking authorization, or contacting your bank.

Canceling your automatic payments with certain vendors and financial institutions can occasionally be a hassle. And sometimes, if you’re not paying attention, months can go by without you realizing that recurring fees are still being deducted from your account.

Here, you’ll learn four effective ways to stop automatic payments when the time comes to do so.

Key Points

• Automatic payments can be convenient for managing bills, but they may lead to unintended charges and difficulty in cancellation if not monitored closely.

• Users can typically stop automatic payments by adjusting settings in their online accounts, often found in the billing section.

• Revocation of payment authorization may require direct contact with the service provider, sometimes necessitating a specific form to be filled out and sent back.

• Contacting the bank directly can facilitate stopping automatic payments, with some banks requiring a formal letter or providing a revocation form.

• Regularly checking bank accounts is essential to confirm that automatic payments have been successfully canceled and to identify any unauthorized charges.

4 Ways to Stop Automatic Payments

If you’re someone who tends to forget to pay bills in a timely manner, automatic payments attached to your debit card can be a financial lifesaver.

Automatic transfers or ACHs (automatic clearing house) can transfer money from your checking account on a specific date to a business, without any checks being written or credit card interest charges being incurred. This method can be used to cover a myriad of life’s expenses, including the cost of a gym membership, cell phone bills, and your favorite streaming services.

But there are some downsides to automatic payments being applied via your debit card. Maybe you accidentally signed up for recurring payments? Perhaps that monthly shipment of protein shakes was initially exciting, but now you’re sick of drinking strawberry-flavored liquids for lunch. Nobody wants to get stuck paying for something they don’t want.

If you want to keep autopay withdrawals from happening, you’ll need to know how to stop recurring debit card payments. Failure to do so can result in a drain on your bank account, and your sanity.

Federal law grants you the right to cancel an automatic debit card payment, or stop ACH payments, even if you previously permitted them. There are generally no fees or penalties for canceling an automatic payment preference.

Here are 4 tips on how to cancel an automatic payment.

1. Turning Off Automatic Payments in Your Account

These days, most utility companies and vendors invite you to automate your finances. When you create an online account, they will encourage you to sign up for automatic payments. This makes it more likely that they will receive your money in a timely fashion and it may allow them to cut down on monthly billing efforts. It also can make it easier for you to stop an automatic payment.

Your automatic payments can usually be set up and terminated simply by switching an option in your settings. Sign in with your username and password and select “opt out of automatic payments” in your personal account. This action is typically performed in the “billing and payment” section in the site menu. If you need help, a customer service representative can often guide you via online chat or over the phone.

Once you’ve turned off your automatic payment feature, it might be wise to document the event. Take a picture of a confirmation message and note the date.

2. Revoking Authorization from Companies

If you can’t turn off your autopay option through an online account, you may have to contact the company directly and revoke the automatic payment authorization. Some vendors will email or mail you what’s known as a “Revoke Authorization” form.

Once you’ve received the Revocation of Authorization form, fill it out, and keep a copy for yourself before emailing or mailing it back. That way, if the automatic payment charges continue, you’ll have evidence of cancellation to show to your banking institution.

3. Calling Your Bank or Credit Union

Another way to stop automatic payments from your debit card is to contact your bank directly. They may ask you to pen a letter to formally revoke authorization, stating that the company and dollar amount is no longer allowed to be electronically debited from your checking account.

Your bank may also have a Revoking Authorization form you can fill out online or in person. Once the form has been processed, any further attempt by the company to withdraw funds can be dealt with by your bank.

4. Issuing a Stop Payment Order

Instead of filing a form to revoke authorization, you could issue a stop payment order. A stop payment order gives your bank or credit union permission to block a company or vendor from taking money from your account. This process could be done over the phone, in an email, or in person. Some banks may charge a fee for this service.

Keeping an Eye On Your Bank Account

It is possible, even after taking actions to cancel your automatic payments, that you may still see funds being withdrawn from your bank account. While this is frustrating, you may have to contact the vendor or your bank a second time. It’s a good idea to frequently check your bank account to be sure the automatic payments have stopped. Regular check-ins can be part of managing your checking account in a big-picture way too.

Dealing with Unauthorized Automatic Payments

Paying attention to your bank account can also help keep your online accounts safe. Your bank may even alert you to fraudulent charges — automatic payments being made without your consent for things you never signed up for.

Should You Consider Closing a Bank Account?

It’s good to know how to cancel all automatic payments that seem suspicious. One surefire way to avoid recurring fraudulent charges is to close your bank account completely. But this is a drastic measure that could cost you more time and fees.

Instead, contact your bank or credit union. In many cases, they will credit you for the false debit, block the vendor from making future attempts, and suggest further security measures.

Recommended: How to Switch Banks

Should You Cancel Your Debit Card?

If a company keeps making erroneous or unauthorized automatic payments, one way to put a stop to it is to cancel your debit card and receive a new one. In the cases of fraudulent charges by an unknown vendor, your bank will strongly suggest this in order to protect you.

