Feb
20
2025
Tips to Track a Money Order

Tips for Tracking a Money Order

By | Budgeting & Goals, Family Finances, money | Comments Off on Tips for Tracking a Money Order

A money order can be a safe and reliable way to send money, but what happens when the recipient doesn’t receive or cash it? It’s possible to track a money order to make sure it is delivered to the intended person, but doing so may come at a cost. While the process for tracking varies by issuer, it’s usually helpful to have the receipt and money order details before filing a request.

If you are handling money orders and want to verify that they arrive at their destination and are cashed, read on.

Key Points

•   Money orders can be tracked using the receipt and details provided at the time of purchase.

•   Tracking methods vary by issuer, but typically involve using a tracking or serial number.

•   If the receipt is lost, a request can be filed with the money order issuer, but fees may apply.

•   Contacting the recipient directly can sometimes save time and cost in tracking a money order.

•   Money order tracking can help recover lost payments and protect against fraud, but it may take time and incur fees.

What Is Money Order Tracking?

Money orders are a way of transferring money. They are prepaid with cash or a debit card vs., say, pulling money from your checking account when they are cashed.

They differ from personal checks and cashier’s checks in one important way: There is no sign in your bank transaction history if and when the money order has cleared. This can raise the question “How do I track a money order?”

Figuring out how to trace a money order is fairly straightforward if you’ve kept your receipt. When you purchase a money order, the issuer should provide a receipt with a tracking or serial number that can verify if it has been cashed or deposited. Senders can submit details from the receipt through the issuer’s website or automated phone line to track the money order.

Without a receipt, however, money order tracking becomes more difficult. You’ll likely need to file a request with the money order issuer. Doing so will probably incur fees and may take several weeks to complete but can hopefully help reduce your financial stress.

Recommended: Ways to Manage Your Money

What Do You Need in Order to Track a Money Order?

Depending on the issuer you used, extra information could be needed beyond the tracking or serial number on the receipt. Additional information will probably be necessary if you’ve misplaced the receipt. Here are more specifics:

•   Tracing a postal money order can be done online or by phone. The following details, which are listed on the USPS money order receipt, are required.

◦   The dollar amount

◦   The post office number

◦   The money order’s serial number, which is typically a 10 or 11-digit code.

However, if you don’t have a copy of the receipt, you’ll have to fill out and submit PS Form 6401 to initiate a money order inquiry.

•   Tracking money orders from other issuers, such as MoneyGram and Western Union, can usually be done online or by automated call center. This is provided that you have the serial number and exact payment total.

   If you’ve lost the receipt, you’ll need to supply more details about you and the recipient, such as:

•   Your name, phone number, and address

•   The exact money order amount

•   The purchase location address

•   The date and time of purchase

•   The payee’s (or recipient’s) name, if included on the money order.

Recommended: How to Cash a Postal Money Order

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Tips to Track a Money Order

Before picking up the phone or filling out any paperwork, consider these tips for tracking money orders.

Contact the Recipient

Before you get to work tracking a money order, consider that you might be able to save time and potential cost by reaching out to the intended recipient. This individual or business is referred to as the payee on the money order.

You can ask if the money order was received. It’s possible that the money order arrived and has yet to be cashed or deposited. Contacting the recipient directly could be simpler than submitting a request with the money order issuer.

Make Sure You Keep the Issuer Receipt

Another route involves using the details from the receipt. Money orders can be purchased at banks, post offices, check-cashing businesses, and retail stores like supermarkets and pharmacies. When you buy a money order, you may receive receipts from both the issuer and location you purchased it. For example, a money order bought at a pharmacy could be issued by MoneyGram or Western Union. Note that the issuer receipt is the one with the information (i.e., serial number and dollar amount) you’ll need to track your money order.

You might have to pay an extra fee and complete additional forms to track a money order without a receipt and the serial or tracking number.

Check the Status Before Submitting a Request

There are multiple ways to check the status of a money order. If you have your serial or tracking number and the money order amount, you should be able to verify online or by automated phone line whether it has been cashed or deposited. This could be free, or there may be fees (up to $15 or more), depending on the vendor.

There are also likely fees and significant waiting times when submitting a request for a copy of the paid money order. The situation is similar if you choose to investigate a money order you believe to be missing or stolen. Checking the money order status beforehand can quickly determine if it’s been cashed and guide your next steps.

Recommended: How to Deposit a Check

Reasons Why Someone Tracks a Money Order

Money orders are considered a safe form of payment, but there are reasons why you might want to track one. Accounting for your money, after all, can be an important aspect of managing your cash effectively and reaching your financial goals.

Recover Lost Payment

A lost money order can be a major inconvenience, especially if you were waiting for the funds to make timely payments. Tracking the money order can help determine if it’s gone missing and recover funds more quickly.

If you are expecting a money order that doesn’t arrive, it’s wise to contact the issuer and complete any required documents quickly.

Protect Against Fraud

Tracking a money order can help protect senders in cases of theft or fraud. In such an event, requesting a photocopy of a cashed money order can support a fraud claim and potentially get your money back. The photocopy will indicate who endorsed the money order. If the signer does not match the payee, you could get a refund since their identity wasn’t properly verified.

How Long Does It Take for a Money Order to Send?

A money order can be purchased and prepared quickly — simply add the recipient’s information, put your address, fill out the memo (if desired), and sign. From there, how long it takes to send depends on the delivery method. If handing it over in person isn’t feasible, sending it via USPS First-Class Mail can deliver the money order in one to five business days, though it might take longer in some cases.

Once received, a money order can show as available almost immediately, but in terms of how long it takes to clear fully, that might be from a couple days to up to a couple of weeks.

