Feb
27
2024
At What Age Can You Get a Debit Card?

At What Age Can You Get a Debit Card?

By | Family Finances, money | Comments Off on At What Age Can You Get a Debit Card?

The minimum age to get a debit card with a checking account at a bank or credit union in your name only is 18. However, it’s possible for kids as young as age six to get a debit card when opening a bank account with a parent. There are also fintech companies that offer debit cards for kids with no minimum age requirements.

Getting your child a debit card can be a great way to introduce them to the basics of money management, as long as you do so wisely.

Key Points

•   The minimum age to get a debit card with a checking account at a bank or credit union is 18, but kids as young as six can get a debit card when opening an account with a parent.

•   Debit cards have age limits because opening a bank account is a legal agreement, and minors cannot enter into contracts.

•   Some banks offer teen checking accounts or joint checking accounts that allow minors aged 13 to 17 to have a debit card.

•   Fintech companies provide prepaid debit cards for kids with no specific minimum age requirements, offering more control and flexibility.

•   Giving minors a debit card can teach them financial responsibility, provide convenience, and prepare them for managing money in the digital age.

Why Do Debit Cards Have Age Limits?

Debit cards have age limits because the age requirement for a bank account is usually set at 18. When you open a bank account, you’re entering into a legal agreement with the bank. Since minors cannot legally enter into contracts, banks require you to be a legal adult in order to open a bank account in your name.

There is, however, an exception to this answer to “When can you have a debit card?” Minors under 18 can qualify for a debit card if they’re opening a bank account with their parent’s help. In that case, banks may agree to issue a debit card that’s linked to a teen checking account for a minor aged 13 to 17 or a joint checking account that’s shared by the teen and their parents.

The minimum age to open a bank account can vary by bank or credit union and go even younger. Chase, for example, offers a bank account for kids as young as 6 that includes a debit card. Parents must be current Chase customers to open the account, and they will own the account.

If you’re interested in getting your child a prepaid debit card that isn’t associated with a specific bank account, there are platforms that allow that with no minimum age restrictions for kids. You can link your child’s debit card to your account to deposit funds and set controls on when and how they can spend the money.

💡 If you’re 18 or older and ready, you can get a debit card with SoFi.

Do Minors Need to Have a Debit Card?

Whether your minor child needs to have a debit card can depend on their financial situation and your personal preferences. Some scenarios to consider:

•   If your teen has a part-time job or runs their own business, then it may be worthwhile to give them a debit card that’s linked to a checking account. They can deposit their paychecks or earnings into their account and use their debit cards to make purchases.

•   Likewise, you might want your child to have a debit card if they have bills they’re responsible for paying. For example, you might expect your 17-year-old to pay for their cell phone or car insurance. If they have a debit card, they could use it to pay those bills themselves, versus you having to pay them and collect the money from your teen.

•   Some parents want their kids to learn how to handle money and think managing a debit card responsibly is a good step in that direction. Still others may want their child to be able to, say, buy a snack after school without carrying cash.

•   Whether a minor should have a debit card can also be a question of maturity and their sense of personal responsibility. If you have a child who’s constantly losing or misplacing their stuff or doesn’t necessarily grasp how money works, then a debit card might do more harm than good. But if your child seems capable and you want to improve their money mindset, it could be a wise move.

Is It Possible to Get a Debit Card as a Minor?

It’s possible to get a debit card as a minor, but a young person will likely need a parent or guardian’s help to do so. The options for getting a debit card as a minor include:

•   Opening a teen checking account at a bank or credit union

•   Opening a joint checking account with a parent or guardian

•   Getting a prepaid debit card

Getting a debit card that’s linked to a checking account may be preferable if you’d like your teen or child to be able to deposit money without you having to reload a debit card. On the other hand, a prepaid debit card may offer more control.

For instance, you might be able to set limits on how much your child can spend per day or where they’re able to use the card.

You can also control when funds are deposited to their prepaid account. If you want them to complete their weekly chores on time, for example, you could make that a condition of adding money to their card.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Benefits of Having a Debit Card as a Minor

There are several good reasons to consider giving your teen or child a debit card.

•   Financial responsibility. Having a debit card can be a good way for kids to learn how to manage money, including how to budget and prioritize saving. Even if your child’s only source of income is allowance, a debit card can still be a helpful tool for teaching them personal finance.

•   Convenience. If your child has their own debit card, they can use it to pay for things themselves without having to borrow from you and then pay it back later. Carrying a debit card also means your child doesn’t have to keep cash on them, which could get lost or stolen.

•   Online purchases. Using a debit card online can spare teens the trouble of having to visit their favorite stores to shop. They can also use their debit cards to enroll in streaming services or make in-app purchases with your consent.

•   Emergencies. A debit card could come in handy in an emergency situation if your child or teen needs money unexpectedly. For example, if your 16-year-old runs out of gas, they could use their debit card to fill up if they’re near a gas station, without having to call you for help.

In terms of what are debit cards good for, the short answer is quite a bit. Learning how to use a debit card at an early age can make it easier for kids and teens to master more complex financial concepts, such as a student checking account or a credit card, as they get older.

When Is the Right Time to Get a Debit Card?

The right time to get a debit card for a minor depends on the child’s age, maturity, and financial needs, as well as the parent’s comfort level. Generally, it may be a good idea to get your child a debit card if they have some form of income, whether it’s allowance, cash received for good grades, money from working a part-time job, or income that’s the benefit of a side hustle.