Knowing When to Give Bank Authorization

In order to effectively stop an automatic payment before it happens, be sure and issue the Revoke Authorization form or stop payment order at least three business days before the automatic payment is due, to give your bank time to process the request.

Remember, stopping an automatic payment doesn’t mean you don’t owe money for products received or services rendered. You’ll have to cancel the service agreement completely, or be on top of paying what you owe by the due date through online payments, mailing a check, or other arrangements.]

The Takeaway

Automatic payments from your checking account are a simple and popular way to pay what you owe on time. They can help you avoid late fees and a trip to the mailbox. If you have an online account, you can discontinue an auto payment with only a few clicks. In most cases contacting the company or vendor directly can also get the job done, or you can ask your bank for help. No one can force you to continue automatic payments against your will, and the control of your bank account is in your hands.

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

FAQ

How much does it cost to stop an automatic payment?

There are typically no fees when you stop an automatic payment option in your online account or if you do so by contacting a vendor directly. However, a bank might charge a processing fee for issuing a stop payment request.

What happens if you close a bank account with automatic payments?

If you close a bank account, companies and vendors will no longer be able to automatically deduct monthly payments tied to that account. You will have to make other arrangements to pay what you owe or discontinue any service agreements.

Will getting a new debit card stop recurring payments?

Yes. A new debit card comes with a new number. You will have to contact companies with your new card information to continue automatic payments.

Photo credit: iStock/vorDa
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.

SOBK0223001

Oct

2024

Postdated Checks: Are They Legal? Is It a Waste of Time?

By Jacqueline DeMarco | Financial Independence, money | Comments Off

If a check writer doesn’t want the payee to be able to cash a check immediately, they may choose to postdate it: On the date line, they would simply write in a future date. This can be helpful if someone needs to deliver a check before they have the funds necessary for the check to clear in their account.

Postdated checks are usually legal, unless they are being used to defraud the recipient. Learn more about how this payment process works and why some people postdate checks.

Key Points

• Postdated checks are typically legal in the U.S., but laws vary by state and they can be illegal if intended to defraud the recipient.

• Writing a postdated check involves filling in a future date, ensuring that the payee cannot cash it until that date arrives.

• If a postdated check is cashed early and there are insufficient funds, it may incur overdraft fees for both the check writer and the payee.

• Alternatives to postdated checks include scheduling online payments and setting up payment plans with businesses to avoid cash flow issues.

• Understanding the legal implications and alternatives can help individuals make informed decisions regarding the use of postdated checks in financial transactions.

What Is a Postdated Check?

When someone writes a postdated check, they fill in a future date on the check instead of the current date. A payer might do this so a check can’t be deposited until that later date (when they’ll have the funds available in their checking account).

This process can come in handy if you want to mail a check to pay a bill before it’s due. Say the bill is due on the 19th, but you are mailing it on the 15th. You might postdate it for the 19th. You know the check needs a couple of days to arrive and then be deposited. This can also be a good move if you know your paycheck hits on the 17th and will help cover the check.

💡 Quick Tip: Make money easy. Enjoy the convenience of managing bills, deposits, and transfers from one online bank account with SoFi.

Are Postdated Checks Legal?

Usually, postdated checks are legal in the U.S., but it’s worth verifying the rules in the state where the check writer lives. Note that these guidelines may not cover cashier’s checks or traveler’s checks, which have their own rules and limitations.

Also worth mentioning: If a check is postdated with the intention of defrauding the recipient, then it could be illegal. Since postdating is sometimes used in this way for fraudulent purposes, think twice before agreeing to accept a postdated check, especially from someone you don’t know well.

Recommended: How to Verify a Check Before Depositing

How to Write a Postdated Check

Writing a postdated check is the same as writing any other check. You fill out the name of the payee, the amount of the check in words and numbers, a memo if you like on the line at the lower left, and sign the check.

The only difference is that instead of putting the current date in the space on the right, you put a future date. This date is often just a few days or a week in the future.

Example of a Postdated Check

If today’s date were September 1st, 2024, and you wanted to write a check for $100 to your friend Susan Jones to repay her for a loan, here’s how you might postdate it:

• You would write “Susan Jones” after the “Pay to the Order of” wording.

• Next to it, to the right, in the space with the dollar sign, you’d write, “100.00”

• Under that, you’d fill out “One hundred and 00/100 cents” on the line for the amount in words.

• You can add a memo at lower left, if you like, such as “loan repayment.”

• Now, for the postdating part: If it’s September 1st but you don’t want the check to be cashed until the 5th, you’d write “September 5, 2024” on the date line at upper right.

The idea here is, you don’t want Susan to deposit the check until the 5th, even though the current date is the 1st.

What Happens When a Postdated Check Gets Cashed Early?

Generally, the payee has to wait to cash a postdated check until the date specified on the check arrives. That being said, some financial institutions may cash a check prior to that date.