Recommended: Emergency Fund Calculator

Tips for Protecting Yourself When Tracking a Money Order

Although money orders are generally a secure form of payment, they can potentially be used for money scams and fraud. Consider using these tips to protect yourself.

Fill out the Recipient Information Immediately

As soon as you purchase the money order, enter the recipient name in the payee field to help safeguard yourself from fraud.

Save the Receipt

After filling out the money order, be sure to detach the money order stub and any receipt. Storing the receipt in a safe and accessible place will make it easy to track the money order in real time. It also provides the necessary information to file a request for cancellation and alert law enforcement in case the money order is damaged, lost, or stolen. It’s recommended to hold onto the receipt until the money order has been cashed.

Wait Before Spending Any Funds

If you receive payment by money order, it’s advised to hold off on using any funds until they’ve been verified by the issuer or cleared by your bank. In the event a money order is fraudulent, you could be liable for any amount spent.

Recommended: How to Send and Receive Money From Someone Without a Bank Account

The Takeaway

A money order is usually a secure way to transfer funds to a payee instead of using cash or a check. It can typically be tracked to ensure that it has been received and cashed by the designated payee. Keeping the receipt and other details will streamline the tracking process if you do need to verify the money order’s status. It can take a bit of time and money to trace a money order if it goes missing.

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 3.80% APY on SoFi Checking and Savings.

🛈 While SoFi does not currently offer money orders, our checking and savings accounts offer other ways to transfer money.

FAQ

Does it cost money to track a money order?

Some issuers let you use the serial or tracking number to track the money order for free online. Otherwise, you may have to pay a small fee. Investigating a lost or stolen money order typically carries fees, often around $15.

Where can I track a money order?

You can track a money order online, by phone, or going to the issuer in person.

How do you cash a money order?

You may be able to cash a money order at a bank or retailer that issues money orders. In addition, retailers where you have cashed checks in the past (such as your local supermarket) may cash money orders. Cashing it typically requires signing the order, verifying your identity, and paying a service fee to receive the funds.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 3.80% 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 3.80% 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.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

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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 Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
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This content is provided for informational and educational purposes only and should not be construed as financial advice.

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Feb
20
2025
Key Terms to Improve Your Financial Literacy

Key Terms to Improve Your Financial Literacy

By | Budgeting & Goals, Family Finances, money | Comments Off on Key Terms to Improve Your Financial Literacy

Financial literacy isn’t something that many of us are taught in school, but it’s essential when managing your money. It gives you the basic foundation of knowledge that can help you thrive.

If you feel you lack the knowledge you need, you might have to learn it on your own. Familiarizing yourself with some basic personal finance vocabulary can be a good place to start.

Finance terminology might seem confusing at first glance, but you don’t need to be a CPA or a financial advisor to make sense of it. Getting to know some of the most common personal finance words can help you build a stronger money foundation.

What Is Financial Literacy?

You might hear a lot about financial literacy but not know exactly what it means. In simple terms, being financially literate means that you have some money knowledge as well as the ability to put it to work.

Money skills can be learned in the classroom, at home, and in the real world as you navigate things like opening a bank account or taking out student loans. Becoming financially literate is important because it can help you to:

•   Have a positive money mindset

•   Act more responsibly with regard to saving and avoiding debt

•   Build wealth and plan for the future

If there are gaps in your financial education, it’s never too late to fill them. Learning some personal finance basics for beginners, including key financial literacy vocabulary, can help you get on track with your money goals.

What Is Financial Literacy Vocabulary?

Financial literacy words are simply the various terms you’ll see used again and again when discussing different money topics. For example, there are personal finance words related specifically to banking, others that are focused on insurance, and more that deal with investing.

Do you need to be a walking dictionary to understand finance and make the most of your money? Not at all. But you can benefit from knowing what certain finance terminology means and why it’s important when making money decisions.

Understanding financial literacy vocabulary can also help you avoid potentially costly money mistakes. If you’re taking out a mortgage, for example, it’s important to understand concepts like amortization and closing costs so you know exactly what you’re paying to buy a home.

Recommended: Guide to Practicing Financial Self-Care

Personal Finance Words to Know

Ready to improve your financial knowledge? Here’s an alphabetical list of some important terms to add to your personal finance vocabulary.

1. Budget

A budget is a plan for deciding how to spend your money each month. Making a budget means adding up your income, then subtracting all of your expenses.

The goal of a budget is to ensure that you’re not living beyond your means and that you have money left over to work toward your goals.

There are different budgeting techniques, like the 50/30/20 rule or the envelope system, and there are different categories people want to set guidelines and guardrails for. For example, you might want to start an emergency fund or pay down debt.

2. Cashier’s Check and Certified Check

Cashier’s checks and certified checks are two types of official checks banks can issue as a form of payment. So what’s the difference between a certified vs. cashier’s check?

A cashier’s check is drawn on the bank’s account, while a certified check is drawn on your personal account, with the bank verifying that you have sufficient funds to cover it. Between the two, a cashier’s check is generally considered to be a safer way to pay since the bank guarantees the amount.

3. Certificate of Deposit

A certificate of deposit (CD) is a time deposit savings account. When you open a certificate of deposit, you add money to the account and agree to leave it there for a certain amount of time, known as the term. The bank pays interest while your money is in the CD and when it matures (or reaches the end of the term), you can withdraw the initial deposit and the interest earned.

A CD is not the same as a regular savings account or a high yield savings account. With savings accounts, you can generally withdraw money up to six times each month or possibly more without any penalty. You’re not locked in the way you are with a CD.