If you’re considering giving your child a debit card, it’s important to talk to them about what a debit card is and how it’s designed to work. Your child should understand that when they use their debit card to pay, they’re spending real money, even if cash isn’t physically leaving their hands.

It’s also helpful to discuss safety so they know how to protect their debit card. For example, you can explain that they shouldn’t share their PIN or debit card number or let a friend use their card. You can also go over how to stay safe when using their debit card online or when withdrawing cash at an ATM.

What to Look for When Choosing a Debit Card

If you’re ready to get a debit card for your teen or minor child, there are plenty of options to consider. As you compare different debit cards for kids, here are a few things to keep in mind.

•   Traditional or prepaid. The first thing to consider is whether you’d like to get a debit card for your teen that’s linked to a bank account or a prepaid debit card option. You might check the options at your current bank first to see whether it’s possible to set up a teen or joint checking account with a debit card before looking at prepaid platforms.

•   Fees. Account fees can nibble away at your child’s balance, so it’s important to check the fees you might pay, either for a traditional debit card that’s linked to a bank account or for a reloadable debit card for teens. The list might include out-of-network ATM fees, reload fees for prepaid cards, or monthly maintenance fees.

•   Access. It’s also important to look at how your teen or child will be able to manage and access their money. This may involve deciding whether to opt for a traditional bank vs. an online bank. If you’re opening a teen checking account at a brick-and-mortar bank, they should have branch and ATM access, along with online and mobile banking. An online bank or prepaid debit card might offer online and mobile banking access only.

•   Parental controls. The level of control you’ll have with a debit card for kids or teens can depend on where it’s issued. Your bank may offer debit cards for minors with parental controls built in. But if not, you might need to search for another card option that allows you the level of oversight you prefer.

Recommended: Debit Cards vs. Credit Cards

The Takeaway

Teens and kids may qualify for a debit card, which can build financial literacy and money skills. However, finding the right one for them, with the level of parental control you like and the lowest fees, can take some research.

Opening a free checking account for your teen can be a great introduction to money, and it’s a simple way to give them access to a debit card. You might also be interested in switching banks yourself if you’re ready to take a break from paying high fees.

With SoFi, when you open an online bank account, you can spend and save in one convenient place, earn a competitive annual percentage yield (APY) and pay no account fees, which can help your money grow faster. Plus, qualifying Checking and Savings account holders with direct deposit can 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 4.00% APY on SoFi Checking and Savings.

FAQ

At what age can a minor have a credit card?

Minors may be added to a parent’s credit card account as an authorized user as young as 13. Otherwise, they’ll need to be at least 18 with their own income in order to get a credit card in their name without a parent’s consent.

Is it better for a minor to have a debit or credit card?

A debit card can be a good stepping stone for a minor to learn how to manage money, without the risk of them creating debt. Once your child begins to learn the fundamentals of finance, you could add them as an authorized user to your credit card to help them learn how credit works.

Do all banks allow minors to have debit cards?

Every bank has its own policy with regard to who can have a debit card or checking account and whether that includes minors. If you’re unsure whether your current bank or credit union offers debit cards for minors, ask them. If the answer is no, you can look around for other banks that have teen or kids checking accounts that include a debit card. Prepaid cards may be another option.

Photo credit: iStock/jacoblund

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

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Feb
27
2024
Can You Write a Check From a Savings Account?

Can You Write Checks From a Savings Account?

By | Family Finances, Life & Career, money | Comments Off on Can You Write Checks From a Savings Account?

If you’re wondering, “Can you write a check from a savings account?” the short answer is no. You can’t write checks from a savings account; instead, you can do so from a checking account, which is designed to provide that specific financial service. Savings accounts are primarily for earning interest on your deposits and transferring money occasionally.

Checks might seem like an old-fashioned payment method, but they are vital in specific transactions. For instance, you might need to pay the deposit for an apartment rental by check. In addition, personal checks are more secure for mailing payments than cash.

While you may want to draw funds from a savings account, that’s really not its purpose. Here, you’ll learn the details on this situation and also a possible work-around or two.

Key Points

•   Writing checks from a savings account is not possible; it can only be done from a checking account.

•   Savings accounts are primarily for earning interest and occasional money transfers, not for check-writing.

•   Checks are still important for certain transactions, such as apartment rental deposits and secure mailing of payments.

•   Savings accounts are designed for saving money, earning interest, and providing security for future needs.

•   While payments cannot be made directly from a savings account using checks, automatic transfers and mobile banking can be used for certain transactions.

Why You Can’t Write Checks from a Savings Account?

You can’t write checks from a savings account because these accounts are for earning interest on cash you leave alone. Federal law, in fact, prohibits check-writing from such accounts and may restrict how often you can transfer money out of a savings account, too.

Part of the way a bank makes money is to lend out your funds on deposit in a savings account for other purposes. You earn an annual percentage yield, or APY, on your deposit for giving the bank the privilege of using your money that’s in a savings account. In other words, your financial institution is depending on some savings-account money staying put, not being regularly transferred out via checks.

Checking accounts, however, are designed to allow customers to write checks and make purchases. They may not make much or any interest, but you can move your money out of these accounts via checks and electronic transfers. You can even write a check to yourself to access your money.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


What Accounts Can You Write a Check From?

