Aug
08
2024
line of atms on white background

How to Avoid ATM Fees

By | Budgeting & Goals, Financial Independence, money | No Comments

“But it’s my money!” may be your thought upon withdrawing money from an ATM and discovering that you’ve been hit with a charge. Sometimes, even two charges: One from your bank (which may charge you a few dollars at out-of-network terminals) and one by the operator of the ATM (which can again add a few dollars).

Think about it: If you assessed two $3 fees when using an out-of-network machine to grab $40, you’ve paid $6 or 15% of the amount withdrawn just to get that cash into your pocket.

Fortunately, you can avoid ATM fees. Try these seven simple techniques.

Key Points

•   Planning ahead for cash needs can help avoid unexpected ATM fees, especially when visiting cash-only businesses or establishments that offer cash discounts.

•   Familiarizing oneself with bank ATM locations and identifying partner ATM networks can greatly reduce the chances of incurring out-of-network fees.

•   Withdrawing more cash than needed in a single transaction can minimize the frequency of ATM visits and associated fees.

•   Retailers often provide cash-back options when making purchases, allowing access to cash without incurring ATM fees at nearby stores.

•   Choosing a bank with a large ATM network or one that refunds out-of-network fees can be a strategic move for those frequently withdrawing cash.

7 Ways to Avoid ATM Fees

Service charges are fairly common these days. You are probably used to getting hit with them when you order movie or concert tickets online, for instance. But if you are merely taking out your very own dollars from an ATM, you likely don’t want to pay for that privilege.

While it may not be possible to always avoid these fees, particularly if you travel frequently, there are some smart strategies for evading those charges. Follow this advice.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

Planning Ahead

Before heading out for the day or evening, consider whether or not you may need cash. Some independent restaurants, stores, and barber shops still operate as cash-only businesses. So if you’re testing out a new spot, you may want to check the website so you’re prepared with cash if needed.

If an establishment only accepts cash and you don’t have any, you may get stuck using the nearest ATM, which may result in double fees. It can also be a good idea to get some cash in advance (fee-free) if you’re going to a restaurant, gas station, or store that offers a discount for paying cash.

Choosing Restaurants That Take Credit Cards

A corollary to the above tip is to scope out a restaurant’s payment policies before you head out to dinner. It’s no secret that dining out can be a big expense (especially if you order that nice bottle of wine). Nor is it privileged information that many eateries are cash-only.

It’s wise to check the restaurant’s situation beforehand to make sure they take plastic. Otherwise, you will likely be forced to use the closest ATM, which can get pricey.

Taking Money Out Before Going Out

Another way to avoid ATM fees when dining out: Hit up the cash machine en route or earlier in the week. That way, you know you are covered.

Recommended: Pros & Cons of Living Cash-Only

2. Using Your Bank’s ATMs

Taking some time to familiarize yourself with your bank’s closest ATM locations (considering both home and work) can save you money and hassle down the line. There may be a location finder tool on the bank’s website or app, or you can do a general web search, or even use your phone’s maps app.

Generally, the larger, national banks will have more options for branded ATMs than smaller, regional institutions. Banks of all sizes, however, often partner with large ATM networks in order to expand their customers’ options and provide them with a fee-free banking experience.

3. Finding Partner ATMs

Another way to avoid out-of-network ATM fees is to find those terminals with which your bank has a relationship.

The biggest advantage of partnership networks is the potentially vast number of fee-free ATM locations available. Some of the largest networks even include ATMs in locations like convenience stores, pharmacies, and retailers.

If your bank partners with an ATM network, you may be able to perform ATM transactions at their terminals without getting hit with any fees from your bank, though some locations may still collect ATM surcharges. It can be wise to familiarize yourself with the policies before you start regularly hitting the machines for cash.

The easiest way to find your bank’s partners is to check the back of your debit card. If you see a logo for Allpoint, for example, you can search their app for the closest of their 55,000-plus locations.

This doesn’t automatically mean that your transaction will be entirely fee-free, but either your bank or the partner may waive charges. It’s a good idea to check with your bank for details.

Bank Partner ATMs Explained

What are bank partner ATMs? This means that there is a relationship between your bank and their partner and you can likely use their ATMs fee-free.

These kinds of partnerships can exist for various reasons. Perhaps you bank at a relatively small, local bank network. They may team up with a larger network of ATMs to make it more convenient for customers to get cash on the go.

Or perhaps you bank at an online bank, which doesn’t have brick-and-mortar locations but wants to provide access to cash machines. Their partner network can provide terminals fee-free, a nice perk for the bank’s clients.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


4. Taking Out More Than You Need

How else to avoid ATM fees? Consider that ATM fees are typically per transaction, so one easy way to avoid extra charges is to withdraw more cash than you need. This is particularly true when traveling overseas, where surcharges can be significantly higher than domestic ATM fees. The downside is that you may feel uncomfortable keeping a bunch of cash on hand.

