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May

2024

17 Tips for Surviving on Minimum Wage

By Marcy Lovitch | Budgeting & Goals, Financial Independence, money | Comments Off

There’s no doubt about it, trying to live on minimum wage is no easy feat. This is especially the case with the cost of living consistently increasing while the federal minimum wage hasn’t budged since 2009. And, according to the Economic Policy Institute, the value of the federal minimum wage is now at the lowest point since 1956, when it was 75 cents an hour, which is equal to $7.19 today.

However, if you are making minimum wage, don’t despair. How to survive on minimum wage can be difficult, but it’s not impossible. The key is not only keeping track of your spending and cutting costs where necessary but also creating and sticking to a realistic, doable budget.

If you’re living on minimum wage, learn how you can stretch your dollars and even manage to sock some money away for that rainy day fund.

Key Points

• Living on minimum wage is challenging due to stagnant federal rates and rising living costs.

• Budgeting and tracking expenses are crucial for managing finances on a low income.

• Saving small amounts regularly can build a financial cushion over time.

• Government assistance programs can help cover essential costs like food and healthcare.

• Additional income through side jobs or higher-paying positions can alleviate financial strain.

What is Considered Minimum Wage?

The federal minimum wage, created by Congress in 1938 under the Fair Labor Standards Act (FLSA), establishes a base hourly rate at which employers are required to pay their employees. The current federal minimum wage is $7.25, and as noted earlier, that’s an amount that’s remained the same since 2009.

Many states, cities, and municipalities have realized the federal minimum wage is extremely low. They have therefore passed their own minimum wage laws, offering a higher amount, generally ranging from about $10 to $16 an hour. In addition, many companies (such as Amazon, Costco, Target, and Walgreens) have also enacted their own higher minimum wage, eclipsing the federal minimum wage.

In situations where an employee is subject to both federal and state minimum wage laws, the worker is entitled to the higher of the two minimum wages. For instance, Georgia’s basic minimum wage is $5.15 per hour, but since the federal rate is higher, employers must pay the federal wage of $7.25.

What about tipped employees, such as waitstaff? According to the U.S. Department of Labor, employers may pay the employee no less than $2.13 an hour in direct wages. There is a condition, though. If that amount plus the tips don’t add up to at least the federal minimum wage, the employer must make up the difference. In a number of states, the direct wage for tipped employees is higher than $2.13 per hour to help ensure a livable wage. Worth noting: When an employee is subject to both the federal and state wage laws, they are also entitled to the provisions providing the greater benefit.

Is Minimum Wage Livable?

The term living wage refers to the amount of earnings a person or family needs to cover basic expenses. These can include groceries, utility bills, housing, healthcare, transportation, and childcare. The goal of paying employees a livable wage is to prevent people from falling into poverty and allow them to have a decent, satisfactory standard of living.

Unfortunately, the cost of living in the U.S. has risen over the decades, especially during recent inflationary times, and the minimum wage has failed to keep up with the prices of goods and services. According to a 2021 report from Drexel University, individuals working full-time at minimum wage cannot afford the above mentioned basic necessities in any location across the country. The bottom line: For most people, earning $7.25 an hour doesn’t cut it as providing a living wage.

For instance, before taxes, a full-time employee working 40 hours a week on federal minimum wage takes home only $15,080 a year, falling $4,640 well below the $19,720 poverty line for a family of two. A full-time worker getting minimum wage with a family of four falls $14,920 below the poverty line of $30,000.

The report also says a true living wage, one that supports a basic standard of living without housing or food insecurity, would fall between $20 and $26 or higher per hour, depending on the state.

Raising the federal minimum wage to $15 an hour has been an ongoing hot-button issue. The Raise the Wage Act of 2021 is a bill that proposes increasing the minimum wage for regular employees over a five-year period. While the bill is currently being debated in Congress, many companies (as noted above) have taken it upon themselves to pay their workers a higher wage.

17 Tips for Living on Minimum Wage

So, how to live on minimum wage? Here are 17 ways that can make it easier to survive on a minimum wage salary and even set aside some money for savings:

1. Evaluate Your Overall Spending

A first step to getting a hold on your finances is to know how much you’re bringing in per month versus how much is going out. One way to do this is to record all of your expenses. Begin tracking your spending for 30 days. Include everything, including the change you put in the tip jar at a coffee shop.

Doing so will give you an overview of exactly where your money is going and help you determine where you may need to make some cuts. Seeing a spending pattern may also pinpoint any causes of overspending, like not being able to say no to a restaurant invite when you really can’t afford it.

2. Create and Stick to a Budget

Having a budget provides you with a structure so you can organize your finances and live better within your means. When you’re not bringing home a lot of bacon, it’s vital to make sure you know exactly where your money is being spent each month. A line-item budget can help you track your spending in various categories and make adjustments as needed.

One common budgeting method to consider is the 50/30/20 rule. With this, you allocate 50% of your income to your needs (essentials), 30% for wants (nonessentials), and the remaining 20% towards savings. This guideline can help you manage your money better.

3. Put Some Money Towards Savings

The thought of saving when you’re barely scraping by can seem impossible. But if you’re making minimum wage, even putting $5, $10, or $20 a paycheck towards savings can add up over time. You might even set up an automatic transfer from your checking account into savings a day or two after every payday. It’s as effortless as automatic bill payments and can help you build up a nest egg.

Doing so can also get you in the habit of saving and even help improve mental health. One University of Arizona study found people who save money report less psychological distress and have improved financial satisfaction.

4. Look Into Government Benefits

Another “how to survive on minimum wage” tip: Millions of low-wage earners in the U.S. qualify for federal and state government assistance benefits. This aid can help lower costs of food, healthcare, housing, and more for those surviving on minimum wage.

Some of the most popular programs include Medicaid and Child’s Health Insurance Program (CHIP), Supplemental Nutrition Assistance Program (SNAP) or food stamps, Temporary Assistance for Needy Families (TANF), and more. To see what benefits you might qualify for, visit benefits.gov .

5. Save on Food

Obviously, minimizing dining out and ordering takeout will lower your food bill. Some other ideas:

• People and families living on minimum wage can qualify for SNAP or food stamps to help offset grocery costs.

