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If you’re looking for your bank routing and account numbers, they are likely easier to find than you may think: You can locate them on your checks or by logging into your financial institution’s app, for instance.

That said, you probably don’t want to broadcast these digits to too many people. Your routing and account numbers are the keys to your banking kingdom.

Your account’s routing number designates which financial institution holds your money, while your account number identifies your own unique checking or savings account. As you go about your financial business, you will require these numbers for many transactions, from enrolling in direct deposit at your workplace to signing up for online bill pay.

What Is a Routing Number?

A routing number is a sequence of nine digits that identifies a bank or credit union, and each banking institution has a unique number. Here are some facts about routing numbers and how they work:

•   A routing number is also sometimes referred to as an ABA number, in reference to the American Bankers Association, which assigns them. Routing numbers are only issued to federal or state-chartered financial institutions that are eligible to maintain an account at a Federal Reserve Bank.

•   Your bank’s routing number and ACH routing number may or may not be the same digits. Check with your bank to be sure.

•   The routing number required for making a wire transfer often differs from the routing number that is printed on your checks. That number can be found online or by contacting your bank.

•   A small bank may only have one routing number, while a larger financial institution may have several (they typically vary by state). An online bank, which operates without physical branches, will typically have one routing number.

Purpose of a Routing Number in Banking

The purpose of a routing number is to identify the financial institution that is responsible for the payment and ensure that funds are sent to the right place in a financial transaction.

Routing numbers are generally required when reordering checks, paying bills, setting up direct deposit, or making tax payments. Making sure you have the right digits will help ensure smooth transactions.

What Is an Account Number?

While the routing number identifies the financial institution where your account is held, the bank account number represents your specific account. While anyone can find your bank’s routing number, your account number is private; that’s a key difference in routing vs. account numbers. Here are some other points about account numbers to know:

•   Typically between nine and 12 digits, your account number acts as a road map of sorts for your bank, letting them know where to deposit or withdraw money, whether that’s a checking account or a savings account.

•   If you have two different accounts at the same financial institution, you will have two different account numbers. The routing number for these accounts, however, will be the same.

•   Because your account number can unlock access to the funds in your checking or savings account, it’s critical that you keep it safe.

Role of an Account Number in Transactions

Whether you are receiving a paycheck, making online purchases, or setting up autopay, your account number plays a key role. While routing numbers identify your bank, account numbers ensure that money is correctly credited to or debited from the right account.

When You’ll Need a Routing Number or Account Number

You’ll need to know your account number and routing number for a variety of everyday financial transactions. These may include:

•   Setting up direct deposit of your paycheck

•   Setting up autopay

•   Setting up direct deposit of Social Security or other government benefits

•   Paying a bill online

•   Setting up autopay

•   Check processing

•   Sending or receiving a wire transfer

•   Sending up a peer-to-peer payment app or service

•   Transferring funds between accounts at different banks

•   Making payments from your bank account by phone

•   Ordering new checks

•   Linking a budgeting app to your bank account

Finding Your Bank Routing and Account Numbers

If you need to find your routing and account numbers, you have several options:

Looking at a Check

You can find your routing number and account number printed on the bottom of your checks.

You’ll see three groups of numbers (often separated by spaces and/or symbols). Typically, reading left to right, the first number (nine digits) is the routing number; the next group of numbers (usually nine to 12 digits) is the account number; the third is the actual check number.

Contacting Your Bank

If you need your bank routing and account numbers and don’t have access to a check, you can call your bank (or stop into a branch) and ask a customer service representative to provide you with the numbers. Since your account number is private information, you will likely have to provide identifying details to prove you are who you say you are to gain access to this number.

Note: If all you need is the routing number, you can easily find it on your bank’s website.

Accessing Your Online Account

If you log into your bank account online or in-app, you should be able to get your banking details. Your account number may be encrypted (meaning you can only see the last four digits). If that’s the case, you can typically get the full number by downloading a recent bank statement. Or, there may be a prompt you can click in order to see the full number.

Protecting Your Routing and Account Numbers

Although anyone can locate your bank’s routing number, your account number is not public information. Just like you are mindful about who sees your Social Security number, the same goes for your bank account number. You want to make sure that someone doesn’t use your bank account and routing number without authorization.

Tips for Keeping Your Banking Information Secure

Here are some ways to keep sensitive banking information safe:

•   Avoid sharing your banking details unless necessary. To protect yourself from potential bank fraud, you generally don’t want to share your account number with any person or business unless you absolutely need to. Also wise: not sharing pictures of checks you’ve written on social media, even if it is for the first payment on your dream car.

•   Store physical checks in a secure place. Since checks contain both your routing and account number, it’s a good idea to keep your checkbook tucked away in a safe place, not sitting out in the open. Also be sure to shred old checks and paper statements before throwing them away.

•   Enable multi-factor authentication for online banking. Two- or three-factor authentication requires additional information beyond a password, such as a code sent to your mobile phone or a fingerprint scan, for account access. You’ll typically find this option inside the account settings.

•   Regularly monitor your accounts. It’s a good idea to review your bank statements monthly and check your online banking once a week. This allows you to pick up on any suspicious transactions and nip any potential issues in the bud.

Recommended: How to Write a Check

What to Do if Your Information Is Compromised

If you suspect fraud or unauthorized access to your bank account:

•   Contact your bank immediately. Call customer service and inform the representative of any unauthorized banking transactions as soon as you notice them.

