SoFi

Figuring out how to prepare for a recession — or any crisis — can be difficult. When facing a potential recession, financial decisions take on a new weight. After all, financial policy may change during a recession, which can leave consumers with questions. For example, if the Federal Reserve lowers interest rates, should you borrow money during a recession?

While lower recession interest rates might sound appealing, there are lots of things to consider before borrowing money during a recession.

Understanding Recessions

A recession is a period of time when economic activity significantly declines. In the U.S., the National Bureau of Economic Research defines a recession as more than a few months of significant decline across different sectors of the economy. We see this decline in changes to the gross domestic product, unemployment rates, and incomes.

In essence, a recession is a period of time when spending drops. As a result, businesses ramp down production, lay off staff, and/or close altogether, which in turn causes a continued decrease in spending.

There are many possible causes of the recession. Usually, recessions are caused by a wide variety of factors — including economic, geopolitical, and even psychological — all coinciding to create the conditions for a recession.

For example, a recession could be caused by a major disruption in oil access due to global conflict, or by the bursting of a financial bubble created by artificially depressed interest rates on home loans during a financial boom (as was partially the case with the 2008 financial crisis in the U.S.). A recession also could be caused in part by something like a pandemic, which could create supply chain disruptions, force businesses into failure, and change spending habits.

As for how psychology plays a role in recessions, financial actors might be more likely to invest in a new business or home renovation during boom years when the market seems infallible. But when an economic downturn or recession starts, gloomy economic forecasts could make people more likely to put off big purchases or financial plans out of fear. In aggregate, these psychological decisions may help control the market.

In the case of a recession, for example, many people choosing not to spend out of fear could cause a further contraction of the market, and consequently further a recession.

Financial Policy During a Recession

Economic policy might temporarily change in an effort to keep the market relatively stable amid the destabilization a recession can bring. The Federal Reserve, which controls monetary policy in the U.S., often takes steps to curb unemployment and stabilize prices during a recession.

The Federal Reserve’s first line of defense when it comes to managing a recession is often to lower interest rates. The Fed accomplishes this by lowering the interest rates for banks lending to other banks. That lowered rate then ripples throughout the rest of the financial system, culminating in reduced interest rates for businesses and individuals.

Lowering the interest rate could help to stem a recession by decreasing costs for businesses and allowing consumers to take advantage of low interest rates to buy things using credit. The increase in business and purchasing might in turn help offset a recession.

The Federal Reserve also may take other monetary policy actions in an attempt to curb a recession, like quantitative easing. Quantitative easing, also known as QE, is when the Federal Reserve creates new money and then uses that money to purchase assets like government bonds in order to stimulate the economy.

The manufacturing of new money under QE may help to fight deflation because the increase in available money lowers the value of the dollar. Additionally, QE can push interest rates down because federal purchasing of securities lowers the risks to lending institutions. Lower risks can translate to lower rates.

Recommended: Federal Reserve Interest Rates, Explained

Downsides to Borrowing Money During a Recession

How do you prepare for a recession? It might seem smart to borrow during this time, thanks to those sweet recession interest rates. But there are other considerations that are important when deciding whether borrowing during a recession is the right move. Keep in mind the following potential downsides:

•   There’s a heightened risk of borrowing during a recession thanks to other difficult financial conditions. Disruptive financial conditions like furloughs or layoffs could make it more difficult to make monthly payments on loans. After all, regular monthly expenses don’t go away during a recession, so borrowers could be in a tough position if they take on a new loan and then are unable to make payments after losing a job. Missed payments could negatively impact a borrower’s credit score and their ability to borrow in the future.

•   It may be harder to find a bank willing to lend during a recession. Lower interest rates may mean that a bank or lending institution isn’t able to make as much money from loans. This may make lending institutions more hesitant.

•   Lenders could be reluctant to lend to borrowers who may be unable to pay due to changes in the economy. Most forms of borrowing require borrowers to meet certain personal loan requirements in order to take out a loan. If a borrower’s financial situation is more unstable due to a recession, lenders may be less willing to lend.

