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Personal loans hold appeal with their capacity to wipe out debts in a single stroke. With student loan debt hovering at, it may appear at first glance that a personal debt is the answer to the problem.

However, using a personal loan to pay off student debt is widely seen as not the best idea. We will break down the process of taking out personal loans to pay off student loans and explain the serious drawbacks.

Can You Use a Personal Loan to Pay Off Student Loans?

While it may sound possible to use a personal loan to pay off your student loans, either federal or private, many lenders may not approve your application if they know you will be using the loan for this purpose.

A personal loan is a loan for which the borrower receives a one-time, lump sum amount of money and repays it, with interest, over a set amount of time in equal installments, typically monthly. Some common uses of personal loans are for debt management, home repairs and maintenance, vacation expenses, and wedding expenses.

Personal loan lenders dictate terms on the uses for the money. Many of these lenders prohibit the use of a personal loan for paying off student loan debt. And you are required to sign a loan agreement that says you will abide by the lender’s terms and forbidden uses.

If you use the money for a prohibited purpose and the lender learns this, you could be held responsible for paying back the full amount immediately. Also, knowingly providing false information on a loan application is considered fraud and is a crime.

For many people looking to replace their federal student loan with another type of repayment, student loan refinancing presents more attractive options than getting a personal loan. Using other loans to pay off student loans requires careful consideration.

Why Refinancing Your Student Loans Might Be a Better Plan

When it comes to either reducing your monthly payment on your loans or paying less in interest, you may want to consider refinancing your student loans with private student loans. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

Refinancing your student loans means that you take out a new private student loan to pay off your existing student debt. When you do this, you might be able to save money if you qualify for a lower interest rate on your private student loan than on a personal loan. Interest rates vary but the average private student loan interest rate ranges from 4% to almost 15%. The national average on a personal loan was 11.48% in Q2 2023, according to the Federal Reserve.

You might also consider getting a longer-term private student loan with lower monthly payments. This will likely mean that you’ll pay more in interest over the life of your loan, but that could give your budget some breathing room. A student loan refinancing calculator can help show how much you may be able to save each month by refinancing your existing student loans.

While refinancing student loans may help students save money, refinancing federal student loans means forfeiting benefits that you might otherwise qualify for, such as deferment, forbearance, and income-driven repayment plans.

While private student loans don’t offer the same protections and benefits as federal student loans, some do offer deferment or forbearance in certain circumstances. Personal loans do not typically offer these benefits.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

Pros of Using Personal Loans to Pay off Student Debt

Let’s say you have found a lender who doesn’t prohibit using a personal loan to pay off student debt and you want to go forward.

There are a few possible benefits in certain circumstances.

•  A potential reduction in the amount of interest that you’re paying if you manage to qualify for a lower rate on your personal loan than what you’re paying for the student loan.

•  You might qualify for a different loan term — or length — potentially reducing your monthly payments by spreading them out over a longer period of time.

•  It is difficult (though not impossible) to discharge a student loan in a bankruptcy. In some cases, it is easier to discharge a personal loan.

Cons of Using Personal Loans to Pay off Student Debt

There are some large drawbacks to consider. It doesn’t make much sense to trade in one loan for another with higher interest. The interest rate on a federal student loan is currently 5.5% for an undergraduate degree and 7% for a graduate degree. As stated above, the national average on a personal loan was 11.48% in Q2 2023, according to the Federal Reserve.

Here are other cons:

•  You’ll forfeit protections and benefits of federal student loans such as the six-month grace period after graduation and the ability to defer or forbear your loans.

•  If you have federal student loans, you also lose the opportunity to use income-driven repayment plans to repay your loans and to take part in any student loan forgiveness programs.

•  If you pursue a personal loan to pay for student loans even though the lender prohibits that use and it is discovered, the loan will be canceled if not yet disbursed, you may have to repay the full amount immediately, and you are open to criminal prosecution for fraud.

•  The lender will assess your creditworthiness, which typically includes checking your credit, during the approval process. A “hard check” usually deducts several points from your credit rating temporarily. Most federal student loans don’t require a hard credit check.

Starting to Repay Your Student Loan Debt

When you graduate from college, you don’t have to start repaying your federal student loans right away.

Some federal student loans have a student loan grace period of 6 months, but with some it can last as long as 9 months. Interest may accrue while your loans are in the grace period, so some people make interest-only payments so that the total loan balance does not increase.