•   Change your login credentials: It’s a good idea to choose a new (unique) password for your bank account. Also consider setting up multi–factor authentication if you haven’t already.

•   Review your recent transactions: Comb through recent activity on your bank account and make a list of any transactions you don’t recognize, noting the date and details. You’ll need this information to file a dispute with your bank.

•   Consider placing a fraud alert on your credit report: You can contact any one of the three credit bureaus — Equifax, Experian, and TransUnion — to place a fraud alert on all three of your credit reports. A fraud alert is free and notifies creditors to take extra steps to verify your identity before extending credit.

The Takeaway

Your account and routing numbers work together to identify your account and ensure that your money gets transferred from the right place or that you receive funds intended for you. If you’re confused about routing vs. account numbers, the routing number indicates the bank where your account is held, while the account number identifies your specific account at that bank.

Knowing the difference between these numbers, where to locate them, and how to protect them is vital to managing your finances securely.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

Do you need both a routing and account number?

Typically, yes. Common transactions — like setting up direct deposits, making electronic payments, or transferring money between banks — require both a routing and account number. The routing number identifies your bank, while the account number specifies your individual account. Together, they ensure that funds are correctly transferred to or from the right institution and account.
That said, for some transactions (like in-branch deposits), just your account number may suffice, as the bank already knows its routing number.

What comes first on a check, a routing or account number?

Typically, when you look at the lower portion of a check (reading left to right), the routing number comes first, followed by the account number, and then the actual check number.

The routing number is a nine-digit code that identifies the bank, while the account number specifies your specific account within that bank. Checks are typically numbered to help with record-keeping.

Do I give my account number or routing number for a direct deposit?

For a direct deposit, you need to provide both your routing and account numbers. The routing number ensures the deposit is sent to the correct bank, while the account number directs the funds to your specific account. You may also be asked to provide a voided check.

What happens if I use the wrong routing or account number?

Using the wrong routing or account number can result in a failed transaction or funds being sent to the wrong account.
If your bank catches the mistake, it may reject the transaction. If your bank misses it and the account number belongs to someone else, the money could get deposited into the wrong account. If that occurs, you’ll want to contact your bank immediately to try to remedy the problem.

Are routing numbers the same across all branches of a bank?

Not necessarily. Smaller banks often have a single routing number for all branches. But if a bank has branches located in different states, routing numbers won’t be the same across all branches. Your routing number will be based on the branch where you first opened your account.

Photo credit: iStock/SeventyFour

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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

SOBNK-Q125-084

A cash management account or CMA is a financial account offered by brokerage firms that combines some of the features of savings and checking accounts. Like a savings account, CMAs pay interest (often more than you would earn in a standard savings account). Like a checking account, CMAs provide access to checks and/or a debit card. In addition, CMAs are typically linked to brokerage accounts, making it easy to transfer funds you want to invest.

While CMAs can be convenient, they may also come with some potential downsides, such as monthly fees, minimums, and a lack of in-person banking options. And, you may be able to earn a higher interest rate elsewhere.

Is a CMA right for you? Our simple guide to cash management accounts can help you find out.

What Are Cash Management Accounts?

Let’s explore what a cash management account is exactly. A CMA or cash management account provides a solution for managing your cash flow and your money. The cash inside the account usually earns interest, so your money can grow over time. You also may have checking-writing capabilities, debit card access, or a combination of both.

Some of these nonbanking institutions charge low or no fees, another attractive aspect of using a cash management account. However, they typically make their money by charging fees for other services, such as investing, retirement planning, or financial planning services.

While traditional banking accounts have similar benefits, the biggest draw to a cash management account is that you can bank and invest with one company. This way, you’re not toggling back and forth between several companies or platforms to manage your money.

How Do Cash Management Accounts Work?

Now that you know what a CMA is in big-picture terms, let’s drill down on how they work. Cash management accounts are interest-earning accounts that offer a safe place to keep your cash. Since investment firms and robo-advisors are not banks, they don’t keep your money at their financial institution. Instead, they partner with several banks and spread your deposit out among them.

As with traditional bank accounts, account holders can deposit funds, withdraw funds, and transfer money. You also typically have online access to your account, making it easy to check on and manage your CMA.

In addition, CMAs typically earn interest like savings accounts and have checking account capabilities. Therefore, they can act as a way to merge these accounts into one. However, some CMAs may not have features of both accounts, so check with the institution to determine what features are available.

What Are the Pros of Cash Management Accounts?

Understanding the benefits of using a cash management account can help you determine if this is the right banking solution for your needs. With that in mind, here are several advantages of using a cash management account.

Convenience

The most significant pull for consumers to open a cash management account is that they can keep their investments and banking under one umbrella. Keeping everything in one place can simplify your money management efforts.

Traditional Banking Features

When you open a cash management account, you typically have access to traditional banking features like:

•   Direct deposit

•   Complementary ATM networks

•   Electronic bill pay

•   Third-party payment site access

But before you open an account, make sure you check with the institution about their banking services. This way you can ensure they have everything you need.

FDIC Insured

The Federal Deposit Insurance Corporation (FDIC) protects your banking deposits from losses up to $250,000 per depositor, per insured bank, for each account ownership category.

So, in the unlikely event that your bank should fail, you can recover your funds (up to the insured limit). While nonbanking firms can’t offer FDIC insurance directly, their partner banks can extend coverage. Since nonbanks spread funds across several partner banks, each can offer up to $250,000 of FDIC insurance per depositor.

💡 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.