When to Consider Borrowing During a Recession

Of course, there are still situations where borrowing during a recession might make sense. If you’re hit with unexpected expenses or have the opportunity to buy quality stocks for a lower price, for instance, it could make sense to have extra funds available.

Another scenario where it might be a good idea is if you’re consolidating other debts with a consolidation loan.

If you already have debt, perhaps from credit cards or personal loans, you may be able to consolidate your debt into a new loan with a lower interest rate, thanks to the changes in the Fed’s interest rates. Consolidation is a type of borrowing that doesn’t necessarily increase the total amount of money you owe. Rather, it’s the process by which a borrower takes out a new loan — with hopefully better interest rates and repayment terms — in order to pay off the prior debts.

Why trade out one type of debt for another? Credit cards, for example, often have high interest rates. So if a borrower has multiple credit card debts with high interest rates, they may be able to refinance credit card debt with a consolidation loan with a lower interest rate. Trading in higher interest rates loans for a consolidation loan with potentially better terms could save borrowers money over the life of the loan. It also streamlines bill paying.
When considering consolidation, borrowers may want to focus on consolidating only high-interest loans or comparing the interest rates between their current debts and a potential consolidation loan.

Note that interest rates on consolidation loans can be either fixed or variable. A fixed rate means a borrower may be able to lock in a lower interest rate during a recession. With a variable interest rate, the loan’s interest rate could go up as rates rise following a recession.

Additionally, just like many other types of loans, consolidation loans require that borrowers meet certain requirements. Available interest rates may depend on factors like credit score, income, and creditworthiness.

Recommended: How to Apply for a Personal Loan

The Takeaway

It can be challenging to navigate any economic downturn, and it’s natural to wonder how to prep for a recession. Deciding whether to borrow, including taking out a personal loan, is a decision that depends on your specific circumstances. There are downsides to consider, such as the general economic uncertainty that can increase risk and heightened risk-aversion from lenders. But if you have high-interest debt, or can secure a lower rate by consolidating, then taking out a consolidation loan during a recession could make sense. It’s a good idea to weigh the risks and benefits carefully and seek out professional advice before making a decision.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Is it good to have money in the bank during a recession?

The general consensus is that banks are a safe place to keep your cash during a recession. If your account is insured by the Federal Deposit Insurance Corporation (FDIC), then individual deposits up to $250,000 are protected. Banks also protect funds against theft or loss.

Is it better to have cash in a recession?

It’s a good idea to have some of your money in cash during a recession. That’s because if you’re laid off from your job or an emergency arises, it can be helpful to have a cushion of readily accessible money.

Should I withdraw all my money during a recession?

If you’re thinking about how to prepare for the recession, it can be tempting to want to take out all of your money from a bank. But there’s good reason to reconsider. Many banks are FDIC insured, which means deposits up to $250,000 are protected.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q424-054

There are at least 11 different types of personal loans out there, but one you may not have heard of yet is the share secured loan.

An accessible option for those who might not qualify for a traditional unsecured personal loan, a share secured loan uses the funds in your interest-bearing savings account as collateral — which means you can pay for a big expense without wiping out your entire savings.

Here are the basics about share secured loans — how they work, the benefits, allowed uses, requirements, and more.

What Is a Share Secured Loan?

A share secured loan, which may also be known as a savings-secured loan, cash-secured loan, or a passbook loan, is a type of personal loan.

However, unlike many other types of personal loans, these loans are — as their name implies — secured: The bank or other lending institution uses the money in your savings account, Certificate of Deposit (CD), or money market account as collateral to lower their risk level when offering the loan. This can make qualification less onerous for the applicant.

In addition to making it easier to qualify for a loan, share secured loans also allow you to fund an expensive purchase or cost without depleting your savings. They can also help you build credit, which is particularly important if your existing credit history or credit score could use some work.

Of course, like all other loans, share secured loans do come with costs and limitations of their own, and it’s worth thinking carefully before going into any kind of debt.

Recommended: What Is a Certificate of Deposit?