The Benefits of Less Frequent Withdrawals

Making less frequent withdrawals can have a few pros:

•   Saves you time thanks to fewer visits to the ATM

•   Costs you less in fees (if they are assessed)

•   Can help with budgeting; taking one larger lump sum may focus you more on your spending vs. grabbing $20 here and there without realizing how much cash you are going through.

Recommended: ATM Withdrawal Limits – What You Need to Know

5. Getting Cash Back

If you need cash and aren’t near one of your bank’s ATMs, you may be able to avoid paying an ATM fee by finding a nearby grocery store, gas station, or large retailer. Many of these retailers offer cash back when you make a purchase using your debit card.

If you go this route, you’ll need to make a purchase (ideally for something you need) and ask for cash back. The cashier will add the amount of cash you want to the purchase price and give it to use as cash, typically without charging any fee.

Where Can You Get Cash Back?

Many retailers allow you to ask for cash back, often with a stated maximum amount. You might be able to get cash when making a purchase at:

•   Gas stations

•   Grocery stores/supermarkets

•   Large retailers, such as Target, Walmart, and Costco.

6. Choosing a Different Bank

Not all banks charge out-of-network ATM fees. If you’re getting hit with fees, especially double fees, you may want to consider switching to an institution that has a larger ATM network, doesn’t charge ATM fees, and/or refunds ATM fees charged by machine providers.

Some banks will reimburse up to a certain amount every month in fees charged by an out-of-network provider. If you suspect you’ll use non-network ATMs frequently, you may want to consider a bank that will refund you.

Some Banks Reimburse ATM Fees

The banking industry is changing, and several players now embrace the idea of reimbursing ATM fees. This puts the customer first. It also addresses the fact that online-only financial institutions are getting more popular; this means there are no bank-owned terminals because there are no brick-and-mortar locations.

Recommended: Cardless Money Withdrawal

7. Using Personal Payment Apps to Pay Your Friends

With peer-to-peer (P2P) payment apps like Venmo, you can often avoid a trip to the ATM entirely. Once you set up an account and link your bank account, it’s easy to move money directly from your account to your friends’ accounts. Your bank may also have its own P2P payment app.

Open a SoFi Checking and Savings Account

ATM fees can be annoying and add up quickly. But, fortunately, this is usually an avoidable expense.

One way to avoid ATM fees is to do some research on where your financial institution’s branded ATMs are located in your area, as well as ATMs that are in their partner networks. Other options include using payment apps or asking for cash back at a retail cash register when it’s available.

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 4.20% APY on SoFi Checking and Savings.

FAQ

How do you avoid paying fees at an ATM?

There are several ways to avoid paying ATM fees, For instance, you might only use in-network or partner bank ATMs, carry cash, and/or use credit cards or P2P payment apps.

Is it free to withdraw cash from ATMs?

It should be free to withdraw cash from an ATM provided you use your bank’s or its partner bank’s network. If you use an out-of-network terminal, however, you could pay a fee to both your bank and the machine’s operator.

Why do some ATMs charge you for withdrawing money?

You may be charged a fee if you use an out-of-network ATM. Because you are not a member of the bank providing the terminal, they can assess a charge to handle your transaction. In addition, free-standing ATM machines are a for-profit enterprise, offering the convenience of cash while earning a fee on every transaction.


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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

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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Aug
08
2024
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Credit Freeze vs. Credit Lock: What Is the Difference?

By | Budgeting & Goals, Credit, Financial Independence, money | Comments Off on Credit Freeze vs. Credit Lock: What Is the Difference?

Many people are aware of the number of data breaches and scams today and want to feel reassured that they are protected from identity theft and other forms of credit card fraud.

If you are among their ranks, you might benefit from a credit freeze, which is typically free, or credit lock, which may involve a fee. Both of these processes block access to your credit file. This can prevent credit checks that may be the first step in unauthorized applications for a new loan or credit card.

It can be a wise idea to apply for a credit lock or credit freeze at one or all three of the major credit bureaus if you are dealing with a data breach or identity theft.

Learn the pros and cons of a credit freeze vs. lock here, as well as when what’s known as a fraud alert might provide the right level of protection.

Key Points

•   A credit freeze is a free service that blocks access to your credit report, making it harder for identity thieves to open new accounts in your name.

•   Credit locks also block access to credit reports but typically require a subscription fee and allow for instant activation and deactivation via an app.

•   Both credit freezes and locks prevent unauthorized access to credit files but differ in terms of ease of use and the potential for legal protections.

•   A fraud alert is a less severe option that allows lenders to see your credit report but requires verification of identity before processing new credit applications.