What Are the Cons of a Cash Management Account?

CMAs also come with some potential downsides. Here are some points to keep in mind as you decide whether a CMA is right for you.

Lower Interest Rates

While these accounts do offer some earnings, you will often find better rates at online banks. If you are planning on parking a large sum of cash in an account, it can literally pay to explore your options elsewhere and see what annual percentage rates (APYs) are available for online savings and checking accounts. You may find a better place to park your short-term savings than a CMA.

Recommended: APY vs. Interest Rate: What’s the Difference?

Fewer Features

Cash management accounts may not offer all the conveniences that come with standard checking accounts, such as bill pay, and may not fully replace a checking account.

No Physical Branches

Many cash management accounts are offered by online brokerages and robo-advisors, which means you won’t have brick-and-mortar locations to visit. If you are the kind of person who prefers personal interaction, this may be a significant issue for you.

Cash Management Accounts vs Checking Accounts

While cash management accounts offer similar services and features to traditional bank accounts, you might wonder what the differences are. If we break down CMAs compared to checking accounts further, these features are worth noting.

•   Maintenance fees. Some CMAs don’t charge maintenance fees, but others may charge monthly fees routinely or when your balance dips below a certain threshold. This is also the case with traditional checking accounts.

•   Interest earning. Many cash management accounts pay interest, and rates are often better than what you could earn in a standard savings account. This gives CMAs an edge over regular checking accounts, which typically pay little or no interest.

•   Account integration. Investment firms and robo-advisors usually offer cash management accounts, as well as brokerage, or investment, accounts. You can usually link your CMA with your brokerage account, making it easy to move money and automate contributions. Traditional banks may also offer retirement and investment services. However, that’s not their primary business. Also, if you have your bank accounts and investment accounts under different roofs, there may be a time lag for transactions, which usually doesn’t happen with CMAs.

Considerations When Comparing Cash Management Accounts

If you’re thinking about opening a CMA, it’s a good idea to shop around and compare your options. Here are some things to keep in mind.

Customer Service

When you need an issue resolved with your money, it’s nice to know customer service is there to help. Check to make sure that the company you’re considering offers a robust customer service solution to assist you with all of your questions or concerns. For online firms, check out the hours that support is available and find out if you’ll be interacting with a human or an automated assistant.

Minimum Balance Requirement

CMAs can have minimum balance requirements to avoid fees and/or keep the account active. Therefore, you’ll want to determine these requirements in advance to see if you have the appropriate sum of cash to deposit.

Investment Management

Most of the institutions that offer cash management accounts offer investment services. If you’re looking to use their investment service, make sure you select a company you trust and feel comfortable with. You’ll also want to ensure the investments offered are suitable for your needs.

Is a Cash Management Account a Good Fit for You?

A CMA can be ideal for people who like to manage their investments and bank accounts under the same umbrella. It may make managing your money somewhat simpler and smoother.

But for those who feel a bit uncertain about using online institutions or mobile apps to complete their daily transactions, a traditional bank account may be a more viable solution. Also, if you would prefer to separate your investments and banking needs, a high-interest checking or savings account may make more sense that stashing your funds in a CMA.

The Takeaway

CMAs are interest-earning alternative solutions to traditional bank accounts like checking and saving accounts. Since investment firms usually offer CMAs, you can keep your investments and banking needs in one place, streamlining your money management efforts. As with most services, there are pros and cons to these accounts. Determining whether one is right for you will depend on your money management style and goals.

If you feel more comfortable with a savings and checking account held at a bank, SoFi offers a smart, money-savvy solution. Our online bank accounts, when opened with direct deposit, are fee-free and earn a competitive APY. Qualifying accounts can even access their paycheck up to two days early. We think it’s a great combination of convenience and money-growing features that you’ll love.

Ready to bank better? Come see what SoFi offers.

FAQ

What is the purpose of a cash management account?

Cash management accounts give consumers a way to earn interest and complete everyday banking transactions (like making purchases with a debit card and writing checks) while managing investments, all under one roof.

What type of account is cash management?

A cash management account is like a traditional bank account, except it’s offered by a non-banking firms, like an online investment firm or robo-advisor. You can complete transactions (direct deposit, withdrawals, check writing, etc.) and earn interest in the same way you would with a traditional checking or savings account.

Is a cash management account the same as a money market account?

No. While cash management accounts and money market accounts have similar features (like earning interest and providing access to debit cards and/or checks), they are not the same. Banks offer money market accounts, while nonbanks like brokerage firms and robo-advisors offer cash management accounts.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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

SOBNK-Q125-056

Whether your travel dreams have you strolling through Paris, eating dozens of flaky croissants, or cozied up in a cabin at a stunning state park, saving for vacation is an important step. To create a travel fund, you may need to determine how much cash you need to accrue; how to automate the process; and how to help your money grow as quickly as possible. Here, you’ll learn the step-by-steps for starting a vacation fund.

The Importance of Emergency Savings

Sure, it can be tempting to pick up on a whim and travel somewhere, without even glancing at your checking account. But that can be somewhat risky business, financially speaking. And so can prioritizing a vacation fund when you don’t have much money in the bank.

Before you think about funding a vacation, you should consider saving for life’s emergencies first. And a prime way to do that is by establishing a healthy amount of money in your emergency fund.

