What Is Deposit Insurance?

Deposit insurance is a guarantee by the federal government that the money in a bank customer’s account is insured up to a specific amount. Deposit insurance is typically provided to bank customers by the Federal Deposit Insurance Corporation (FDIC), an independent federal agency that works to make sure deposits are safe in the event of bank failures. Currently, up to $250,000 per depositor, per account ownership category, per insured bank is covered as long as the money is in an FDIC-insured financial institution. The National Credit Union Administration, or NCUA, covers money held in credit unions in a similar manner.

Most, but not all, banks offer this kind of safety net. Read on to learn more about how deposit insurance works, plus ways to make sure your money is protected.

Key Points

•   Deposit insurance guarantees bank customers’ money up to a specific amount by the federal government.

•   In the United States, the FDIC provides this insurance for banks, covering up to $250,000 per depositor per account ownership category at participating banks.

•   Deposit insurance protects funds in the very rare event of a bank failure.

•   The FDIC’s role is to maintain stability and confidence in the U.S. financial system.

•   Since the FDIC’s inception, no depositor has lost any FDIC-insured money.

Definition and Purpose of Deposit Insurance

Deposit insurance protects the money customers have in deposit accounts in FDIC-insured banks in case there is a bank failure. What is the FDIC specifically and what does it do? The agency was created in 1933 after the Great Depression, when thousands of banks failed. The purpose of the FDIC is to protect bank customers and maintain stability and confidence in the U.S. financial system. Since its creation, no depositor has lost any FDIC-insured money.

The funds you have in an FDIC-insured bank, whether it’s in a savings account or a checking account, are insured up to $250,000 per depositor, per account ownership category, per bank. In the very rare event that your bank fails, your money will be covered up to the insured amount.

In the case of bank failure, the FDIC historically pays customers within a few days up to the insured limit. This typically happens in one of two ways: The FDIC provides the customer with the insured amount in a new account at another insured bank, or they send the customer a check for the insured amount.

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How Deposit Insurance Works

Deposit insurance works by protecting customers’ money in the event their bank fails. If a bank shuts down, the FDIC reimburses depositors’ money through the Deposit Insurance Fund (DIF). The DIF is backed by the U.S. government and funded by a type of insurance premium that banks pay plus interest earned on Treasury notes bought by the FDIC.

While most banks in the U.S., including online banks, are insured by the FDIC, not all of them are. Banks must apply for FDIC coverage. When you visit your bank, look for FDIC signs or ask a bank representative if the institution is FDIC-insured.

(Credit unions insure their money separately through the National Credit Union Administration, or NCUA vs. the FDIC.)

Account Coverage

When it comes to how much money banks insure, the amount is typically up to $250,000 per depositor, per account ownership category, per bank, though some banks may offer options for receiving additional coverage through special programs they’ve created.

Account ownership categories include:

•   Single accounts, such as a checking account or savings account that’s yours alone

•   Joint accounts, like an account you have with a spouse or another person

•   Certain types of retirement accounts you have at a bank, including an individual retirement account (IRA)

•   Trust accounts

•   Corporation, partnership, or unincorporated association accounts

In practical terms, what this means is that if you have two single accounts at the same bank, such as a checking account and a savings account, you’ll be insured for up to $250,000 of the combined balance of the two accounts. So you’ll want to make sure that both accounts don’t add up to more than $250,000. Anything over that amount would not be insured.

However, if an individual has a single account and a joint account at the same bank, or a single account and an IRA, they will be insured for up to $250,000 for the single account plus another $250,000 for the joint or IRA account because the accounts fall into different account ownership categories.

And if you have two single accounts but each one is at a different FDIC-insured bank, they will each be covered for up to $250,000. That’s because they’re at two separate institutions. In addition, some banks offer programs in which they will allocate deposited funds that total more than $250,000 per depositor among insured partner banks. This can allow the customer to have FDIC coverage in excess of the usual limits while one bank manages their money.

You can use the FDIC’s Electronic Deposit Insurance Estimator (EDIE) to calculate your specific account coverage.

As a bank customer, you don’t have to do anything to get FDIC coverage. As long as your account is in an FDIC-insured bank, your money, up to the limit per account ownership type, is automatically covered. It can add to your sense of financial security to know you have liquid assets protected in this way.

History of Deposit Insurance

Deposit insurance dates back to the Great Depression, when approximately 9,000 banks across the U.S. failed between 1930 and 1933. The Depression caused widespread panic, and many people rushed to the bank to withdraw their funds. Banks couldn’t handle all the withdrawal requests, and many were forced to shut down. Many bank customers lost their money.

Because of that, President Franklin Roosevelt signed the Banking Act of 1933 into law, which created the FDIC to protect bank depositors. In January 1934, the agency began operating, insuring $2,500 per depositor. Five months later, the FDIC-insured amount was doubled to $5,000, and the FDIC became a permanent part of the U.S. financial system by law in 1935.

Fifteen years later, the FDIC insurance coverage was raised to $10,000 per depositor, and at that point it fully protected 99% of all deposit accounts in FDIC-insured banks. In 1969, the coverage was raised to $20,000, and in1974, amid high inflation and rising interest rates, it was increased to $40,000.

In 1980, President Jimmy Carter signed the Depository Institutions Deregulation and Monetary Control Act into law, raising the FDIC-insured limit to $100,000. Over the next 14 years, during the Savings and Loan Crisis, approximately 1,300 savings and loans failed, along with more than 1,600 banks. The FDIC covered the bank losses.

When the financial crisis known as the Great Recession hit in 2008, dozens of U.S. banks failed. But no insured bank depositors lost their money. (In the ensuing seven years, hundreds failed.) Two years later, in 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law, permanently increasing the FDIC insurance limit to $250,000.

