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Homeownership is expensive, no matter what type of property someone owns. And the cost of homeowners insurance can vary greatly depending on where someone lives, the size of the home, and the type of insurance.

If you’re debating whether you can afford to buy a single family home or a condo, make sure to factor in condo insurance vs. homeowners insurance costs. Keep reading for the full lowdown.

What Is the Difference Between Homeowners Insurance and Condo Insurance?

The difference between homeowners insurance vs. condo insurance is fairly straightforward. Both protect homeowners financially, but the policies differ in the scope of their coverage. (Neither policy should be confused with mortgage insurance, which is totally different)

Homeowners insurance protects most of the property someone owns (inside the home, outside the home, and the surrounding area). Condo insurance protects only the interior of the home. Because multiple condos share one building, the exterior and area around the condo are the responsibility of the homeowners association (HOA) master insurance policy.

You can learn more about both types of coverage by shopping around with online insurance brokers.

How Does Dwelling Coverage Differ for Home Insurance vs Condo Insurance?

When it comes to homeowners vs. condo insurance, how dwelling coverage works varies:

•   Homeowners insurance: Dwelling coverage is based on how much it might cost to completely rebuild the home.

•   Condo insurance: How much dwelling coverage is needed is based on what the HOA master policy covers. For example, some master policies may cover select interior structures (like drywall or ceilings) or the entire interior.

Recommended: First-Time Home Buyer’s Guide

How Does Liability Coverage Differ?

For liability insurance, coverage needs can also be different for condos and homes.

•   Homeowners insurance: Liability coverage extends to the entire property (inside and outside the home).

•   Condo insurance: Covers accidents that happen inside the condo.

How Does Personal Property Protection Differ?

Personal property protection works similarly whether someone has a homeowners policy or a condo policy. This type of coverage is designed to protect the policyholder’s belongings from damage and theft. HOA master policies don’t include this coverage, so condo owners need to make sure they purchase it. Both homeowners and condo owners can benefit from personal property protection.

Cost of Homeowners and Condo Insurance by State

To get a better idea of what each type of insurance costs, let’s look at the average condo insurance vs. homeowners insurance costs by state.

As with most insurance, you can lower your premiums by choosing a higher homeowners insurance deductible.

Condo Insurance vs Homeowners Insurance Cost

Once someone is ready to buy homeowners insurance or condo insurance, price is likely top of mind. When it comes to the average condo vs. homeowners insurance cost, homeowners is $1,680 per year and condo is $429 per year.

Types of Condo Insurance

There are a few types of condo insurance to be aware of:

•   Personal property. When someone has personal property protection, they can be reimbursed for the cost of repairing or replacing their belongings, such as clothing and electronics, up to a certain amount.

•   Loss of use. If the owner needs to leave their condo to stay in a hotel during repairs after a covered incident occurs, loss of use coverage can help pay for things like hotel stays and dining out.

•   Liability. Liability coverage can help out if the condo owner is legally responsible for damage or injuries caused to someone else due to an accident that occurs in their condo.

•   Dwelling. This type of coverage steps in to pay for replacing or repairing everything in the condo unit (starting from the drywall in) after a covered loss.

•   Loss assessment. If an accident occurs in a shared area of a condo’s property (like the pool, stairs, or clubhouse), then the HOA master policy is the first line of defense. However, if damages exceed the amount that this policy will cover, then the residents may end up responsible for covering the remaining costs, which is where loss assessment coverage can come to the rescue.

Recommended: The Difference Between Homeowners Insurance and Title Insurance

Condo Insurance Benefits

While the HOA does have some insurance coverage that protects parts of condo units, residents really need to have their own condo policies to make sure they’re fully protected. The benefits of condo insurance are many, from covering repairs to replacing belongings after a break-in to paying medical bills after a guest slips and falls.

Condo owners who are still unsure what sort of policy to choose may benefit from reading How Much Home Insurance Do I Need?

Types of Homeowners Insurance

These are the main homeowners policy options:

•   HO-1: Only dwelling protection. Also known as hazard insurance.