• Consider shopping at less expensive supermarkets, using coupons, buying the store or generic brand, and if applicable, ask if the store has a customer club card so you can get additional discounts.

• Buying in bulk and stocking up on frozen foods and pantry staples such as bread, milk, eggs, peanut butter, pasta, beans, rice, tuna, and canned soups can help when money is particularly tight.

• Food banks or pantries can be another resource. You can search for one in your area at FeedingAmerica.org .

6. Find Additional Ways to Increase Your Income

If you are struggling to make ends meet, you might also think about how you could bring in more income.

• This might be the time to look for a higher-paying job or simply ask your boss for a raise.

• Investigate getting a side hustle on your off hours like driving for Uber, Lyft or delivering food for DoorDash, GrubHub, or Instacart. You could also consider house cleaning, babysitting, dog walking, or pet sitting for extra money.

• Have a marketable craft or hobby? Try selling your creations on Etsy or at a craft fair.

• If you have unwanted stuff that others might want, put it up for sale on Facebook Marketplace, eBay, or your community’s neighborhood group. A garage or yard sale can also bring in some bucks if you’ve got enough to peddle.

7. Lower Your Housing Costs

Housing is where Americans spend the largest share of their paycheck, according to the U.S. Bureau of Labor Statistics. With the prices to rent or own a home consistently rising across the country, this can be a major issue for those living on minimum wage.

A 2022 report by the National Low Income Housing Coalition found that the average minimum-wage worker must work 79 hours per week (the same as approximately two full-time jobs) to afford a one-bedroom rental home at the fair market rent.

If you’re paying more than you can afford for housing, there are ways to cut the costs.

• Consider downsizing to a smaller home or apartment, moving to a more affordable area in your town or city, getting a roommate, or living with a friend or family member while you save.

• Look into applying for affordable public housing in your area, specifically established for eligible low-income people. The U.S. Department of Housing and Urban Development (HUD) oversees public housing agencies in your state or city. You can find your local housing authority office at hud.gov or by calling 800-955-2232.

8. Work Towards Reducing Your Debt

When you’re not bringing in a lot of money, it’s easy to accumulate debt, especially by using credit cards to get by till the next paycheck. This can leave you with high credit card bills due at the end of the month and increase the chance of a minimum payment you can’t afford. You can tackle the problem in a few ways:

• Consolidate your debt by rolling multiple debt payments into one.

• Consider a balance transfer onto one credit card with a zero or low-interest promotional rate. These can provide a period of time during which you can pay down debt before the interest rate rises.

• Seek out help from a reputable non-profit organization such as the National Foundation for Credit Counseling (nfcc.org ), a professional credit counselor, or certified financial planner who can help you create a plan to start tackling your debt.

9. Minimize Healthcare Costs

Healthcare can take a big bite out of a tight budget. These moves may help lower those expenses:

• Medicaid and the Children’s Health Insurance Program (CHIP) are among the government programs providing free or low-cost health care to some low-income families and individuals. To determine if you’re eligible, go to Healthcare.gov where you can also fill out an application.

• Work towards saving on prescription drug costs at participating pharmacies with a discount card or coupons offered by companies such as GoodRx, SingleCare, or America’s Pharmacy.

• Try a variety of free things you can do to stay healthier. Take a walk, ride your bike, pick up a basketball game, or do free workout videos on YouTube.

10. Look to Save on Transportation

Owning a car and maintaining it can be costly. Here, some ways to lower expenses:

• Consider the alternatives to car ownership, such as public transportation, carpooling, walking, or riding a bike.

• When you drive, try to limit extraneous trips to reduce mileage and wear and tear on your car.

• Save money on gas by comparison shopping at your local fuel stations.

• See if you can lower your car insurance payment with good driver discounts or by skipping extras that you don’t really need, like car rental coverage or emergency roadside assistance.

11. Make the Most of Tax Breaks

When it comes time to file your taxes, make sure you’re taking advantage of whatever tax credits and deductions are offered for low-to-moderate-wage employees, such as the Earned Income Tax Credit, Child Tax Credit, or the Child and Dependent Care Credit. If you qualify, you can use the credits to help reduce the amount of taxes you owe and possibly increase your refund.

Recommended: What Tax Bracket Am I In?

12. Check Your Paycheck Withholding Amount

When you start a new job as a regular employee, your employer will have you fill out a W-4 form to determine how much tax money should be withheld from your pay and sent to the IRS for you. This is determined by what your tax filing status is (single or married, for example) and whether you have any dependents.

If you choose to have too much money taken from each paycheck, yes, you’ll get it back in the form of a tax refund, but it might be more useful to have that extra money during the year. You can change or update the withholding information on your W-4 form with your employer at any time. What’s more, you should do so if you experience any type of personal life change, such as marriage, divorce, or having a child.

13. Mind Your Utility Usage

Americans pay up to $613.00 a month for utility costs, according to a study from Move.org. This can add up to half a minimum wage-earner’s monthly paycheck.

Fortunately, there are many ways to lower your utility bills that can help with the challenge of how to live on minimum wage.

• Switch to using more energy-efficient light bulbs and you can save on average $225 a year, recommends the U.S. Department of Energy.

• Avoid phantom energy usage: Turn off or unplug any appliances not in use, even those sitting idle still drain some energy from the outlet.

• Save up to 10% on heat and cooling costs by setting your thermostat back seven to 10 degrees back from its normal setting for eight hours a day (such as when you are out at work).

• Switching to doing cold water washes can save on gas and electricity needed to heat water.

• If you need new appliances, opt for ENERGY STAR labeled machines that use less water and energy than standard ones.

• Get rid of any extra cable channels you don’t watch or downsize to a more basic plan.

• If you’re having trouble making payments, call your utility companies and see if you can negotiate rates or be put on a financial assistance payment plan.

14. Take advantage of any employer-sponsored benefits

Make sure you use any plans your employer offers, such as health insurance, retirement accounts like a 401(k), daycare services, or paid time off. These things can be priceless to any employee but especially if you’re surviving on minimum-wage.