One of the ways that checking accounts vs. savings accounts differ is that you can’t write checks from a savings account. However, both checking accounts and money market accounts can let you move funds out via checks. You can choose from the following types:

•   Standard checking. This account typically provides a checkbook and debit card to make purchases. You might earn meager or no interest, but you can access your cash quickly. And, as with most kinds of checking accounts, you’ll be able to get cashier’s checks and certified checks if needed.

•   Premium checking. This is a checking account on steroids, with better interest rates, rewards programs, and customer perks. In addition, these accounts might have monthly fees or steep minimum balance requirements in order to get those enhanced benefits, so check your customer agreement carefully.

•   Rewards checking. Think of rewards checking as akin to a premium checking account but focuses on providing cash back for debit card usage. Again, it’s crucial to read the fine print for these accounts, as they usually require specific spending habits to be worthwhile.

•   High-interest checking. This kind of account, also known as high-yield checking, blends saving and checking together by providing higher interest rates while allowing you to write checks and use your debit card.

While this account attempts to provide the best of both worlds, you’ll likely receive a lower interest rate than a savings account. You also might have to fulfill strict requirements (such as a monthly high account balance or transaction count).

•   Student checking. High school and college students can access banking through these accounts. Student checking accounts typically provide leniency for overdrafts and promotional rewards for new customers. However, your account will change to a standard checking account when you lose student status, meaning you may lose the advantages of a student account.

•   Second chance checking. Customers with less than perfect banking histories can struggle to find a bank that will provide them with an account. Unpaid bank fees and repeated overdrafts can cast a shadow over your banking record, making financial institutions hesitant to work with you. Fortunately, numerous institutions offer second chance checking to give customers another shot at banking. These accounts might restrict spending or charge monthly fees to cover their risk but can help you get back on your feet.

•   Money market account. Many money market accounts also combine some of the features of savings and checking accounts. For example, money market accounts can earn higher interest than typical checking accounts (making them more like savings accounts) but allow you to write checks, as with a checking account.

Recommended: How to Sign Over a Check to Someone Else

What You Can Do With a Savings Account

While you can’t write checks with a savings account, the different types of savings accounts offer these functions and benefits:

•   Security. You can safely save for the future, whether that means building an emergency fund or saving for a down payment on a house. If you bank at a Federal Deposit Insurance Corporation (FDIC)- or National Credit Union Administration (NCUA)-insured institution, you will have up to $250,000 per depositor or shareholder, per insured institution for each account category.

•   Interest. As noted above, you’ll earn interest. The annual percentage yield (APY) will help your money grow.

•   Convenience. You can also use mobile banking with a savings account. This feature allows you to access your account from your phone to deposit checks, transfer money, and view monthly statements.

•   Perks. You may be able to snag some perks by opening a savings account, such as some banking fees being waived or a one-time cash bonus.

•   Automated savings. You can set up automatic transfers from your checking account to savings to help increase your savings in an effortless way.

•   Account linking. You can link your savings account as a backup to your checking to help avoid overdrafting.

Quick Money Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Tips for Using a Savings Account to Make Payments

If your goal is to make payments from a savings account, you can’t use a check, as you’ve learned above. Plus, saving accounts may often have monthly transaction limits, meaning you can’t move money from the account for every monthly expense and random bill that may pop up. Generally, you can transfer money from a savings account six times a month.

You can, however, set up a small number of automatic transfers out of your savings account. Follow these tips:

•   Have your account details handy. Double-check your account and routing numbers to make sure you are transferring funds out of the right account.

•   Limit the bills you pay with your savings account. The less information is out there, the less likely it is to fall into a thief’s hands.

•   Don’t attempt more than your account’s transaction limit. Usually, plan on paying no more than six monthly bills with your savings account. Check with your financial institution, however, to find out your exact transaction limits.

•   Maintain an adequate balance. Transferring money from your checking account and depositing cash or paychecks into your savings account will help ensure you don’t overdraft the account.

Banking With SoFi

Savings accounts are excellent tools for earning interest and working towards your financial goals. However, they are less suitable for making payments because you can’t write checks from a savings account. Although you can make payments from savings accounts in a pinch, it’s better to use checking accounts for these transactions. After all, it’s what checking accounts are designed for.

If you’re looking for a banking partner who can provide the best of both checking and savings accounts, see what SoFi offers. When you open an online bank account, you’ll have the convenience of spending and saving in one place. Plus, with our Checking and Savings, you’ll earn a competitive APY and pay no account fees, two features that can help your money grow faster. Plus, you’ll receive both paper checks and a debit card to help you make payments.

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

FAQ

Why do checks come from checking accounts?

Checks come from checking accounts because banks intend payments to flow frequently from these accounts. In addition, checking accounts are the most convenient way to deposit and withdraw money from a bank because you can withdraw money an unlimited amount of times per month.

Why can I not write checks with a savings account?

You can’t write checks with a savings account because the account is for saving money and earning interest payments. Banks don’t provide checks for a savings account because the intention is for you to save money and leave at least a chunk of it untouched in the account. On the other hand, checking accounts allow you to write checks.

Can I write any check from a savings account?

You can’t write a check from a savings account because that is not how they operate according to federal guidelines. You can save money and earn interest with a savings account, while a checking account allows you to write checks.