• If there are sufficient funds in the check writer’s account, the check will be paid.

• If there isn’t enough money to cover the check’s amount, the check will be returned. This typically incurs overdraft or NSF (nonsufficient funds) fees, possibly for both parties.

For this reason, even if a bank or credit union is willing to cash a postdated check before the date written on the check, the payee may be better off waiting to cash it. The odds are that the payer added a postdate because at the time they didn’t have the funds available in their account to cover the check.

Alternatives to Postdated Checks

Check writers who want to buy some time until a deposit to their account clears have other options besides postdated checks.

• Online and Automatic Bill Payments: One option for making future payments without having to postdate a check is to go digital. The payer can go online to schedule a bill to be paid on the exact date of their choosing. As a bonus, there’s no need to order checks or manage a checkbook with this payment method.

Also, at your request, some businesses — including mortgage, utility, and credit card companies — can change the due date of your monthly bill to one of your choosing. For instance, if you get paid on the first of the month, you can request that the due date of your rent or mortgage payment always be three days later. That way, you can set up automated bill pay without worrying about your transaction clearing.

• Payment Plans: Before you consider postdating a check to avoid overdrawing your checking account, ask if the business will offer you a payment plan. Some companies will allow individuals to make smaller, incremental payments over time rather than one big payment. Make sure to find out first if the payment plan involves a fee or interest.

The Takeaway

A postdated check is the same as a standard check, but instead of putting the current date on it, the check writer fills out a future date. This is often done with the intention that the payee will not cash the check until that future date, when funds are available.

As you manage your money, it helps to have the right banking partner.

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

FAQ

What is the meaning of a postdated check?

A postdated check is filled out with a date in the future. The meaning is that it is not intended to be processed until the future date written on it.

Are postdated checks illegal?

No, it’s generally not illegal to postdate a check. That said, it’s a good idea to learn about the laws governing postdating checks in your area. Postdating a check can be considered a crime if the payer’s account does not have the required funds to process the check and if they intended to defraud the payee when they issued the postdated check.

Can a postdated check be returned?

If a postdated check is deposited (whether before or after the date on it) and there aren’t sufficient funds to cover it, the check may be returned unpaid.

Photo credit: iStock/AndreyPopov

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.

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

SOBK-Q224-1920411-V1

Who Is the Payee of a Check?

What Is a Payee?

Payee vs Payor: What’s the Difference?

Ways That Payees Can Receive Money

Get up to $300 when you bank with SoFi.

How to Identify a Payee on a Check

Tips for Handling a Check Safely

The Takeaway

FAQ

What are payee requests?

Can you get scammed by a payee?

Can the payee ever be the one who sends the payment?

What Is a Basis Point (BPS)? Definition & Use Cases

Understanding Basis Points

Converting Between Basis Points and Percentages

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Uses of Basis Points

Examples of a Basis Point Application

Federal Reserve Interest Rate Hike

An Adjustable-Rate Mortgage

Importance of Basis Points in Finance

The Takeaway

FAQ

What is the definition of a basis point?

How do you convert basis points to percentages?

In what financial contexts are basis points commonly used?

Safe Deposit Box: Key Things to Know

What Is a Safe Deposit Box?

What You Should and Shouldn’t Keep in a Safe Deposit Box

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Items Typically Kept in a Safe Deposit Box

Items to Avoid Putting in a Safe Deposit Box

How Much Does a Safe Deposit Box Cost?

How to Get a Safe Deposit Box

How Safe Is a Safe Deposit Box?

Pros and Cons of Safe Deposit Boxes

The Takeaway

FAQ

What can I use instead of a safe deposit box?

Can safe deposit boxes be jointly shared?

Is it safe to keep money in a safe deposit box?

Do banks know what you put in a safety deposit box?

How to Stop Automatic Payments on Your Debit Card

4 Ways to Stop Automatic Payments

1. Turning Off Automatic Payments in Your Account

Get up to $300 when you bank with SoFi.

2. Revoking Authorization from Companies

3. Calling Your Bank or Credit Union

4. Issuing a Stop Payment Order

Keeping an Eye On Your Bank Account

Dealing with Unauthorized Automatic Payments

Should You Consider Closing a Bank Account?

Should You Cancel Your Debit Card?

Knowing When to Give Bank Authorization

The Takeaway

FAQ

How much does it cost to stop an automatic payment?

What happens if you close a bank account with automatic payments?

Will getting a new debit card stop recurring payments?

Postdated Checks: Are They Legal? Is It a Waste of Time?

What Is a Postdated Check?

Are Postdated Checks Legal?

How to Write a Postdated Check

Example of a Postdated Check

Get up to $300 when you bank with SoFi.

What Happens When a Postdated Check Gets Cashed Early?

Alternatives to Postdated Checks

The Takeaway

FAQ

What is the meaning of a postdated check?

Are postdated checks illegal?

Can a postdated check be returned?

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