Recommended: APY Interest Calculator

Deposit Insurance Around the World

According to the Center for Global Development, 80% of high-income countries currently have deposit insurance in place, and the number of lower-come countries with deposit insurance has more than tripled. Here’s an overview of deposit insurance in the U.S. and the European Union.

United States (FDIC)

In the U.S, deposit insurance is handled by the FDIC, which was created as an independent federal agency in 1933, after the Great Depression. The FDIC works to make sure deposits are safe in the event of bank failures. Up to $250,000 per depositor, per account ownership category, per bank is insured as long as the money is in an FDIC-insured bank.

The other purpose of the FDIC is to help maintain stability and public confidence in the U.S. financial system. Since its inception, no depositor has lost a penny of FDIC-insured money.

European Union

In the European Union (EU), deposit insurance is known as national deposit guarantee schemes (DGS), and they protect the savings of EU depositors whose banks fail. Deposits are guaranteed up to €100,000. DGS are also designed to help prevent mass withdrawals in the event a bank fails and to promote financial stability.

In 2015, a proposal was introduced by the European Commission to set up one European deposit insurance scheme (EDIS) that would build upon the national DGS system in EU countries. Meant to strengthen and unify coverage, the EDIS would be a single European fund to insure up to €100,000 per depositor, per bank in case of bank failure. However, as of late 2024, the EDIS was still being debated by EU members.

Benefits of Deposit Insurance

Deposit insurance has a number of advantages for bank customers. These benefits include:

Insuring Deposits

Deposit insurance can provide peace of mind to depositors at FDIC-insured banks because up to $250,000 per depositor, per bank, per account ownership category is protected if the bank fails. Since the agency was created, no depositor has lost money in an FDIC-insured account.

Protecting Different Types of Deposit Products

FDIC protects various types of deposits at insured banks, such as:

•   Checking and savings accounts

•   Money market deposit accounts (MMDAs)

•   Certificates of deposit (CDs)

•   Prepaid cards, as long as certain conditions are met

Covering Various Account Ownership Categories

Deposit insurance pertains to different types of account ownership categories, including:

•   Single accounts, such as a checking account or savings account

•   Joint accounts

•   Certain types of retirement accounts a customer has at a bank, including IRAs

•   Trust accounts

•   Corporation, partnership, or unincorporated association accounts

Depositors are covered up to $250,000 per account ownership category, per FDIC-insured bank.

Automatic Protection

There’s no need to enroll in or pay for FDIC protection. As long as you deposit money in an FDIC-insured bank, your funds are automatically protected up to the limit.

Helping to Maintain Stability and Confidence in the Financial System

By protecting depositors’ money in case of a bank failure, deposit insurance helps instill confidence in the financial system and maintain the system’s stability.

Recommended: Money Management Tips

Limitations and Criticisms

For all its benefits, deposit insurance has come under criticism. And it does have limitations. Here are some of the main critiques.

May Encourage Banks to Take On Excessive Risk

Some critics believe that deposit insurance may encourage banks to take more risks since they know the FDIC will protect insured deposits and help bail out failing banks.

Coverage Is Not Enough

For many individuals, the $250,000 FDIC-insured limit may be enough (and, as noted above, some banks offer programs for enhanced coverage). But for businesses, especially those that use banks for payroll and other purposes, the limit may be too low.

Protection Does Not Extend to Certain Assets

There are a number of assets that deposit insurance does not cover. These include stocks; bonds; mutual funds; annuities; life insurance policies; cryptocurrency; and U.S. Treasury bonds, bills, and notes.

Uninsured Deposits

Deposits of more than $250,000 may be held by individuals and businesses. This could leave the account holder vulnerable in the very rare instance of a bank failure since insurance typically covers up to $250,000. (That said, some financial institutions may offer programs to protect more than that amount.)

In addition, not all banks are FDIC-insured. Individuals who have deposits in uninsured banks are at risk of losing their money if their bank fails. If your bank is not FDIC-insured, you may want to consider closing your bank account and switching to a financial institution that can give your money FDIC protection.

Finally, some depositors have more than $250,000 in two of the same account ownership category types. Their combined balance in a checking and a savings account might exceed the limit, for instance. They may not be aware of this, or perhaps they just haven’t gotten around to transferring money between banks to stay under the limit.

Other depositors may have combined bank accounts after getting married, for instance, and their new balance may exceed the limit.

If you have more than the insured limit in your bank account, there are ways to maximize FDIC insurance that you can explore.

How to Check If Your Deposits Are Insured

As mentioned, although the FDIC insures deposits in most banks, not all banks are protected. How can you tell if your bank is? If you use an online bank, the institution’s website should contain information about its FDIC coverage. If you use a brick-and-mortar bank, the next time you visit your local branch, check for a sign that says “FDIC-insured.” Each FDIC-insured financial institution is required to display official signs.

In the near future, it should be even easier to spot FDIC signage. In 2025, banks will be required to display the FDIC official digital sign on certain automated teller machines and to display it near the name of the bank on all bank websites and mobile applications.

Another way to find out if your deposits are insured is to use the FDIC BankFind tool.

Common Misconceptions About Deposit Insurance

There are a number of myths about deposit insurance. Here are some common misconceptions to be aware of.

•   Misconception: Every bank is FDIC-insured.
Fact: Most banks in the U.S. are FDIC-insured, but not every bank is. Look for FDIC signs at your bank’s branch or call the institution and ask them. You can also use the FDIC BankFind tool mentioned above.

•   Misconception: A bank customer has to apply for deposit insurance.
Fact: Customers do not need to apply for or buy FDIC insurance. The coverage is automatic for deposit accounts at FDIC-insured banks up to $250,000 per depositor, per account ownership category, per bank.

•   Misconception: Each deposit account a customer has is fully FDIC-insured.
Fact: The $250,000 limit applies per depositor, per account ownership category, per bank. So if you have two accounts in the same account ownership category type, such as a single checking account and a single savings account, you would be insured for up to $250,000 of the combined balance of each account.