4. Compound Interest

Compound interest means the interest you earn on your interest. That’s different from simple interest, which is paid on your principal balance only. Compounding interest is central to building your savings and wealth, since it helps your money grow faster and allows you to increase your net worth over time.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


5. Credit

Credit means borrowing money with the promise to pay it back. When you open a credit card account, for example, the credit card company issues you a credit line that you can make purchases against. You use the card to buy groceries, get gas, or cover other expenses, then pay that amount back to the credit card company. You typically pay interest on any balance you carry over from one month to the next.

A credit card is revolving credit, since your balance can go up or down over time as you make purchases and pay them back. Loans are a form of installment debt, since the balance only goes down over time as you make your scheduled payments.

6. Credit Score

A credit score is a three-digit number that measures how responsible you are financially. Your credit scores are generated from information in your credit reports. A credit report collects details about your debts, including payment history, balances, and available credit.

FICO scores are the most commonly used credit scores. These scores range from 300 to 850, with 850 being considered a “perfect” credit score. The better your credit scores, the easier it usually is to qualify for loans and credit cards.

7. Debt

Debt is money owed to someone else. A debt may be secured, meaning that it’s attached to a specific piece of collateral. Collateral is something your creditor can take possession of if you fail to repay the debt. So if you own a home, for example, your mortgage is a debt, and your home is the collateral.

Unsecured debts don’t have any collateral, so if you fail to pay them, your creditor has to pursue other means to collect what’s owed. Credit cards, medical bills, and student loans are examples of unsecured debt.

8. Debt to Income Ratio

Debt to income (DTI) is one of several important personal finance ratios to know if you’re trying to improve your financial literacy. Your debt to income ratio means how much of your income goes to debt repayment each month.

So why is that important? The more money you put toward debt, the less cash you have to save and invest. And when your DTI is too high, that could make it harder to qualify for a mortgage or other types of loans.

9. Emergency Fund

An emergency fund is money that you set aside for unplanned or unexpected expenses. When you save for emergencies, you’re saving for the unknown, versus setting aside money for a specific goal like a vacation or new furniture.

But you may wonder, how much emergency savings should I have? Saving three to six months’ worth of expenses is a commonly used rule of thumb but ultimately, your emergency fund should reflect the amount that you need to feel comfortable.

10. FDIC

The Federal Deposit Insurance Corporation (FDIC) is an independent agency that’s responsible for maintaining stability in the banking industry. One of the ways the FDIC does that is by insuring banks in the rare event of a failure. If you have accounts at an FDIC-insured bank, they’re covered up to $250,000 per depositor, per account ownership type, per financial institution.

11. Financial Planning

Financial planning means creating a plan or strategy for reaching your financial goals. Creating a financial plan is something you can do on your own or with the help of a financial advisor. If you’re not sure how to go about finding a financial advisor, consider what type of planning services you might need first. That can help you decide if you should work with an online advisor or seek out an advisor in person.

12. Gross Income and Net Income

Understanding gross income and net income are central to making a budget. Your gross income is all the money you earn before any deductions or taxes are taken out. Your net income is the money that hits your bank account, once you take out things like taxes, health insurance, and retirement plan contributions.

If you’re not sure about the difference between your gross pay and net pay, reviewing your pay stubs can help. You should be able to see a breakdown of everything you earned and everything that was deducted for the pay period.

13. Health Savings Account (HSA)

A Health Savings Account (HSA) is a savings account that’s attached to a high deductible health plan. An HSA allows you to set aside money for health care expenses on a tax-advantaged basis.

It’s easy to confuse HSA with other health insurance terms, like HMO. But the difference between HMO vs. HSA is that HMO stands for Health Maintenance Organization and is a type of health care plan. An HSA is a special type of health care savings account.

14. Inflation

Inflation is a rise in prices for consumer goods and services over time. In the United States, inflation is generally measured by the Consumer Price Index (CPI). When inflation rises, the things you spend money on every day cost more. Understanding inflation is important for managing your budget but it can also affect how you invest your money.

Recommended: How to Beat Inflation

15. Investing

Investing money means putting it into the market or other vehicles in the hopes that it will grow in value. Investing money is not the same thing as saving it. When you save money, you might park it in a savings account, CD account, or money market account. There’s virtually no risk of losing money, especially if your bank is FDIC insured.

When you invest money, however, you’re using it to buy stocks, mutual funds, real estate, cryptocurrency, and other investments. You can potentially get a much higher rate of return with investing vs. saving, but you’re usually taking more risk. And if an investment doesn’t pan out, you could lose money instead of growing it.

16. Life Insurance

Life insurance provides a death benefit to your beneficiaries when you pass away. Buying life insurance can offer peace of mind if you’re worried about how your loved ones might be able to pay the bills if something were to happen to you. There are different types of life insurance to choose from, depending on your needs and situation. Life insurance, along with a will, are often part of a comprehensive financial plan.

17. Money Market Account

A money market account is a deposit account that blends features of a savings account and a checking account. You can deposit money and earn interest on the balance. If you need to withdraw money, you may be able to do so using a linked debit card or by writing checks. But those withdrawals are not necessarily unlimited; banks can still cap you at six withdrawals per month. Also known as MMAs, these accounts are not to be confused with money market funds, a kind of mutual fund.

18. Net Worth

Net worth is the difference between what you owe and what you own. To calculate net worth, you’d add up all of your debts, then subtract that amount from the value of your assets. An asset is anything that has a positive value, such as a home, retirement account, or CDs. Net worth can be positive if you have more assets than debts, but it can be negative if your debt outweighs your assets.