15. Look for Cheap or No Cost Things to do

Living on a low-income salary doesn’t mean you have to sit home and give up on fun. But instead of pricey entertainment and eating out, consider these ideas.

• Check to see if any museums have a day where admission is free.

• Grab a slice of pizza with a friend for a cheapie lunch.

• Take a walk or bike ride; visit the library to check out free books and DVDs.

• Host a potluck gathering with friends.

16. Check Out Your Local “Buy Nothing” Groups

Neighborhood “buy nothing” groups, where people post things they want to give away, have become popular. These community networks can be a great way to get clothing, food, toys, appliances, and furniture absolutely free.

Not sure where to start? Visit BuyNothingProject.org or search Facebook to see if there’s a buy nothing group near you.

Recommended: 15 Creative Ways to Save Money

17. Be Kind to Yourself

Living on a minimum wage income can be a constant source of anxiety and stress. But think about thriving rather than just surviving on minimum wage. Be sure to practice self-care. There are lots of low-cost or free ways to reward yourself, from camping out to treating yourself to a fancy coffee to finding free live music in your area.

The Importance of Having a Savings Account

When you’re living paycheck to paycheck, saving money can feel like an impossibility. But opening a high APY savings account is a wise move. It’s a place where your money can securely grow over time, thanks to the interest it earns. It’s also a place that may be less tempting to tap into than your checking account, and it’s less risky than, say, investing in the stock market.

You can save for a specific financial goal, such as moving to a bigger apartment, or let it build as a nest egg for your retirement. Another reason it’s important to have some savings? You need an emergency fund for life’s unexpected and expensive moments, such as having a sick pet, needing a car repair, or suddenly losing your job.

Financial experts generally advise having at least three to six months’ worth of living expenses socked away. This cash can help prevent your using credit cards or money in your checking account slated for bills when an urgent need crops up.

Can You Open a Bank Account While Earning Minimum Wage?

Yes. You don’t have to have a high-paying job in order to open a bank account. Anyone in the U.S. who is 18 years old or older can open a bank account on their own, and that includes people who are unemployed or have no income at all.

It’s important to know that many traditional banks require you to make a minimum deposit when opening a bank account, which can be anywhere between $25 and $100. However, some banks, especially online ones, will allow you to open an account with no minimum balance required.

What to Look for in a Bank on a Minimum Wage Salary

If you earn a minimum wage, you’ll likely want a bank that doesn’t have a lot of hurdles to opening an account or charge a lot of fees. Look for these features:

• No extra fees: Some banks tack on extra fees for different reasons, such as using an ATM not in their network, overdraft fees for having to cover for insufficient funds, or a monthly maintenance or service fee. Look for a bank that doesn’t charge these fees.

• Interest-bearing account: A bank account that allows you to earn money on your deposits can only help your money grow. Many banks don’t pay interest on checking funds, or pay a sliver of a percentage on savings. Shop around for a better annual percentage yield (APY).

• No monthly minimum balance requirements: Many banks charge a monthly fee if you don’t keep a minimum balance in your account. Search for one without any rules on how much money you’re required to have in there.

• Low-to-no minimum deposit requirements: You may find some banks have a minimum amount of money you have to deposit in order to open an account. It could be as low as $10. However, you can also find banks that don’t require any deposit at all to start an account.

Banking with SoFi

People who live on a minimum-wage salary can benefit from creating and sticking to a budget, finding ways to cut costs, knowing about financial assistance programs, and finding a trusted online bank offering zero account fees, no balance or deposit minimums, and no service charges.

Banking with SoFi can help your money grow, whether you’re earning a lot or a little. When you open an online bank account with direct deposit, you’ll earn a competitive APY, have no monthly minimum balance requirements, and pay no account fees. Another plus? Qualifying accounts get paycheck access 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

Is minimum wage a liveable salary?

It can be, depending on where you live, your expenses, and how much of a minimum wage you’re earning. Many states, cities, and even companies offer a higher minimum wage than the federal wage of $7.25, making it easier for people to survive. That said, in some parts of the country, you would have to work almost two full-time minimum wage jobs just to afford a one-bedroom rental.

What are some tips for lowering expenses when earning minimum wage?

Housing, transportation, and food are the biggest expenses for the average American household. Some ways you can lower these costs is downsizing your housing situation or getting a roommate, limiting restaurant meals, cutting grocery costs, and opting for public transportation. In addition, it can be worthwhile to research local and federal programs that can help you lower expenses and get more for your money, from food stamps to Medicaid.

Can you open a bank account when earning minimum wage?

Yes, you can, but it’s wise to shop around for a bank that doesn’t charge any excess fees or require a monthly minimum balance requirement. Also look for ones that pay a competitive APY on your savings and possibly your checking balance as well.

Photo credit: iStock/AsiaVision

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® 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.

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May

2024

How Much Cash Should I Have on Hand?

By Janet Siroto | Budgeting & Goals, money | No Comments

Are you wondering, “How much cash should I have on hand?” There are two ways to look at this question. One meaning is how much actual currency (say, $20 bills) you should keep in your wallet or at home. Another way to look at that question is how much liquid money should you have available in case of emergency, such as cash in a savings account vs. equity in your home, which can be a challenge to tap into quickly.

This guide will cover both of those scenarios and help you understand the importance of having some cash accessible when it’s needed, whether in case of an emergency or everyday spending. Read on to learn the specifics.

Key Points

• Determining the right amount of cash to keep on hand involves considering both physical currency and liquid assets for emergencies.

• Working individuals should aim to save three to six months’ worth of expenses in an accessible emergency fund.

• For retirees, it’s advisable to have three to six months of living expenses readily available, with some experts recommending up to 24 months.

• Keeping a small amount of cash at home, such as $100-$200, can be practical for immediate needs during emergencies.

• The amount of cash to carry daily might vary, but having around $100 can be useful for minor cash-only transactions or emergencies.

How Much Cash Should You Have If You’re Still Working?

First, consider how much cash the typical person who’s working should have available. You may be at a stage of life when you are putting away money towards certain financial goals, such as retirement or your child’s college education. That’s money you don’t want to touch.