How Does a Share Secured Loan Work?

In order to take out a share secured loan, you must first have money saved in an interest-bearing savings account. Your savings account balance will be used as collateral. Money invested in the stock market cannot be used as collateral for this kind of loan, since it isn’t FDIC- or NCUA-insured and is at some amount of risk.

Banks that offer share secured loans will cap the loan at some percentage of the amount of money you have in your account, usually between about 80% to 100% of those funds. They may also list a loan minimum.

When you apply for the loan, the money in your savings account will be put on hold and made inaccessible to you, and the loan funds will be issued to you as a check or directly deposited into your checking account.

You’ll then be responsible for paying the loan back in fixed monthly installments over a term that may last as long as 15 years, and which will include an interest rate of about 1% to 3% more than your savings account earns. For example, if you secured the loan with a money market account that earns 2.00% APY, your loan interest rate might be 3.00% to 5.00%. Typically, share secured loans come with lower APRs than unsecured loans, since they’re less risky for lenders.

Once the loan is paid off, you’ll regain access to the funds in your savings account, which will still have been earning interest the entire time.

Benefits of a Share Secured Loan

It may seem a bit strange to borrow money you already have, which is pretty much how a share secured loan works. But there are certain benefits to this approach if you need to pay down an expensive bill or fund a costly project up front.

Cost

Of the different types of personal loans that are available, share secured loans have some of the lowest interest rates — precisely because the bank has your money as collateral if you don’t repay the loan.

Still, even if the loan interest rate is only a few percentage points over the amount of money you earn in interest on your savings account, you’ll pay more than you would if you were able to use cash to fund your expense.

Eligibility Requirements

One of the biggest benefits to share secured loans is their relatively lenient eligibility requirements. Since they are secured, lenders consider them less risky.

If your credit score is on the low end of the range, you may not qualify for other types of personal loans, and if you do qualify, their interest rates may be high (as in the case of a payday loan or pawnshop loan). A cash-secured loan offers an accessible and relatively inexpensive alternative.

Flexible Repayment Options

With a share secured loan, you can often choose a repayment term that suits your needs and financial plans. Many lenders offer terms within the 36- to 60-month range.

Credit Building

Finally, one of the most important benefits of share secured loans is their power to help you improve or build your credit, which can help you qualify for other types of loans in the future. Credit building and credit improvement are two of the best reasons to seriously consider a share secured loan to fund an expense you might otherwise be able to pay for in cash.

Are Share Secured Loans a Bad Idea?

There are some risks to using your existing funds as collateral to go into debt. Namely, if you fail to pay back the loan, the lender can seize the funds in your savings account — and you’ll still be responsible for repaying the loan, which can have a negative effect on your credit score.

Additionally, even a low-cost loan isn’t free, and depending on the loan amount and its term, you may end up spending a significant amount of cash on interest over time.

That said, there are times when a share secured loan may make sense:

•   You’re a first-time borrower. A share secured loan offers you access to credit without requiring you to have a lengthy credit history.

•   Your credit is poor. By making consistent payments on the loan, you can rebuild and repair your credit.

•   You need help paying for an emergency expense. A share secured loan helps you cover unexpected bills without depleting your savings.

Common Uses of a Share Secured Loan

Share secured loans are used for a wide variety of reasons and share many of the common uses of a personal loan.

For example, a borrower might use a share secured loan to cover an unexpected medical bill or car repair payment. Share secured loans can also be used to cover moving expenses, home improvement costs, or even debt consolidation to pay off other forms of high-interest loans, like credit cards, which could help you get back on track financially.

Who Is a Share Secured Loan Best For?

While it’s important to consider all your options before going into any form of debt, a share secured loan might be an attractive choice for borrowers who already have a substantial amount of cash in savings but might not have the liquidity to pay for a large expense comfortably.

Additionally, if you have a poor or fair credit score, a share secured loan may help you qualify for the funding you need while also building up your credit score over time.