•   Regular monitoring of financial accounts is essential, regardless of whether a credit freeze, lock, or fraud alert is in place, to catch any fraudulent activity promptly.

What Does a Credit Freeze Do?

A credit freeze (also known as a security freeze) is a free tool that allows you to block all access to your credit report and makes it tougher for identity thieves to open new accounts in your name.

That’s because nearly all creditors want to see your credit report before they approve an account and extend credit to you.

If they can’t access your credit report, it’s unlikely that you will get approved. That works in your favor when someone other than you is trying to open an account in your name and perhaps commit identity theft.

Fortunately, according to the Federal Trade Commission (FTC), freezing your credit will not harm your credit score, nor will it impair your ability to get your free annual credit report.

A credit freeze also won’t limit your ability to open new accounts. However, because credit freezes prevent lenders from checking your credit, you will need to lift the freeze temporarily before applying for a loan or credit account, and then place the freeze again when you are done accessing your account.

In addition, freezing your credit won’t hurt your ability to apply for a job, rent an apartment, or, say, buy insurance for your family. According to the FTC, the freeze doesn’t apply to those actions.

It’s important to keep in mind, however, that a freeze won’t prevent a thief from making charges to your existing accounts.

For that reason, you will still need to stay on top of your finances and monitor all of your bank, credit card, and insurance transactions carefully for fraudulent transactions.

You may also want to be aware that, even with a freeze, certain entities will still have access to your credit report.

These include your existing creditors, debt collectors acting on their behalf, and government agencies who need to have access in response to a court order.


💡 Quick Tip: Make money easy. Open a bank account online so you can manage bills, deposits, transfers — all from one convenient app.

How to Freeze Your Credit On Your Own

Putting a freeze in place simply requires contacting each of the nationwide credit bureaus, which include:

•   Equifax
•   Experian
•   TransUnion

You will need to supply your name, address, Social Security number, date of birth, along with some other personal information.

After receiving your freeze request, the credit bureaus will give you a PIN (personal identification number) or password. You’ll want to keep this in a safe place since you will need it whenever you choose to lift the freeze.

By law, credit bureaus must activate a credit freeze within 24 hours of receiving a request by phone or online, and they must lift a freeze within one hour of receiving a request to do so accompanied by your PIN or password.

Your freeze will remain in place until you temporarily lift or completely remove it (more on how to do that below). In some states, a freeze lasts indefinitely; in others, up to seven years.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


How to Lock Your Credit Report

If you’re wondering about a credit freeze vs. a credit lock, here’s more intel. Like a credit freeze, a credit lock blocks access to your credit report but won’t harm your credit score.

Like a freeze, to be fully protected, you must place locks with all three credit reporting agencies. However, it may offer lesser legal protection if you do encounter an issue.

With locks, however, there’s no PIN, and usually, there is no delay of up to 24 hours when locking your credit file, nor a delay of up to an hour for unlocking it.

With a credit lock, you can activate and disable it instantly via a smartphone app or secure website.

Locking your credit involves enrolling in one (or all) of the programs offered by the three major credit bureaus, Equifax, (Lock & Alert), Experian (CreditWorks), and TransUnion (TrueIdentity).

There is often a monthly fee involved in enrolling in one of these services. Credit locks, however, often come with additional services, such as monthly access to credit reports from all three bureaus, alerts when there’s new credit activity on your accounts at any of the three bureaus, identity theft insurance, and fraud resolution assistance.

Credit bureaus typically require you to provide proof of identity when you set up a credit lock. You can submit the necessary documents electronically or mail in hard copies.

The security benefits of a credit lock are the same as those for a credit freeze, and the limitations on access to your credit are the same as well–criminals won’t be able to access your credit file.

By the same token, new lenders whom you are legitimately working with to apply for loans or credit won’t be able to either unless you temporarily lift the block.

Unlike credit freezes, credit locks are not regulated by state law but are instead governed by a contract between you and the credit bureau.

Recommended: Guide to Blocked Credit Cards

How To Remove a Credit Freeze or a Credit Lock

If you want to lift or remove a freeze, you’ll need to call the credit bureau or visit the credit freeze page on its website, then use the PIN code or password you set up when you activated your credit freeze.

If you are lifting a freeze because you are applying for credit and you can find out which credit bureau the lender will contact for your credit file, you may be able to lift the freeze only at that particular credit bureau. Otherwise, you need to make the request with all three credit bureaus.

When you call or go online, you’ll likely have the option to thaw your credit temporarily (in which case, you will likely be issued a single-use PIN or password that you can provide to a creditor to access your frozen credit file), or to lift the freeze permanently.

Removing a credit lock, on the other hand, is typically just a matter of turning off a virtual switch online or in an app provided by the credit bureau.

When access to your credit file is no longer required, you can simply turn the switch back on.