Which is why you also likely need to have money in an emergency fund. This is money you can quickly access if you have an unexpected medical or car repair bill or if you were to lose your job. This money can tide you over and help you avoid resorting to using your credit cards to pay for things. Credit card debt is high-interest debt, with interest rates currently over the 20% mark on average.

Financial experts usually advise that people add up their monthly expenses: housing, food, healthcare, utilities, discretionary spending, etc. Then, you want to sock away three to six months’ worth of those monthly expenditures. That money doesn’t have to be accumulated all at once. You might automate your savings and have a small amount transferred from checking into an emergency savings account every time you get paid.

Recommended: Find out how much you should save for unexpected expenses with our emergency fund calculator.

What’s nice about an emergency fund is that the money is immediately accessible when you need it. Unlike, say, the equity in your home, your invested funds (the value of which can rise and fall), and a valuable family heirloom, the cash is ready and available. A good place to keep it might be in a high-yield savings account, where it will be insured up to the FDIC or NCUA limits.

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

How Much Cash Should You Have If You’re Retired?

If you are retired, the same basic thinking holds true about how much cash to have available. Whether you are on fixed income or still bringing in some kind of paycheck, you will want to have at least three to six months’ worth of living expenses available.

Some experts suggest that those who are retired should keep more than that amount in cash available. They believe that 12 to 24 months is a wiser number. That way, if you are hit with a major medical bill that you can’t negotiate down, you will be able to tap your cash vs. sell off investments. That’s an example of why an emergency fund is a priority.

How Much Cash Should I Keep at Home?

Now that you understand how much cash to have available in a liquid form, consider how much literal cash (as in the bills you get when using an ATM) to keep on hand.

Of course, you don’t want too much cash sitting in a drawer when it could be safely in a bank or credit union, earning interest. But it can be wise to keep at least $100 or $200 on hand.

For instance, you might imagine what would happen if a mammoth storm came through and knocked out power to a portion of your town and many businesses were closed. You might need to fill your gas tank to drive to the next town over to get food, or you might have to pay for some emergency supplies or to refill a medication prescription.

While some people may want to keep more than that amount “just in case,” the prevailing wisdom is to have no more than $1,000. If you keep that much cash in your house, you may want a home safe. Otherwise, theft, fire, and simply forgetting where you stashed it could be issues.

How Much Cash Should I Keep in My Wallet?

How much money you need to keep in cash in your wallet will vary. Many people today use their debit card and payment apps for daily spending and carry very little or even no cash. But having some money, perhaps $100 or so, can be a wise move.

You might wind up needing to buy something at a local, cash-only business. Or you might be purchasing something from a store that adds a surcharge for those who use cards or mobile payment apps, to recoup the fees they are charged. Having a bit of money in your wallet could help you out in this and other situations.

Where Should I Store My Cash?

You might consider keeping day-to-day money in a checking account, and emergency money in a separate savings account. That way, you don’t need to battle the constant temptation to spend it. Keeping cash in an account insured by the Federal Deposit Insurance Corporation (FDIC) and that earns a solid interest rate are wise moves as well. Online banks typically offer these features.

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 much cash should the average person keep at home?

According to one recent survey, the largest segment of Americans keep less than $100 at home, with between $101 and $500 being the next most common amount. About one in six don’t keep any money at all. That said, it can be helpful to have some cash on hand in case of emergency.

How much cash does the average person carry?

The average American carries $67 in cash, but that figure can vary widely.

Why do people keep large amounts of cash at home?

Some people may feel their money is safest at home, close at hand. Others may be unbanked and not have a bank account in which to stash their cash. Still others may want the reassurance of knowing they have some dollars available if, say, there were an emergency situation.

Is it wise to keep cash at home?

It can be wise to keep some cash at home. Perhaps you want to run to the farmers market and make a purchase in cash without stopping at an ATM. Or maybe there’s an emergency situation, and your local ATM is out of cash. Having cash on hand can be very helpful.

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.

SOBK1023023

May

2024

8 Common Online Bank Scams and How to Avoid Them

By Sarah Li Cain | Financial Independence, money | Comments Off

These days, it’s all too easy to get sucked into a bank scam. The reason is that scammers, and their scams, are getting increasingly sophisticated. According to the latest Federal Trade Commission data, consumers lost more than $10 billion to fraud in 2023, a 14% increase over reported losses in 2022. The most commonly reported scam category in 2023 was imposter scams, which saw significant increases in reports of both business and government impersonators.

Scammers often use savvy tactics to commit fraud that make it hard to cancel or reverse the transaction. As a result, one of the best ways to protect your hard-earned cash is to be aware of what’s out there. Learn what the most common bank account scams are and how to spot them.

Key Points

• Online bank scams are increasingly sophisticated, with consumers losing over $10 billion to fraud in 2023.

• Overpayment scams involve fraudulent checks where sellers are tricked into refunding excess amounts.

• Check cashing scams exploit the victim’s compassion, leading to financial losses when the fake check bounces.

• Unsolicited check fraud can trap recipients into unwanted contracts through fine print on the checks.

• Phishing scams mimic communications from trusted entities to steal personal information.

1. Overpayment Scams

If you sell products online, you could inadvertently be hoodwinked by this popular scam. Here, the fraudster will pose as a buyer and send you a check or money order for more than the purchase price. Then, they’ll ask you to refund the difference either through an online payment or wire transfer. But the original payment type was fraudulent, meaning you lose the refunded money. If you already sent the item you “sold” them, you’ll lose that too. But it doesn’t end there: You’ll likely also be on the hook for a returned item fee from the bank.

How to Avoid Them

If you ever receive an overpayment, your best bet is to ask the buyer to void it and send the correct amount.

2. Check Cashing Scams

This scheme appeals to your compassion. A scammer approaches you outside your bank to see if you would be willing to cash a check for them. They explain that they don’t have any ID on them or don’t have a checking account at that particular bank and really need the money. You deposit the check and, since it generally takes time for a check to clear, you give them the amount it’s written for from your own funds. Days or weeks later, the bank comes back to you and says the check is fake, and you’re responsible for the withdrawn amount, plus any fees.