•   Misconception: Every financial product offered by a bank is insured by the FDIC.
Fact: Deposit insurance only covers certain deposit accounts at an FDIC-insured bank. This includes checking and savings accounts, certain retirement accounts like IRAs containing deposit accounts, CDs, and money market deposit accounts. Investment products that are not deposit products, such as mutual funds, stocks, bonds, and annuities, are not FDIC-insured.

The Future of Deposit Insurance

Deposit insurance has changed numerous times throughout its history, and it’s possible it could change again. The FDIC has recently proposed certain reforms. In a May 2023 report, the agency outlined three options for deposit insurance reform.

The first is to leave the framework of the system as it is, but possibly raise the $250,000 limit. The second is to offer unlimited insurance to all bank depositors. And the third option is to provide targeted insurance with different limits for different account types. So, for instance, business accounts might get substantially higher insurance limits than other types of accounts.

The FDIC said that of these three options, targeted coverage “best meets the objectives of deposit insurance of financial stability and depositor protection relative to its costs.” However, action by Congress would be required to move forward.

The Takeaway

The Federal Deposit Insurance Corporation (FDIC) provides insurance that can help protect bank depositors in the very rare event of a bank failure. Its programs also help maintain stability and confidence in the U.S. financial system. As long as your bank is FDIC-insured, you are covered for up to $250,000 per depositor, per account ownership category. Deposit insurance applies to checking and savings accounts and CDs, among other deposit accounts. FDIC coverage is automatic — you don’t have to apply for or purchase it.

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.

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FAQ

What is the FDIC insurance limit per depositor, per insured bank?

The FDIC insurance limit per depositor per insured bank is $250,000 per account ownership category type. Account ownership categories include single accounts; joint accounts; trust accounts; and corporation, partnership, or unincorporated association accounts.

Does deposit insurance cover investment products like stocks and bonds?

Deposit insurance does not cover investment products like stocks and bonds. It also does not cover mutual funds, life insurance, or annuities. Deposit insurance only covers certain bank deposit products such as CDs and money market deposit accounts, certain retirement accounts like IRAs, and checking and savings accounts.

How quickly can I access my insured deposits if a bank fails?

If a bank fails, the FDIC has historically paid customers their insured deposits within a few days. Typically, the FDIC will either provide the customer with the insured amount in a new account at another insured bank, or they’ll send the customer a check for the insured amount.


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

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

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

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

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

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

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/.
*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.

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

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Breaking Down the Different Types of Debit Cards

In today’s cashless society, many electronic financial transactions are done with a debit card. Most debit cards are tied directly to a checking account and withdraw money from it whenever you make a purchase.

However, there are many variations available, such as business debit cards, prepaid debit cards, and HSA debit cards. Understanding the different types of debit cards is important so you can determine which options are right for you and how to use them effectively.

Key Points

•   There are different types of debit cards, including standard, prepaid, business, HSA, EBT, and other specialized options.

•   Standard debit cards are linked to checking accounts, withdrawing funds directly upon purchase.

•   Prepaid debit cards are often available in fixed denominations and can be bought at retail locations; some options are reloadable.

•   Business debit cards linked to business bank accounts help separate personal and professional expenses.

•   Virtual debit cards offer temporary numbers for secure transactions without needing to use a physical card.

Standard Debit Cards

A standard debit card is likely the one that most people are likely familiar with. If you have a checking account with a debit card, your standard debit card will be tied directly to your checking account. When you make a purchase with your debit card, the money is withdrawn from your checking account.

If you attempt to make a purchase with your debit card but don’t have sufficient funds, your purchase may be declined. If you have overdraft protection, the purchase may go through, but you will likely be charged overdraft fees.

Prepaid Debit Cards

Another type of debit card is a prepaid debit card. These prepaid debit cards are often sold in grocery stores, convenience stores, or pharmacies. Prepaid debit cards come in various denominations and often come with a small initial fee that you pay upfront. There are two main types of prepaid debit cards:

Reloadable Prepaid Cards

The first type of prepaid debit card is a reloadable prepaid card. When you buy a reloadable prepaid card, you can usually load it with a specific amount of money at the time of purchase. As you use your reloadable debit card, you can also add additional money to it. You don’t have to worry about overdraft fees when using a reloadable prepaid card, since you are limited to only spending the amount that is available on your card.

Gift Cards

In contrast to reloadable prepaid cards, gift cards are a different debit card variety, one that often comes in a specific preloaded denomination, usually ranging from $10 or $25 to several hundred dollars. Once you purchase the gift card, you cannot add any additional funds to it. You can continue to use the gift card anywhere its network (usually Visa, Mastercard, or American Express) is accepted, but once you have used up the initial funds, the gift card has no value.

Recommended: High-Yield Savings Account Calculator

Teen and Student Debit Cards

There are also debit cards that are targeted to certain demographics and often associated with a specific type of checking account. When you apply for a debit card as part of a teen or student checking account, your debit card will be tied to your account. However, usually anyone who is authorized to make purchases on the account (such as a parent and the child) can use the card.

Business Debit Cards

Another type of specialized debit card is a business debit card, typically associated with a business checking account. Business debit cards can be useful for owners of small businesses, since it helps them keep personal and business transactions separate, as they make purchases for their company, such as buying ad space or paying for supplies.

Recommended: 23 Ways to Make Quick Cash

Virtual Debit Cards

Many banks and other financial institutions support the creation of virtual debit cards. These virtual debit cards are temporary debit card numbers that are tied to your account. So you could leave your physical debit card at home and make purchases while out and about with a virtual debit card stored in your digital wallet. You can also use a virtual debit card to buy goods and services online and in apps.

Using a virtual debit card number can help protect your account from fraud since you don’t have to use your actual account number or debit card numbers when making a transaction.