💡 Quick Tip: Want a simple way to save more each month? Grow your personal savings by opening an online savings account. SoFi offers high-interest savings accounts with no account fees. Open your savings account today!

How Is a Credit Freeze or Lock Different from a Fraud Alert?

Now that you’ve learned about a credit lock vs. freeze, there’s another scenario to consider. If you are worried about catching credit card fraud and/or identity theft but haven’t yet become a victim, you might consider placing a fraud alert on your credit report, which is less severe than a credit freeze or lock.

Unlike a freeze or lock, which shuts down access to your credit information, a fraud alert allows lenders to see your credit file, but it requires verification of your identity before any credit application is processed or any new account is opened in your name.

For example, if you have a phone number in your credit file, the business must call you to verify whether you are the person making the credit request.

A fraud alert can make it harder for an identity thief to open more accounts in your name, and can be a good idea if your wallet, Social Security card, or other personal, financial or account information is ever lost or stolen.

To place a fraud alert you simply need to contact one of the credit bureaus. It will then put the alert on your credit report and tell the other two credit bureaus to do so.

A fraud alert is free, and the alert stays on your report for one year. It’s a good idea to mark your calendar, so you can then place a new fraud alert.

If you’ve been a victim of identity theft, credit bureaus often offer a free extended fraud alert that lasts for seven years.

Recommended: Types of Bank Fraud to Look Out For

The Takeaway

A credit freeze vs. a credit lock can each provide a layer of protection if you’re an identity theft victim or you have good reason to believe someone with criminal intent has accessed your information. Credit freezes and credit locks both restrict access to your credit reports. But you can turn a credit lock on and off instantly while adding or lifting a credit freeze requires making a request to the credit bureau.

Another key difference is that credit freezes are free, while credit locks are typically offered as part of paid services from the three national credit bureaus.

Whatever form of fraud protection you choose, it’s still important to stay on top of and regularly check all of your financial accounts.

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 4.20% APY on SoFi Checking and Savings.

FAQ

Can I freeze my credit for free?

Yes, you can freeze your credit for free by contacting each of the three credit bureaus, Equifax, Experian, and TransUnion.

What’s the difference between a credit freeze vs. credit lock?

A credit freeze limits access to your credit reports, is free, and must be filed with each of the three credit bureaus. A credit lock can be a paid service, can be instantly turned on and off, and may in some cases provide a lesser degree of legal protection.

How long does a credit freeze vs. credit lock last?

A credit freeze lasts until you remove it or up to seven years in some states. A credit lock lasts as long as you subscribe to the service providing it.


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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

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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Aug
08
2024
Reasons Why You Would Put Money Into a Savings Account

6 Benefits of Having a Savings Account

By | Budgeting & Goals, Fresh Out of School, money | Comments Off on 6 Benefits of Having a Savings Account

Keeping all your cash in a checking account may seem like the simplest way to manage your money. But if that’s the only type of bank account you have, you’re missing out on all the benefits that come with a savings account.

No matter what your financial goals are or how much money you’re able to set aside, opening a savings account is probably a good idea. You typically don’t need a lot of money to open a savings account, and a high-yield savings account allows you to earn a competitive interest rate while still keeping your money safe and accessible.

Read on to learn why a savings account can be an important component in anyone’s financial toolkit.

Key Points

•   A savings account effectively separates savings from spending, helping individuals manage their finances and reach specific financial goals without impulsive expenditures.

•   Money held in a savings account is insured, providing protection up to $250,000 per depositor, which offers greater security than keeping cash at home.

•   Interest earned on savings accounts typically exceeds that of checking accounts, allowing account holders to grow their savings through competitive annual percentage yields.

•   Many savings accounts require a low initial deposit to open, making them accessible without significant financial commitment, especially with online banks often having no minimums.

•   Automating savings through recurring deposits enables individuals to consistently contribute to their savings goals, simplifying the process and encouraging financial discipline.

1. Separate Your Saving From Your Spending

A savings account is designed to hold money you don’t need right away. Maybe you’re looking to save up for a large upcoming expense, like a vacation, car, or downpayment on a home. Or, perhaps you want to build an emergency fund to provide backup for any unexpected bumps in the road (like a medical bill, car repair, or loss of income). A savings account can help you reach these goals by putting some distance between your savings and your daily spending needs.

Without a savings account, it can be all too easy for the money in your checking account to become an all-purpose fund where you spend more than you planned. If funds earmarked for future spending are stored in your savings account, you might think twice about delaying your future plans for an impulse purchase like new shoes or a fancy meal out.

You might even opt to open multiple savings accounts to help you organize your cash by goals. Maybe you have an emergency fund but are saving for a trip or new furniture. Savings accounts are typically easy to open and separating your money can help you monitor progress towards each goal.

