Does a Gas Credit Card Help Build Your Credit Score?

Does a Gas Credit Card Help Build Your Credit Score?

If you’re attempting to build credit from scratch, a gas credit card can help. That’s because, similar to other types of credit cards, gas credit cards report your payments to the three major credit reporting bureaus. Further, gas cards are good for building credit because they tend to be easier to get approved for than other types of cards.

On top of that, a gas credit card can allow you to save on gas by earning discounts and fuel credits when you fill up your tank and use your card to pay for transactions. Here’s all you need to know about gas credit cards, including how to get a gas card to build credit.

Key Points

•   Gas credit cards help build credit by reporting payments to bureaus.

•   Easier approval processes make gas cards accessible to many.

•   Discounts and rewards are often available, enhancing user benefits.

•   High interest rates and limited opportunities for use can be significant drawbacks.

•   Responsible use, including making timely payments and maintaining low credit utilization, can be key credit-building factors.

Understanding Gas Credit Cards and How They Work

A gas credit card works similarly as other types of credit cards in that it offers access to a revolving line of credit. In other words, you have a credit limit that’s set ahead of time. You can borrow up to that limit, and then repay the debt over time through monthly payments. If you carry a balance from month to month, you’ll pay interest.

There are two main types of gas credit cards:

•   Gas station cobranded credit cards: Also known as a single-purpose or closed-loop card, a gas station cobranded credit card is a card that you can only use to make purchases from a single company. In this case, you could only use the card when you pump gas from a particular gas or oil company, which the card will usually bear the logo of.

•   General-purpose gas credit cards: A traditional gas credit card can be used when you fill up at any gas station, rather than only with one particular brand — marking the difference between gas cards vs. gas station credit cards.

As mentioned, gas credit cards can be a good way to build credit from scratch. Keep in mind that the best rates, terms, and rewards offerings generally are reserved for consumers with strong credit. That being said, some gas cards are easier to get approved for, especially those from a particular oil company or brand.

Another benefit of gas credit cards is that they can offer discounts per gallon or an introductory promotional period where you can receive additional discounts at the pump. For instance, a cobranded gas credit card might offer 30 cents back on each gallon for the first two months after you open an account, and then 10 cents back per gallon after that.

Some general-purpose gas credit cards might also feature rewards, like cash back on everyday purchases up to a certain amount per year.

Tips for Building Credit with a Gas Credit Card

A gas card can build credit because they report your activity and payment history to the three major consumer credit bureaus — Equifax®, Experian®, and TransUnion®. Using one can be a good way to help you establish credit when you’re starting out on your credit journey.

For a gas card to build credit, however, you’ll need to stick to the following credit best practices.

Choose a Card Carefully

If you decide to open a gas credit card, carefully review the terms, rates, and fees. Gas credit cards typically have high interest rates compared to other types of cards, so if you anticipate carrying a balance, you could end up paying a considerable amount on interest charges.

While many gas credit cards don’t carry an annual fee, you might get hit with late fees, balance transfer fees, and returned payment fees. Make sure you’re aware of what fees a gas credit card may charge so you can avoid them.

Pay on Time Each Month

Your payment history is the largest contributing factor to your FICO® credit score. As such, it’s important to make your payments on time, each and every month.

You can keep track of when credit card payments are due with reminders or else set up autopay. You might also aim to pay off your balance in full each month, which will allow you to avoid paying interest on your gas credit card. To do this, set a limit for how much you want to spend on your gas credit card each month and stick to it.

Don’t Spend Up to the Credit Limit

Another factor that influences your credit score is your credit utilization, which is how much of your overall credit limit you’re currently using. It’s generally suggested to keep this credit utilization ratio at no more than 30% to avoid adverse effects to your credit score. If you were to spend up to your credit limit, that would likely drive up your credit utilization well about that recommended threshold.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score?

Keep Track of Your Credit Score

Monitoring your credit score can help you pinpoint behaviors that can impact your credit score, as well as notice any red flags. By keeping an eye on your credit, you can better make adjustments to your habits and spending to ensure you’re making progress on building your credit score.

You can keep track of your credit score in a handful of ways, including by signing up for a free credit monitoring service or possibly through your credit card issuer.

Advantages of Building Credit With Gas Cards

Gas cards absolutely can be good for building credit, and here are the benefits of using one to do so:

•   Savings on gas: A major perk — and the one that is most apparent — is that you can receive discounts at the pump by using a gas credit card.

•   Potentially easier approval: A gas credit card can have easier approval requirements than other types of cards, such as rewards credit cards. This can make it easier to get credit, and therefore start building your credit.

•   Rewards and sign-up bonuses: Gas credit cards might offer rewards, perhaps just on your spending at the pump or more generally across purchases, depending on the type of gas credit card. Some gas credit cards offer a sign-up bonus if you meet a minimum spending requirement within the first few months.