To build an emergency fund, a general rule of thumb is to have enough money to cover at least three to six months’ worth of expenses socked away. It’s totally okay to start off with a small fund and build your way up over time. Even depositing $20 per paycheck into the fund can be a wise start. This account may be for a true emergency, such as a car breaking down, an unexpected move, paying rent after being laid off, or a visit to the emergency room. What isn’t a good use for your emergency fund? A sale on plane tickets to Hawaii doesn’t count, sorry to say.

You can use an emergency fund calculator to help you figure out exactly how much to save. And remember: This account may be for a true emergency, such as a car breaking down, an unexpected move, paying rent after being laid off, or a visit to the emergency room. What isn’t a good use for your emergency fund? A sale on plane tickets to Hawaii doesn’t count, sorry to say.

Beyond emergency funds, it may be a good idea to ensure you’ve paid off any high-interest debt before allocating your money toward a vacation.

How Much to Save for Vacation

Once your emergency reserves are on good footing, you can take the first step in saving for a vacation by opening a separate account earmarked for travel. Keeping it in the same bank as the rest of your money could allow you to easily keep track of how much you’ve saved. It can also make it a bit simpler to transfer extra cash into your vacation account.

However, don’t overlook the value of keeping your cash in a high-yield savings account, which can earn considerably more than a standard savings account. These accounts are often offered at online banks, which may no or low fees as well. That combination of higher interest rates and lower fees can help pump up your savings.

A couple of other tips:

•   Many financial institutions will let you name the account, which is seriously worth doing. It might be harder to be motivated to contribute to account XXX924 than your “Valentine’s Day in Paris” Fund. Go ahead, and give it a good name so you know what you’re working towards.

•   Another smart move is to automate savings. You can set up automatic deposits into this account each week or month, depending on your pay cycle and what you’re comfortable with. You could even allocate a specific amount to be auto deposited right from your paycheck. That way, the cash never even hits your checking account, where it can tempt you to go shopping and have a fancy dinner. You won’t see the money until you’re ready to go on vacation.

Now, about how much to save. Here are a couple of approaches to try:

•   Some people like to establish an amount of their paycheck to siphon off into travel savings. Perhaps it’s 5% of your take-home pay, or an amount like $50. Once it hits a certain figure ($500 or $1,000), you can then dig in and start your specific planning.

•   For many, though, building a budget makes the dream real. You can scout out transportation and lodging costs, among other items by doing online research. You can add food, entertainment, excursions, and other potential expenses and come up with the figure you’ll need. Then divide that by how long you have to save, and you’ve determined your monthly savings goal.

   So if you need $2,400 for your trip and have eight months till the date you want to travel, you’ll need to set aside $300 per month.

Doing Some Research on Your Dream Vacation

As briefly mentioned, research can be the foundation of your trip planning. And it’s often a really fun enterprise, whether you are a moodboard or a Pinterest sort of person. Decide what kind of vacation you want to have — be it a surf, snow, hiking, adventure, leisure, city, or country escape — then start looking into destinations that suit your desires. Maybe a friend took a cool 30th birthday trip to Iceland that you want to emulate, or you are in search of a few budget-friendly spring break destinations. Start searching! Some guidelines:

•   Once you pick a spot, you can look at things like average hotel pricing, average food cost, transportation costs (including the flight, drive, boat, or train there as well as a car rental, taxi, or ridesharing service for when you’re there), average excursion cost, and add in a bit extra for entertainment expenses.

•   Don’t forget to budget for hidden fees, such as resort fees, rental fees, and taxes. You may want to call the hotel’s concierge to get those numbers if they aren’t displayed, as they can add up rather quickly. Also, you may want to ensure your number crunching includes an “extra” slush fund for those “just in case” moments.

  (Also worth noting on the topic of hotels and money: Most hotels will put a hold on your credit card when you check in to cover incidental expenses and other potential charges. This can change your available credit, so keep that in mind.)

•   If hotels look to be a bit too pricey in your intended destination, you could always look for cost-cutting accommodations. There are always hostels, and some are adding amenities these days that make them less barebones.

•   You might consider places that will let you stay for free in exchange for services. You could try signing up on websites like Rover to swap dog sitting services in exchange for a free place to stay. Websites like Mind My House also bring together people looking for house sitters and those looking for accommodations. Check out the listings and see if any fit your vacation needs.

Recommended: Tips for Finding Travel Deals

Saving Consistently into Your Travel Fund

If you have an estimate of how much it will cost, now you just have to figure out how to save for a vacation. Consider these ideas:

•   Dividing your projected vacation cost by the months you have to save and stashing cash away is a tried-and-true method. By doing so, you can watch your trip fund grow and get you closer to your trip.

•   Some people like to use round-up apps or the “change jar” method to also boost their savings.

How to start a vacation fund is simple: You make that first deposit, But next, learn some other ways to keep building towards your travel goal.

Using Windfalls to Your Advantage

While working toward your vacation, you could use any financial windfalls to your advantage. Consider these sources:

•   A tax refund

•   A bonus at work

•   A raise at your job

•   Proceeds from selling your stuff, like electronics, kitchenware, or clothes you no longer need or use.

Putting this money into where you keep a travel fund is a great way to boost your savings.

Adding a Side Hustle to Your Routine

You could always create a windfall for yourself by taking on a low-cost side hustle as you save for your vacation.

Working a side job or taking on freelance work you have the skillset for could help you save money faster to get the vacation show on the road. And the best part is, if you save using your side gig money, you won’t even need to touch your savings or primary paycheck.

Some pointers:

•   Think about what you’re after: Something that will help your career in the long-term, or perhaps something that will simply earn you a bit of quick cash?