If you’re unable to pay your federal student loans after the grace period ends, you may be able to defer your loans for a number of reasons including if you’re returning to school, are unemployed, or have recently been on active duty service in the military.

But what happens if you can’t afford your payments but don’t fit any of those criteria and don’t have any other help paying for school?

As your salary increases, you will likely be better financially able to pay your loans but, in the first few years after graduation your salary may not cover much more than basic expenses.

There are other ways you can lower your payments.

Recommended: Examining How Student Loan Deferment Works

Basing Student Loan Payments Off Your Monthly Income

After a three-year pause due to Covid-19 hardship, the Debt Ceiling Bill required federal student loan payments to resume, with interest accrual restarting on Sept. 1, 2023 and payments due starting in October.

If you’re struggling to cover your basic monthly living expenses, you might want to look into the “On-Ramp” created by President Joe Biden earlier this year. Running from October 1, 2023 to September 30, 2024, the plan specifies that financially vulnerable borrowers who miss monthly payments during this period are not considered delinquent, reported to credit bureaus, placed in default, or referred to debt collection agencies.

Another option is enrolling in an income-driven repayment program.

There are various repayment plans to choose from that allow you to limit your monthly payments to a percentage of your monthly discretionary income. That will often reduce your monthly payments to a more manageable level.

President Biden’s Saving on a Valuable Education (SAVE) Plan is replacing other IDR programs as the main offering of the Department of Education. Like other plans, it calculates your monthly payment amount based on your income and family size. The SAVE Plan provides the lowest monthly payments of any IDR plan available to nearly all student borrowers, says the DOE.

After 20 to 25 years of on-time student loan payments — or 10 years if you’re enrolled in the Public Service Loan Forgiveness Program — your loans may qualify to be forgiven under these repayment plans. If you’re interested in enrolling in one of these plans, contact your student loan servicer for information on how to do so.

Recommended: The SAVE Plan: What Student Loan Borrowers Need to Know About the New Repayment Plan

The Takeaway

When deciding whether to use a personal loan or student loan refinancing to pay off existing student debt, there are many options to choose from. A good way to begin is to consider your current budget (how much money do you have to allocate toward student loan payments), what your goal is (e.g., lowering your interest rate, lowering your monthly payment, paying off the debt as soon as possible), and other overall financial goals.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

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.

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If you’ve taken out a Parent PLUS loan to help your child through college, you may be wondering if it’s possible to transfer the loan into your child’s name now that they have an income. While there are no federal loan programs that allow for this, there are other options that allow your child to take over the debt.

How to Transfer a Parent PLUS Loan to a Student

In order to transfer a Parent PLUS loan to a child or student, the student can apply for student loan refinancing through a private lender. With a student loan refinance, the child takes out a refinanced student loan and uses it to pay off the Parent PLUS loan. The student is then responsible for making the monthly payments and paying off the loan.

To get a student loan refinance and use the funds to pay off a Parent PLUS loan, simply have your child fill out a student loan refinancing application. Make sure to include the Parent PLUS loan information in the application.
If approved, the student can pay off the Parent PLUS loan with their new loan and begin making payments on the new loan.

Advantages of Refinancing a Parent PLUS Loan

The main advantage of refinancing a Parent PLUS loan is to get the loan out of the parent’s name and into the student’s. However, there are other potential advantages to refinancing student loans, including:

•   Lowering your interest rate

•   Reducing your monthly payments

•   Paying off your loan quicker

•   Allowing the student to build a credit history

💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

Disadvantages of Refinancing a Parent PLUS Loan

While it may be beneficial to get the loan out of the parent’s name and into the student’s, there are some disadvantages that should be considered, such as:

•   Losing federal student loan benefits, including income-driven repayment, deferment options, and Public Service Loan Forgiveness

•   Possibly getting a higher interest rate, especially if the student has poor credit

•   The student is now responsible for the monthly payment, which might become a hardship if their income is low

If you do choose to refinance your Parent PLUS loan by means of a student loan refinance, you should note that this process is not reversible. Once your child signs on the dotted line and pays off the Parent PLUS loan, the debt is now theirs.