19. Overdraft

Overdraft is a banking term that means you’ve spent more money than you had in your account. If you sign up for overdraft protection, your bank will link your checking account to a savings account, a credit card, or line of credit, which will kick in whenever you withdraw more than the current balance. Some banks charge a fee when an overdraft protection transfer takes place, but it may be significantly less than what you would otherwise be charged for overdrawing your account.

20. Time Value of Money

Time value of money is the idea that money in the present is worth more than the same amount in the future due to its potential to earn interest or investment returns. A dollar received now can be invested to grow over time, whereas a dollar received later has lost that earning opportunity.

The Takeaway

Expanding your personal finance vocabulary can give you a better understanding of how your money works and how to make it work for you. Knowing these terms can grow your financial literacy and help you achieve your goals.

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


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

What are the four pillars of personal finance?

The four pillars of personal finance are income, expenses, assets, and debt. Income and expenses are important for creating a budget. Assets and debt reflect the difference between the things of value that you own and the money that you owe to other people.

What are financial skills?

Financial skills are the skills you use to manage money. For example, budgeting is a financial skill, since it requires you to understand the difference between income and expenses and prioritize spending in a prudent way. Financial skills can be learned at school, at home, or through daily experiences.

Why is financial literacy important?

Financial literacy is important for helping you to better understand your financial situation. When you know how to make a budget, create a plan for saving and investing, and use debt responsibly, it becomes easier to get ahead financially. On the other hand, lacking financial literacy skills could make you more susceptible to poor decision-making, like overspending or carrying high-interest debt.

Photo credit: iStock/Geber86

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 3.80% 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 3.80% 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.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

*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 Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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Feb
20
2025

Are Online Savings Accounts Safe?

By | Budgeting & Goals, money | Comments Off on Are Online Savings Accounts Safe?

Online savings accounts are generally very safe. There are many features that keep them that way, from typically being insured by the Federal Deposit Insurance Corporation (FDIC) to the latest security technology.

That can be reassuring news since online savings accounts can offer many perks to account holders. The annual percentage yields (APYs) offered by online banks tend to be considerably higher than that of traditional banks, and these accounts can also offer tremendous convenience, such as being able to move money around with a minimal number of clicks on an app or website.

Key Points

•   Online savings accounts are generally very safe, protected by security technology and protocols such as SSL encryption, two-factor authentication, firewalls, and communication policies designed to prevent fraud.

•   As with traditional banks, online banks typically provide FDIC insurance up to $250,000 per depositor, per ownership category, per insured bank, in the highly unlikely event of a bank failure.

•   The Electronic Funds Transfer Act (EFTA) also limits liability for unauthorized activity in your account, as long as you notify your financial institution promptly.

•   Account holders can take proactive steps to protect their savings accounts, such as setting strong, unique passwords, keeping antivirus software updated, and avoiding public wifi for financial transactions.

•   Another way to protect your savings account is to stay vigilant — monitor the activity in your account regularly and avoid replying to calls, texts, or emails that request personal information.

What Is an Online Savings Account?

You may already think of a traditional savings account as being “online” — especially if, like an increasing number of Americans, you prefer to use your computer or a mobile app to do most of your banking instead of heading to the local branch. In fact, according to an American Bankers Association (ABA) survey released in November 2024, more than half of Americans bank by mobile app than any other method.

Thanks to the popularity of direct deposits and ATMs, many savers seldom see bank tellers anymore, but the banks and their employees are still there to do business.

True online-only banks don’t offer in-person access. They don’t have physical branches, so customers manage all their transactions with a computer, a mobile app, or at an ATM.

Savers can still deposit checks, check their account balance, transfer money, and more. If they have a problem, they handle that online as well or make a phone call to customer service.

Because online banks vs. traditional banks generally have lower overhead costs since they don’t operate brick-and-mortar locations, they tend to pass their savings on to their customers. That means their clients are often charged low or no fees, and they may earn interest rates that’s higher than a traditional savings account.

Consider that as of February 2025, the average savings account annual percentage yield (APY) was 0.41%, while a number of online banks were offering 3.70% or higher for their high-yield savings accounts.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


How Do Online Banks Keep Savings Secure?

The digital world can be a dangerous place, with hackers and identity thieves looking for new ways to get their hands on others’ hard-earned savings. Both traditional and online-only financial institutions regularly update the methods they use to protect their customers’ accounts, whether a checking account or savings account.

You may be able to find a list of those security measures on a bank’s website, or you can ask before you open an account. Precautions you might want to look for include:

Secret Socket Layer (SSL) Encryption

Encryption is an internet safety protocol that creates a secure connection when you log in to a site on your computer or with an app.

Basically, your data is scrambled and can be read (or decrypted) only by the intended recipient.

Tip: To be sure a site is using SSL encryption, you can look for a padlock and “https://” at the start of the web address.

Two-Factor or Multifactor Authentication

Two-factor or multifactor (MFA) authentication adds an additional verification step to a normal log-in procedure. With single-factor authentication, you enter your username or email and a password, and then you’re done.

With MFA, you must provide an additional verification credential before you can gain access to your account. For example, a financial site might text or email a one-time-only verification code to your smartphone (or another device you’ve pre-registered), and you must use that code within a limited amount of time to gain access to the account.

Firewalls

Like authentication, a firewall serves as a gatekeeper; it monitors the data coming in and out of a company’s computers and can block unauthorized access from certain websites or IP addresses.

Communication Policies

Your financial institution probably has a policy against asking customers to provide personal information (Social Security numbers, usernames, passwords, PINs, etc.) through unsolicited emails.