Rewards Debit Cards

While perhaps not as common as rewards credit cards, there are some debit cards that offer rewards every time you use a debit card online or in a store. While the exact details will vary depending on the bank or debit card program, you might earn cash back, points, or discounts on certain transactions.

EMV Chip Debit Cards

While debit cards traditionally transferred information by way of a magnetic strip on the back of the card, many debit cards today have an EMV chip installed in them. EMV stands for Europay, Mastercard, and Visa — the companies credited with pioneering cards that have encrypted information stored in the chip. These chip debit cards are considered to be a more secure way of transferring personal details.

Contactless Debit Cards

Another way that debit cards transfer information when making a purchase is through wireless technology known as RFID (radio frequency identification). When you tap to pay vs. inserting your card into a reader, you are accessing this contactless technology. Debit cards that support contactless payment are becoming increasingly prevalent as users look for more convenient ways to make purchases.

ATM Cards

When comparing ATM cards vs. debit cards, it’s important to understand the differences between the two. Debit cards allow you full access to your account, including conducting such transactions as making purchases, getting cash back, and withdrawing cash from an ATM.

ATM cards are more limited, only allowing you to complete financial transactions at ATMs. You might withdraw cash, say, or transfer money between bank accounts.

Specialized Debit Cards

While most debit cards are tied to a checking account, there are some specialized debit cards that work in a different way.

Health Savings Account (HSA) Debit Cards

Health savings account (HSA) debit cards are tied directly to a specific health savings account vs. a checking account. If you have a high-deductible health plan, an HSA can offer a tax-advantaged way to set aside money for qualified medical expenses. When you use a debit card that is tied to an HSA, you are responsible for ensuring that it is used correctly on appropriate expenses. Otherwise, you might face taxes and/or penalty fees.

Electronic Benefits Transfer (EBT) Cards

Electronic Benefits Transfer (EBT) cards are given to participants of Supplemental Nutrition Assistance Program (SNAP). These EBT cards allow SNAP participants to purchase food and use their benefits in a more convenient fashion. An EBT card is loaded each month with the participant’s benefit amount and can be used at most grocery stores and other food retailers.

Choosing the Right Debit Card

Understanding what debit cards are can help you choose the right debit card for your situation. Most debit cards are tied to your checking account, so choosing the right debit card comes down to choosing the right checking account. How a bank’s debit card works is one factor in whether an account suits your needs. For instance, some people may prefer a contactless debit card over other options but will also want to look into such bank account features as monthly fees (if any) and the size of the ATM network.

In addition, different debit cards can suit particular needs, such as:

•   Allowing you to save for qualified medical expenses if you have an HSA

•   Paying for business expenses

•   Giving a gift card as a present

It’s always wise to comparison-shop a bit and compare what a few different possibilities can offer you.

The Takeaway

A traditional debit card is generally tied to a checking account, and purchases made with a debit card are deducted from your account balance. However, these may operate differently (some are contactless, for example) and offer different perks, such as rewards. There are several other types of debit cards, too. These include prepaid debit cards, EBT cards, and HSA debit cards. Understanding the different types of debit cards available can help you make the right choice for your needs.

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


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

FAQ

What’s the difference between a debit card and a credit card?

The main difference between a debit card and a credit card is how funds for a purchase are financed. With a debit card, the funds are removed within a short period of time (often almost instantly) from your bank account. In contrast, purchases made with a credit card are funded as a line of credit with the credit card company. Each charge is posted to your account, and you then have until your statement date to pay for the purchases. If you don’t pay off the debt in full within the specified period, you are assessed an interest charge for the privilege of being extended this credit.

Can I use my debit card internationally?

Whether you can use your debit card internationally depends on the type of debit card you have as well as the policies of your bank or other financial institution. Many debit cards are issued by a major processing network such as Visa or Mastercard, and in most cases you can use them internationally, wherever those processing networks are accepted. If you’re not sure if you can use your debit card internationally, check with your bank before traveling.

Are prepaid debit cards safer than standard debit cards?

Prepaid debit cards come with many of the same fraud protections as standard debit cards. One thing to be aware of is that in many cases a prepaid debit card should be treated as cash. If you lose or misplace your prepaid card, you may not be able to access or recover the money that was on the card. With a lost or stolen debit card, if you cancel it quickly, you can have some protection against unauthorized usage.


Photo credit: iStock/Lordn

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


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

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

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

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

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

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

*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.

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.

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-Q424-013

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What Is a Regional Bank? A Comprehensive Guide

Regional banks are midsized financial institutions that typically serve a certain geographical area, such as a state or a particular region of the country. They occupy a middle ground between smaller community banks and large national banks and can offer a personalized approach, as well as a relatively large number of financial products and services.

While regional banks may not have a national footprint, they can offer a number of benefits that can make them an appealing option for both individuals and businesses, though they may not always have the services customers are looking for. Here are key things to know about regional banks.

Key Points

•   Midsized regional banks are those, per the Federal Reserve, that have between $10 billion and $100 billion in assets and typically serve specific geographic areas.

•   Regional banks tend to provide financial services like loans, credit cards, and investment products, with fewer branches than national banks.

•   They are typically FDIC-insured, ensuring deposit protection up to $250,000 per account owner and category at an insured institution.

•   Regional banks may face challenges from national and online banks, regulatory pressures, and economic vulnerabilities.

•   They can positively impact local economies by providing loans to small businesses and reinvesting in communities.

What Is a Regional Bank?

As defined by the Federal Reserve, regional banks are those that have between $10 billion and $100 billion in total assets. This makes them larger than community banks, which have assets under $10 billion, but smaller than national banks, which can have assets in the trillions.