Parent PLUS Loan Overview

The Department of Education provides Parent PLUS loans that can be taken out by a parent to fund their child’s education. Before applying, the student and parent must fill out the Free Application for Federal Student Aid (FAFSA®). Then the parent can apply directly for a Parent PLUS loan, also known as a Direct PLUS Loan.

The purpose of a Parent PLUS loan is to fund the education of the borrower’s child. The loan is made in the parent’s name, and the parent is ultimately responsible for repaying the loan. Parent PLUS loans come with higher interest rates and origination fees than federal student loans made to students. Further, these loans are not subsidized, which means interest accrues on the principal balance from day one of fund disbursement.

Parents are eligible to take out a maximum of the cost of attendance for their child’s school, minus any financial aid the student is receiving. Payments are due immediately from the time the loan is disbursed, unless you request a deferment to delay payment. You can also opt to make interest-only payments on the loan until your child has graduated.

💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

Pros and Cons of Parent PLUS Loans

Parent PLUS loans allow you to help your child attend college without their accruing debt.

Pros of Parent PLUS loans include:

You can pay for college in its entirety. Parent PLUS loans can cover the full cost of attendance, including tuition, books, room and board, and other fees. Any money left over after expenses is paid to you, unless you request the funds be given directly to your child.

Multiple repayment plans available. As a parent borrower, you can choose from three types of repayment plans: standard, graduated, or extended. With all three, interest will start accruing immediately.

Interest rates are fixed. Interest rates on Parent PLUS loans are fixed for the life of the loan. This allows you to plan your budget and monthly expenses around this additional debt.

They are relatively easy to get. To qualify for a Parent PLUS loan, you must be the biological or adoptive parent of the child, meet the general requirements for receiving financial aid, and not have an adverse credit history. If you do have an adverse credit history, you may still be able to qualify by applying with an endorser or proving that you have extenuating circumstances, as well as undergoing credit counseling. Your debt-to-income ratio and credit score are not factored into approval.

Cons of Parent PLUS loans include:

Large borrowing amounts. Because there isn’t a limit on the amount that can be borrowed as long as it doesn’t exceed college attendance costs, it can be easy to take on significant amounts of debt.

Interest accrues immediately. You may be able to defer payments until after your child has graduated, but interest starts accruing from the moment you take out the loan. Subsidized loans, which are available to students with financial need, do not accrue interest until the first loan payment is due.

Can a Child Make the Parent PLUS Loan Payments?

Yes, your child can make the monthly payments on your Parent PLUS loan. If you want to avoid having your child apply for student loan refinance, you can simply have them make the Parent PLUS loan payment each month. However, it’s important to note that the loan will still be in your name. If your child misses a payment, it will affect your credit score, not theirs. Your child also will not be building their own credit history since the debt is not in their name.

Parent PLUS Loan Refinancing

As a parent, you may also be interested in refinancing your Parent PLUS loan. Refinancing results in the Parent PLUS loan being transferred to another lender. By transferring your loan, you may be able to qualify for a lower interest rate. Securing a lower interest rate allows you to pay less interest over the life of the loan — and if you also shorten your loan term, you can pay off the loan more quickly.

When you refinance Parent PLUS loans, you do lose borrower protections provided by the federal government. These include income-driven repayment plans, forbearance, deferment, and federal loan forgiveness programs. If you are currently taking advantage of one of these opportunities, it may not be in your best interest to refinance.

At SoFi, you can refinance federal Parent PLUS loans and qualified private student loans into one new loan with one convenient payment. You can do this on your own and keep the Parent PLUS loan in your name, or you can have your child apply for student loan refinancing and use that money to pay off your Parent PLUS loan. With SoFi, there are no application fees, no origination fees, and no prepayment fees.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

What if I can’t pay my Parent PLUS loans?

If you are struggling to pay your Parent PLUS loan, we recommend getting in touch with your lender and asking for a deferment or forbearance to temporarily suspend your payments. Keep in mind, though, that interest will continue to accrue on your loan even if payments are postponed. You could also consider switching the repayment plan you are enrolled in to an extended repayment plan, or refinancing your loan in order to get a lower interest rate. If you’re able to consolidate your Parent PLUS loan with a federal Direct Consolidation loan, you can also make it eligible for the Income-Contingent Repayment plan. This plan adjusts your monthly payment to 20% of your discretionary income while extending your repayment terms to 25 years.

Can you refinance a Parent PLUS loan?