How to Avoid Them

You’re better off saying no to anyone who asks you to cash a check for them, no matter what reason they give. You never know, and it’s not a good idea to risk it.

3. Unsolicited Check Fraud

This banking scam involves a check you get in the mail. It might be described as a “rebate check,” a refund on an overpayment, or prize money for a contest you’ve won, even though you don’t remember entering one. You deposit it into the bank — why not?

Here’s why: There may be some (very) fine print on the front or back of the check stating that by cashing the check you are entering into a legally binding contract — one you likely don’t want to enter. It might be a membership with monthly fees, a loan, or other long-term commitment that ends up costing you far more than the “free” check you deposited.

How to Avoid Them

Be sure to double check any unsolicited checks with your bank before cashing or depositing them.

4. Automatic Withdrawal Scams

Also known as automatic debit scams, these involve unauthorized withdrawals from your bank account — typically checking accounts. Scammers get access to your bank account numbers through fraudulent telemarketer calls or by stealing them from unsecured websites when you sign up for a free trial.

Once a scammer has access to your account information, they set up an automatic withdrawal. When your bank receives the draft, they transfer money from your checking account to pay the scammer. Unless you pay close attention to your daily bank transactions, you may not notice the scam until much later.

How to Avoid Them

It’s a good policy to never share sensitive information over the phone, unless it’s with a trusted friend or family member.

Also make sure you only use encrypted websites when entering your bank information: Look for “https://” before the URL (not “https://”) and a locked padlock in the left corner of the address bar.

5. Phishing Scams

Phishing scams are particularly tricky because they come dressed as emails or texts from trusted companies you already know. The message may even mention suspicious activity on a personal account, such as your savings or checking account.

Typically, you need to click on a link in the email or text, and then complete an action like confirming personal information. When you click through, it usually looks like the website from your bank or the company in question. So you tap in the required information (which may be a password, account numbers, or some other type of personal information). The scammers now have your sensitive data.

How to Avoid Them

If you get an email or text warning you of suspicious activity or a compromised account, and asks you to click on a link, don’t. Instead, head to the website for the financial institution or company, and log into your account there. If there aren’t any notices asking you to update your information, chances are it’s a phishing scam.

6. Government Imposter Scams

A fraudster will contact you by phone, email, or text posing as a representative from a government or law enforcement agency (like the IRS, Medicare, or the FBI). They may ask you to provide personal information needed to issue a payment (like for a tax refund) or tell you that you owe money and need to make a payment immediately. The imposter could even threaten to put you in jail if you don’t reveal your personal information or send payment.

How to Avoid Them

Don’t engage with anyone who makes this type of contact. The reality is that a federal agency will never call, email, or text you and ask for personal information or a payment of any kind. This is not a strategy the government uses to collect payments or to get missing information on tax returns or other forms.

7. Charity Scams

Sadly, many scammers play on people’s compassion, kindness, and generosity to line their own pockets. A charity scammer might contact you by phone, email, or ringing your doorbell. They claim to represent a real (or real-sounding organization) and tell you in detail about an urgent need or crisis. They often flash legit-looking IDs.

You want to help, so you give them cash, a check, or, perhaps, your credit card or bank account information for a recurring donation. Unfortunately, they aren’t connected to any type of nonprofit organization and you’ve given funds or sensitive financial information to a scammer.

How to Avoid Them

If you’re approached by a charitable organization asking for money, don’t give right away — even if you fully believe in the cause. Instead, look up the charity to see whether it’s legitimate. There are online databases, such as Charity Watch, that will let you know if the organization is real, as well as exactly how the group will use your donation. If you’re still interested in giving to that charity, you can then reach out to them yourself and make a donation.

8. Employment Scams

A job scammer posts an enticing ad on a job board. The job they’re offering sounds too tempting to pass up. It might be a work-from-home set-up, the chance to be a mystery shopper, or a job that pays a full-time salary for part-time work. Before the employer can onboard you, however, you’ll need to pay a fee or supply your bank account information and other personal details so they can pay you. It’s all a front to get you to part with your money.

How to Avoid Them

Use only reputable job boards when job hunting and verify the position directly before sending any personal information. If a job offer sounds suspicious, research the company, check online reviews, and find out if there have been any complaints on the Better Business Bureau’s site before applying.

Also know that applying for a job should never involve paying a fee, even one supposedly needed to process your application or conduct background screening. If you encounter this scenario, the job is unfortunately too good to be true.

More Tips on How to Protect Yourself From Bank Fraud

To make sure you don’t inadvertently fall for a bank scam, here are some general guidelines to keep in mind.

Know the Red Flags

While today’s scammers are increasingly sophisticated, there are some red flags that can give them away:

• You need to act urgently.

• You’re threatened with law enforcement or a government agency action.

• You’re told to purchase gift cards and provide codes as a form of payment.

• You need to mobile deposit a check and then transfer cash from your account to the person or company that wrote the check.

Don’t Trust Strangers

Never cash a check for someone you don’t know, no matter what reasons they give you. Also refrain from engaging with unknown callers on the phone, even if they have government agency names as their caller ID.

Contact Your Bank

If you receive any calls, emails, or texts from your financial institution asking for information, don’t respond directly. Instead, reach out to your bank on your own using the phone number listed on your statement or debit card. You only want to provide information when you have initiated the conversation using a vetted contact number.

Stay Up to Date With Your Bank Statement

It’s important to carefully check your monthly bank statements, whether you view them online or receive them by mail. This will allow you to spot any suspicious activity right away. The sooner you catch and report a scam, generally the easier it is to resolve the situation.

The Takeaway

These days, scammers can come off as entirely believable — they can fake the caller ID and may already have a lot of your data so they sound like they’re legitimate. Fortunately, by knowing the red flags and all the latest scams for stealing your hard-earned cash, you can protect yourself and your bank account.

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 bank scams work?

Bank scams usually involve someone asking for your banking or personal info — like account numbers, passwords, PIN codes — for a seemingly legit reason. They may have a “real” caller ID or a website that looks exactly like your bank’s. Once you provide or input your information, however, they use it to drain your account.