Regional banks typically operate within a specific geographic region, which might be one or two states, several states, or a defined area like the Midwest or East Coast. For example, Prosperity Bank, headquartered in Houston, serves customers in two states (Texas and Oklahoma), while Zions Bank, based in Salt Lake City, serves what is known as the Intermountain West.

Unlike national banks, which often have a presence across the entire country, regional banks tend to focus on serving customers in their designated region or regions. They typically offer a variety of financial services, including checking accounts, savings accounts, personal and business loans, and sometimes investment products, and often serve as an important financial resource for local companies and industries.

Recommended: APY Calculator

Characteristics of Regional Banks

Regional banks have some distinct features that separate them from other types of banks:

•   Geographic focus: Regional banks often limit their operations to a specific geographic area. They may have branches across multiple states but generally do not extend their reach nationwide.

•   Asset size: Regional banks hold more assets than community banks but less than national and international banks, usually ranging from a few billion to one hundred billion dollars.

•   Range of services: Regional banks offer a broad array of financial services, including checking and savings accounts, loans, mortgages, credit cards, and business banking services. They may also provide investment products, though these offerings are usually not as extensive as those of larger banks.

•   Local expertise: Regional banks tend to have a strong understanding of the economic conditions and needs of the areas they serve. This allows them to offer financial solutions tailored to local businesses and customers.

•   Moderate branch networks: While regional banks have more branches than small community banks, their networks are usually less extensive than those of large national banks, averaging around 100. However, online and mobile banking allow customers to access their accounts from any location.

How They Differ From National and Community Banks

Banks generally fall into three size categories — community, regional, and national. While all three offer many of the same services, there are some key differences between them.

•   Community banks are the smallest, with assets under $10 billion. They are typically chartered at the state (rather than the national) level. These banks focus on serving local communities and have a limited geographic footprint compared to regional and national banks. In addition, their product offerings may be less extensive and digital banking capabilities might not be as advanced as larger banks. However, community banks are known for their strong commitment to customer service and local engagement.

•   Regional banks are larger than community banks, usually with between $10 billion and $100 billion in assets, and offer a broader array of products and services. They typically operate in multiple states but generally don’t have a national presence. Regional banks may be chartered at the state or federal level, depending on their size and operations.

•   National banks operate under a federal charter regulated by the Office of the Comptroller of the Currency and are generally the largest banks in the U.S. These financial institutions usually have more than $100 billion in assets. They typically have extensive networks of branches across the country and offer a wide range of services, enabling them to meet the diverse needs of individuals, businesses, and institutions. National banks tend to be well-known names like JPMorgan Chase, Wells Fargo, and Bank of America.

Recommended: How to Combine Bank Accounts

The Role of Regional Banks in the Financial System

Regional banks play a key role in the financial system by bridging the gap between community banks and large national institutions. They may provide a level of customized service that is often missing from big banks. At the same time, they offer a diverse range of financial products to meet the needs of individuals and businesses located within their region.

Crucially, regional banks often bring banking services to small towns and rural areas where larger financial institutions might not operate.

Services Offered by Regional Banks

Regional banks typically provide a variety of financial services for consumers and businesses and enable you to have multiple bank accounts under one roof. Here are some of products and services you can often find a regional bank:

•   Checking accounts

•   Savings accounts

•   Money market accounts

•   Credit cards

•   Personal loans/credit lines

•   Auto loans

•   Mortgages

•   Home equity loans

•   Business banking

•   Commercial loans

•   Individual retirement accounts (IRAs)

•   Taxable brokerage accounts

As you see, regional banks can offer a wide variety of financial products and services.

Advantages of Regional Banks

Regional banks can offer several benefits to their customers. Here are some to consider:

•   Local expertise: Regional banks tend to have a strong understanding of the economic conditions and financial needs of their communities. This local knowledge can allow them to make more informed lending decisions and offer products that are well-suited to the area.

•   Personalized service: Whether you need help opening a bank account or applying for a mortgage, regional banks often provide a level of personalized service that larger banks may lack. Customers can often build relationships with their bankers, who understand their financial history and needs.

•   Competitive rates: Regional banks may offer more favorable interest rates on loans and savings accounts to compete with national banks.

•   Digital and mobile banking: Like larger banks, regional banks typically provide digital and mobile banking options, allowing customers to manage their accounts, make payments, and transfer money between banks.

•   Support for local businesses: Regional banks can play a crucial role in financing small and mid-sized businesses, which are essential for local economic growth. They often provide loans, credit lines, and other financial services to help businesses expand and create jobs.

•   Community involvement: Many regional banks actively support local communities by sponsoring events, donating to charities, or offering financial education programs. This community involvement can help strengthen the bank’s relationship with its customers.

•   FDIC insurance: Regional banks can benefit from the same Federal Deposit Insurance Corporation (FDIC) insurance that protects cash deposits at larger banks. This means your money is insured up to $250,000 per depositor, per account category, per insured institution in the very rare event of bank failure.

Recommended: Does Switching Banks Affect Your Credit Score?

Challenges Faced by Regional Banks

Despite their advantages, regional banks also face several challenges:

•   Competition from national and online banks: Regional banks often compete with larger national banks that have more resources, larger branch networks, and a broader range of services. In addition, online banks are often able to offer better rates and fees, as well as more sophisticated digital banking options. This competition can make it difficult for regional banks to attract and retain customers.

•   Limited reach: Regional banks often only serve a specific geographic area. This can be limiting for people who travel often, have multiple residences, or are relocating (which could lead to someone closing a bank account at a regional institution).

•   Regulatory pressure: Due to the surprising recent failures of three regional banks (Silicon Valley Bank, Signature Bank, and First Republic Bank), U.S. bank regulators have stepped up their scrutiny and financial oversight of regional banks to help ensure that failures don’t happen again in the future. These occurrences are quite rare, and the government keeps a watchful eye to ensure the stability of U.S. banks.