Qualifying for a Share Secured Loan

The good news about qualifying for a share secured loan is that so long as you have the money in your account saved up, this financial product is very accessible. Many share secured loans are available for borrowers with poor credit or even no credit history — though it’s always a good idea to shop around and compare rates and terms available from different lenders.

Share Secure Loans: Alternative Loan Options

While share secured loans can be a good option for certain borrowers, there are other alternatives worth considering as well:

•   A secured credit card works in a similar way to a share secured loan. You’ll only be able to use as much cash as you put on the card, and it can help you build credit.

•   If you don’t have substantial savings built up quite yet, a credit-builder loan might work for your needs, though it’s likely to come at a higher interest rate since there’s no collateral involved.

•   A guarantor loan, on which someone cosigns with you and agrees to repay the debt if you default, may make it possible for you to qualify for better terms than you otherwise would with poor to fair credit.

Other Types of Secured Loans

Share secured loans are far from the only type of secured loans out there. Any loan that involves some form of collateral is considered a secured loan. Some of the most common forms of debt fall into this category, such as:

•   Mortgages, which utilize the home and property as collateral.

•   Auto loans, which utilize the vehicle as collateral.

•   Secured credit cards, as mentioned above, which require cash collateral.

Recommended: Using Collateral on a Personal Loan

The Takeaway: Is a Personal Loan Right for You?

Share secured loans are a secured type of personal loan that can be used for a wide variety of expenses. Share secured loans are available for low-credit borrowers, so long as they have substantial cash savings — but there are other options available, too.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

Are share secured loans a bad idea?

Share secured loans are not an inherently bad idea, but they can cost the borrower more in interest than if they had paid cash for the purchase.

Why would someone take out a share secured loan?

The reasons people take out a share secured loan are much the same as reasons for taking out a personal loan: medical expenses, moving costs, home repairs and improvements, and more.

How do share secured loans work?

The borrower uses funds in their interest-bearing savings account as collateral to secure the share secured loan. If they fail to repay the loan, the lender can seize the savings account as repayment on the loan.

Photo credit: iStock/Julia_Sudnitskaya

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q424-013

You may not stop to think about money because it’s a part of our everyday life, but there are lots of fascinating facts about currency. Learning some interesting tidbits may change how you think about money and even come in handy the next time trivia night rolls around.

Read on for 21 fun facts about money.

Surprising Things You Probably Didn’t Know About Money

Maybe you already know only two non-Presidents grace the front of U.S. bills (Alexander Hamilton on the $10 bill and Benjamin Franklin, the $100 bill). But did you know our paper currency isn’t really made out of paper? And that no living person can appear on a U.S. coin or dollar bill? It’s true! Here, learn more intriguing money facts.

1. Each Dollar Amount Has Its Own Lifespan

Money doesn’t last forever, but some dollar bills have a longer life cycle than others.

According to the U.S. Currency Education Program, a $10 bill has the shortest lifespan while a $100 bill has the longest. Here’s the estimated lifespan of the different denominations:

•   $1: 6.6 years

•   $5: 4.7 years

•   $10: 5.3 years

•   $20: 7.8 years

•   $50: 12.2 years

•   $100: 22.9 years

2. A Banknote Can Be Folded 4,000 Times

Our currency is pretty durable. The Bureau of Engraving and Printing, the sole producer of U.S. paper currency, says it would take 4,000 double folds, forward and backwards, for a dollar bill to tear. It might be because paper money isn’t actually made of paper. It’s actually a blend of 75% cotton and 25% linen with tiny blue and red synthetic fibers of various lengths evenly distributed throughout the bill.

3. There’s a Reason US Dollars Are Green

Dollar bills weren’t always green. Colonial money for example, was tan with black or red ink. It wasn’t until the Civil War the government started using green ink to print paper money where it got the name greenbacks. The color was selected because the ink didn’t fade or easily decompose, which protected against counterfeiting.

4. A Coin Can Last Around 30 Years

Coins stay in circulation for about 20 to 30 years, which is when they become too worn to use. At that time, the Federal Reserve takes them out of circulation and melts them down to use for other purposes.