Yes, it is possible to refinance a Parent PLUS loan through a private lender. Doing so will make the loan ineligible for any federal borrower protections, but it might allow you to secure a more competitive interest rate or have the refinanced loan taken out in your child’s name instead of your own.

Is there loan forgiveness for parents PLUS loans?

It is possible to pursue Public Service Loan Forgiveness (PSLF) with a Parent PLUS loan. To do so, the loan will first need to be consolidated into a Direct Consolidation loan and then enrolled in an income-driven repayment plan. Then, you’ll have to meet the requirements for PSLF, including 120 qualifying payments while working for an eligible employer (such as a qualifying not-for-profit or government organization). Note that eligibility for PSLF depends on your job as the parent borrower, not your child’s job.

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.

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.

A no-interest, or 0%, credit card means you won’t be charged any interest on your purchases for a certain period of time. In some cases, these cards also offer 0% interest on balance transfers for a set period of time.

But these cards also have some potential downsides. For one, the 0% annual percentage rate (APR) is only temporary. Once the promotional period ends, a potentially high APR will start accruing on any remaining balance you have on the card. In addition, you typically have to pay a fee to transfer your balance, which might negate any savings on interest.

Here are key things to know before signing up for a no-interest credit card.

Pros of No-Interest Credit Cards

Using a 0% APR credit card can create some breathing room within your budget. Here’s a look at some of the key perks, and how to make the most of them.

No Interest During the Promotional Period

Of course, one of the biggest advantages of a zero-interest card is that you’ll pay just that — zero interest — for a certain period of time, which may be anywhere from six to 18 months. If you use the card to make a large purchase and are able to pay it off in full before the end of the promotional period, it can be the equivalent of getting an interest-free loan.

Opportunity to Pay Down Debt Faster

In some cases, you also get the 0% APR on any balance you transfer over from another credit card. This can make a no-interest card a good option for consolidating and paying off high-interest credit card debt. If you have a plan in place to pay off the debt within the promotional period, a balance transfer could improve your financial situation.


💡 Quick Tip: A low-interest personal loan can consolidate your debts, lower your monthly payments, and help you get out of debt sooner.

Perks and Bonus Rewards

Some credit cards with 0% APR introductory rates on purchases and/or balance transfers also have additional rewards bonus programs. This might include a welcome offer and/or cash back or rewards points based on each dollar you spend. These extras can lead to even more savings.

For example, let’s say you want to purchase a new chair that costs $500. After some research, you find a credit card offering an introductory 0% APR for 15 months and a $200 rewards bonus after you spend $500 on purchases within the first three months of opening the account. You decide this will work for your financial situation, so you apply and are approved. After buying the chair with the new credit card, you pay the balance in full before the promotional period ends.

With this example, not only would you have paid nothing in interest, you would also have netted $200 in rewards cash.

Cons of No-Interest Credit Cards

Some might look at no-interest credit cards as too good to be true. That’s not necessarily the case, but there can be some drawbacks to them. Here are some potential pitfalls to be aware of.

Temporary Promotional Rate

Alas, that 0% APR doesn’t last forever. If you use the card for a large purchase but are unable to fully pay it off before the end of the promotional period, any balance will start accruing the card’s regular APR.

At that point, the card may not have any advantages over any other card. In fact, the card could have an APR that is higher than average. When comparing 0% rate cards, it’s important to look at what the rate will be when the promo period ends and exactly when it will kick in.

Also keep in mind that you could lose the 0% intro APR before the end of the promo period if you are late with a payment. Here again, it pays to read the fine print.

Fees for Balance Transfers

Some — but not all — no-interest credit cards also feature a 0% APR on balance transfers. However, you typically still have to pay a balance transfer fee, often around 3% to 5% of the transferred balance. If you’re transferring a large balance from another card, the balance transfer fee could actually be significant. You’ll want to do the math before making the switch to be sure it will work in your favor.

Interest May Apply Retroactively

Similar to a no-interest credit card, a deferred-interest credit offer is one that’s commonly used by individual retail stores. If you’ve been asked if you’d like to apply for a store’s credit card when you’re making a purchase, it might be one that comes with a deferred interest promotion.

Like no-interest credit cards, a deferred-interest card doesn’t charge interest as long as the balance is paid in full within a certain time period. The biggest difference between the two: If the balance is not paid in full before the promotional period ends, interest will be applied to the entire purchase — not just the remaining balance. And APRs on deferred-interest cards can be even higher than APRs charged by regular credit cards.