This can help customers spot requests that are actually bank fraud efforts and/or phishing scams that use personal information to gain access to financial accounts.

Alerts or Notifications

Some banks may offer different types of alerts that let customers know when there’s unusual activity on an account. (If there’s been a large ATM withdrawal, for example, or the balance drops below a certain amount.) You usually can set up text or email alerts through your account profile or account settings. If you receive a ping that several hundred dollars has been swept out of your account versus your typical $60 withdrawal, you can take steps to protect your account.

Automatic Logouts

If you forget to logout of your online account when you finish your business, your financial institution will probably do it for you. Many sites automatically log out users after a period of inactivity. This can help keep prying eyes from viewing your private information.

Limited Login Attempts

If at first you don’t succeed in logging into your account, you may get a warning from the site that you’ll have a limited number of times to get it right. After that, your account will be locked for a certain amount of time.

This security measure is designed to protect against “brute-force attacks,” when hackers try a variety of password combinations to break into a customer’s account. If this happens to you, the site will likely advise you to wait 24 hours before trying again.

Recommended: What Is a High-Yield Savings Account?

Does the Government Protect Online Savings?

It’s not just financial institutions themselves that are safeguarding online savings accounts. The government helps lower savings account risk in a couple of different ways.

The Electronic Funds Transfer Act

If your debit card is lost or stolen, the Electronic Funds Transfer Act (EFTA) limits your liability for any unauthorized activity in your account.

The limits are based on how quickly you notify your financial institution, so you’ll have no liability if you notify your bank before any fraudulent transactions are made.

•   You’ll be responsible for just $50 if you report it within two business days.

•   You’ll be responsible for up to $500 if you report the loss after two business days but within 60 business days.

•   After 60 days, everything changes. Whether the thief used your physical card or a computer to get your money, if you didn’t report the unauthorized transactions within the 60-day timeline, you could be facing unlimited liability. So it’s important to monitor your account and move quickly if you see anything that troubles you.

But the EFTA isn’t just about fraudulent debit card use. If someone manages to hack directly into your savings account and takes your money, you generally won’t be liable as long as you report the unauthorized activity within 60 days.

The Federal Deposit Insurance Corporation (FDIC)

Online banks, just like traditional banks, are eligible for FDIC coverage in the very rare event of a bank failure. Many online banks have FDIC insurance of $250,000 per depositor, per ownership category, per insured bank. The FDIC is an independent agency of the U.S. government and was created to protect the money Americans deposit in banks and savings associations. It currently insures more than 4,500 different financial institutions.

So your money is safer in a bank account with FDIC coverage, whether it’s online-only or has multiple locations in your neighborhood. To confirm the financial institution you are considering offers FDIC insured accounts, you can ask a representative, check their website, or visit the FDIC’s online tool BankFind to confirm.

Recommended: Ways to Manage Your Money

How Can Account Holders Protect Themselves?

Here are some preventive steps you can take to keep your online savings account secure:

Making Protection a Priority

While you’re shopping around for savings accounts with the best interest rates and lowest bank fees, keep in mind that safety is also key.

And when you sign up for an account, remember to take advantage of what’s offered by enabling security features like multifactor authentication and fraud detection notifications.

Recommended: What Is a Bank Reserve?

Not Getting Passive with Passwords

To keep your account secure, change your password often. Try to select a password that is as strong as possible, with a mix of numbers, symbols, and upper- and lowercase letters. Avoid using predictable combinations like “Qwerty123” or ones that involve your birthdate or pet’s name.

Make it long (as many characters as you can). Don’t share it with anyone or keep it taped to your computer. And try not to use the same password for everything you do online. If your password is compromised in a breach, it can make every account for which you use it more vulnerable.

To keep your account secure, change your password often.

Make it long (as many characters as you can). Don’t share it with anyone or keep it taped to your computer.
And try not to use the same password for everything you do online. If your password is compromised in a breach, it can make every account for which you use it more vulnerable.

Keeping Antivirus Software Updated

If you don’t already have antivirus and anti-malware programs installed on your computer, you may be able to find a free or trial version online. You also can purchase security software at a local electronics store or buy it and download it.

A full protection package can monitor your computer and other devices, and could include features such as a password manager, a virtual private network (VPN), and some type of identity theft protection.

If you already have protection on your device, be sure it’s turned on and update it regularly, so your computer recognizes every new threat that’s out there.

Avoid Using Public Wifi

Try not to use public wifi when you’re logged in to financial accounts, shopping online, or sending personal information. If you’re using a shared computer at work or at the library, don’t give the browser permission to save your password, and be sure you log off when you’re finished. You also may want to consider changing the settings on your mobile devices so they don’t automatically connect to the nearest wifi network.

If you must access online accounts through wifi hotspots, consider using a VPN app, which can encrypt the traffic between your computer and the Internet even when you’re using an unsecured network. (Carefully research the app you choose to be sure it’s a trustworthy brand, and review the permissions the app requests before agreeing to the terms.)

Staying Vigilant

It may seem unnecessary to monitor your savings on a regular basis — especially if you’re mostly depositing money into the account and almost never taking money out.

But by monitoring your bank account and keeping an eye on your balance, you might spot a problem before the bank does. And that could save you some major headaches if an identity thief decides to drain your funds.

Don’t reply to calls, texts, or emails that request personal information, even if your financial institution’s logo is on the email. It may be a phishing scam. The thief is hoping their targets will fall for the bait and hand over details that could be used to access your account and take your money.

If you get a call, say you’ll call back, hang up, and call the phone number on your savings account statement or the financial institution’s website to report your concerns. If it’s an email or text, check online for alerts on your account or call to get more information.