Recommended: How Do Federal Reserve Banks Get Funded?

5. The Highest Bill Denomination Issued by the US Was $100,000

Printed in 1934 and featuring President Woodrow Wilson, this $100,000 bill was a gold certificate currency that was never intended for public use, such as being deposited into a checking account. Instead, it was meant only for official transactions between Federal Reserve Banks. The last time this banknote was printed was in 1945, and it can’t be legally held by collectors.

6. A Penny Costs More to Make than It’s Worth

A recent report says it costs almost 3.1 cents to make a penny as of 2023. Why the increase? Part of the rise could be the higher prices of copper and zinc, both of which are used to make pennies.

7. Money Is Dirtier Than You Think

Both paper currency and coins can carry viruses and bacteria that can live on the surfaces and easily transfer to your skin or onto other objects after touching it. Research has found physical currency can change hands up to 110 times a year or almost twice a week. One recent study found banknotes made with cotton or linen fibers, such as U.S. dollar bills, present increased areas for germs and the capacity to retain moisture, which can make it an easier place for bacteria to thrive.

8. The Dollar Sign Was First Used in 1785

Here’s another fun money fact: The official adoption of the dollar sign in the U.S. can be traced back to 1785, when it evolved from the Spanish symbol for pesos. It’s believed the $ originated from the abbreviation PS, which was used to indicate Spanish pesos in the Americas. Gradually the “S” came to be written over the “P,” eventually morphing into the dollar sign we know today.

9. Martha Washington Is the Only Woman to Appear on a US Bill

America’s first First Lady, Martha Washington, is to this day, the only woman to have her likeness appear solo on a U.S. paper currency note. Her image appeared on the $1 Silver Certificate, first issued in 1886 and discontinued in 1957. It was the country’s second-longest issued paper money.

10. America Isn’t the Only Country that Uses the US Dollar

Besides the United States and its five inhabited territories, 11 countries in the world also use the U.S. dollar, the world’s reserve currency, as their official currency: The British Virgin Islands, Timor-Leste (or East Timor), Bonaire, Ecuador, El Salvador, Federated States of Micronesia, Marshall Islands, Palau, Sint Eustatius, Saba, and Turks and Caicos.

Recommended: Examining the Value of the U.S. Dollar

11. You Can Make Your Money Crisp by Ironing It

Ready for a surprising money fact that involves a little bit of fabric know-how? If you’ve got a creased, crumpled, or wrinkled dollar bill, you can make it look new by pressing it with your iron. As mentioned earlier, U.S. dollars are 75% cotton and 25% linen, so it’s actually fabric. To iron the money, dampen the dollar bill slightly with a spritz bottle, sprinkle water by hand, or use the spray function on the iron itself. Set the iron to a low heat, put a towel under the bill and another on top of it, then iron the money in a circular motion. Set aside to air dry. Presto! You should have a nice flattened bill, ready to stick in a gift card or slide into an ATM en route to your savings account.

Recommended: How to Write a Check

12. The Oldest Currency Still in Use Is the British Pound

The British pound dates back to 775 AD and was called the pound sterling, when Anglo-Saxon kings used silver pennies, or sterlings, as money. Today, this foreign currency is the fourth most traded in the foreign exchange market, after the U.S. dollar, the euro and the Japanese yen.

Recommended: Here’s What You Can Do with Leftover Foreign Currency

13. 13. There Are 1.2 Billion $2 Bills Still in Circulation

The first $2 bills were printed in 1862. Although they originally featured Alexander Hamilton, they were later redesigned to feature Thomas Jefferson. The bills are still in circulation (1.2 billion of them in fact) and are considered to be the rarest currency denomination in the U.S. Some people believed $2 bills were bad luck and would rip off the corners of the bill to “reverse the curse,” making them unusable.

14. The First Universal Credit Card Was Introduced in 1950

Credit cards originated in the U.S. back in the 1920s, but were issued by individual firms, such as oil companies and hotel chains, to their customers, specifically for purchases made at company outlets. It wasn’t until 1950 when Diners Club founders Ralph Schneider and Frank McNamara issued a card that could be used at a variety of establishments. The Diners Club card sparked the modern credit card era. Others soon followed, such as American Express, which debuted their card of this type in 1958.