Photo credit: iStock/AndreyPopov

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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Feb
27
2024
What Does a Pending Transaction Mean on a Bank Account?

What Does a Pending Transaction Mean on a Bank Account?

By | money | Comments Off on What Does a Pending Transaction Mean on a Bank Account?

A pending transaction on your bank account means that a transaction is underway but hasn’t been fully processed yet. Perhaps a vendor has accepted your debit card as payment and is working with your bank to receive payment. Or maybe you are expecting an electronic payment but the funds are awaiting release.

Usually, your bank takes a few business days to resolve the pending transaction and post it to your account. However, it’s vital to remember that pending transactions subtract your purchase amount from your bank account as soon as they appear. Likewise, an incoming credit will turn up as an addition to your balance, usually with an anticipated release date.

Bank pending transactions, even if they come from vendors you recognize, may require a closer look. For instance, why is there an extra charge from the gas station you visited this morning? And why would a charge still be pending from the sandwich shop you stopped at last week? These items are examples of pending transactions, which can create holds on your account until your bank resolves them.

Key Points

•   A pending transaction on a bank account means a transaction is in progress but hasn’t been fully processed yet.

•   Pending transactions can include purchases, bill payments, or deposits that are awaiting completion by the bank.

•   Banks typically take a few business days to resolve pending transactions and post them to the account.

•   Pending transactions affect the account balance as the purchase amount is deducted immediately, and incoming credits are added with an anticipated release date.

•   It’s important to review pending transactions, as they can create holds on the account until the bank resolves them.

What Is a Pending Transaction?

A pending transaction on your bank account means your bank is processing a purchase you made, a bill you paid, or a deposit that’s heading your way, but it hasn’t been completed yet. Either the payment hasn’t been sent to the vendor yet or the incoming funds haven’t cleared, although they are in process.

For instance, when you purchase a good or service by using your debit card, your account will show a pending transaction shortly after. This acknowledges that you used your card, shows the amount, but the transaction isn’t in the rearview mirror just yet. Here’s why:

•   Pending purchases happen when you swipe, insert, or tap your card, the business you’re transacting with confirms the card is valid through a quick online process.

•   Then, the business accepts the purchase and puts a hold on your account, signifying that your bank needs to pay them for the purchase. This hold creates a pending transaction on your checking account.

•   The business resolves the pending transaction on your account by settling your purchase with your bank or financial institution. When your financial institution receives communication from the business, it will perform a bank transaction deposit to the business’s financial account.

•   Once the business receives payment, the transaction goes from pending to posted.

Likewise, pending deposits happen when the funds from another account haven’t been released to your bank account yet. However, they appear pending to let you know funds are processing and should be deposited soon. This could reflect a check you deposited or perhaps a direct deposit that you set up.

How long do direct deposits take to clear? Typically, direct deposits can take a couple of days to clear, but paychecks are often orchestrated in advance to show up and be available on payday, so they may appear instantaneous.

If you’ve deposited a check, it typically takes no more than two days to clear, but in some situations, it can take up to a week.

Recommended: What Happens if a Direct Deposit Goes to a Closed Account?

Pending Transaction vs Posted Transaction

A bank pending transaction and a posted transaction represent two different stages of your bank or financial institution processing a payment or a deposit. Specifically, the difference is:

•   A pending transaction on your bank account means one of two things: either a merchant initiated a request for payment to your bank because of a purchase you made with your debit card or a deposit is waiting to be released into your account.

•   To get to posted transaction status, your bank finishes processing the payment or deposit request, and money goes from your account to the vendor to fund your purchase or vice versa. For example, say you spend $50 at the grocery store. After you use your card, the store communicates with your bank to record a pending transaction. Then, your bank uses funds in your account to fulfill your grocery purchase. Your account has a posted transaction, a debit, of $50 after your bank pays the grocery store.

How Long Does a Transaction Stay Pending?

A transaction typically stays pending for one to three business days. During this time, your bank or financial institution processes the request and transfers money from one account to another according to your purchase or deposit amount.

After these steps occur, the transaction is no longer pending. It becomes a posted transaction.

What Causes a Transaction to Stay Pending?

A transaction can stay pending for various reasons.

•   First, the vendor you transacted with might be slow to move the payment from your bank. The transaction stays pending until the vendor accepts payment from your bank. If the vendor takes too long to accept the money, the bank can cancel the transfer. If that happens, the pending transaction will vanish from your account, along with the charge against your balance.

•   In addition, pending transactions can take longer to clear because of how businesses operate in specific industries. For example, a hotel won’t resolve a pending transaction on your account until you check out because you might, say, order room service during your stay, increasing your bill. As a result, the pending transaction stays on your account until the hotel can charge the grand total to your card.

•   Lastly, transactions can stay pending because of holidays and weekends. During these times, banks and businesses may take longer to resolve pending transactions on your account.

How Does a Pending Transaction Impact Your Account Balance?

Although a pending transaction on your bank account means the vendor hasn’t received payment yet or the funds for the deposit are not cleared, it still influences your account balance. Put another way, pending transactions count toward your balance, which helps prevent you from overspending money.

There’s another benefit to this practice: That quick deduction of pending charges from your bank account balance might help you avoid overdraft or NSF fees. You see how much money is actually in your account and can therefore be cautious with your purchases.