💡 Quick Tip: Tired of paying pointless bank fees? When you open a bank account online you often avoid excess charges.

2. Your Money Is Insured

With investing, you could lose money, break even, or earn a return — there are no guarantees. If you open a savings account at a bank insured by the Federal Deposit Insurance Corp. (FDIC) or a credit union insured by the National Credit Union Association (NCUA), on the other hand, your money is guaranteed up to $250,000 per depositor, per ownership category.

This means that even if the financial institution fails, your savings are protected up to that limit. You would either receive that money directly or, more likely, a new account would be opened for you at another bank with the same balance you had before.

Your money is generally safer in a savings account than under the mattress or in a piggy bank. If your stash of cash were stolen or destroyed in a fire or flood, you likely would not be able to get your money back.

3. You Earn Interest on Deposits

Savings accounts typically offer a higher annual percentage yield (APY) than checking accounts, which are designed for spending and not necessarily for accumulating large balances. This allows you to earn money on your money just by letting it sit in the bank.

While the average savings account APY is only 0.47%, some banks and credit unions offer much more than the average. The best savings account interest rates are now around 5.00%. If you put $10,000 into a savings account that pays 5.00% APY, you would earn about $500 in a year. An account paying just 0.40% APY, on the other hand, would earn about $40. The more you deposit, and the longer it stays in the account, the greater the difference in returns.

Generally, you can find the highest APYs and lowest fees at online-only banks. Without the added expenses of large branch networks, online banks are usually able to offer more favorable returns than national brick-and-mortar institutions.

Earn up to 4.20% APY with a high-yield savings account from SoFi.

No account or monthly fees. No minimum balance.

9x the national average savings account rate.

Up to $2M of additional FDIC insurance.

Sort savings into Vaults, auto save with Roundups.


4. It Doesn’t Require a Large Initial Investment

Many investments, such as mutual funds, require a significant amount of money as an initial investment, sometimes thousands of dollars. Savings accounts, on the other hand, typically have a low bar for entry. Traditional brick-and-mortar banks often request an initial deposit, but it can be as low as $25 to $100. Many online-only banks have no minimum deposit requirements.

With some traditional savings accounts, you need to keep your average monthly balance above a certain threshold (such as $300 or $500) to earn a certain interest rate or to avoid monthly fees. Many online savings accounts, however, don’t charge monthly service fees, and don’t require that you keep a specific amount of money in the account to avoid fees or get a certain APY.

5. Your Money Is Accessible

Unlike investment accounts, most savings accounts (even online-online accounts) can be accessed any time at an ATM. Just insert your debit card, tap some buttons, and you can get your money in hand. With a traditional savings account, you can also get cash in person at a teller.

If you need more money in your checking account, you can simply go online or use your bank’s app to transfer money from your savings account to your checking account, even if the accounts are at two different banks.

This is why many people use a savings account for their emergency fund. When the unexpected happens, you can easily access the funds you need and immediately deal with the problem. There’s no waiting period or need to sell off investments to gain access to your money.

That said, savings accounts typically come with withdrawal limits, often six per month. If you exceed your bank’s monthly limit, you may get hit with a fee. These limits aren’t necessarily a bad thing, though. After all, savings accounts are designed for saving rather than spending.

6. You Can Put Saving on Auto Pilot

Finding extra cash to set aside each month isn’t always easy. A great way to make sure you’re working towards your near-term savings goals is to establish an automatic monthly deposit into a savings account. This can help you build up your savings without thinking about it.

You can automate saving by setting up a recurring transfer from your checking account to your savings account on the same day each month (perhaps right after you get paid). Or, you might choose to automatically direct deposit a portion of each paycheck into savings, with the rest going to checking.

It’s fine to start small. Since the money will get added to your account every month without fail, putting just $50 or $100 a month into savings can add up to a significant sum over time.

If you’re married or in a domestic partnership, you might consider opening a joint savings account to help you work towards mutual goals. You can each set up an automatic deposit into that account, doubling your efforts.

💡 Quick Tip: Want a simple way to save more everyday? When you turn on Roundups, all of your debit card purchases are automatically rounded up to the next dollar and deposited into your online savings account.

The Takeaway

Opening a savings account is a good way to keep savings safe and easily accessible while earning a higher interest rate than checking accounts provide. This type of account can be a great choice for your emergency fund or to work towards short-term savings goals, like a vacation, home upgrade, or large purchase.

If you decide a savings account is what you need, shopping around to compare APYs, account fees, and features can help you choose the right savings account to meet your goals.

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 4.20% APY on SoFi Checking and Savings.

Photo credit: iStock/Povozniuk

SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. 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.