•   If you’re hoping it could help your career growth, you could try tackling a side job that’s connected to your goals. For example, if you’re hoping to be a writer, scout article writing or copywriting gigs. Want to be a photographer? Build a website and offer your services.

•   If it’s just quick cash you need, think local and urgent. Could you sub in at a busy cafe on weekends or do odd-jobs through various apps like TaskRabbit or Fiverr?

•   Decide how much you’re willing to put into a side hustle. Often, side gigs require you to work before or after your regular nine-to-five, which could mean giving up your nights and weekends. But, again, all that extra work could pay off for either your career or your short-term goals.

Recommended: How to Make Cash Quickly

Making a Little Extra Cash While on Vacation

You could always try putting your assets to work for you while you’re away to help pay for your vacation. If you own your home or apartment or your landlord allows it, you might rent your space on websites like Airbnb or VRBO. You may be able to earn a hefty sum.

Have a car? That can be rented out on websites like Turo, too.

The Takeaway

If you’re planning a vacation, dreaming about it and planning where you’ll go and what you’ll see can be a fun pursuit. But you’ll also need to save for it. That can be accomplished by saving from your paycheck, stashing away any windfalls, and putting energy towards earning additional money.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

How does a vacation fund work?

A travel fund is an account that helps you save the amount needed to take a trip. Typically, you add to it regularly (manually or by automatically depositing some of your paycheck) until you reach your goal amount. Having the money in an interest-bearing account can help you grow your money more quickly.

Where should I put vacation money?

If you want to grow your trip fund money, it’s wise to put it in a savings account where it’s liquid but earning interest. Look for a secure bank that offers a healthy annual percentage yield (APY). These high-interest or high-yield accounts are often found with no fees and low or no minimum balance requirements at online banks. Because these banks don’t have bricks-and-mortar locations, they can pass the savings onto customers.

What is a reasonable vacation budget?

A reasonable vacation budget will depend on your particular plans. Are you going to a lavish resort in the Mediterranean for two weeks or to a cabin at a local park for the weekend? Whatever your travel style may be, making a budget is critical. By researching transportation, lodging, food, entertainment, and excursion costs in advance, you can likely figure out your savings goal.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q125-092

In today’s digital age, making money from home has gotten easier than ever. Whether you’re looking for a full-time income, a side hustle, or just some extra cash, there are plenty of opportunities to earn without leaving your house. The best option for you will depend on your skills, interests, and financial goals. Read on for inspiration.

33 Easy Ways to Make Extra Money from Home

This list of home-based business ideas can help earn income without stepping foot out your front door.

1. Test Websites

Most websites are well-designed and easy to use because they’re tested by real users — a service they get paid to do. Platforms like UserTesting and Userbrain will link you up with companies who need website testers, and you’ll earn money for each test you do. There are also opportunities to earn more money for live interviews about your experience.

2. Test Products

Products also need testers, and testing can be done at home, too. You might be able to earn extra cash by giving your opinion on gadgets, personal care products, and more. (Plus, you might get some free stuff in the bargain.)You can find product testing opportunities directly through large companies or using third-party sites like ProductReportCard and FocusGroups.org.

3. Take Surveys

Another way to make some extra money from home is by taking online surveys. You can tap this market through sites like Swagbucks, Survey Junkie, and MySurvey. Some platforms pay you in points you can later redeem for cash or gift cards, while others pay by check. You won’t get rich quick, but it can be worth exploring if you have a lot of free time.

4. Become a Voice Actor

If you’ve got a voice for radio — or an audiobook, video game, or the PA announcement at your local grocery store — you may be able to earn money doing voiceover work from the comfort of your own home. (Or more accurately, the comfort of your own closet, which is probably the most noise-insulated room in the house.)

5. Do Closed Captioning

If you’re a fast typist with the ability to pay close attention to speech, you might make a great transcriptionist or captioner. Companies like Rev make it possible to get paid for captioning video content, and you get to set your own hours.

6. Become a Translator

Are you fluent in a second language? If so, you may be able to put your language skills to work by becoming a professional translator. Popular platforms that post freelance translators gigs include: Fiverr, PeoplePerHour.com, Lionbridge, and Translate.com

7. Teach an Online Course

If you’re highly skilled in a certain area, chances are there’s someone out there who would pay to learn what you’re an expert at. Whether it’s creative writing, singing, or coding in JavaScript, you might be able to get paid for sharing your knowledge with platforms like Udemy, Teachable, or Thinkific.

Recommended: Money Management Guide

8. Become a Tutor

If you aced the SATs or ACTs or have expertise in a particular subject, you may be able leverage your skills by offering online tutoring to high school and college students. You could market your services in your local area or apply to work for an online tutoring company.

9. Offer Music Lessons

If you play an instrument or know how to sing, you may be able to turn your talent into cash by offering music lessons or being a vocal coach. You could teach local students in your home or offer lessons virtually.

10. Write a Book

Okay, okay: This one is not a quick, nor guaranteed, way to make money at home by any stretch. But if you’ve got the chops and the dedication, you might just actually write a marketable novel, memoir, or essay collection. Just know that as far as the money goes, it’s generally a slow burn.

11. Start a Blog

If you love to write but aren’t ready to take on a book, you might start a blog that focuses on something you’re good at, such as baking, being a mom, or rating restaurants. If your audience gets large enough, you could potentially make money through ads or affiliate marketing. A successful blog could also land you speaking gigs, public appearances, and other earning opportunities.

💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.

12. Become a Freelance Writer

Another way to use your writing skills to make money at home is to become a freelance writer, either on the side or full-time. It can be a tough industry to break into, but once you’ve established yourself, it’s possible to earn a living wage doing this work. Having examples of your published work is the best way to show a prospective client your writing skills. You might get started by writing a few pieces for a low (or even no) fee to build up your portfolio.

13. Do Freelance Copy Editing

If you’re a strong editor with a keen eye for detail and proper grammar, you might be able to earn money as a freelance copy editor. You can look for short-term gigs through freelance sites like Fiverr and Upwork. If you’d prefer something more long term, try a job board like Indeed.

14. Freelance as a Graphic Designer

If you have design skills, you could turn your creativity into cash by designing logos for businesses, graphics for company websites, and more. You’ll likely need a portfolio of your work to show prospective clients.

Recommended: Managing Your Money as a Freelancer

15. Become an SEO Consultant

Search engine optimization (SEO) is a service that companies will often pay mighty well for… after all, good rankings translate into more money in their pockets, too. To get consulting gigs, you’ll likely need to share success stories and metrics, whether for accounts you managed professionally in the past or your own personal account.

16. Become a Virtual Assistant

If you’re the kind of Type-A person whose Google calendar is comprehensive and color-coded, consider channeling those organizational skills into becoming a virtual assistant. Tasks might include making travel arrangements, scheduling appointments, managing invoices, and answering phone calls. You can not only do this from home but can often set your own hours. Try Fiverr, Upwork, and LinkedIn for leads.

17. Sell Your Crafts

If you already spend your downtime enjoying a craft like painting or knitting, why not consider placing your wares up for sale on a site like Etsy? Not only will your art bring smiles to other peoples’ faces, it might also be an easy and creative way to make extra money from home.

18. Design a T-shirt (or Mug, or Tote Bag)

Got a witty slogan, a riff on pop culture, or a beautiful image in mind that just has to be on a t-shirt? Make it happen! Websites like CafePress and CustomInk make it easy to create and sell your unique designs.

19. Become a YouTuber

If you’ve got something to say and are creative enough to say it with engaging video content (whether it’s dog grooming or fashion advice), YouTube can be a lucrative way to make money from home. Just keep in mind: This is a side-gig that can easily take a lot of time and require a considerable investment in audio/video equipment.

20. Stream Your Gaming Habits on Twitch

Earning money by playing video games might sound like a fantasy, but platforms like Twitch make it possible…provided you’re actually good (or at least entertaining to watch). You’ll need to have more than 50 followers and meet other marks to become what’s known as an affiliate and start earning cash via people subscribing to watch you.

💡 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.

21. Get Paid to Post on Insta

If you have an Instagram or other social media account with a strong following and often share products you love, why not get paid for it? You may be able to partner with your favorite brands and earn money for sharing information about their products. You might also get the chance to test out some new ones for free.

22. Sell Your Stuff

If you’re overdue for a closet clean-out, consider selling the stuff you don’t need anymore on a site like Craigslist or Facebook Marketplace. Be sure to take clear photos and do a search to find how much similar items sell for, so you can set a competitive price. Just be on the lookout for money scams that can crop up when buying and selling online.

23. Sell Your Photos

If you know your way around a DSLR or honestly even just an iPhone, you might be able to sell your stock-photo-worthy snaps for money. Platforms like Alamy and GettyImages are two places to sell or license your pictures.

24. Rent Out Your Clothes

Yes, this is real! Turn that prom or bridesmaid dress in your closet into income by renting it out to others. Peer-to-peer rental platforms like Tulerie and Pickle can help. Designer clothes are most in demand.

25. Rent Out Your Equipment

If you have a lawn mower, camping gear, snow blower, or any other piece of equipment you don’t use on the regular, you could be earning money by renting it out. Sites like Loanables and Fat Llama make it easy to list your items for rent. Bonus: Sharing items is a way to reduce our overall carbon footprint.

26. Rent Out Your Driveway

If you live in an area where there’s a shortage of parking spaces, such as a crowded metropolitan city, you could start a passive income stream by renting out your driveway through a platform like Neighbor or Spacer.

27. Do Data Entry

Are you a quick typist with great attention to detail? These days, companies who need data entry sometimes hire remote workers, which means you can populate those spreadsheets in the comfort of your own home.

28. Provide Customer Service

In today’s WFH world, you don’t necessarily have to commute to a crowded, noisy call center to get a job doing customer service. Many companies hire virtual customer service employees, including Amazon. Other than getting a good headset, this is a low-cost side hustle.

29. Do Medical Coding And Billing

Medical coding and billing might be tedious, but it generally pays well. And you don’t have to work on-site to do it. Many hospitals, healthcare companies, and medical practices hire at-home medical coders to help process patients through their systems. You can find leads through online job platforms.

30. Start a Podcast

It might be a long shot, but many successful podcasts started as a casual, at-home conversation between friends. If your subject matter is interesting enough to draw advertisers, it could become a fun way to earn money without a real job.

31. Start An At-home Daycare

Love kids? You could get paid to care for them by offering at-home daycare services for parents who need time to work or meet other commitments. Starting a business like this may require licensing and home modifications, but you can also hire out your services as a babysitter using an app like UrbanSitter, Care.com, or Bambino Sitters.

32. Become a Professional Pet-Sitter

Getting paid to hang out with puppies may sound like a dream, but it can be your reality if you charge for pet-sitting services. Apps like Rover make it easy to get started, but you can also just advertise around your neighborhood and get clients through word-of-mouth.