Pending Transaction Examples

Say you have $2,000 in your bank account, and you go to buy a $400 espresso machine. The merchant initiates a hold with your bank account, and your bank creates a $400 pending transaction on your account. This transaction reduces your account balance by $400.

Meanwhile, the bank takes four days to process the merchant’s request. However, the moment the pending transaction hit your account, your balance changed to $1,600. As a result, you had a realistic sense of the money available to spend immediately after buying the espresso machine despite your bank taking four days to pay the merchant.

In other words, the bank pending transaction is instantly subtracted from your bank account to prevent you from overdrafting. So, when managing your checking account, your balance might be lower than expected from time to time. In these situations, check for pending transactions from recent purchases, as they may be taking away from your balance sooner than you thought.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

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Can You Cancel a Pending Transaction?

Depending on where you are in the purchase process, you may be able to cancel a pending transaction with the vendor or your bank. Here are a few scenarios to consider. First, here’s how you might be able to work with a vendor:

•   Perhaps you place an online order for new clothes and feel buyer’s remorse a few hours later when you see the pending transaction hit your bank account. Fortunately, the vendor probably hasn’t shipped your order yet, so you contact them and cancel the order. Once your vendor processes the cancellation, the pending transaction should disappear from your bank account and restore your available funds.

•   What if you placed an online order, but you notice the pending transaction on your bank account is double the amount of what you actually ordered? You realize the vendor has charged your account twice, so you notify them about the issue. Once they rectify the ordering error, the pending transaction should change to the correct amount.

In other situations, contacting your bank or financial institution is a better move.

•   If you see an unfamiliar pending transaction from a company you don’t remember doing business with, it’s best to notify your bank of the suspicious activity. The bank will investigate on your behalf and cancel any fraudulent charges.

•   If you see a pending transaction for an amount that doesn’t match your records, you can ask your bank to nullify the charge. This option is helpful if you can’t get in touch with the vendor or want to avoid overdrafting your account.

•   Say you have a pending transaction from a business that is unresponsive to your communication or refuses to cancel the transaction. In that case, contacting your bank to cancel the pending transaction can resolve the issue.

Recommended: Benefits of Using Mobile Deposit

The Takeaway

A pending transaction on your bank account means your bank is processing a purchase or an incoming deposit from another account. Although a pending transaction signifies your vendor has yet to receive payment or the deposit funds aren’t released yet, the amount involved is typically reflected from your bank account. This gives you an accurate, up-to-date picture of the money you have available.

It’s possible to cancel a pending transaction by contacting the vendor or your bank, but it’s crucial to act quickly.

Looking for a banking partner that makes money management easy and rewarding? Open an online bank account with SoFi. Our high interest bank account offers a competitive annual percentage yield (APY) and no account fees, both of which can help your money grow. We also have features like Vaults and Roundups that can help take your savings to the next level. Plus, the fact that you spend and save in one convenient place can streamline the time you spend wrangling your finances.

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

FAQ

Are pending transactions already deducted from my account?

Once a pending transaction appears on your bank account, the amount is deducted from your balance. As a result, you don’t have to wait for the transaction to post to see how the purchase impacts your bank account.

What do I do if my transaction is pending?

If your transaction is pending, all you need to do is wait for your bank to resolve the charge with the vendor or the deposit to your account. This process usually takes one to three business days. The only reason to take action regarding a pending transaction is if you want to cancel it.

Can pending transactions be declined?

A vendor can decline a pending transaction by not accepting payment from your bank. This scenario means the vendor loses money on your purchase, so it’s rare for this to happen (unless, say, an item is sold out). The vendor will also decline a pending transaction if you successfully cancel your order with them.

Photo credit: iStock/Morsa Images

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.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SOBK0223017

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Feb
27
2024
Fixed Expense Vs Variable Expense

Fixed Expenses vs Variable Expenses

By | Budgeting & Goals, Financial Independence, money | Comments Off on Fixed Expenses vs Variable Expenses

A budget can be a great tool for managing your money and making it work harder for you. But typically a budget involves distinguishing between fixed expenses (those that stay constant, month after month) and variable expenses, which change over time.

Understanding where your money is going in these two ways can be helpful as you work to track and optimize how you earn, spend, and save.

What’s important to know is that each kind of expense can be lowered in many cases, and fixed vs. variable expenses don’t necessarily translate as needs vs. wants.

Here, you can learn more about these two ways you spend money and how to pay less. You will likely find smart tips for how you can budget even better.

Key Points

•   A budget helps manage money by distinguishing between fixed expenses (constant) and variable expenses (fluctuating).

•   Fixed expenses include rent, mortgage, insurance premiums, and gym memberships, while variable expenses include groceries, utilities, dining out, and entertainment.

•   Both fixed and variable expenses can be reduced, but cutting fixed expenses may require bigger life changes.

•   Examples of fixed expenses are mortgage payments, car payments, student loan payments, and subscription fees.

•   Examples of variable expenses are utilities, food, dining out, entertainment, and travel.

What Is a Fixed Expense?

Fixed expenses are those costs that you pay in the same amount each month — items like your rent or mortgage payment, insurance premiums (which can be an often-forgotten budget expense), and your gym membership. With fixed expenses, you know the amounts you will owe ahead of time, and they don’t change (or perhaps only annually).