The Takeaway

Online savings accounts are generally very safe. They employ such features and techniques as FDIC insurance, SSL encryption, multifactor identification, and automatic logouts to help protect customers. Account holders can also do their part to secure their accounts by using unique and complex passwords, antivirus software where possible, and alerts.

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 3.80% APY on SoFi Checking and Savings.

FAQ

Is it safe to put money in an online savings account?

Yes, online savings accounts are typically very safe places to store your money. Check to see that your bank has FDIC insurance and uses such state-of-the-art technology as SSL encryption, multifactor authentication, and automatic logouts.

What are the disadvantages of online savings accounts?

One disadvantage of online savings accounts is that you will not be able to visit a bank branch and meet in person with a bank representative. Transactions are typically conducted online, in-app, or using the online bank’s network of ATMs.

What are the risks of an online savings account?

The risks to an online savings account are typically the same as the risks to a traditional savings account. There is the slight risk of hacking, a computer virus, or a bank card being lost or stolen and then used without authorization.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 3.80% 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 3.80% 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.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

*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 Checking & Savings 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.

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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20
2025

Different Types of Savings Accounts You Can Have

By | Budgeting & Goals, member | Comments Off on Different Types of Savings Accounts You Can Have

If you’re looking to put money aside for future needs and watch it grow, a savings account can be a great option. However, not all savings accounts are created equal. There are actually several different types to choose from, and the best choice for you will depend on your goals, how you want to access your money, and how soon you’ll need it.

If you’re looking for easy, in-person access to your savings, for example, you might like a traditional savings account. If getting a high return is your priority, a high-yield savings account, certificate of deposit (CD), or online bank account may be a better option. There are also speciality accounts for longer-term savings goals like retirement.

Here’s the lowdown on the different types of savings accounts to have and how to choose the best one (or ones) for your needs.

Key Points

•   Different types of savings accounts cater to different needs and goals and each has pros and cons.

•   Traditional savings accounts provide easy access and are typically insured up to $250,000.

•   Online savings accounts often offer higher interest rates due to lower operational costs.

•   CDs lock you money up for a set period of time but generally offer higher interest rates than traditional savings accounts.

•   Money market accounts combine features of savings and checking accounts, often including check-writing privileges and higher interest rates.

Common Types of Savings Accounts

When you’re choosing between the different types of savings accounts, it’s helpful to understand how they work. While there are many differences between the accounts listed below, one thing they generally have in common is access to online banking. According to SoFi’s April 2024 Banking Survey of 500 U.S. adults, 48% of survey respondents use online banking daily, and 26% use it several times a week.

Traditional Savings Account

Many people start their savings journey by opening a traditional savings account at the same bank where they have a checking account. SoFi’s data found that 71% of respondents with a bank account have a savings account.

If your bank is insured by the Federal Deposit Insurance Corporation (FDIC), then your deposits are insured for up to $250,000 per depositor, per account category, per insured institution. The National Credit Union Administration (NCUA) provides similar insurance for credit unions.

You can typically open a basic savings account with a small minimum deposit. And, while the interest rates on these accounts tend to be low compared to other savings options, they offer fairly easy access to your funds. Just keep in mind that some institutions limit “convenient” transactions (those made by check, debit card, or online) on savings accounts to six per month, and will charge a fee if you exceed the limit. However, there are generally no restrictions on the number of in-person withdrawals and transfers (at the teller or ATM) you can make on a basic savings account.

Online Savings Account

Brick–and–mortar financial institutions aren’t the only place where you can shop for a savings account. If you’re comfortable doing your banking online or from your mobile device, you might consider an online bank for your savings account.

Because online-only financial institutions tend to have lower overhead costs than traditional banks, they often pass that savings on to customers in the form of higher interest rates and lower, or no, fees.

While you can’t meet with a bank representative face-to-face, these accounts often come with well-designed and user-friendly websites and mobile apps, along with customer service representatives available via online chat and by phone.

Like basic savings accounts, online savings accounts may have restrictions on the number of transactions you can make per month without incurring a penalty fee.

If you choose an online savings account from an institution with FDIC insurance, then your funds will be protected, even if the online bank were to go out of business.

High-Yield Savings Account

Also known as high-interest savings accounts, this type of savings vehicle tends to come with higher interest rates than traditional savings accounts and often lower fees. They are primarily offered by online-focused banks and credit unions and, as a result, some consumers aren’t aware they exist. According to SoFi’s survey, just 59% of adults know what a high-yield savings account is and only 23% have one.

Depending on the financial institution, a high-yield savings account will likely be insured by the FDIC or NCUA up to $250,000 per depositor, per account category, per insured institution, or possibly more.

Like other savings accounts, withdrawals from high-yield savings accounts may be limited to six per month, and going over the withdrawal limit may trigger a fee. Of the 55% of people in SoFi’s survey who say they have switched banks, 29% did so because they wanted lower fees.

Learn more: Basics of High Yield Savings Accounts

Earn up to 3.80% APY with a high-yield savings account from SoFi.

No account or monthly fees. No minimum balance.

9x the national average savings account rate.

Up to $2M of additional FDIC insurance.

Sort savings into Vaults, auto save with Roundups.


Money Market Account

A money market account (MMA) is a type of savings account that also offers some of the features of a checking account. Like a regular savings account, MMAs pay interest on your balance (often at a higher rate than a traditional savings account). Like a checking account, MMAs offer checking-writing privileges and/or debit cards, making it easy to access your funds.

On the downside, money market funds generally require a much larger initial deposit than a basic savings account. And, you could be charged fees if the balance goes below a minimum amount.