What bank information does a scammer need?

Having your bank account number and routing number is often enough for a scammer to perform fraudulent activities. While it’s not sufficient to access your bank account, it can allow a scammer to make fraudulent payments, create checks for your account, and make online purchases from retailers that only require bank account information.

What do you do if you suspect an online bank scam?

If you believe a scammer made an unauthorized transfer from your bank account, contact your bank as soon as possible. Let them know it was an unauthorized debit or withdrawal and request that they reverse the transaction and give you your money back.

If you gave a scammer your username and password, you’ll want to create a new, strong password. If you use the same password anywhere else, change it there, too.

If you gave a scammer your Social Security number, you can go to IdentityTheft.gov to see what steps to take, including how to monitor your credit.

Photo credit: iStock/eggeeggjiew

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.

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.

SOBK0124042

May

2024

Helpful Tips on Recovering From Being Scammed

By Jamie Cattanach | Financial Independence, money, Money & Life | Comments Off

You might associate scams with far-fetched ruses about foreign “princes” or emails, full of misspellings, that claim to be from your bank. And you might think you would never fall for those ploys. Scams, however, have grown more convincing over time, as evidenced by a growing amount of consumer dollars lost to fraud each year. And no, internet-savvy younger folk aren’t immune. In fact, according to data collated by the Federal Trade Commission (FTC), those between the ages of 30 and 39 were the most likely to get scammed in 2023.

Fortunately, there are ways to recover from the financially and emotionally draining experience of being scammed — and to avoid falling victim to scams in the first place. Read on for wise advice on how to rebound from being scammed, plus what to look out for so you don’t become a future scam statistic.

Key Points

• Immediately inform your bank if you suspect a scam to protect your accounts.

• Replace compromised debit or credit cards to prevent further unauthorized transactions.

• Document all details of the scam to aid in any investigations.

• File a complaint with the FTC to help track and stop scammers.

• Use two-factor authentication and regularly update passwords to enhance security.

How Many People Are Scammed Every Year?

The short answer: Lots. The FTC states they received fraud reports from 2.4 million consumers in 2022 — and chances are not everyone who was scammed followed through on filing a report about it. (If you have been scammed, though, you should; the FTC’s data can help law enforcement build cases against scammers and stop the problem from happening to others.)

Common Scams in the United States

Scams come in a wide variety of shapes, sizes, and styles, but here are some of the most common scams reported in the US.

Imposter Scams

In imposter scams, the fraudster acts as if they’re a person or business entity you already know and trust to swindle you out of your money. This is by far the most common type of scam in the US, and it can be perpetrated in a variety of different ways.

• You might get an email that looks like it’s from your bank (but is not) and prompts you to enter your login information. This however allows the fraudster to get access to your login credentials, which they can then use to drain your checking account.

• Imposter scams also include romance scams, wherein someone often woos you online from afar and asks you to wire them money to help them through some emergency.

• Scammers might even impersonate someone you already know, like a friend or relative. They could hack someone’s online accounts and then send messages that they need money for an emergency, help buying gift cards or some other scam.

Prize and Sweepstakes Scams

As their name implies, prize and sweepstake scams trick consumers into believing they’ve won something. They take a person’s sensitive information under the pretense of giving them the prize, only to wrest away their hard-earned money.

Job Opportunity Scams

It’s pretty cruel to target people who are looking for job opportunities, but scammers can do just that. You might find their ads in the exact same places you’d find legitimate employment opportunities, but instead of offering a position, they’re really in the business of getting your private information — and using it to steal from you.

Many people have fallen victim to overpayment scams this way, in which a person is told they are hired and is sent money to buy home officer equipment. However, the check was for a higher amount than needed, and the unwitting scam victim sends back the overage. By then, the funds they received from their supposed new employer? That check bounces ultimately, and they are out of cash and still without a job.

Investment-Related Scams

A smart investment can be a great way to make money… but when scammers use the guise of an investment opportunity to get your cash up front, the return never comes. According to the FTC, among the most common investment scams are those related to financial markets, real estate, or precious metals and coins.

Be extremely careful about individuals or companies you invest with. Some fraudsters create very official-looking websites that can fool people out of a lot of their money. These ”get rich quick” schemes can sound very believable.

What Can You Do if You Have Been Scammed?

If you’ve been scammed, don’t panic: You have options. And in many cases, you may be able to recoup some or all of your lost funds. Here’s advice on how to recover from being scammed.

Tell Your Bank That You Have Been Scammed

Here’s what to do after being scammed: If a fraudster got hold of your bank account information, let your bank know ASAP. After all, the sooner they can change your checking and savings account numbers, the sooner you can stop any theft. While FDIC insurance does not cover money lost due to theft, fraud, or scams, many banks will reimburse you money you’ve lost in a fraudulent transaction. It’s not a guarantee, but it’s definitely worth a try.

Request a New Debit or Credit Card

If a scammer got hold of your debit card or credit card information, immediately call the issuer to report that the card was stolen so they can hook you up with a brand new card and account number. Again, many credit card issuers will refund you for charges that were unauthorized or fraudulent transactions, so it’s critical to reach out to them pronto.

Remember the Details

If you suspect you’ve been the victim of a scam, you should immediately write down everything you can remember about the interaction: the details of how the scam was carried out, how much money or which pieces of information were stolen, the time of day, the payment and communication methods, and where you were. All of these details could help law enforcement catch the perpetrator and ensure your case is solid if it gets taken to court.

File a Complaint With the FTC

As discussed above, another step to take after being scammed is filing a complaint with the FTC. This can help track down and stop fraudsters. The FTC can also provide you with valuable information to help you protect yourself from future scams, too.

Tips on Protecting Yourself From Being Scammed Again

There are steps you can take to help ensure you don’t become victimized by a scam for a second time. These can also be good moves to make to avoid being scammed in the first place.

Use Two-Factor Authentication

Chances are, you’re already familiar with two-factor authentication: It’s the process where a website or platform verifies your identity with both a password and a second form of authentication, like a code texted to your cell phone or using facial recognition. Use these tools to secure as many of your accounts as you can.