Recommended: 10 Credit Card Rules You Should Know

15. There’s an ATM on Every Continent on Earth

One interesting money fact involves how we access it. There are more than 3 million cash machines around the world today. You can get or deposit cash at ATMs in the most remote of places including in the most remote of places including Easter Island and McMurdo Station in Antarctica!

16. The Secret Service Originally Fought Counterfeiting

Today we typically think of the U.S. Secret Service as protection for certain political leaders, including the President and Vice-President and their immediate families. But the agency was founded for a very different reason. By the end of the Civil War, fake money was a significant problem, with nearly one-third of all U.S. paper currency in circulation being counterfeit. As a result, the financial stability of the country was in jeopardy, so in 1865, the Treasury Department established the Secret Service to suppress the counterfeiting. They didn’t start protecting the President until 1901, after the assassination of President William McKinley.

17. Most Americans Hoard Their Spare Change

One landmark survey by MyBankTracker.com found 55.5% of people do nothing with the loose change they’ve accumulated. Interestingly, 60.3% of the male respondents said they’re more likely to leave their extra coins untouched compared to 51% of the female respondents.

Another survey from Coinstar, conducted a few years ago, found that people estimated they had about $28 in change at home but typically took $56 in change to Coinstar machines.

Recommended: 7 Tips to Managing Your Money Better

18. Only 8% of the World’s Currency Is Physical Money

Interesting money fact: With mobile banking and electronic payments becoming more and more common, people are earning and spending money without having to even touch it. Economists estimate only 8% of the world’s currency is literal cash with the rest existing on computer hard drives in electronic bank accounts.

19. Coins Didn’t Always Say “In God We Trust”

The original American penny, reportedly designed by Benjamin Franklin, features a motto he popularized, “Mind Your Business.” The message wasn’t literally telling people not to be nosy. Instead, it was meant as a literal instruction about business and commerce, to keep focused on your livelihood.

20. US Airports Make Big Money from Loose Change

According to the Department of Homeland Security, airline passengers leave behind thousands of dollars in coins each year at U.S. airport screening checkpoints. In 2023, the most recent year studied, the Transportation Security Administration collected almost $1 million in unclaimed money (mostly coins) from passengers who emptied their pockets while going through the security line. These funds get deposited into a special fund so that collection and spending can be easily tracked. After a period of

21. This Century Is Transforming Money

Online banking has recently transformed how people manage their personal finances, and technology continues to alter how money is handled.
New ways to pay for things continue to rise in popularity, including mobile payment technology like Venmo, PayPal and Google Pay.

Approximately 42.6% of people worldwide use mobile or digital wallets.

The Takeaway

Learning fun facts about money reveals that there’s more to it than its face value. Finding out some fascinating money trivia might even change the way you think about it. These facts can enrich your understanding of the history of our currency system, how it’s evolving, and its place in the global market.

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

Photo credit: iStock/bob_bosewell

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

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

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

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

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

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.

SOBK-Q424-063

If the kitchen is the heart of the home, what does it say when yours is falling apart? Shabby fixtures, failing appliances, or a dysfunctional layout might have you daydreaming about a full gut reno — but how much does an average kitchen remodel cost? A minor kitchen update by DIY-savvy homeowners may come in around $7,000, while a major remodel can balloon to $50,000, or even $100,000+.

Before you begin your kitchen update, it helps to consider why you’re remodeling and whether it will add value to your home. We’ll help you scope out the average cost of a kitchen remodel — including cabinetry, countertops, and labor — and where you can save money without sacrificing function or design.

Factors Affecting Kitchen Remodel Costs

Before you start a kitchen remodel, it’s important to consider what you want to get out of it and what your return on investment (ROI) might be. You’ll also want to understand what factors can impact your costs so you know just how far your kitchen remodeling budget can go. Here are some factors to keep in mind:

Size of the Kitchen

The more square footage you’re remodeling, the more expensive the project tends to be. After all, you’re not only buying more materials (think cabinets, flooring, or tile), you’re also paying more in labor costs to have everything installed.