Due to the potentially higher interest rates and check-writing/debit access, money market accounts can be a good choice for emergency funds if you’ve already saved enough to meet the initial deposit.

It can be important to know the distinction between money market accounts vs. money market funds, too. The latter is a type of investment account and not guaranteed by the FDIC or NCUA.

Certificate of Deposit (CD)

Certificates of deposit, or CDs, can be a good savings tool if you don’t need quick access to your money. This type of savings account comes with a specific term — often between three months and five years — during which you need to keep your money in the account.

In return for leaving your money untouched for that time period, CDs generally offer higher returns than standard savings accounts. Generally, the longer term, the higher the interest rate — but that is not always the case.

While savings and money market accounts pay variable interest rates (meaning your rate can change after you’ve opened the account) CDs typically pay fixed rates, so your rate is likely to be locked in once you’ve deposited the cash. You’ll know these funds are safe if they’re FDIC-insured. However, if you pull your cash before the maturity date, you will usually pay a penalty, which might mean losing any interest earned. (There are some no-penalty CDs, but the interest rate is probably lower than you’d otherwise earn.)

Cash Management Account

A cash management account (CMA) is an interest-bearing account that is usually offered by a brokerage firm, an investment firm, or a robo-advisor. These accounts typically combine the features of a savings account, checking account, and (in some cases) a brokerage account. Though they are not held by banks, they may be insured by the FDIC via a partner bank. Not all are, so be sure to check if you are thinking of opening one.

CMAs may offer higher interest rates than traditional savings accounts, along with check-writing privileges and a debit card. CMAs also typically provide easy transfers to brokerage accounts, where you can invest your funds. Keep in mind, however, that interest rates may not be as high as what you could earn in a high-yield savings account.

Speciality Savings Plans

The types of savings accounts listed above can be great places to build your emergency fund or save money for a downpayment on a house. But if you’re looking to save for a more specific or longer-term goal, such as retirement or a child’s future education, you may want to open a more specialized account.

Specialty savings accounts are designed to serve a specific financial goal. They can earn interest to help you grow your money, just like other savings accounts. Some of these accounts, however, are investment vehicles, which means they can yield higher returns over the long term, but may also involve some risk.

Among the most common specialty accounts are 529 college savings plans, 401(k)s and individual retirement accounts (IRAs), health savings accounts (HSAs), and custodial accounts for a child (which are savings accounts set up and administered by an adult for a minor).

Opening a specialty savings account can make sense if you have a singular purpose for saving money. You may want to keep in mind, however, that there may be restrictions on when and how you can withdraw those funds later. Some specialty accounts, such as IRAs, 529s and HSAs, have strict tax rules for making withdrawals.

The Takeaway

There are many different types of savings accounts, and the best option for you will likely depend on how and when you want to access your money.

You might like a traditional savings account if you want to bank in person. For better interest rates and lower fees, you might prefer an online high-yield savings account or, if you won’t need the money for a while, a CD.

For more specific savings goals, such as preparing for retirement, covering health expenses, or saving for your child’s education, you may want to open a specialty savings account in addition to a more liquid savings vehicle.

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 3.80% APY on SoFi Checking and Savings.

FAQ

What type of account is best for savings?

There are different kinds of savings accounts that suit different goals and money styles. If you like banking in-person, a traditional bank might work fine. If you prefer the convenience of an online bank, you are likely to be rewarded with higher interest rates and lower fees. If you are saving for a specific goal, a specialty account might work best. For instance, a 529 account can be a good choice if you are stockpiling funds for a child’s future college tuition.

How do I choose a savings account?

Choosing a savings account depends on your needs and goals. If you are looking for an in-person banking relationship, a traditional savings account at a brick-and-mortar bank could work well. If you want a high-yield account and low fees, and don’t plan on making trips to a branch, an online bank’s offerings might better suit your needs. If you’re able to keep your money in an account for a specific time period and want to earn a guaranteed rate, consider a certificate of deposit (CD).

Is it better to have a savings account or invest?

This depends on your goals. A savings account is best for short-term needs and emergencies. These accounts offer safety and easy access, but lower returns. Investing is generally better for long-term goals, since it can offer potentially higher returns over time. However, investing comes with risks, particularly in the short-term. Ideally, you want to have both — a savings account for short-term needs and goals and an investment account to help build future wealth.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 3.80% 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 3.80% 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.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

*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 Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBNK-Q125-058

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Feb
20
2025
Brokerage Account vs. Cash Management Account

Cash Management Accounts (CMAs) vs Brokerage Accounts: How They Compare

By | Growing Wealth, invest, Investing | Comments Off on Cash Management Accounts (CMAs) vs Brokerage Accounts: How They Compare

Both brokerage accounts and cash management accounts (CMAs) are offered by brokerage firms and both have the potential to earn returns on your money. However, these accounts serve different purposes and work in different ways: Brokerage accounts are for investing in the market, while CMAs focus on managing cash with easy access and the ability to earn interest on your balance.

Here’s a closer look at brokerage accounts vs. cash management accounts to help you decide if you need one or the other, or both.

Key Points

•   Cash management accounts offer checking and savings features, while brokerage accounts are for trading securities.

•   Cash management accounts earn interest, while brokerage accounts can earn income from investment gains.

•   Brokerage accounts have higher potential returns but also higher risk.

•   SIPC insurance covers brokerage accounts from firm failure or theft, while CMAs receive FDIC insurance when funds are swept to partner banks.

What Is a Cash Management Account?