•   HO-2: Includes personal belongings and extra perils on top of basic coverage.

•   HO-3: Includes dwelling, belongings, and liability coverage. This is the most popular type of coverage.

•   HO-4: Applies to policyholders who rent out their home and want liability and personal property coverage.

•   HO-5: This is a comprehensive policy that usually applies to brand-new homes and comes with extra coverage.

•   HO-6: The term HO-6 is another way of saying condo insurance.

•   HO-7: This type of coverage is for mobile homes.

•   HO-8: Robust coverage for older and historical homes.

It’s always possible to change homeowners insurance policies if someone decides they want more coverage.

Homeowners Insurance Benefits

The type of homeowners policy someone has influences the benefits of their policy. Generally speaking, the point of this insurance is to financially protect homeowners from disastrous events that can destroy a home, but it can also protect against theft and liability.

If you have a mortgage, homeowners insurance may be required by your lender.

The Takeaway

If someone owns a home or a condo, they need some type of insurance coverage to protect themselves from financial hardship. Homeowners policies typically include dwelling coverage for the building itself, while condo policies do not. Both cover the contents of the home, and may include liability coverage too. The average annual cost of a homeowners policy is $1,680, while the average annual condo policy is $429.

If you need a new homeowners policy, you can turn to SoFi. We teamed up with Experian to deliver homeowners insurance built for the 21st century — without brokers. Policies are customizable, and getting a quote online takes just minutes.

FAQ

What is the key difference between a homeowners and a condo policy?

The main difference between condo and homeowners insurance coverage is what each type of insurance protects. Condo insurance only protects the interior of the condo whereas homeowners insurance protects the entire property including the outside of the home and the land around it.

Which type of property insurance coverage is more expensive?

Generally homeowners insurance is more expensive (average cost of $2,777 per year) than condo insurance (average cost of $759 per year). That being said, the location, size, and repair cost of the property can lead to a condo being more expensive to insure than a single family home.

What’s the difference between HO3 and HO6?

An HO3 policy protects a single family home with dwelling, belonging, and liability coverage. An H06 policy on the other hand is designed for condo owners to protect the inside of the condo, as well as providing belonging and liability coverage.

Photo credit: iStock/miniseries

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

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.

SOPT1022003

The average annual cost of flood insurance through the National Flood Insurance Program (NFIP) is $850 for California homeowners. But renters, who would only be insuring their personal possessions and not the building they’re in, can expect to pay much less for their coverage.

The cost of insuring your rental home’s contents still can vary significantly, depending on several factors, including if you live in a high-risk area, the coverage amount you want, and the deductible you choose.

Read on to learn more about purchasing flood insurance as a California renter, including what it can cost and why you might choose to purchase a policy to protect your belongings.

What Is Flood Insurance?

While most renters insurance policies cover some types of water damage (from a burst pipe or an overflowed toilet, for example), a standard renters policy typically doesn’t cover flood damage that comes from outside the home or from underground sources.

To be sure your furniture, electronics, and other belongings are protected if waters rise and flooding affects your rental home, you may need to buy a separate flood policy that will help you repair or replace what you’ve lost.

How Can Renters Get Flood Insurance?

Most people get their flood coverage through the NFIP, which is managed by the Federal Emergency Management Agency (FEMA). The NFIP works with a network of insurance companies across the country to provide policies.

FEMA’s flood insurance for renters and others isn’t sold directly by the federal government. Instead, you can purchase an NFIP policy through an authorized insurance company, under what’s known as a Write Your Own (WYO) program. The NFIP works with more than 50 insurance companies, so if an agent or broker helped you purchase your renters or auto policy, you can probably work with that same person or organization. If not, you can get help finding an NFIP provider online at FloodSmart.gov, or you can call the NFIP at 877-0336-2627.

You also may want to check into private, non-government-backed flood insurance policies that may be offered in your area. These policies have different coverage limits, premiums, and deductible amounts than what an NFIP policy offers and can be a good fit for some needs. Just be sure your quote is coming from a stable company that is capable of paying out claims in the event of a major flood.