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Aug
08
2024

ATM Withdrawal Limits: What You Need to Know

By | Budgeting & Goals, Financial Independence, money | Comments Off on ATM Withdrawal Limits: What You Need to Know

ATMs can be a quick, easy solution when you need a fast cash infusion, but banks typically impose a limit on how much money you can withdraw in one day. If you are planning to withdraw a certain amount of cash, it can be wise to know whether you’ll actually be able to get the money you need from the nearest ATM. The typical amount is between $500 and $1,000.

Here, you’ll learn how much money you can likely withdraw from an ATM and how to get around these ATM maximum limits.

Key Points

•   ATM withdrawal limits are set by banks to manage cash availability and enhance security for consumers against potential fraud.

•   Daily withdrawal limits can vary widely, typically ranging from $300 to $5,000, depending on the bank and account type.

•   Premium checking accounts often have higher ATM withdrawal limits compared to standard accounts, reflecting the banking history of the customer.

•   To access more cash than the ATM limit allows, individuals can consider methods such as cash back at stores, withdrawals from savings accounts, or visiting a bank teller.

•   Understanding specific bank policies and planning ahead can help individuals navigate ATM withdrawal limits more effectively.

What Is an ATM Withdrawal Limit?

An ATM withdrawal limit sets a maximum amount of cash you can withdraw per day from these machines. The limits vary widely, from several hundred to several thousand dollars. Often, those with premium checking accounts may have higher limits than those with standard accounts.

The kind of ATM you’re using (in-network or out-of-network) can make a difference, too, with in-network often having higher limits.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

Why Do Banks Have ATM Withdrawal Limits?

While ATM withdrawal limits can be frustrating, they exist for two important reasons:

•   Cash availability: Banks want to make sure there is enough money available for all ATM users. But ATMs can only hold so much cash, and banks only have so much cash on hand at any one given time. Say you go to an ATM on the Friday before a long holiday weekend to get some spending money and find that there is no cash left. This doesn’t happen often, but it’s a possibility. Capping the amount of money that can be withdrawn at an ATM helps ensure that customers can’t clean out ATMs or drain the bank’s cash reserves.

•   Security: ATM withdrawal limits also protect consumers. If someone were to get hold of your debit card and PIN number, the ATM withdrawal maximum would prevent that fraudster from immediately draining your entire checking or savings account.

How Much Can I Withdraw From an ATM per Day?

The answer depends on the specific bank’s rules around withdrawals, with some capping at $300 and others going as high as $5,000 a day. A limit of somewhere between $500 and $1,000 is common.

In some cases, a withdrawal limit depends on a specific customer’s banking history or account type. A new customer with a basic checking account may have a lower withdrawal limit than an established customer with a premium checking account. If you have a student or a second chance account, your max ATM withdrawal might be lower than if you had a standard checking account.

Whether you are withdrawing from checking vs. savings can also make a difference. In some cases, how savings accounts work is to have a higher cap on how much you can withdraw at any one time. In others, you will find that you can pull more cash from an ATM using your checking account.

One thing to be aware of: You may be limited to how many withdrawal transactions you can make per month from your savings account. Check your financial institution’s policies for specifics.

You may also find that how much you can withdraw will depend on the type of ATM you are using. For example, you may be able to withdraw more from an in-network machine than an independent one at a gas station.

Here’s a chart showing the range of withdrawal limits for some popular banks:

Bank

 Daily ATM Withdrawal Limit
Ally $1,000
Bank of America Varies; typically up to $1,500
Capital One Varies; typically $200 to $5,000
Chase Varies; typically $500 to $3,000
Citi Typically $1,500
PNC Varies; often $500 and up

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


How to Work Around ATM Withdrawal Limits

If you need more cash than an ATM will allow you to withdraw, there are a few workarounds that can help as you manage your money.

Ask for Cash Back While Shopping

In some stores (like grocery stores), it’s possible to ask for cash back at checkout when making a purchase. While cash back may count toward your debit card’s daily purchase limit, it typically doesn’t count toward a daily ATM withdrawal limit.

The store will likely also have a cash back limit that applies on a per-purchase basis. That could mean you’ll need to make multiple purchases to withdraw the full amount of cash needed.

Withdraw From Savings

If you have both a checking account and savings account, you can withdraw money from a savings account when using an ATM. This can help avoid the daily checking account withdrawal limit.

There may, however, still be some limitations on ATM savings withdrawals, and this may vary with the kind of savings account you have.

Withdraw at the Window

If you bank at a brick-and-mortar location and the branch is open when you need more money, head inside. You can withdraw the amount you need by seeing a teller.

Contact Your Bank to Increase Your Limit

You may be able to negotiate a higher ATM withdrawal limit simply by contacting your bank’s customer service department and asking for a boost.

Recommended: ATM Cards vs Debit Cards: What’s the Difference?