Can Credit Scores Be Affected by No-Interest Credit Cards?

Applying for a new credit card results in a hard inquiry on your credit report, which can have a minor, temporary negative impact on your credit scores. This is generally nothing to worry about.

However, repeatedly opening new credit cards and transferring balances to them can cause a lasting negative impact on your credit. That’s because too many hard inquiries too close together can lead lenders to believe you’re applying for more credit than you can pay back.

In some cases, a balance transfer can positively impact your credit by helping you pay off your debts faster than you would otherwise be able to. This lowers your credit utilization ratio, or how much of your available credit you are currently using, which is a key component of your credit score.


💡 Quick Tip: Swap high-interest debt for a lower-interest loan, and save money on your monthly payments. Find out why SoFi credit card consolidation loans are so popular.

The Takeaway

A 0% intro APR card can help you avoid paying interest on your purchases for a set period of time. It can also allow you to consolidate and pay down credit card debt faster.

Keep in mind, however, that cards with no interest often come with a balance transfer fee. Also be aware that your interest rate will likely be much higher when the intro APR offer ends if you haven’t paid off your balance by then.

No-interest credit cards aren’t the only option for paying off debt. You may also be able to pay off high-interest credit cards with a personal loan. A personal loan calculator can give you an idea of what your potential savings might be.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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If you are hitched or have a significant other, you may wonder if a joint bank account is the right move or if you should keep your finances separate.

When you open a joint checking account, it can make it easier for the two of you to budget, spend, and save, especially if you are splitting household expenses. However, doing so also means you have less privacy financially speaking and you may not be comfortable with this level of transparency.

If you are mulling over this decision, read on to learn the pros and the cons of opening a joint bank account, as well as the steps required to open a joint bank account. In addition, you’ll find out about options to a shared bank account which may suit your needs.

What Is a Joint Bank Account?

A joint bank account is an account that’s shared between two people.

Simply put, a joint bank account is an account that’s shared between two or more people. Each person has full access to the money, whether withdrawing or adding to the funds.

While some couples will open an account and put all of their combined cash into it, other couples may choose to open up a shared bank account in addition to their pre-existing individual accounts.

Shared accounts can be both checking and savings accounts, and which account you choose — if you choose to create one at all — will depend on your specific goals and circumstances.

Sharing a financial account can come with some great benefits, as it generally provides each account holder with a debit card, a checkbook, and the ability for two people to deposit and withdraw funds into the same account. It can also come with some potential drawbacks.

One of the biggest decisions a couple will make is whether they decide to treat their money as a shared asset or as separate entities. As with any discussion about money, every individual or couple will have different goals and experiences, so it’s helpful to take a look at both sides. Considering the pros and cons of joint accounts may help you decide if this kind of account suits you.

How Does a Joint Account Work?

A joint account functions just like an individual account, except that more than one person has access to it.

Everyone named on a joint account has the power to manage it, which includes everything from deposits to withdrawals.
Any account holder can also close the account at any time. And, all owners of a joint account are jointly liable for any debts incurred in relation to the account.

Two or more people can own a joint account. They don’t have to be a married couple or even live at the same address to combine bank accounts.

You can open a joint account with an aging parent who needs assistance with paying bills and managing their money. You can also open a joint account with a friend, roommate, sibling, or business partner.

What Are Some Pros of a Joint Bank Account?

Here are some of the pros of opening a joint account.

•  Ease of paying bills. When you’re sharing expenses, such as rent/mortgage payments, utilities, insurance and streaming services, it can be a lot simpler to write one check (or make one online payment), rather than splitting bills between two bank accounts. A shared account can simplify and streamline your financial life.

•  Transparency. With a joint checking account, there can’t be any secrets about what’s coming in and in and what’s going out, since you both have access to your online account. This can help a newly married couple understand each other’s spending habits and talk more openly about money.

•  A sense of togetherness. Opening a joint bank account signals trust and a sense of being on the same team. Instead of “your money” and “my money,” it’s “our money.”

•  Easier budgeting. When all household and entertainment expenses are coming out of the same account, it can be much easier to keep track of spending and stick to a monthly budget. A joint account can help give a couple a clear financial picture.