Drawbacks of Building Credit With Gas Cards

There are downsides to using gas cards to build credit as well, including:

•   Potentially restricted use: If you get approved for a credit card that you can only use when you fill up at a gas station from a single gas or oil company, it might take you a bit more work and planning to use your card. That being said, there are some more general use gas cards available.

•   Higher interest rates: If you’re building your credit from scratch and are approved for a card with less stringent financial or credit criteria, this can mean higher credit card interest rates and less generous or attractive card perks.

•   Limits on earnings and rewards programs: While some gas cards do offer rewards, they’re usually not as robust as they would be with other types of credit cards. Plus, many gas cards have a cap on how much you can earn in rewards in a given year.

Recommended: What Is the Average Credit Card Limit?

The Takeaway

A gas credit card could be a strong option if you are looking for a credit card with easier approval requirements to take a step toward building credit. Before deciding, consider the advantages and drawbacks of getting a gas card to build credit.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Are gas cards worth it?

Gas cards can be worth it if you are looking for a credit card with less stringent approval criteria and are trying to establish or build credit. Many don’t have annual fees, so if you’re able to pay the balance in full each month, it could be worth opening. Plus, you might be able to save at the pump.

Are gas cards good for building credit?

Gas cards can be good for building credit as they do report your activity and payment history to the credit bureaus. However, in order for them to help with your credit, you must maintain responsible credit habits, like making on-time payments and maintaining a reasonable credit utilization ratio.

Is it better to use a fuel card or a credit card?

Whether a fuel card or credit card is better depends on what you typically use your credit card for, as well as what cards you’re able to get approved for. If you would like a card that you can use only for gas and would like to rack up gas savings, then a fuel could be a good fit. Another type of credit card, such as a cash-back or travel rewards credit card, could offer you different perks. However, they might be harder to get approved for.

Do gas cards save you money?

Gas credit cards can shave a few dollars at the gas pump in the way of discounts and promotions. Some cards offer cash back rewards, usually up to a certain amount per year.


Photo credit: iStock/Talaj

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.

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 .

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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What Does At the Money Mean in Options Trading?

What Does At the Money Mean in Options Trading?


Editor's Note: Options are not suitable for all investors. Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Please see the Characteristics and Risks of Standardized Options.

An at-the-money (ATM) option is one where the strike price is at or very near the current price of the underlying stock itself. At-the-money options have no intrinsic value, but they may have value due to their potential to go in the money before they expire.

Options traders must understand the difference between the three types of options’ “moneyness:” at the money, in the money, and out of the money.

Key Points

•   An at-the-money (ATM) option has a strike price at or near the current price of the underlying stock, with no intrinsic value.

•   ATM options typically have a delta of around 0.50, meaning their price moves about 50 cents for every dollar movement in the stock.

•   ATM options can be less expensive than in-the-money (ITM) options but more costly than out-of-the-money (OTM) options.

•   The volatility smile indicates that implied volatility is generally lower for ATM options compared to ITM or OTM options.

•   Understanding ATM, ITM, and OTM options is crucial for effective options trading strategies.

What Is At the Money?

Conventionally, being at the money means that a given option’s strike price is identical to the price of the underlying stock itself. Both a call option and a put option can be at the money at the same time if their strike price is the same as the price of the stock.

In the age of decimal stock pricing, however, it is rare for an option’s strike price to exactly equal the price of the underlying stock. The at-the-money strike is usually considered the one closest to the stock’s price.

Understanding At the Money

Usually, an option that is at the money will have a delta of around 0.50 for an -call option and -0.50 for a put option. This means that for every $1 of movement of the underlying stock, the option will move about 50 cents.

Some options traders employ more complicated strategies, such as an at-the-money-straddle. This involves buying or selling both an at-the-money call and an at-the-money put on the same underlying asset with the same strike price and expiration date. This strategy offers the potential to profit from large price swings in either direction. It also carries the risk of loss if the underlying price stays near the strike, as both options may expire worthless, costing the investor the net premium paid. Be aware that investors can only buy, and not sell, options on SoFi Active Invest at this time.


💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.

At the Money vs In the Money vs Out of the Money

Usually there is one option strike price considered at the money, with any other strike prices being either in the money (ITM) or out of the money (OTM). The difference between ITM and OTM is that an in-the-money option is one that has intrinsic value, meaning it would be profitable to exercise it today.

A call option is in the money when the stock price is above the strike price, while a put options is in the money when the stock price is below the strike price.

Out-of-the money options have no intrinsic value and will generally expire worthless if they remain out of the money at expiration.

Consider the following call or put options for stock ABC with a current price of $55.

Option

Strike price

ATM / ITM / OTM

ABC Call option $55 At the money
ABC Put option $55 At the money
ABC Call option $70 Out of the money
ABC Put option $70 In the money
ABC Call option $40 In the money
ABC Put option $40 Out of the money

Recommended: Call vs. Put Options: The Differences

At the Money and Near the Money

An option is considered near the money usually if it is within 50 cents of the price of the underlying stock. However, it is common for investors to use the terms “near the money” and “at the money” interchangeably.