Fixed expenses tend to make up a large percentage of a monthly budget since housing costs, typically the largest part of a household budget, are generally fixed expenses. This means that fixed expenses present a great opportunity for saving large amounts of money on a recurring basis if you can find ways to reduce their costs. However, cutting costs on fixed expenses may require bigger life changes, like moving to a different apartment — or even a different city, where the cost of living is lower.

Keep in mind, too, that not all fixed expenses are necessities — or big budget line items. For example, an online TV streaming service subscription, which is withdrawn in the same amount every month, is a fixed expense. It’s also a want as opposed to a need. Subscription services can seem affordable until they start accumulating and perhaps become unaffordable.

Examples of Fixed Expenses

Here are some examples of fixed expenses:

•   Mortgage payments or rent

•   Car payments

•   Student loan payments

•   Membership and subscription fees

•   Insurance premiums

•   Childcare or tuition payments

•   Internet or mobile phone fees

💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.00% APY, with no minimum balance required.

What Is a Variable Expense?

Variable expenses, on the other hand, are those whose amounts can vary each month, depending on factors like your personal choices and behaviors as well as external circumstances like the weather.

For example, in areas with cold winters, electricity or gas bills are likely to increase during the winter months because it takes more energy to keep a house comfortably warm. Grocery costs are also variable expenses since the amount you spend on groceries can vary considerably depending on what kind of items you purchase and how much you eat.

You’ll notice, though, that both of these examples of variable costs are still necessary expenses — basic utility costs and food. The amount of money you spend on other nonessential line items, like fashion or restaurant meals, is also a variable expense.

In either case, variable simply means that it’s an expense that fluctuates on a month-to-month basis, as opposed to a fixed-cost bill you expect to see in the same amount each month.

Examples of Variable Expenses

Here are specifics of what can constitute a variable expense:

•   Utilities

•   Food

•   Dining out

•   Entertainment

•   Personal care

•   Travel

•   Medical care

•   Gas

•   Property and car maintenance

•   Gifts

💡 Quick Tip: Your money deserves a higher rate. You earned it! Consider opening a high-yield checking account online and earn 0.50% APY.

Fixed vs Variable Expenses

To review the difference between variable vs. fixed expenses:

•   Fixed expenses are those that cost the same amount each month, like rent or mortgage payments, insurance premiums, and subscription services.

•   Variable expenses are those that fluctuate on a month-to-month basis, like groceries, utilities, restaurant meals, and movie tickets.

•   Both fixed and variable utilities can be either wants or needs — you can have fixed expense wants, like a gym membership, and variable expense needs, like groceries.

When budgeting, whether you are calculating expenses for one person or a family, it’s possible to make cuts on both fixed and variable expenses.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Ways to Save on Fixed Expenses

Just because an expense is fixed doesn’t mean it can’t be downsized. Consider these possibilities.

Review Where Your Money Is Going

Take a look at your fixed expenses with a critical eye. Did your landlord raise your rent a significant sum? It might be time to look for more affordable options or get a roommate.

Has the number of subscription services you pay for crept up over time? You might save on streaming services by dropping a platform or two.

Refinance Your Loans

Interest rates rise and fall. If they are dropping, you might be able to save money by refinancing your loans, such as your mortgage. Check rates, and see if any offers are available that would reduce your monthly spend.

One option can be to get a lower payment over a longer period. You will likely pay more interest over the life of the loan, but it could help you out if you are living paycheck to paycheck right now.

Consolidate Your Debt

If you have a significant amount of high-interest debt, such as credit card debt, you might consider paying it off with a personal loan that offers a lower interest rate. This could save you money in interest and help lower your fixed expenses.

Bundle Your Insurance

Many insurance companies offer a lower premium if you sign up for both automotive and homeowners insurance with them. Check available offers to potentially reduce your costs.

Ways to Save on Variable Expenses

As you delve into variable vs. fixed expenses, here are some possible ways to minimize the ones that vary.

Scrutinize How You Spend

When you track your spending, you may find ways to cut back. For instance, you could look for ways to do your grocery shopping on a budget by planning meals in advance and shopping with a list. You might be able to challenge yourself to go for one month without, say, takeout food and the next without movies and then put the savings towards paying down debt.

Hit “Pause” on Impulse Purchases

If you feel the urge to buy something that isn’t in your spending plan, try the 30-day rule. Mark down the item and where you saw it and the price in your calendar for 30 days in the future. When that date arrives, if you still feel you must have it, you can find a way to buy it. But there is a very good chance that sense of urgency will have passed.

Try Different Budget Methods

If you find you need more help reining in your variable expenses, you might benefit from trying different budgeting tactics. There is the popular 50/30/20 budget rule, which says to allocate 50% of your take-home pay to needs, 30% to wants, and 20% to savings.

Other people prefer the envelope budget method or using a line-item budget to dig into where their money is going. You might also benefit from apps and digital tools to help you track where your money is going. Many banks offer these to their customers.

Check in With Your Money Regularly

The exact cadence is up to you, but it can be helpful to review your money on a regular basis. Some people like to check in on their account balances a few times a week; others prefer to review their accounts in-depth monthly. Find a system that works for you so you can see if your spending is on-target or going overboard.

Benefits of Saving Money on Fixed Expenses

If you’re trying to find ways to stash some cash, finding places in your budget to make cuts is a big key. And while you can make cuts on both fixed and variable expenses, lowering your fixed expenses can pack a hefty punch, since these tend to be big line items — and since the savings automatically replicate themselves each month when that bill comes due again.