33. Rent Out Your Car

If your car is in good condition and you don’t need it every day, you might be able to make money by renting it out through a car-sharing app like Turo and HyreCar. Just make sure your insurance allows you to do this.

Tools to Help You Earn Money From Home

If you’re looking for a way to make money from home, these tools can help get you started.

Online Platforms for Freelancers

•   Upwork: This popular freelance marketplace connects professionals with clients in need of writing, design, programming, and more.

•   Fiverr: Freelancers can post their services and set their own pricing on this global marketplace.

•   Toptal: An exclusive network of freelancers, Toptal is known for its rigorous screening process.

•   Freelancer: Businesses post projects on this site; freelancers can then bid on them to try to win the work.

Apps to Rent or Sell Items

•   Facebook Marketplace: This free platform can be great for selling a wide variety of items locally and is directly integrated with your Facebook profile.

•   eBay: You can use this global online marketplace to auction or sell new and used items, including electronics, clothing, and collectibles.

•   Poshmark: A fashion-focused app, poshmark can be a great place to sell your gently used clothing, shoes, and accessories.

•   OfferUp: This app offers a quick and easy way to post items for sale in your local community.

•   Fat Llama A peer-to-peer rental platform, Fat Llama allows users to rent out or borrow items like cameras, tools, and equipment.

Pros and Cons of Making Money from Home

Before you embark upon one of the ideas listed above, take a closer look at the pros and cons of earning income at home.

Advantages

Among the benefits of working from home are:

•   Convenience

•   Save time and money on commuting

•   Don’t have to buy an office wardrobe

•   Can set your own hours

•   Not interrupted by office distractions

•   Better work-life balance

•   Potentially less stress (less “office politics”).

Disadvantages

That said, there are also downsides to working from home:

•   Isolation/lack of social interaction

•   Lack of teamwork/anyone to brainstorm with

•   May end up working longer hours

•   Communication issues if you use technology to stay in touch

•   May not have office equipment you need

•   Possibly more complicated taxes when you work from home

•   Lack of motivation.

Alternatives to Making Money From Home

If you like the idea of flexibility and freedom, but don’t want to be at home all the time, here are some other options to consider.

Part-Time Jobs with Flexible Hours

These occupations often offer part-time positions with flexible scheduling:

•   Bookkeeper

•   Real estate agent

•   Childcare provider

•   Occupational therapist

•   Speech pathologist

•   Personal trainer

•   Business consultant

•   Fundraising manager

•   Marketing or social media manager

•   Events manager

Gig Economy Opportunities Outside the Home

Here are some side hustles that help you get out and about:

•   Rideshare driving (Uber/Lyft) – Earn money by driving passengers to their destinations on your own schedule.

•   Food delivery (DoorDash/Uber Eats/Grubhub) – Pick up and deliver restaurant orders to customers in your area.

•   Grocery shopping (Instacart/Shipt) – Shop for and deliver groceries to customers who place orders through the app.

•   Task-based work (TaskRabbit) – Complete various on-demand tasks like furniture assembly, moving help, or home repairs.

•   Scooter charging (Bird/Lime) – Pick up, charge, and return electric scooters.

The Takeaway

Working from home can be a great way to earn extra income. As that money starts flowing in, you can help it grow (without doing anything at all) by choosing the right banking partner.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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.

FAQ

How can I make $1000 a week from home?

To make $1,000 a week from home, you might explore options like freelance writing, graphic design, web development, virtual assisting, online tutoring, and creating and selling digital courses. You may need to combine multiple income streams to reach that amount consistently.

How can I make $200 a day from home?

You might be able to make $200 a day working from home by freelancing online. You might be a writer, editor, SEO consultant, translator, tutor, medical coder, virtual assistant, or find other professional work that pays by the hour or day.

How can you make money fast but legally?

Some ways to legally make some quick money include: selling things you no longer need, walking dogs, driving for a ride/share app, delivering food, freelance writing and graphic design, tutoring, renting out your car, and (if you live in a popular urban area) renting out your driveway.

How do I balance multiple income streams from home?

Balancing multiple income streams requires organization. Some tips include: using scheduling tools like Google Calendar, setting clear boundaries for each job to avoid burnout, and mixing passive and active income streams. It’s also helpful to use a budgeting app like QuickBooks to keep track of expenses and earnings for each income stream. This can also help you assess which streams are most profitable and adjust your workload accordingly.

What tools or equipment do I need to work from home?

To work from home effectively, you generally need a reliable computer, high-speed internet, and a comfortable workspace with an ergonomic chair. You might also want to invest in a quality microphone and webcam to enhance virtual interactions. If you live in a noisy environment or neighborhood, you may also want to get noise-canceling headphones to block out distractions and improve your focus.

SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. 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.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible 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 (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, 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 Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details 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.

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

SOBNK-Q125-088

Non-bank financial institutions provide financial services, but they don’t hold the same license or charter as a bank. Also referred to as non-bank financial companies or NBFCs, these entities can extend credit, provide investment services, cash checks, and exchange currencies. However, they generally can’t accept deposits from customers.

There are different types of non-bank financial institutions, and the way they’re structured can determine what services they provide. An NBFC can serve as a complement to traditional banking services or act as a competitor to licensed banks.

Here, you’ll learn more about these businesses, how they compare to banks, and their pros and cons.

What Are Non-Bank Financial Institutions?