•   Technological advances: As digital banking continues to grow, regional banks may struggle to keep up with the technological innovations of larger banks and fintech companies. Limited resources can make it difficult to invest in advanced digital platforms and services.

•   Economic vulnerability: Because they focus on specific regions, regional banks may be more vulnerable to economic downturns or sector-specific challenges within their service area. This can impact their financial stability. However, as noted, regional banks insured by the FDIC are safe places to keep your money up to the insurance limits.

The Impact of Regional Banks on Local Economies

Regional banks offer loans and credit to small and midsize businesses, helping to fuel local economic growth and job creation. In fact, regional banks serve as the source of nearly one-third of small business bank lending in the U.S, according to the Bank Policy Institute.

Many regional banks also reinvest in the communities they serve, whether through charitable donations, sponsorship of local events, or support for community development projects. This involvement helps strengthen local economies and fosters a sense of community that can help attract and retain both businesses and residents.

The Takeaway

Regional banks play an important role in the banking industry. They offer many, if not most, of the products and services you might find at a national bank but can provide a more personalized experience due to their midsize scale.

That said, regional banks may not offer every financial product or service you need. They also have smaller footprints than national banks, making them less practical if you travel frequently or may need to relocate in the near future.

If you’re considering opening a new bank account, also see what online banks offer.

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


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

FAQ

How large is a typical regional bank?

Regional banks are banks with $10 billion to $100 billion in assets, typically making them larger than community banks but smaller than national banks. Regional banks usually operate within a defined geographic area, covering multiple states or a particular region of the country. They may offer more products and services than a community bank but generally not as many as you would find at a national bank.

Are regional banks FDIC-insured?

Yes, regional banks are typically insured by the Federal Deposit Insurance Corporation (FDIC). This means your deposits are protected up to the legal limit, which is $250,000 per account owner (co-owners of joint accounts are each insured up to $250,000), per account category, per insured institution. If you have money in an FDIC-insured bank account and the bank fails (a very rare occurrence), the agency reimburses you for any losses you incur, up to the insured limit.

Can I use a regional bank if I move out of the area?

Yes, you can generally still use a regional bank if you move out of the area. Regional banks typically offer online and mobile banking services, allowing you to manage your accounts and make payments from any location. However, access to physical branches may be limited or unavailable outside the bank’s primary service area. If in-person banking is important to you, it might be challenging to continue using a regional bank after moving out of the area.


Photo credit: iStock/stocknshares

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


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

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

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

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

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

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

*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.

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

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

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

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

SOBNK-Q424-012

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5 Online Banking Myths & Realities

Online banking offers a convenient way to manage your money. Plus, online banks typically offer attractive perks like competitive rates on savings and no-fee checking accounts. Still, many consumers worry that online banks aren’t as safe, dependable, or customer-friendly as the big traditional players. Are they right to be concerned?

While all types of banks have pros and cons, many fears about online banks are actually based on misinformation. Below, we debunk five common myths about online banks, and uncover some important truths about online vs. traditional banks.

Key Points

•   Like traditional banks, online banks use state-of-the-art security tools like encryption and multi-factor authentication to protect customer accounts.

•   Though online banks lack in-person customer service, you can get help from a human via phone, online chat, and email.

•   Online banks typically offer a wide network of fee-free ATMs, making it easy to access cash when you need it.

•   Deposits at online banks are protected by FDIC insurance up to $250,000 per depositor, per insured bank, for each account ownership category.

•   Online banks typically offer better rates on savings accounts, but may not offer as many products and services compared to traditional banks.

Myth: Online Banking Isn’t Safe

Security is often the largest concern about online banking, and in a world where we’re constantly hearing of data breaches, that’s a valid consideration. But online banks and traditional banks store your data digitally and both are susceptible to data breaches.

That said, both online banks and traditional brick-and-mortar banks go to great lengths to protect your personal and banking information, including the use of encryption software (which blocks your accounts to unauthorized parties) and multi-factoring authentication (which requires you to enter unique personal information in order to access your account). Many online, and some traditional, banks also offer 24/7 account monitoring, instant card freezes, and real-time alerts so you’re aware of any unusual account activity as soon as it happens.

There are also steps you can take on your own to keep your accounts safe (regardless of where you bank). These include choosing a unique user ID and password, not using public wifi when you access your accounts, and avoiding phishing attempts to get your banking information.

Myth: You Can’t Get Help From a Human

Many consumers like being able to walk into a physical location and speak to a real human when they need assistance. And that’s simply something online banks can’t offer. By nature, there are no brick-and-mortar locations; all customer service is virtual. But that doesn’t mean mobile banking doesn’t come with good customer service.

Online banks typically offer phone-based customer service, where you can easily speak with a live customer service representative when there’s an issue or you simply want someone to walk you through setting up bill pay or making an online transfer. In addition, many offer 24/7 customer service via live online chat (with a human not a bot on the other end), as well as help via email. A lack of physical locations doesn’t necessarily equate with a lack of good customer service.

Recommended: How to Deposit a Check

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.00% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Myth: It’s Hard to Access Money From an Online Bank

It’s true you can’t visit a bank branch and withdraw money at a teller window. But online banks typically partner with wide ATM networks to offer customers a convenient and free way to withdraw cash from their accounts. Some online banks will also reimburse for out-of-network ATM charges, though you may be capped to a certain max per month.

You can also access money in an online account by transferring it to an account at a different bank or using the bank’s bill pay function. If you have an online checking account, you can use your debit card for purchases and may be able to order checks. Some online banks also offer a peer-to-peer (P2P) payment service, so you can send money to friends and family directly from your bank account.

Myth: Online Banks Aren’t Insured

Like traditional banks, online banks are typically insured by the Federal Deposit Insurance Corporation (FDIC). This means your deposits are protected up to $250,000 (per depositor, per insured bank, per account ownership category) if the bank were to go out of business. Co-owners of joint accounts are each insured up to $250,000 for the total they have in joint accounts at an insured bank.