The Takeaway

ATM withdrawal limits are there for your protection as well as the bank’s, but that doesn’t mean they aren’t inconvenient at times.

If you regularly need cash, you may want to find out your bank’s daily ATM withdrawal limits and plan ahead. Or, you can work around the maximums in place and get cash from other sources. By using a bit of smart strategy, you can make sure you have the cash you need on hand.

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 4.20% APY on SoFi Checking and Savings.

FAQ

Can you withdraw $1,000 at an ATM?

The amount you can withdraw will vary based on a number of factors, including your account type (standard or premium) and the type of ATM you are using (in-network or out-of-network).

Which ATM lets you withdraw the most money?

You may find you can withdraw more cash at an in-network than out-of-network ATM.

What is the maximum amount I can withdraw from an ATM at one time?

The amount you can withdraw from an ATM may range from $300 to $5,000 a day, depending on the financial institution and your particular account. Somewhere between $500 and $1,000 is typical.

Photo credit: iStock/RgStudio

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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. 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.

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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Aug
08
2024
What Is ChexSystems?

Understanding ChexSystems

By | Budgeting & Goals, Financial Independence, money | Comments Off on Understanding ChexSystems

ChexSystems is a nationwide credit reporting system that collects information about bank accounts that are now closed. It compiles data on red flags, such as whether a bank account was closed due to numerous overdrafts or suspicious financial transactions.

Many (but not all) financial institutions rely on ChexSystems data to decide whether or not to approve an application for a new checking or savings account. If you have a bank account or plan to open one, it’s helpful to understand what goes into a ChexSystems report and why it might matter to you.

Key Points

•   ChexSystems is a nationwide reporting system that collects information on closed bank accounts, highlighting negative behaviors like overdrafts and fraud for financial institutions.

•   Individuals can obtain a free copy of their ChexSystems report annually to review their banking history and dispute any inaccuracies found.

•   Negative information on a ChexSystems report generally remains for up to five years and can impact the ability to open new bank accounts.

•   Cleaning up a ChexSystems report involves disputing errors, settling outstanding debts, and practicing responsible banking habits to avoid future negative marks.

•   Alternative options exist for those denied a bank account, such as seeking banks that do not use ChexSystems or considering second-chance accounts.

What Is ChexSystems?

Authorized by provisions in the Fair Credit Reporting Act (FCRA), ChexSystems is a risk-management tool for financial entities that are checking an individual’s banking history.

ChexSystems compiles information that can help financial institutions gauge whether a customer is creditworthy before granting them an account. The information that ChexSystems compiles is based only on closed accounts, not current ones, and can reveal whether past accounts were closed voluntarily or due to negative behavior, such as repeated overdrafts or suspected fraud.

Negative marks typically stay on a ChexSystems report for up to five years. If a financial institution sees any kind of negative activity on a ChexSystems report, the applicant may be denied a bank account.

The information in your ChexSystems report can also be used to generate a ChexSystems consumer credit score. This is separate from consumer credit scores generated using information from the three major credit reporting bureaus to help lenders decide who may qualify for a loan.

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.20% APY, with no minimum balance required.

What Is In a ChexSystems Report?

Not everyone will have a file with ChexSystems. Those who have a clean banking record may not be listed. However, those who have had bank accounts closed in the past for negative reasons will likely have a report with ChexSystems.

A report will usually include basic identifying information, such as name, address, phone number, and date of birth. It will also include details about your banking history, such as:

•   Suspected fraudulent activity

•   Non-sufficient funds (NSF) or overdraft activity

•   Inquiries (when someone has viewed your ChexSystems report)

•   Check cashing inquiries

•   Returned checks reported by retailers

•   History of checks ordered

•   Checking account closures

ChexSystems only collects information for closed accounts, and negative behaviors typically stay on file for five years, as noted above. Current checking accounts do not show up on a ChexSystems report.

Worth noting: If you’ve ever had a security freeze in place, that will usually show up on your ChexSystems report, as will identity theft alerts.

Recommended: Why Is Having a Good Credit Score Important?

How to Get a Copy of Your ChexSystems Report

You can get a copy of your ChexSystems report for free once every 12 months under the Fair and Accurate Credit Transaction Act (FACTA), similar to the way you can request a free copy of your credit reports once a year from the three main credit bureaus.

You can request your ChexSystems report online, by phone, or by mail:

•   You can complete and submit the Consumer Request for Disclosure Form online.

•   You can call 1-800-428-9623 Monday through Friday, 8:00 am to 7:00 pm CST.

•   You can mail a Consumer Request for Disclosure Form to ChexSystems, Inc., Attn: Consumer Relations, PO Box 583399, Minneapolis, MN 55458.

ChexSystems also offers options for people with visual or hearing impairments. In addition, the ChexSystems website details ways to obtain a report for those under age 18 or for an adult for whom you have power of attorney.