Think about it this way: if you quit your morning latte habit (a variable expense), you might save a grand total of $150 over the course of a month — not too shabby, considering it’s just coffee. Even small savings can add up over time when they’re consistent and effort-free — it’s like automatic savings.

But if you recruit a roommate or move to a less trendy neighborhood, you might slash your rent (a fixed expense) in half. Those are big savings, and savings you don’t have to think about once you’ve made the adjustment: They just rack up each month. The savings you reap can help you pay down debt or save more, which can help you build wealth.

Saving Money on Variable Expenses

Of course, as valuable as it is to make cuts to fixed expenses, saving money on variable expenses is still useful — and depending on your habits, it could be fairly easy to make significant slashes.

As mentioned above, by adjusting your grocery shopping behaviors and aiming at fresh, bulk ingredients over-packaged convenience foods, you might decrease your monthly food bill. You could even get really serious and spend a few hours each weekend scoping out the weekly flyer for sales.

If you have a spendy habit like eating out regularly or shopping for clothes frequently, it can also be possible to find places to make cuts in your variable expenses. You can also find frugal alternatives for your favorite spendy activities, whether that means DIYing your biweekly manicure to learning to whip up that gourmet pizza at home. (Or maybe you’ll find a way to save enough on fixed expenses that you won’t have to worry as much about these habits.)

Saving and Budgeting With SoFi

Fixed expenses are those costs that are in the same amount each month, whereas variable expenses can vary. Both can be trimmed if you’re trying to save money in your budget, but cutting from fixed expenses can yield bigger savings for less ongoing effort.

Great budgeting starts with a great money management platform — and SoFi can help you with that, thanks to our dashboard and smart 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 4.00% APY on SoFi Checking and Savings.

FAQ

What are examples of variable expenses?

Variable expenses are changeable costs that include such items as groceries, utilities, entertainment, dining out, and credit card debt. They differ month by month.

What are examples of fixed expenses?

Fixed expenses are constant month after month. These can include such things as rent, car payments, student loan payments, and subscription services.

Are utilities fixed or variable?

Utilities may be a need vs. a want in life, but they often vary. For instance, if you live in a cold climate, your heating bill will rise in the winter. Or you might run the dishwasher more over the holiday season, increasing your bill.

Photo credit: iStock/LaylaBird

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

SOBK0723044

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Feb
27
2024
All You Need to Know About a Foreign Currency Certificate of Deposit

The Basics of an ACH Hold

By | Family Finances, Life & Career, money | Comments Off on The Basics of an ACH Hold

If you ever see the phrase “ACH hold” when checking on your bank account, it can be helpful to know that this means funds are on hold, anticipating a completed electronic transfer.

ACH, which is short for Automated Clearing House, is a popular kind of ETF (electronic fund transfer). Both businesses and individuals may use this method to move money between bank accounts. When you grant a business or government the right to conduct an ACH debit (which is the electronic removal of funds from your bank account), you may see those words “ACH hold” on funds in your account, telling you that verification is taking place.

This may cause you to wonder if your bank account and financial affairs are in good shape.

Key Points

•   ACH holds refer to funds being placed on hold in anticipation of a completed electronic transfer.

•   ACH stands for Automated Clearing House, a network used for electronic fund transfers.

•   Banks put ACH holds on accounts to verify funds availability before approving transactions.

•   ACH holds can last up to 24 to 48 hours and are typically processed in batches throughout the day.

•   If an ACH hold doesn’t clear within a few days, contacting the bank is necessary to resolve the issue.

What Is an ACH Hold?

So what does ACH hold mean? When a company or institution that you have authorized to make a withdrawal from your account submits an ACH debit, your bank will receive and acknowledge the transaction. At that point, the bank might place an ACH hold on your account. Here’s what is happening:

•   While there is a hold on your account for the amount of the ACH debit, you will not be able to use those funds for a purchase.

•   During the ACH hold, the bank is verifying that you have the funds in your account to cover the requested debit.

•   Once confirmed, your bank will deduct the money from your account.

•   If there are not adequate funds for a transaction, it could be rejected.

In such an instance, the ACH hold simply makes the funds you will owe unavailable before they are actually debited from your account.

On the flip side, you may sometimes notice a pending ACH credit in your account. Here’s a bit of detail about what that may represent:

•   If you open your mobile banking app a day before payday, you might see the pending direct deposit, but the funds are not yet available.

•   This means your employer has sent the money through ACH, but your bank has simply placed a hold until it can verify the transaction and push the funds through to your account.

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Understanding Automated Clearing House

ACH stands for Automated Clearing House, a U.S.-based network governed by Nacha (National Automated Clearing House Association). The system enables businesses and individuals to electronically debit (take money from) or credit (put money into) accounts.

ACH credit transfers are quite common today. For instance:

•   Examples of a company or government agency putting funds into an individual’s or company’s account include direct deposit payments from an employer to an employee, social security benefits, and tax refunds.

•   As an individual, you likely utilize ACH debit as well. If you have connected your online bank account to a peer-to-peer or P2P payment app like PayPal, Venmo, or Cash App and you utilize standard transfers, you are likely using ACH debit when you pay friends and family.

•   You may also use ACH when you enable autopay for bills each month, such as your mortgage, rent, or utilities. When you sign up for this kind of payment, those companies are using ACH debit to withdraw the necessary funds to cover your monthly payment.