What Is Covered by Flood Insurance?

The NFIP offers two types of flood coverage. You can get a policy that covers a building only, a policy that covers only the contents in the building, or you can get coverage for both a building and its contents.

It’s up to a building’s owner to decide whether to buy flood insurance for their structure. Renters only have to worry about getting coverage for the possessions they keep in their rental condo, apartment, or house.

What does flood insurance cover for renters? An NFIP contents-only policy can provide up to $100,000 in personal property damage and typically covers items like:

•   Personal belongings, including clothing, furniture, and electronic equipment (TVs, computers, etc.)

•   Valuables, such as original artwork (up to $2,500)

•   Portable and window air conditioners

•   Washer and dryer

•   Microwave or convection oven

•   Rugs

•   Curtains and other window coverings

What Isn’t Covered by Flood Insurance?

Most personal property kept in a basement — including money, furniture, clothing, and electronics — won’t be covered by NFIP flood insurance. So if you’re renting a basement apartment (even if it’s a walkout basement), you’ll want to be clear about what can and can’t be insured.

Items you keep outside the building also may not be covered under an NFIP policy, including your car, bicycle, or plants.

NFIP flood insurance also won’t cover the costs you may incur if you must move to temporary housing because of flooding damage. (If you have renters insurance with “loss of use coverage,” you may be out of luck there, too. Loss of use coverage typically pays out only when the reason you’ve been displaced is covered by your renters policy — and as noted above, the standard renters policy doesn’t cover flooding damage.)

Keep in mind that private flood policies may have different coverage exclusions.

Recommended: The Cost of Repairing a Plumbing Leak

Is Flood Insurance Required for California Renters?

Flood insurance isn’t legally mandated for renters in California, or anywhere in the U.S. And though your landlord can require renters insurance, a landlord can’t make renters purchase a separate flood policy.

However, if you feel your personal property could be at risk, you may want to consider adding flood protection.

Residents may worry more about their risk from earthquakes and wildfires, but according to the Public Policy Institute of California, much of the state is vulnerable to flooding. The valleys are susceptible to overflowing rivers. Some coastal areas are unprotected from high tides and storm-driven waves. Deserts and areas burned by wildfires may be hit by flash flooding. And urban areas with poor drainage systems and lots of concrete are at risk of flooding from heavy rains.

FEMA says just one inch of floodwater can cause up to $25,000 in damage. And without a flood policy, the cost of replacing your ruined belongings would fall to you.

How Can You Assess Your Rental’s Risk?

Knowing your designated flood zone can help you decide if you want to prioritize purchasing flood insurance for your rental. You can find your zone by entering your address at the FEMA Flood Map Service Center at MSC.FEMA.gov. Buildings in zones A and V are at the highest risk for flooding, while those in zones B, C, and X are considered at moderate risk.

Even if you don’t live in a high-risk zone, you can still experience flood damage. More than 20% of all insurance claims come from moderate- to low-risk flood zones, according to NFIP data.

If you’re new to the state or your city — or even if you’ve just moved to a new building — you may want to speak with your neighbors or landlord about the history and potential for flooding.

How Much Is Flood Insurance for Renters?

The NFIP offers contents-only policies for as low as $100 annually. Your premium can vary based on several factors, including the items you plan to protect and their replacement cost.

Remember, with an NFIP contents-only policy, the maximum amount of coverage you can get is $100,000. If your needs go beyond that threshold, you may want to consider buying excess flood insurance through a private flood policy. Or you may find a private policy alone is a better fit for you.

If it seems as though adding a flood policy on top of the cost of renters insurance might be beyond your budget, you may be able to lower the premium by raising your deductible amount. And your insurance agent can probably make other suggestions to keep the cost down.