•  Banking perks. Your combined resources might allow you to open an account where a certain minimum balance is required to keep it free from fees. Or, you might get a higher interest rate or other rewards by pooling your funds. Also, in a joint bank account, each account holder is insured by the Federal Deposit Insurance Corporation (FDIC), which means the total insurance on the account is higher than it is in an individual account.

•  Fewer legal hoops. Equal access to the account can come in handy during illness or another type of crisis. If one account holder gets sick, for example, the other can access funds and pay medical and other bills. If one partner passes away, the other partner will retain access to the funds in a joint account without having to deal with a complicated legal process.

What Are Some Cons of a Joint Bank Account?

Despite the myriad advantages of opening a joint account, there are some potential downsides to a shared account, which include:

•  Lack of privacy. Since both account holders can see everything that goes in and comes out of the account, your partner will know exactly what you’re earning and how much you are spending each month.

•  Potential for arguments. While a joint account can prevent arguments by making it easier to keep track of bills and spending, there is also the potential for it to lead to disagreements if one partner has a very different spending style than the other.

•  No individual protection. As joint owners of the account, you are both responsible for everything that happens. So if your partner overdraws the account, you will both be on the hook for paying back that debt and covering any fees that are charged as a result. If one account holder lets debts go unpaid, creditors can, in some cases, go after money in the joint account.

•  It can complicate a break-up. If you and your partner end up parting ways, you’ll have the added stress of deciding how to divide up the bank account. Each account owner has the right to withdraw money and close the account without the consent of the other.

•  Reduced benefits eligibility. If you open a joint account with a college student, the joint funds will count towards their assets, possibly reducing their eligibility for financial aid. The same goes for an elderly co-owner who may rely on Medicaid long-term care.

How to Open a Joint Bank Account

If you decide opening a joint account makes sense for your situation, the process is similar to opening an individual account. You can check your bank’s website to find out if you need to go in person, call, or just fill out forms online to start your joint account.

Typically, you have the option to open any kind of account as a joint account, except you’ll select “joint account” when you fill out your application or, after you fill in one person’s information, you can choose to add a co-applicant.

Whether you open your joint account online or in person, you’ll likely both need to provide the bank with personal information, including address, date of birth, and social security numbers, and also provide photo identification. You may also need information for the accounts you plan to use to fund your new account.

Another way to open a joint account is to add one partner to the other partner’s existing account. In this case, you’ll only need personal information for the partner being added.

Before signing on the dotted line, it can be a good idea to make sure you and the co-owner know the terms of the joint account. You will also need to make decisions together about how you want this account set up, managed, and monitored.

Should I Open a Joint Bank Account or Keep Separate Accounts?

As you consider your options, know that it doesn’t have to be all or nothing. You could open a new joint account while keeping your own separate bank accounts. Or you could decide between separate vs. joint accounts, and go all in on one or the other.

Some couples may find that the best solution is to pool some funds in a joint account for specific purposes, from paying for basic living expenses to saving for the down payment on a house or building an emergency fund.

Recommended: Find out how much you should save for unexpected expenses with our emergency fund calculator.

You might keep your own separate accounts as well, where you can spend on what you like without anyone watching (or judging). Or perhaps you want to keep some funds separate so you can pay off your student loans, while your partner doesn’t have any.

In addition to making financial logistics more streamlined, opening a joint account may also help you and your partner practice better communication about money.

Opening a Joint Checking and Savings Account with SoFi

If you decide that a joint account feels right for you, you’ll have a number of options, including opening a SoFi joint account.

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

FAQ

What are the disadvantages of a joint account?

Disadvantages of a joint account include complete transparency (meaning you and your partner can see each other’s financial transactions), responsibility for the other person’s cash management, and complications if you decide to separate down the road.

Are joint bank accounts a good idea?

Joint accounts can be a good idea and can help streamline money management, save on fees, and reach financial goals more efficiently. Much depends on the two people involved and how well they can sync their financial lives.

Is it better to have joint or separate bank accounts?

That’s a personal decision. Joint accounts offer benefits like simpler money management, transparency, and saving money on fees. However, others prefer to keep separate accounts and have control over their funds as well as privacy.

Who owns the money in a joint bank account?

Money in a joint bank account belongs to those who hold the account. Each person has the right to add or withdraw funds.

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

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

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

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

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

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

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

This article is not intended to be legal advice. Please consult an attorney for advice.