Nonbanking financial institutions (NBFI) are institutions that don’t have a banking license but are able to facilitate certain types of financial services. They’re different from depository institutions, which can offer deposit accounts such as checking accounts, savings accounts, or money market accounts. An NBFI or NBFC is not licensed or equipped to accept deposits.

Non-bank financial institutions can specialize in niche financial services, including:

•   Investments

•   Financial consulting

•   Brokeraging

•   Money transfers

•   Check cashing

•   Risk pooling.

They can target a broad or narrow range of customers, which can include consumers, business owners, and corporate entities. Because they’re not licensed the same way that banks are, NBFCs are not subject to the same degree of government regulation and oversight.

💡 Recommended: Community Development Financial Institutions

How Do NBFCs Work?

Now that you know NBFCs’ meaning, consider how these institutions work. In general, NBFCs work by providing financial services that are outside the scope of what traditional banking typically entails. There are different types of organizations that can bear the NBFC (or NBFI) label. The type of organization can determine how it works and what services it offers.

Here are some of the most common types of NBFCs:

•   Investment companies

•   Loan companies

•   Companies that offer asset-based financing

•   Micro-lending companies

•   Risk pooling institutions.

In terms of regulation, NBFCs generally operate within the framework of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. However, the scope of regulation that extends to NBFCs and NBFIs is limited. For that reason, they’re sometimes referred to as “shadow banks” since they operate within the shadows of traditional banking institutions.

Pros and Cons of NBFCs

Non-bank financial institutions have both advantages and disadvantages. On one hand, they can play an important role in providing financial services outside the confines of traditional banking.

However, questions have been raised about the lack of oversight for NBFCs and what implications that might have for the individuals and businesses that use them.

Here are some of the main pros and cons of NBFCs at a glance.

Accountability is more of a question mark with non-bank financial companies since there’s less oversight overall. The increase in popularity of NBFCs has raised questions about the need for greater regulation of this section of the financial services industry.

Recommended: How to Switch Banks in 3 Easy Steps

NBFCs vs Banks vs Fintech

You may wonder how NBFCs and NBFIs compare to banks and fintech companies. Here are some points to consider:

•   Non-bank financial companies are not the same as banks, and they can also be differentiated from fintech. Again, a bank is a financial institution that holds a license or charter which allows it to accept deposits from its customers. Some banks may fall within the category of Community Development Financial Institutions (CDFIs), which help to promote access to capital and financial services in underserved areas.

•   Fintech or financial technology is a term that describes the use of innovation to improve financial services and products. Fintech generally encompasses tools, apps, and other tech that can make managing money or borrowing it easier. There can be some overlap between NBFCs and fintech or between fintech and banks.

Which is better, an NBFC vs. a bank vs. fintech? There is no single answer as each one can fulfill different needs. Comparing them side by side can make it easier to distinguish between them.

Examples of NBFCs

As mentioned, there are different types of NBFCs and NBFIs. If you’re looking for a specific non-banking financial institution example, the list may include:

•   Life insurance companies

•   Insurance companies that underwrite disability insurance policies

•   Property insurance companies

•   Mutual funds

•   Pension funds

•   Hedge funds

•   Financial advisors and investment advisors

•   Securities traders

•   Broker-dealers

•   Mortgage companies

•   Peer-to-peer lending companies

•   Payday lenders

•   Leasing or financing companies

•   Companies that provide money transfer services

•   Check cashing companies.

If you invest money, send money to friends and family via an app, or own a home, then chances are you’ve encountered an NBFC somewhere along the way. Examples of companies that may be classified as NBFC include LendingClub, Prosper, and Quicken Loans.

At the same time, you may also use traditional banking services if you have a checking account or savings account at a brick-and-mortar bank or an online bank.

NBFCs and the 2008 Financial Crash

The 2008 financial crash was fueled by a number of factors, including risky lending and investment practices. The resulting fallout included bank failures, banking bailouts, and a housing market crisis. Many of the companies that were engaging in these risky behaviors were NBFCs.

In 2010, the Dodd-Frank Act was passed to address some of the conditions that led to the crisis, including the lack of regulation and oversight as it pertained to NBFCs. The legislation made it possible for non-banking financial institutions to flourish, rather than whither away in the wake of the crisis.

Why? Simply because NBFCs continued to lend money at a time when traditional banks were placing greater restrictions on lending. While questions linger about the degree of regulation needed for NBFCs, their popularity has only increased since the financial crisis.

Recommended: Alternatives to Traditional Banking

The Takeaway

Non-bank financial institutions can play a part in how you manage your money. For some people, they may provide financial services that make their lives easier. However, they are not regulated in the same way that licensed or chartered banks are. Also, if you want to be able to deposit money into your checking or savings account, then you can do that through a bank.

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FAQ

How are NBFCs different banks?

NBFCs are different from banks because they do not hold a banking license or charter. While they can provide some of the same financial services as banks, they’re not equipped to accept deposits from customers.

What is the difference between fintech and NBFCs?

Fintech refers to the use of innovation and technology to improve financial products and expand access to financial services. An NBFC can use fintech in order to offer its products and services to its customers. For example, an investment company may offer robo-advisor services that operate on a fintech platform.

What are the disadvantages of NBFCs?

The main disadvantages of NBFCs include lack of government regulation and oversight, as well as their inability to offer deposit accounts. However, NBFCs can offer numerous advantages, including convenient access to credit and the potential to earn higher returns on investments.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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