It might make sense to sit down and look at how renters insurance for flooding would fit — along with life, car, health, and standard renters insurance — as part of your overall personal insurance planning. Don’t put off the decision to purchase until forecasters are predicting a potential flood event, though. There is typically a 30-day waiting period for an NFIP flood insurance policy to go into effect.

Recommended: Different Types of Insurance Deductibles

The Takeaway

FEMA offers flood insurance for renters, known as contents coverage, for as low as $100 a year through the National Flood Insurance Program (NFIP). But the cost of an NFIP policy or a private (non-government-backed) flood policy can vary significantly depending on where you live and what you want to protect. Flood insurance is a standalone policy, so the premium would be on top of whatever you may be paying for renters insurance. (Most renters insurance policies don’t cover flood damage.)

While SoFi doesn’t offer flood insurance, the National Flood Insurance Program offers coverage that can protect you from expensive damage.

If it’s time to reevaluate your overall insurance plan, SoFi can help. SoFi teams with top carriers to help you get reliable coverage with the convenience of shopping for insurance online. With SoFi Protect, you can search for the coverage you need — for your home and belongings, life, and car — at a price you can afford.

FAQ

Is there flood insurance for renters?

Yes. Renters can get contents-only insurance through the National Flood Insurance Program (NFIP) or a private (non-government-backed) flood policy.

Can my landlord require flood insurance?

No. Flood insurance is not legally mandated in any state, and landlords can’t require renters to carry it.

Will my bicycle, kids’ toys, and other things I store outside my apartment be covered by flood insurance?

An NFIP contents-only policy won’t cover items that are kept outside, and there are also limits on what an NFIP policy will cover in a basement.

Photo credit: iStock/Cunaplus_M.Faba

Insurance not available in all states.
Gabi is a registered service mark of Gabi Personal Insurance Agency, Inc.
SoFi is compensated by Gabi for each customer who completes an application through the SoFi-Gabi partnership.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

SOPT1022008

Dental care is an important part of maintaining a healthy lifestyle, as oral health is connected to health issues in other parts of the body.

The demand for dentists, like other health care professionals, is on the rise, partly due to an aging U.S. population and partly due to more attention on dental health with each generation. The aging population is likely to need additional oral care, some of which can include complicated procedures.

By learning about the average tuition costs and ways to pay for dental school, prospective students can figure out if a dental career is the right choice for their future.

Employment Outlook for Dentists

The U.S. Bureau of Labor Statistics (BLS) projects there to be a 6% increase in available dentist jobs from 2021 to 2031. Dentists can work in a variety of settings, such as in private practice — either on their own or with a partner — or in an outpatient care center, among others.

The median annual salary of a general dentist was $163,220 in 2021. For perspective, the median annual U.S. income in the same year was $70,784.

While dentistry pays well, it also costs a lot to become a dentist. Dental school programs typically take four years to complete after students have already completed a bachelor’s degree. A degree from an accredited dental school will be either a D.D.S. — Doctor of Dental Surgery — or a D.M.D. — Doctor of Dental Medicine.

Individual universities determine which degree is awarded, but they are both approved by the Commission on Dental Accreditation (CODA), a part of the American Dental Association (ADA). Whichever degree a dental graduate is awarded, chances are they may also have hundreds of thousands of dollars worth of student loan debt to contend with after graduation.

How Much Does Dental School Cost?

The range of dental school costs depends on whether a student is in state (resident) or out of state (non-resident), and whether attending a public or private school. In-state public school tuition is typically going to be the least expensive option for most students.

According to the ADA, the average first-year cost of dental school (public or private), including tuition and mandatory fees, in 2021-2022 was $53,601 for residents and $71,742 for non-residents.

The cost difference between public schools and private schools can be substantial. The average resident cost for the first year of a public dental school program was $39,662, while the resident cost for private dental school was $72,271. After four years in school, students are looking at between $158,648 and $289,084 worth of debt, on average.

According to the American Dental Education Association (ADEA), in 2021, 81% of dental school students graduated with dental school debt. The average debt for a dental school graduate for the same year was $284,855.