There is an exception to this “once a year” free report rule: If you’ve been denied a bank account, you can request a copy of your ChexSystems report to understand the factors behind the bank’s decision, even if less than a year has passed since the last time you pulled a report. The bank is required to specify the reason for the denial, too.

How to Clean Up Your ChexSystems Report

To clean up your ChexSystems report, you’ll first need to get a copy of it, if you haven’t done so already. You can then dispute any negative information you may find. This can help improve your ChexSystems profile if you can get the information removed.

You can reach out to the bank that shared any negative information about your past account and offer to make good on any outstanding obligations. The bank could agree to remove the negative information.

Going forward, you can prevent any further negative information from being reported by practicing good banking habits, such as:

•   Maintaining positive balances across accounts so you don’t land in overdraft

•   Keeping of checks and deposits to avoid bounced checks

•   Protecting your banking information to prevent fraud

•   Reporting any suspected fraud to your bank right away

Those actions won’t erase a negative ChexSystems file. But they can help you to stay on your bank’s good side.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.20% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Does a ChexSystems Report Affect Your Credit Score?

Your ChexSystems report doesn’t affect your consumer credit scores directly. FICO® credit scores, for example, are based on how responsibly you manage credit and debt. For example, it can reveal how often you pay bills late, how much of your available credit you’re using, and how often a hard credit inquiry shows up on your report.

Those are some of the main factors that affect credit scores.

But there could be a ripple effect. If your ChexSystems report makes it difficult or impossible to open a bank account, you might have a hard time paying bills when they are due. If, as a result, you send payments late, that could lower your credit score.

Options if You’ve Been Denied a Bank Account Due to ChexSystems

If you’ve been denied a checking account because of a negative ChexSystems report, it helps to know what to do next. You have a few options:

•   Clean up your ChexSystems file. Request a copy of your ChexSystems report to understand why you were denied. Review your report for any errors or inaccuracies, and dispute any errors you find. Or, if you owe a debt to your previous bank, you could pay it off and request that the bank remove the mark against you.

If successful in cleaning up your report, you can ask the financial institution you recently applied to if they would reconsider the denial. You might also try opening a savings account with the new bank first, see if you can build a relationship, and then add a checking account.

•   Try another bank. Find a bank that doesn’t rely on ChexSystems reports to evaluate potential clients. They are out there and can be found with a little research.

•   Consider a second chance bank account. These are designed for people who have been denied a checking account previously. These accounts may have higher fees or more restrictions than regular bank accounts. They can, however, help you establish a positive banking history and, if managed well, transition to a standard checking account in the future.

•   Use prepaid debit cards in the short term for spending and bill payment. You can load funds onto these cards (which typically charge fees) and then take care of daily needs with that money.

The Takeaway

ChexSystems is a nationwide reporting system for closed bank accounts. Qualified institutions may access ChexSystems reports to evaluate individuals who are applying for new checking or savings accounts. Being listed in ChexSystems means you likely have negative incidents on your closed accounts (e.g., overdrafts, fraud, unpaid negative balances). This can prevent you from opening new accounts. In this situation, you can focus on cleaning up your ChexSystems report or try some workarounds so you can manage daily financial transactions.

SoFi is among the banks that do not rely on ChexSystems when reviewing account applications.

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 4.20% APY on SoFi Checking and Savings.

FAQ

What happens if you are on ChexSystems?

If you have a file on ChexSystems, you may find it hard to open a bank account. ChexSystems gathers negative information about past bank accounts, such as past overdrafts or involuntary account closings.

Can you remove yourself from ChexSystems?

It may be possible to remove yourself from ChexSystems if your report includes information that’s inaccurate or reported in error. You’ll need to dispute the information through ChexSystems in order to have it corrected or removed from your file. Or if, say, you owe overdraft charges on a now-closed account, you could contact your former bank, pay what you owe, and see if they would remove the negative information from ChexSystems.

How do I know if I am in ChexSystems?

You can request a free copy of your ChexSystems report annually. If there is a report on file for you (those in good standing may not be listed), getting this record can reveal the details of negative information.

How long does a person stay in ChexSystems?

Generally, negative information can stay on a ChexSystems report for up to five years. If you have multiple negative items on your ChexSystems report, the five-year reporting time frame applies separately to each one.

Which banks report to ChexSystems?

ChexSystems doesn’t specify which banks use its reporting system. If you’re unsure whether a bank reports to ChexSystems or reviews ChexSystems reports when you apply for a new account, you can call the bank and ask. You can also ask whether second-chance banking is an option, in case you’re denied a traditional bank account.

Photo credit: iStock/atakan

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 4.20% 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 4.20% 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 4.20% 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 10/31/2024. 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.

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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