If you opt for an online credit union instead of an online bank, your money won’t be insured by the FDIC but it will still be protected. Credit unions are covered by the National Credit Union Association (NCUA), which offers similar insurance.

Before opening an account at an online (or brick-and-mortar) bank, it’s always a good idea to make sure it’s insured. You can do this by using the FDIC’s “Bank Find” tool or the NCUA’s Credit Union Locator tool.

Myth: The Big National Banks Offer Better Rates

You might assume big banks offer the best deals due to their size and scale. But it’s more likely to be the opposite: Online banks typically beat out the major national banks when it comes to annual percentage yields (APYs) on savings accounts, with some offering 9x the national average.

How do they do it? Online-only banks generally have lower overhead costs and can pass that savings to their customers in the form of higher-than-average yields. Many of these banks also offer better rates as a way to compete with the bigger players for customers.

In addition to better rates, online banks also tend to charge fewer and lower bank fees compared to the big traditional banks. Many online accounts don’t charge monthly service fees, for example, and some don’t charge overdraft fees, either.

Understanding Digital Banking Features and Limitations

Online banks offer several advantages over traditional banks, which often include higher APYs on checking and savings accounts and lower (or no) fees. They also tend to outshine traditional banks when it comes to technical innovation, offering state-of-the art banking platforms and apps.

That said, digital banking does have its limitations. Here are some downsides to consider:

  No branches: Since they lack physical locations, online banks aren’t able to provide customers a way to interact face-to-face with a teller or other bank representative. They also can’t offer services that require a physical location, such as getting a cashier’s check or renting a safe deposit box.

  Cash can be harder to deposit: It’s not always as straightforward to deposit cash into an online bank account. You may need, for example, to deposit cash at a participating retailer for a small fee rather than at an ATM or use another option, such as depositing your cash into a traditional bank account and transferring it to your online bank account.

  Fewer financial services: Unlike large traditional banks, online banks sometimes aren’t a one-stop shop. Some only specialize in a few types of accounts. While others offer a range of products and services, including credit cards and loans, they generally don’t have as many products and services as the biggest brick-and-mortar banks provide.

Recommended: Pros and Cons of Online Banking

🛈 SoFi only offers ATM withdrawals at this time. For members looking to deposit cash into their SoFi Checking & Savings account, you can follow these instructions.

The Takeaway

Online banks work very similarly to traditional banks. They just lack physical locations to conduct in-person services. They typically offer the same kinds of checking and savings accounts that you may find at brick-and-mortar banks. And since online banks don’t need to maintain and staff physical locations, they can often offer higher interest rates on both checking and savings. While some people are concerned about the safety and security of online banks, you can feel confident that online financial institutions are just as secure as brick-and-mortar options.

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


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

FAQ

Is online banking safer than traditional banking?

Online banking and traditional banking are considered equally safe. Both online and traditional banks generally use robust security measures like encryption, multi-factor authentication, and fraud monitoring to protect customer accounts. In addition, both types of banks are usually insured by the Federal Deposit Insurance Corporation (FDIC), which means your funds will be covered (up to the insured limits) even if the bank were to go out of business.

Can I do everything online that I can do in a physical bank?

You can do nearly everything online that you can do in a physical bank. This includes opening an account, making transfers, paying bills, depositing checks, and managing your account. Many banks also offer one-on-one customer service via phone or online chat. However, certain services like obtaining cashier’s checks, notary services, or large cash withdrawals generally require visiting a physical bank.

How does online banking affect my privacy?

Information that is stored digitally (by an online or traditional bank) could potentially have an impact on your privacy, as online information is susceptible to cyber attacks. However, reputable banks use strong encryption and cybersecurity practices to protect customer data. There are also steps you can take on your own to protect your accounts. These include choosing a unique user ID and password, not using public wifi when accessing your accounts, and logging out of your account after every session.


Photo credits: iStock/AleksandarNakic

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


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

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

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

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

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

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

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

Third Party 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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How to Budget on a Fixed Income

Budgeting on a fixed income can involve carefully reviewing your income and expenses and managing spending to stretch your dollars.

Typically, older adults are the ones living on a fixed income, meaning they receive Social Security payments and/or a pension or rely on retirement savings. They generally receive the same amount each month, though payments may fluctuate slightly due to benefit adjustments or other changes. If you’re living on a fixed income, budgeting can help you avoid overspending and prepare for unexpected expenses. Here are smart strategies to consider.

Key Points

•   Budgeting on a fixed income can involve tracking income and expenses to better understand finances.

•   A detailed budget should include all essential and discretionary expenses, utilizing methods like the 50/30/20 rule.

•   Cost-cutting measures, such as downsizing or limiting discretionary spending, can improve financial stability.

•   Building an emergency fund can provide a cushion for unexpected expenses and enhance financial security when living on a fixed income.

•   Exploring additional income sources, like part-time work, can supplement fixed incomes effectively.

Understanding Fixed Income Budgeting

Living on a fixed income means you know exactly how much money you’re bringing in each month. While your income may be predictable, expenses can be unexpected. You might need, say, a roof repair or want to help with a grandchild’s summer camp costs one year. That’s why a budget for seniors on fixed income can be so important.

Creating a budget will give you a comprehensive understanding of the money you have coming in and going out of your checking account. You can track your spending, set aside money for emergencies, and monitor your monthly bills.

You might also identify areas where you can cut back to cover an unforeseen expense or keep up with inflation.

Assessing Your Financial Situation

Making a budget allows you to assess your financial situation. Along with tracking your income, you’ll want to make a record of all your expenses.