Prospective students can compare the cost of dental schools and then determine how much they are willing to pay for their education. According to the ADA, there are 70 accredited dental schools throughout the United States and 10 in Canada.

Ways to Pay for Dental School

Even though dental school tuition can be expensive, students have options when figuring out how to afford it. Students can explore scholarships, grants, fellowships, or service programs to help pay for dental school.

Federal or private student loans are also an option. After graduating from dental school, some borrowers may consider refinancing their student loans as they pay off dental school debt. Continue reading for more details on ways to pay for dental school.

1. Scholarships and Grants

Scholarships and grants are awards that, in most cases, don’t have to be repaid. For students without the means to pay for tuition and other costs from personal savings, exploring these options may be a good place to start.

Dental schools may offer scholarships and grants to students who meet certain academic standards or who are working towards a certain type of degree, for example. When researching dental schools, prospective students may consider asking financial aid offices about available scholarships and grants.

Along with reaching out to schools, students may want to research scholarships and grants through organizations like The American Dental Association, The American Association of Public Health Dentistry, or The American Dental Education Association. There are also a variety of online scholarship search tools that students can use to find scholarships.

Recommended: What Is a Scholarship & How to Get One?

2. Employment

Dental school is rigorous, but if students have the time and energy, they may want to consider working to supplement their educational costs. The Federal Work-Study program is available to graduate and professional students with financial need, and has the same eligibility requirements and position availability as it does for undergraduate students. Financial aid offices at individual schools will have information pertaining to this program.

Training grants and fellowships, an option some dental students might find appealing, are sources of funding that often include a stipend and sometimes cover part of a student’s tuition.

These programs are designed to further a student’s education in a specific research area that interests them. They differ from simple grants in that there is a work component to them.

3. Service Programs

The Bureau of Health Workforce offers scholarships, loans, and loan repayment programs to eligible healthcare students and workers, including those in the dental field. One program, the National Health Service Corps (NHSC), provides scholarships to eligible students pursuing degrees in certain health professions.

In exchange for two years of full-time service in an underserved area, recipients will receive one year of scholarship support, up to a limit of four school years. The Bureau of Health Workforce also offers grants to eligible applicants through the Oral Health Workforce Development programs.

Service programs are also offered through the Indian Health Service (IHS). Eligible American Indian and Alaska Native students can apply for the IHS Scholarship, externship programs, or loan repayment programs. Scholarships are available to eligible students in pre-dental programs or for those completing dental school.

Recipients agree to serve a two-year commitment with the IHS. Third-year dental students can choose to apply for an externship, which typically spans two to four weeks, with placement in an Indian health facility. Loan repayment programs are either through the IHS or the NHSC. Both include a service commitment.

Students willing to serve in the military may want to consider programs through the United States Army, Navy, or Air Force. Each branch offers scholarships through the Health Professions Scholarship Program (HPSP).

Military scholarships cover full tuition and other related costs, plus a monthly stipend. Recipients agree to serve on active military duty in exchange for scholarship funds — the number of years varies with the branch and the number of years the student receives the scholarship.

4. Federal Student Loans

Completing the FAFSA® (Free Application for Federal Student Aid) form is the first step students should take to determine eligibility for federal financial aid. To fill out the form, they will need to provide personal identification and financial records.

Federal student loans for graduate and professional school students are either Direct Unsubsidized Loans or Direct PLUS Loans. Students may borrow up to $20,500 each year in Direct Unsubsidized Loans, and eligibility is not based on financial need.

If a student has costs in excess of that borrowing limit, they may want to consider a Direct PLUS Loan. Like a Direct Unsubsidized Loan, eligibility for a Direct PLUS Loan is not based on financial need, although a credit check is required.

Students are encouraged to ask the financial aid office at their school about school-based loans that might be available. Some federal funds are offered to schools instead of directly to students and are tied to certain eligibility requirements.

5. Private Student Loans

It’s always recommended that students exhaust all federal student loan options before considering a private student loan. But if there is still a financial need, a private student loan may be the right choice for some students. Private student loans are available from private lenders and are awarded based on factors including your income, credit history, and credit score, among other factors.