Reset Your Passwords

Whether or not you’ve been scammed in the recent past, it’s always worthwhile to reset your passwords regularly.

• Use strong, distinct passwords for each account you have. No reusing!

• To keep all your accounts straight, you may want to consider utilizing a password manager, which can also help you generate stronger passwords and remind you to change your passwords from time to time.

Be Wary of Suspicious Emails and Phone Numbers

If you get an email or phone call that promises you a lot of money very quickly — or says there’s a problem you have to pay to fix very quickly — be suspicious. If you’re not totally sure you’re dealing with the person or entity who says they’re on the other side of the interaction, hang up or click delete and reach out yourself (say, directly to your bank, Apple, or whatever company is allegedly contacting you).

It’s also worth looking for tiny typos in email addresses or slightly “off” logos. In all cases, be very wary before you offer sensitive information over email or the phone. It’s highly unlikely you will be asked to “verify your account immediately” by text message, for instance.

Recognize Sometimes Things May Be Too Good to Be True

If someone calls you promising you a prize of thousands of dollars as soon as you provide your Social Security number or says they have the investment of a lifetime if you just cough up $1,000 to start, think twice. If something sounds too good to be true, there’s a good chance it’s just that.

Order Credit Reports

Keeping an eye on your credit report is one of the best ways to stay ahead of any fraud you may fall victim to without otherwise knowing. You’re entitled to one free credit report each year from each of the big three credit bureaus via annualcreditreport.com.

You can also sign up for ongoing credit monitoring with a variety of service providers, though this may be a paid service. You can also consider whether you want to activate a fraud alert or security freeze on your credit files with the credit bureaus. This can help prevent new accounts from being opened without your permission.

The Takeaway

Scams are getting more sophisticated these days, which can mean they can be harder to detect and avoid. Popular ploys are romance and job opportunity scams. Staying vigilant and immediately reporting any fraudulent transactions can help minimize your losses — and possibly recoup lost funds.

Check with your financial institution to see what tools they offer to help you monitor and protect your accounts.

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 I report a fraud to the FTC?

The FTC makes it easy to file a fraud report online. Just navigate to the FTC’s website at reportfraud.ftc.gov, and hit “Report Now,” and follow the online prompts. While the FTC can’t help investigate or solve your individual fraud case, your report can be used to help track down fraudsters at large and stop future fraud from happening to others.

What do I do if I do not remember all details of the scam?

If you don’t remember all the details of a scam, be sure to write down the details you do remember and file them in your report or claim. Writing down information can help you remember it for longer.

Will I get any money back if I get scammed?

Many banks are willing to reimburse some or all of the money you transferred in a fraudulent transaction, depending on the circumstances. Credit card companies, too, may cover you for unauthorized charges. It’s worthwhile to ask for details.

Photo credit: iStock/Delmaine Donson

SOBK0124055 Read more

May

2024

6 Advantages of Having a Savings Account

By Timothy Moore | Budgeting & Goals, Family Finances, money | Comments Off

Sure, you could store all the cash you’re likely to need in the near future in a checking account and call it a day. But that would mean missing out on the many benefits of having a savings account.

While savings accounts don’t offer the returns you could potentially get in the market, they pay interest (generally a lot more than you can earn in a checking account), while still keeping your money safe and accessible. This makes them ideal for housing your emergency funds and money you’re saving for shorter-term goals, like buying a car or going on vacation.

Here’s a closer look at the perks of having a savings account and why this type of account likely deserves a place in your financial toolkit.

Key Points

• A savings account safely stores money while earning interest, making it ideal for short-term savings like emergency funds or vacation funds.

• These accounts are insured up to $250,000, providing security against bank failures.

• Savings accounts offer easy access to funds, unlike some investments that may require time to liquidate.

• Opening a savings account doesn’t necessarily require a large initial deposit, making it accessible to start saving immediately.

• Money can be earmarked for specific goals, helping to manage finances effectively by separating funds for different purposes.

What Savings Accounts Are

A savings account is a type of deposit account at a bank, credit union, or other financial institution where you can safely store your money and earn interest. Savings accounts at banks insured by the Federal Deposit Insurance Corporation (FDIC) are typically covered up to $250,000 per depositor. Co-owners of joint accounts at the same bank are typically each insured up to $250,000. Credit unions offer similar insurance through the National Credit Union Administration (NCUA).

Unlike a checking account, which is set up for everyday money management, a savings account is designed to store money you don’t need right away, separate from everyday spending cash. These accounts typically don’t come with checks and debit cards, and some banks may limit you to a certain number of withdrawals per month.

Because savings accounts offer safety, liquidity, and interest, they can be a great place for setting aside money for shorter-term goals, such as:

• An emergency savings fund

• A down payment on a house

• A wedding

• A vacation

• A new car

• A large purchase

• Home renovations

Dive deeper: How Do Savings Accounts Work?

6 Benefits of Savings Accounts

Here’s a look at some of the main advantages of a savings account.

1. You Earn Interest on Your Deposits

Savings accounts earn interest, expressed as an annual percentage yield (APY). That means you’ll earn money just for keeping your funds in the bank, making it a low-risk way to build wealth. Not every savings account offers the same interest rate, however. While the current national average savings yield is 0.57 percent, top-yielding savings accounts are currently earning APYs above 5% percent.

To see how that translates into actual dollars, let’s say you currently have $5,000 sitting in your checking account you don’t need right away, and you transfer it to a 5% APY high-yield savings account. Even if you don’t add any additional money to the account, you could increase your balance in one year to $5,250, just by letting the initial deposit sit in your new savings account.

2. Your Money Is Insured

Savings accounts are typically insured by the FDIC or NCUA, depending on where the account is held. That means your money is protected against major losses (up to $250,000) in the event that the bank or credit union goes out of business. You would either be paid that money directly or, more likely, a new account would be opened for you at another bank with the same balance as before. This makes a savings account safer than keeping your money in a sock drawer or under the mattress, where it is susceptible to theft or loss.