Scope of the Remodel

Generally speaking, the more extensive the work, the higher the price tag. For example, knocking down walls will set you back anywhere from $1,000 to $10,000. Want to relocate your sink? Expect to pay between $500 to $1,000. Compare that to the cost of smaller jobs, like replacing cabinet pulls (around $300) or adding new kitchen lighting ($100-$200 per fixture).

You may be interested in this story on the difference between a renovation vs. remodel.

Quality of Materials and Finishes

The average kitchen remodel cost can vary a lot depending on a few key items: cabinetry, countertops, and appliances. And the quality and type of materials of those items can have a significant impact on how much you’ll pay.

Take, for example, the cost of countertops, which is determined by the material. Typical materials include granite, marble, quartz, stainless steel, and butcher block wood. Granite, stainless steel, and butcher block are good budget options, ranging from $850 to $6,750 depending on the size of your kitchen. Marble and quartz command $1,500-$10,000.

Level of Customization

The more complex the design — and the more customized features you include — the more you’re likely to pay for a kitchen remodel. Consider cabinetry, which typically eats up 25% of a kitchen budget. There are three types of kitchen cabinet construction, each priced per linear foot:

•   Stock cabinets, the least expensive, run $100-$300 per linear foot.

•   Semi-custom are $100-$650 per linear foot.

•   Custom will set you back $500-$1,200 per linear foot.

Custom cabinets are made to order, based on your kitchen’s precise measurements, and are made of solid wood. Stock are ready-made and mostly constructed of engineered wood, and semi-custom are a hybrid of stock and custom.

Installation and Labor Costs

Labor is a major cost that can be hard to predict. But count on spending 20%-35% of your budget on contractors and installers. Your price will depend on where you live, how large your space is, and the features being installed.

Regional Variations in Kitchen Remodel Costs

Bargain hunters should be aware that some factors influencing budget are not within their control — like where in the U.S. you live. Homeowners on the West Coast generally pay more for materials and labor than in the South. Prices also tend to run higher in and around major cities. There are several reasons for this, including the cost of shipping materials to your area, local permits and fees, and your cost of living.

Notice how the overall costs vary by region, according to 2024 data from the home services website Angi.

Budgeting for Your Remodel

Deciding what your new-and-improved kitchen will look like is important, but so is figuring out how to pay for it. Here are some strategies to keep in mind:

Set a Realistic Budget Based on Your Goals

Money.com recommends spending between 10% and 15% of the value of your home on a kitchen remodel to get the best ROI. A major reno for a $400,000 home, then, would cost between $40,000 and $60,000.

Look for Ways to Save

In a full-scale kitchen remodel, new kitchen cabinets are typically the biggest expense, accounting for up to 40% percent of the project budget. If your cabinets are in good shape and fulfill your storage needs, refacing them can slash your bill. Refacing can mean either stripping and repainting or staining existing doors, adding stick-on veneers, or replacing the doors while preserving the cabinet shelves. Add new hardware for a more modern look.

You may also be able to trim some costs by doing simple things yourself: picking up items instead of paying for delivery, painting walls instead of paying contractors for the labor, or replacing your own backsplash.

Understand the Potential Return on Investment

The truth is you probably won’t recoup the total cost of a kitchen remodel in a home sale. According to Remodeling Magazine’s 2024 Cost vs. Value Report, the national average ROI for a minor remodel with mid-range materials is 96%. A major remodel with upscale materials, on the other hand, yields just a 38% ROI.

Clearly, the best bang for your buck will be less costly but visually impactful minor updates: replacing cabinets fronts, countertops, faucets, and lights, plus painting and perhaps new flooring. But if you want to change the layout or add all new appliances, you’re looking at five figures. More on that in a minute.