Considering Student Loan Refinancing

After graduating, now-dentists may consider refinancing their student loans to secure a more competitive interest rate or more favorable terms. Refinancing also allows borrowers to combine all their loans into a single loan. This won’t be the right choice for all borrowers because when you refinance federal loans you’ll lose access to any federal benefits — like any loan forgiveness options.

Should you refinance your student loans? The answer is personal and will depend on factors including the amount of student debt you currently have, your credit score, income, and whether you are refinancing without a cosigner.

A cosigner is someone who agrees to repay the loan if you are unable to do so for any reason. Adding a cosigner can potentially strengthen your application, allowing you to secure more competitive terms than without the cosigner.

Recommended: Student Loan Refinance Guide

To get an idea of what refinancing could do for your student loans, take a look at SoFi’s student loan refinancing calculator.

The Takeaway

Dental school can be expensive but can lead to a fulfilling and lucrative career. When determining how to pay for dental school, students can explore dental school scholarships, grants, federal student loans, and private student loans. After graduating, former students may consider student loan refinancing, to combine their existing loans and hopefully secure more competitive terms.

Graduate school loans from SoFi have competitive rates, no fees, fixed and variable loan rates, and multiple repayment options. Pre-qualification can be completed in as little as three minutes.

SoFi members can access live customer support seven days a week, may qualify for rate discounts on additional SoFi loans, and have access to other exclusive member benefits.

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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.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

Do you love your bank? Is it convenient? Do you feel valued? Are you getting a top-notch interest rate? Paying low or no fees?

If you can’t answer “yes” to all of those questions, it might be time to make a switch.

Changing banks can be a surprisingly simple process (though not instantaneous), and it can save you time and money. Here, we’ll break it down for you into three super simple steps, so you can complete the process as quickly and easily as possible. Read on for the guidance you need.

How to Switch Banks: Step-by-Step Guide

1. Choose a New Account for Your Money

Identify the key benefits you want but currently don’t have and do an online search to compare options. For example, if you are looking to eliminate monthly fees, target that; if you are looking for a bank with branches near your home and office, make that your focus. The possible options should quickly come into focus via a search engine.

If lower fees and higher interest rates are driving your decision, you’ll likely want to review online banking options vs. traditional banks. Because these financial institutions don’t have the overhead of bricks-and-mortar locations and staffing, they can often pass those savings onto their customers. That’s a major benefit of online banking.

Similarly, credit unions vs. traditional banks often have lower fees and higher interest rates because they are non-profit organizations and therefore have a different business model.

2. Open Your New Account

Found a new home for your cash? Go and open that account. You can likely transfer funds from your old one to make that initial deposit.

Some bank accounts require no initial deposit if you sign on with direct deposit; others will need a small deposit of perhaps $25. If you are signing up for a premium checking account or high-yield account, there may be higher minimums involved.

Here’s an important point: Don’t whisk every last cent out of your old account into the new account. You may have pending transactions and autopays coming up that will take time to sort out. Leave a cushion in the old account; you’ll learn more about this in the next step.

Make sure to set up direct deposit from your employer directly into your new account. This will ensure that your pay appears in your account without having to deposit a physical check. Visit your HR or pay office and provide them with the new account information, including the new account number and routing number.

You may also want to link a savings account to your new checking account. This can make transfers easier and allow you to opt into overdraft protection.

💡 Recommended: How to Open a Bank Account

3. Close Your Old Bank Account

Now that you have your new account, here’s how to close the old one while tying up any financial loose ends.

Cancel Automatic Payments and Direct Deposits

If you’re like most of us, you rely on autopay to simplify your banking; the pros of automatic payments are hard to ignore. This means that each month your various bills and subscriptions are seamlessly deducted from your primary account on their due date. To avoid falling behind on bills or accidentally getting your streaming service suspended, you need to turn off or redirect every automatic payment that currently comes out of the account you wish to close.