But money does not go directly from one account to another. Before your direct deposit paycheck reaches your bank account — or your automatic payment reaches your landlord or the electric company — it goes through the clearing house, which batches payments multiple times a day. That means ACH payments are not immediate, though they can be same-day.

How Does an ACH Hold Work?

When an ACH hold turns up in your account, here are the steps that are typically going on behind the scenes:

1.    The ACH request is sent to your bank to debit funds from your account.

2.    The bank receives the request and begins work.

3.    The bank puts a hold on the funds.

4.    The bank ensures the funds are available.

5.    The transaction is completed.

Recommended: ACH vs. Check: What Are the Differences?

How Long Does an ACH Hold Last?

There is not a set time that an ACH hold will last. ACH transfers are often processed in batches throughout the day, so if a transfer misses one batch, it likely waits for the next one. For this reason, ACH transfers typically occur in one or two business days.

For this reason, it’s unlikely a hold would last any longer than 24 to 48 hours.

Tracking Your ACH Hold

But what happens if the days are passing and an ACH hold doesn’t clear? This can be a major inconvenience, whether the transaction involved is an incoming paycheck or an outgoing bill payment.

Unfortunately, as the customer, you will not be able to resolve this on your own. You will need to to contact the bank and make an inquiry, giving them the pertinent details. This will likely include your account number, the amount of the ACH, and how long you have seen the hold in your account. If you are able to see any other specifics under a section such as “transaction details,” those can be helpful as well.

Tracking an ACH hold can be a wise move if a couple of days have passed (say, you are on day three) and the funds in question still have not cleared. Usually, by this point, the transfer would either have taken place or been rejected.

Why Do Banks Perform an ACH Hold?

ACH holds allow banks to verify that funds are in place before approving the transaction. For example, say your account has $100 in it, but a bill collector has initiated an ACH debit for $500. It will be in the bank’s best interest to place the hold on your account. Once the bank realizes that your account does not have the funds to complete the transaction, it will likely reject the ACH transfer.

This protects the bank’s assets, but it means you have an unpaid bill. In this example, you may also have to pay late fees in addition to the funds you owe. What’s more, the bank might charge you an ACH return fee. These fees can certainly add up.

It is a good idea to monitor your account closely and set up low-balance alerts. As a best practice, you might want to keep track of scheduled automatic payments via calendar reminders so your account balance is always high enough to cover charges.

Unauthorized ACH Holds

ACH holds can benefit you as well as your bank. For example, if you monitor your checking account closely and notice a pending ACH transaction that you weren’t expecting, you can contact your bank to learn more about the transaction.

If a person or entity is attempting to debit your account without your authorization, this could mean that your banking details have been compromised. Your bank will be able to help you with next steps to protect you from fraud.

Another scenario to consider: The Consumer Finance Protection Bureau (CFPB) advises that you can stop electronic debits via ACH by payday lenders. These payday loans are a way to get an advance on your paycheck. To curtail unauthorized account deductions, you must revoke their payment authorization (or ACH authorization) by calling and writing to the loan company and your financial institution or by issuing a stop payment order. Visit the CFPB website for sample letters .

Note: Stopping payment via ACH debit does not cancel your contract with payday lenders. You must still pay off the full balance of your loan, but you can work with the lender to determine an alternate method.

An ACH hold is typically part of a financial institution’s processing protocol. The end user (you) likely isn’t able to intervene.

However, if you’d like to try to remove the hold or cancel the transaction, you may contact your bank’s customer service representative to see if anything can be done.

Also, you can follow the steps above to revoke ACH authorization if the hold reflects an unauthorized transaction. That step may or may not cancel the pending transaction but can help curtail future debits that you don’t want to take place.

Recommended: How to Open a Bank Account

The Takeaway

ACH (or Automated Clearing House) holds work to protect banks during transfer processing. While delays may seem annoying at times, there are pros and cons to them in this situation. When a company initiates an ACH debit from your account, the hold allows the bank to confirm that funds are available to complete the transaction, which can ensure good flow of finances. Such holds also give you an opportunity to identify any unauthorized ACH debits, which is definitely a plus.

Having a bank that looks out for your best interests is another thing that’s usually a big plus. Which is why SoFi makes sure you can manage all your automatic payments seamlessly so your finances can stay on-track and organized. But that’s not all. When you open an online bank account with direct deposit, you’ll earn a competitive annual percentage yield (APY) and pay no account fees, both of which can help your money grow faster.

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

FAQ

How long can a bank hold an ACH transfer?

When an entity, such as your employer or the government, issues you a direct deposit via ACH transfer, your bank must generally make the funds available for withdrawal by the next business day. However, weekends and bank holidays do not count as business days, so it may take a few days to get your money even after an ACH transfer has gone through.

How long does it take an ACH check to clear?

Financial institutions may be able to process ACH transfers in one to two business days or on the same day. However, a bank or credit union might hold onto transferred funds once it receives them, generally until the next business day.

What is the ACH hold check order fee?

In your banking life, you might encounter the phrase “ACH hold check order fee.” It typically just means that your financial institution charges a fee for ordering checks, which may be automatically deducted from your account. The “ACH hold” is the pending fee that’s been debited and the “check order” tells you why the fee is being deducted.

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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

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