3. It’s Low Risk

Savings accounts don’t offer high returns compared to what you could potentially make in an investment account over the long term. However, these accounts won’t let you down either. With many investments, you can lose money over the course or days, weeks, months, and even years. The balance on a savings account, on the other hand, will typically continue to go up over time (unless, of course, you make a withdrawal).

If you have money you plan to use within the next couple of years that you can’t afford to lose, a savings account can be the perfect place to store it.

4. It Doesn’t Require a Large Initial Investment

Savings accounts are easy to open and typically do not require you to make a big initial deposit. In fact, many online-only savings accounts allow you to open an account with $0, so you can start saving from scratch. Savings accounts at traditional brick-and-mortar banks may require deposits of $25 to $100 to open a new account. By contrast, many investments (such as real estate and mutual funds) often require a significant amount of money as an initial investment, sometimes as much as several thousand dollars.

Keep in mind, though, that some savings accounts do offer higher interest rates and low (or no fees) if your balance stays above a certain minimum threshold or you meet other criteria.

5. You Can Separate Money for Different Goals

If you’re saving for a particular goal, like buying a car or putting a downpayment on a home, it can be helpful to keep that money in a separate savings account. This helps to ensure that you don’t blow the money on something else, like groceries or clothing.

If you have several things you’re saving for, you might even want to open multiple savings accounts, such as one for emergency savings, one for a new car, and one for a vacation. Separating money can help you visualize progress toward each goal. Some savings accounts let you organize your savings into separate buckets or “vaults” so you can save toward multiple goals within one account.

6. Easy Access When You Need It

Savings accounts are relatively liquid, meaning you can access your money when you need it by transferring it into your checking account or withdrawing it at an ATM or through a teller at a local branch. That’s not true for many investments, which may take a few days to convert to cash. Some investment products, such as real estate properties, can potentially take months or years to sell off.

That makes a savings account an ideal spot for your emergency fund. When an unexpected expense comes up, you can access your funds immediately — and avoid running up expensive credit card debt — in order to cover it.

That said, the money is not quite as accessible as the money in a checking account. Savings accounts typically don’t come with checks and debit cards, and some banks limit the number of withdrawals you can make to six or nine per month. However, you might see these limitations as benefits, since they encourage saving rather than spending.

Is a Savings Account Right for You?

Savings accounts offer numerous benefits, including insurance on your deposits, higher APYs than checking accounts, and liquidity. Plus, you generally don’t need a large (or sometimes any) initial deposit to get started.

However, the interest you earn on a savings account may not always keep up with inflation, which means your balance could become less valuable over time. As a result, a savings account is generally not the best place to put the money you are saving for a long-term goal, such as retirement or your child’s college education. You might earn a better return if you invest that money in the market.

If you’re interested in opening a savings account, it’s a good idea to research your options and compare APYs, minimum deposits, balance requirements, and any fees. And if you have a savings account but aren’t satisfied with the perks, there’s likely a better fit for you offering the full benefits of a savings account.

Recommended: Perks of Long-Term Savings Accounts

Opening a Savings Account With SoFi

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.

FAQs

What is the benefit of a savings account?

The primary benefit of a savings account is that it allows you to grow your money over time (by earning interest), while still keeping it safe and accessible.

What are the advantages and disadvantages of a savings account?

Advantages of savings account include:

• Earning Interest Savings accounts accrue interest on deposited funds, helping your money grow over time.

• Safety and security Funds in savings accounts are typically insured by the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Administration (NCUA), providing protection against loss.

• Liquidity Savings accounts offer easy access to your funds, making them ideal for emergency savings.

Disadvantages of savings accounts include:

• Lower interest rates While savings accounts offer interest earnings, the rates are often lower compared to other investment options.

• Inflation risk Inflation may erode the purchasing power of your savings over time, especially if the interest earned does not keep pace with inflation rates.

• Fees and minimum balance requirements Some savings accounts may have fees or minimum balance requirements, potentially reducing the overall return on your savings.

How is a savings account most useful?

Savings accounts can be most useful for storing your emergency funds and money you plan to spend in the next few months or years, since they pay interest while keeping your funds safe and accessible. However, returns on savings accounts are often lower than what you could potentially earn by investing in the market over time. That makes these accounts less useful for long-term savings goals like retirement or a child’s future college education.

Photo credit: iStock/PeopleImages

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17 Tips for Surviving on Minimum Wage

What is Considered Minimum Wage?

Is Minimum Wage Livable?

17 Tips for Living on Minimum Wage

1. Evaluate Your Overall Spending

2. Create and Stick to a Budget

3. Put Some Money Towards Savings

4. Look Into Government Benefits

5. Save on Food

6. Find Additional Ways to Increase Your Income

7. Lower Your Housing Costs

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8. ​​Work Towards Reducing Your Debt

9. Minimize Healthcare Costs

10. Look to Save on Transportation

11. Make the Most of Tax Breaks

12. Check Your Paycheck Withholding Amount

13. Mind Your Utility Usage

14. Take advantage of any employer-sponsored benefits

15. Look for Cheap or No Cost Things to do

16. Check Out Your Local “Buy Nothing” Groups

17. Be Kind to Yourself

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What to Look for in a Bank on a Minimum Wage Salary

Banking with SoFi

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8 Common Online Bank Scams and How to Avoid Them

1. Overpayment Scams

How to Avoid Them

2. Check Cashing Scams

How to Avoid Them

3. Unsolicited Check Fraud

How to Avoid Them

4. Automatic Withdrawal Scams

How to Avoid Them

5. Phishing Scams

How to Avoid Them

6. Government Imposter Scams

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7. Charity Scams

How to Avoid Them

8. Employment Scams

How to Avoid Them

More Tips on How to Protect Yourself From Bank Fraud

Know the Red Flags

Don’t Trust Strangers

Contact Your Bank

Stay Up to Date With Your Bank Statement

The Takeaway

FAQ

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Common Scams in the United States

Imposter Scams

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Job Opportunity Scams

Investment-Related Scams

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What Can You Do if You Have Been Scammed?

Tell Your Bank That You Have Been Scammed

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8. Work Towards Reducing Your Debt

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