Take a look at your monthly account statement and make a list of every automatic deduction, from your electric bill to newspaper subscriptions. Once you’ve made your list, log in to each of your service provider accounts and change your payment information.

Also consider any automatic deposits you may receive. For instance, do you use P2P transfers on platforms like PayPal and Venmo? Update the info so when you transfer funds from those accounts, they go to your new checking.

Wait For Any Pending Transactions To Clear

After you’ve canceled or rerouted all the automatic payments that deduct from the account you want to close, you will need to wait for any pending transactions to clear. These pending transactions are usually for bills or subscriptions that have one remaining payment left before the company can change your payment information.

Waiting for all pending transactions to clear ensures that your bills will be paid and your subscriptions will continue without facing any overdraft fees. Make sure there is enough money in the account you wish to close to cover any pending payments. Wait two weeks to one month for any automatic payments to be deducted.

Cut the Cord

Once you have transferred all automatic payments and possible deposits and waited a cycle for those to update, you’re done. It’s time to close your old account. Depending on where it’s held, you may be able to finalize this online or by phone. In other cases (usually at smaller local banks or credit unions), you may have to send a written request or turn up in person.

Be sure to transfer out any remaining funds or get a check for the amount left in the account.

Whether you close your account online or in person, make sure to request written confirmation that the account has been closed, says the Consumer Financial Protection Bureau. This is a safety-net move to protect you if some issue were to arise. When you receive the letter confirming your bank account is closed, make sure to save it somewhere safe for future reference.

You’re done! How easy is it to switch banks? Hopefully, you’ve learned that it’s not too hard.

Should You Switch Banks?

There are many good reasons to switch banks. Perhaps one is advertising an incentive (such as a sign-on bonus) that’s too good to pass up. Or is offering a discount on a home loan rate if you open an account, and you want to snag that lower mortgage APR (annual percentage rate).

Or maybe you have realized that bank fees are eating away at your money. Consider these recent stats revealing how expensive banking can be:

•   Monthly fees on non-interest checking average $5.08 and $16.35 on interest-bearing accounts.

•   Insufficient or non-sufficient funds fees average a dizzying $33.58 each.

•   Out-of-network ATM fees are typically $4.59 (ouch) per transaction.

It’s worth noting that fees aren’t the only reason to make a change: Interest rates can vary wildly. On savings accounts, you might earn 0.01% at a traditional bank and 4.00% APY at an online one. Also, for some people, they want a bank that better suits their needs; perhaps a local one that caters to first-time homebuyers or is a niche bank and understands their student-loan debt issues among healthcare professionals.

The Takeaway

As the personal banking market becomes ever more competitive, you may find yourself thinking about changing banks for the sake of better services, greater convenience, lower fees, higher interest rates, or other features. If you do find a new home for your money, it takes just three steps to make the switch. Yes, it’s a bit of effort, but the payoff can be well worth it.

If you are thinking of making a swap, take a look at what SoFi offers. When you open an online bank account with us, your money can grow faster. When you set up Checking and Savings with direct deposit, you won’t pay any account fees and you’ll earn a hyper competitive APY.

FAQ

How do I switch banks?

To switch banks, you’ll need to identify a new financial institution and fund your new account. Then, you will need to transfer automatic payments, deposits (say, via direct deposit or PayPal), and wait for them to update. Once that happens, you are ready to transfer any remaining funds and officially close your old account.

Are there downsides to switching banks?

If you’re wondering about cons or how hard it is to switch banks, know that changing banks requires some effort and patience. You will need to complete some forms and move any automatic payments or deposits to your new account, as well as wait a cycle while these update. But changing financial institutions should not involve a charge or impact your credit score.

What documents do I need to switch banks?

Typically, opening a new account requires government-issued photo ID, a Social Security or taxpayer identification number, and possibly proof of your current address (such as a copy of your utility bill). To close an account, you’ll probably need your government-issued photo ID and perhaps a bank statement or your debit card.

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.

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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.

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