A cash management account (CMA) is a type of cash account offered by brokerage firms that offers some of the same features as checking accounts and savings accounts. CMAs allow you to deposit money and earn interest. Most provide access to your money via debit cards, in addition to checks.

What Is a Brokerage Account?

A brokerage account allows customers to deposit money which can then be used to buy and sell investments such as stocks, bonds, mutual funds, exchange-traded funds (ETFs), and other securities.

There are three main types of brokerage firms.

•   A full-service brokerage firm usually provides a range of financial services including financial advice and automated investing.

•   A discount brokerage offers lower fees in exchange for fewer financial planning services.

•   Online brokerages allow you to trade via the internet and often charge the lowest fees.

Similarities Between a Cash Management Account and Brokerage Account

Although brokerage and CMA accounts work in different ways, there are some similarities.

Both Offered by Brokerages

Both types of accounts are offered by brokerage firms. When you open a brokerage account and link it to a CMA at the same firm, it can provide a convenient way to transfer assets from one account to another when you buy and sell securities.

The Potential to Earn Returns

When considering a brokerage account vs. a cash management, remember that they both offer customers the potential to earn money on investments or deposits, respectively.

In a brokerage account, you have the potential to earn returns from your investments, although you also face the risk of loss that comes with investing in stocks, bonds, and other securities.

A cash management account is generally a safer place to keep your money and you’ll earn interest on your deposits. But those rates are generally lower than the gains you might see from other investments.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 3.80% APY on savings balances.

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FDIC insurance.


Brokerage Account vs Cash Management: What Are the Differences?

Cash management accounts and brokerage accounts work in different ways. CMAs mirror traditional savings and checking accounts and brokerage accounts are strictly for investments. Here are the details:

Earnings Come From Different Places

In a brokerage account, potential earnings come from the gains you might see when investing in stocks, bonds, and other investments. Investing in securities also comes with the risk of losses.

Earnings in cash management accounts come from the interest rate paid on your balance. Usually, these rates are similar to the rates paid in traditional savings accounts.

CMAs also act like checking accounts because you can use checks or a debit card for purchases. But traditional checking accounts don’t usually pay interest, or if they do the rate is often lower than a CMA.

Earnings on Brokerage Accounts Are Potentially Higher Over Time

Over the long term, investing has historically provided higher returns than savings accounts. With those potential earnings comes market risk, meaning you may experience losses too, especially in the short-term.

To manage a brokerage account or work with a broker, you need to take into account your tolerance for market risk and what combination of stocks and bonds is right for your financial goals.

Insurance Is Provided by Different Sources

When you open a new bank account, up to $250,000 of your cash deposits are typically covered by the Federal Deposit Insurance Corporation (FDIC) in the unlikely event of bank failure. The $250,000 limit is per depositor, per insured bank, for each account ownership category.

Most brokerage accounts, however, are insured by the Securities Investor Protection Corporation (SIPC) in the event of theft, fraud, or if the brokerage fails. The SIPC offers up to $500,000 of coverage total, per person, if such a loss were to occur. The SIPC does not cover investment losses.

Cash management accounts have so-called sweep accounts, which are insured by the FDIC. Here’s how it works: CMAs sweep funds into a variety of FDIC-insured banks. If you make a $200,000 deposit, for example, your money may be split into four $50,000 deposits in four different bank accounts. (The CMA provider manages this process — you only see your total CMA balance.)

Before your money is moved into the different accounts, your deposit is protected by SIPC insurance if the brokerage is an SIPC member.

What Money in These Accounts Can Be Used for

Because CMA accounts typically offer checks and/or debit cards, you can use that money for purchases or bill paying or ATM withdrawals.

Money kept in a brokerage account is strictly used for trading securities. But by linking a CMA to your brokerage account, you can easily transfer cash from one to the other, for investing purposes.

The Takeaway

When considering a brokerage account vs. cash management, it helps to know what makes these accounts different, and how they can work together. While a brokerage account is for trading securities, and comes with the risks associated with investing in securities, a cash management account (CMA) is similar to a traditional checking or savings account. There’s almost no risk of losing money, and your deposits can earn interest. Because both are offered at brokerage firms, you can have both, and use your cash management account as a place to keep funds you don’t wish to invest.

Or, as an alternative to a cash management account, you might consider keeping your extra cash in a high-yield savings account. This is a type of federally insured savings product offered by banks and credit unions that typically earns a much higher rate than a regular savings account.

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 3.80% APY on SoFi Checking and Savings.

FAQ

Are brokerage accounts and cash management accounts the same?

No. Brokerage accounts are used to buy and sell securities. Cash management accounts act more like traditional bank savings and checking accounts, but are provided by brokerage and other non-bank financial institutions. Sometimes the accounts may be linked. However, the accounts earn money from different sources.

Can you keep cash in a brokerage account?

Yes, you can deposit and keep cash in a brokerage account. However, money in a brokerage account is strictly for investing in stocks, bonds, funds and other securities. If you’re just looking to store cash and earn interest, you’re likely better off with a cash management account, money market account, or high-yield savings account.

Do cash management accounts and brokerage accounts work together?

Generally, yes. If you have a cash management account (CMA) and a brokerage account at the same brokerage firm and the accounts are linked, you can use your CMA to move cash into your brokerage account in order to execute trades. You can also transfer the money from sales of securities into your CMA for safekeeping. The combination gives you the ability to purchase stocks, bonds, mutual funds and other securities, but also offers the flexibility, liquidity, and interest earnings of traditional bank accounts.

Photo credit: iStock/Aja Koska

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2025 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 3.80% 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 3.80% 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 3.80% 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.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

*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 Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.

SOBNK-Q125-057

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