Consider a Loan to Help Cover Costs

It can be tempting to throw all your kitchen purchases on a credit card, but keep in mind that high-interest rates can inflate your renovation costs. These days, many homeowners are turning to a flexible personal loan to fund home renovations and remodels.

With home improvement loans, you receive a lump sum payment to cover your kitchen remodel cost. You can pay back the loan over a term of your choosing in equal monthly installments. The interest rate is determined by your credit history and credit score, but is typically lower than credit card interest.

Our Home Improvement Cost Calculator can give you an idea of how much you’ll need to borrow.

Maximize Value and ROI in Your Kitchen Remodels

Want to get the most bang for kitchen remodel buck? Here are a few places to start:

•   Choose durable, timeless design elements. Trends come and go, so to get the most mileage out of your remodel, stick with upgrades that can stand the test of time (and appeal to future buyers). If your budget allows, select a durable, classic countertop material like granite or marble, and opt for a neutral color palette and go-with-anything fixtures and handles.

•   Optimize layout and functionality. The kitchen isn’t just a natural gathering spot — it’s also a place for work. Whether it’s prepping meals or cleaning up afterward, a functional space is key. As your remodeling vision starts to take shape, be sure above all it enhances the workflow and offers you plenty of countertop and storage space.

•   Select energy-efficient appliances and fixtures. Sure, energy-efficient appliances and lighting use less energy and can lower utility bills. But they also have the added bonus of attracting potential eco-conscious buyers.

Choosing the Right Kitchen Remodeling Contractor

When you’re starting the home remodel process, it’s important to find a contractor you can trust. That means doing your research, speaking with and getting quotes from multiple contractors, and reaching out to their previous clients for referrals. You’ll also want to check licenses and certifications.

It’s also a good idea to request detailed project proposals and cost estimates to avoid any surprises. And when entertaining bids, remember that an experienced, in-demand contractor will likely charge more than less capable competitors, but will almost certainly be worth it.

Popular Kitchen Remodel Ideas

The Internet can be your best friend if you want to spruce up your kitchen but have no idea what to tackle first. As you’re browsing, keep an eye out for projects that will improve the functionality of the space and increase the value of your home.

Updating cabinets and countertops, for instance, can give your space a whole new look and provide more room for meal prep. Both upgrades also tend to deliver a high ROI.

Adding more functional storage solutions can make cooking more enjoyable and also make your home more attractive to potential buyers down the line. Similarly, adding or improving the lighting in your kitchen — or freshening up the fixtures — can also breathe new life into your space.

The Takeaway

The average kitchen remodel cost can vary widely from $7,000 to $50,000 or more, though you can get a fair return on your investment by spending between 6% and 10% of your home’s value. Your cost will depend on a number of factors such as kitchen size and whether you choose bargain, mid-range, or high-end materials and appliances. The major kitchen remodel cost drivers are cabinets, countertops, appliances, and labor. The good news is that the ROI for a smart, mid-range remodel is 96%.

When you’re ready to take the next step, there are various ways to finance the remodel, including a personal loan. Your credit history and credit score will help determine your interest rate, but it will likely be lower than the interest you’d pay on a credit card.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

FAQ

What is a realistic budget for a kitchen remodel?

When setting your budget for a kitchen remodel, a good rule of thumb is to plan to spend between 6% and 10% of your home’s value.

Is $10,000 enough for a kitchen remodel?

On average, a kitchen remodel can cost as little as $7,000 or as much as $50,000 or more. With a budget of $10,000, you’ll likely have enough to cover a cosmetic refresh or even a more substantial upgrade for a small kitchen.

Is $30,000 enough for a kitchen remodel?

Depending on the size of your kitchen and the work you want to do, a budget of $30,000 should easily cover a mid-range remodel.

What is the most expensive part of a kitchen remodel?

Generally speaking, the most expensive line item in a kitchen remodel is the cabinets. Stock cabinets are the least-expensive option, typically running around $100-$300 per linear foot. Custom cabinets are the most-expensive option and cost around $500-$1,200 per linear foot.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SOPL-Q424-058