This component of your budget might include:

•  Housing costs (rent or mortgage)

•  Utilities

•  House, car, and health insurance

•  Medical costs

•  Transportation

•  Groceries and dining out

•  Debt payments

•  Subscriptions and services

•  Clothing

•  Travel

•  Savings

•  Gifts and charitable donations

Some of these expenses may fall into the essential category (housing, food, and health insurance, for example), while others may be considered discretionary (such as clothing and travel). If you’ve found yourself financially overextended, consider whether there are any areas where you could cut back.

You might also explore specific types of budgeting methods, such as the 50/30/20 approach to budgeting. This strategy involves allocating 50% of your after-tax income to needs, 30% to wants, and the remaining 20% to savings or additional debt payments.

To help you with this budgeting technique or another one, you could use a spreadsheet, work with an online calculator, download a budgeting app, or create your own budget planner to track your expenses.

Recommended: 50/30/20 Budget Calculator

Creating a Detailed Income Statement

An important step in this budgeting process is delving into your monthly income. Your sources of fixed income could include:

•  Social Security benefits (you may sometimes hear this referred to as OASDI, or Old-Age, Survivors, and Disability Insurance payments)

•  Supplemental Security Income

•  Pension benefits

•  Withdrawals from a 401(k) or 403(b) account

•  Withdrawals from a traditional or Roth IRA

•  Withdrawals from brokerage or other investment accounts

•  Interest and/or dividends from assets

•  Passive income from a rental property or another source

In addition, you may have some earnings from work you do, such as a seasonal or part-time job. Factor that in, too.

Take note of how your income might change, as well. A couple of points to consider:

•  Government benefits like Social Security, for example, undergo an annual cost-of-living adjustment. Also, if you are claiming Social Security benefits but are younger than full retirement age, you might also receive a lower benefit if you’re earning income above the yearly limit (in 2024, it was set at $22,320).

•  If you’re withdrawing money from investment accounts, the amount may fluctuate depending on the performance of the stock market. Although these changes are unpredictable, they’re worth tracking and recording in your budget plan so you can respond as needed.

One of the most common budgeting mistakes is not adjusting the cost of your expenses, so make sure to update your budget as you go. Rent, health insurance premiums, food costs, and more can shift, and it can be important to stay attuned to that.

Cutting Costs and Saving Money

About 40% of older Americans receive income solely from Social Security in retirement, and the average benefit is currently $1,784 per month. This amount can be challenging to live off of, especially when costs are rising due to inflation.

If you’re looking to reduce your spending, here are a few steps you can take:

•  Downsize your home: About half of seniors move into smaller homes after they retire. Downsizing could significantly decrease your housing costs and utility bills.

•  Reevaluate your transportation needs: If you’re spending a lot on car payments and insurance, consider whether you can switch to a less expensive vehicle or swap your car for public transportation.

•  Limit discretionary spending: Shopping, travel, eating out, and streaming services can add up. Review your discretionary expenses to see if you can limit your spending or cut out some costs entirely.

•  Seek out senior discounts: From groceries to movies to museums, find out if you can save with a senior discount. You may be pleasantly surprised to find that some discounts begin well before age 65.

•  Look for assistance programs: If you’re facing financial hardship, you might qualify for assistance. The government may help cover medical costs via Medicaid, for instance, while patient assistance programs can help out with prescription medications. The Supplemental Nutrition Assistance Program (SNAP) program offers assistance for groceries. This BenefitsCheckUp tool from the National Council on Aging can help you find other programs that offer assistance and benefits.

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*Probability of Member receiving $1,000 is a probability of 0.028%.

Building an Emergency Fund

After years of saving for retirement, you might think your savings days are behind you. However, having an emergency fund can be a crucial lifeline if you run into a big surprise expense, especially when you’re living on a fixed income.

Consider setting up a high-yield savings account and automating the deposit of a portion of your income into it each month. With a high-yield bank account, your savings will be accessible when you need to withdraw them and earn a competitive interest rate when you don’t.

Planning for the Future

Although you may be living on a fixed income, it’s wise to keep an eye on how your financial needs can shift. Those who are retired or semi-retired may want to consider the following:

•  Long-term financial planning: The specific amount of income you receive could rise or fall in the years ahead. Consider how adjustments to your cost of living might impact your Social Security benefits, for example, or how much longer you plan to work if you have a part-time job.

•  Healthcare considerations: If your expenses increase due to healthcare needs or other factors, consider whether you can take larger withdrawals from your retirement account or set up another income source. Investors may look into rebalancing their portfolios to ride out a volatile stock market.

•  Estate planning basics: Estate planning may also be top of mind as you get important documents in order and consider how your assets will be handled in future years. All of this planning can become complex, so you might consider working with a financial advisor.

The Takeaway

Budgeting on a fixed income can help you stabilize your finances and achieve peace of mind. By tracking your income and expenses, you’ll have a clear understanding of the money you have coming in and going out each month. You might also identify areas where you can cut costs, as well as monitor your progress toward building an emergency fund, paying off debt, or reaching another financial goal.

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


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

FAQ

How can I save money on a fixed income?

Learning how to make a budget can help you save money when living on a fixed income. You can use your budget to identify your recurring expenses and cut any non-essentials you find. You might also consider downsizing your home, swapping out your car for a less expensive vehicle or public transportation, and seeking out senior discounts and deals.

What if my fixed income doesn’t cover all my expenses?

If your fixed income doesn’t cover all your expenses, you can try reducing your spending, increasing your income, or both. You might also explore assistance programs from the federal government, your state, or a local organization.

Are there government assistance programs for fixed income individuals?

There are government assistance programs for fixed income individuals on both the federal and state level. The Supplemental Security Income program provides payments to disabled, blind, or elderly individuals, for example, while the Low Income Home Energy Assistance Program (LIHEAP) can help low-income individuals pay for heating and cooling their homes. The SNAP program offers grocery assistance to low-income individuals.


Photo credit: iStock/Ridofranz

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


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

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

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

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

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

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

*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.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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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