This is because stocks are priced to the nearest cent, while option strike prices are usually only to the nearest dollar or half-dollar, depending on the magnitude of the underlying stock price. It is rare for a stock to have an option that exactly matches any specific strike price.

Pricing At-the-Money Options

Because an at-the-money option has a strike price at or near the price of the underlying stock, it has no intrinsic value. Any value in an ATM option primarily consists of extrinsic value, meaning the portion of an option’s value determined by its potential to increase in value before it expires, measured by factors such as its time to expiration and implied volatility.

Options have the potential to provide greater returns, relative to the cost, than directly purchasing stock if the underlying asset moves favorably, but options investors also face the risk of losing their entire investment if the market moves unfavorably.

At the Money and Volatility Smile

A “volatility smile” is a graph that shows implied volatility across different strike prices, typically forming a curve that resembles a smile. This pattern generally shows that implied volatility is often lower for at-the-money options compared to those that are in-the-money or out-of-the-money. That said, it’s important to know that not all options fit into the volatility smile model.

Pros and Cons of Trading At-the-Money Options

Here are some pros and cons of trading at-the-money options:

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Pros:

•   Generally less expensive than in-the-money options, which have intrinsic value.

•   Can offer a hedge against downside risk on stocks you already own.

•   May offer a range of trading strategies, given their position between in-the-money and out-of-the-money options, which can affect risk and potential reward.

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Cons:

•   Higher premiums compared to out-of-the money options.

•   ATM options have lower intrinsic value at purchase, and may expire worthless if the stock price doesn’t move.

•   If the stock moves against your expectations, you could potentially lose your entire investment.

The Takeaway

Understanding the difference between options that are at the money, in the money and out of the money is crucial if you want to trade options through your brokerage account. Prices with these three different types of options contracts react differently to movements in the price of the underlying stock, so make sure you buy the right one based on your overall strategy.

Investors who are ready to try their hand at options trading despite the risks involved, might consider checking out SoFi’s options trading platform offered through SoFi Securities, LLC. The platform’s user-friendly design allows investors to buy put and call options through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.

Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors. Currently, investors can not sell options on SoFi Active Invest®.

Explore SoFi’s user-friendly options trading platform.

FAQ

What does buying at the money mean?

When you buy an at-the-money option, you are buying an option whose strike price is at or near the price of the underlying stock. An option that is at the money generally has a delta value of around positive or negative 0.50, depending on if it is a call or a put. That means its price will move about 50 cents for every dollar that the price of the underlying stock moves.

How do at the money and in the money differ?

An at-the-money option is one whose strike price is at or near the price of the underlying stock. An in-the-money option is one with a strike price that would be exercised if the option closed today. An at-the-money call option is one whose strike price is at or lower than the stock price, while an at-the-money put option is one whose strike price is at or higher than the stock price.

Is it best to buy at the money?

There are several different strategies for trading options, and the strategy you trade will help decide whether it’s a good idea to buy at the money. It can certainly be profitable to buy or sell at-the-money options, but other strategies for making money with options exist as well.


Photo credit: iStock/DMEPhotography

SoFi Invest®

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

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

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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Capital Gains Tax Rates and Rules for 2025

What Is Capital Gains Tax?

Capital gains are the profits you make from selling investments, like stocks, bonds, properties, and so on. Capital gains tax doesn’t apply when you simply own these assets — it only hits when you profit from selling them.

Short-term capital gains (from assets you’ve held for less than a year) are taxed at a higher rate than long-term capital gains (from assets you’ve held for a year or more).

In addition, other factors can affect an investor’s capital gains tax rate, including: which asset they’re selling, their annual income, as well as their marital status.

Capital Gains Tax Rates Today

Whether you hold onto an investment for at least a year can make a big difference in how much you pay in taxes.

When you profit from an asset after owning it for a year or less, it’s considered a short-term capital gain. If you profit from it after owning it for at least a year, it’s a long-term capital gain.


💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.

Short-Term Capital Gains Tax Rates for Tax Year 2025

The short-term capital gains tax is taxed as regular income or at the “marginal rate,” so the rates are based on what tax bracket you’re in.

The Internal Revenue Service (IRS) changes these numbers every year to adjust for inflation. You may learn your tax bracket by going to the IRS website, or asking your accountant.

Here’s a table that shows the short-term capital gains tax rates for the 2025 tax year, for tax returns that are usually filed in 2026, according to the IRS.

Marginal Rate

Income limits:
Single filers

Income limits:
Married, filing jointly

10% $0 to $11,925 $0 to $23,850
12% $11,926 to $48,475 $23,851 to $96,950
22% $48,476 to $103,350 $96,951 to $206,700
24% $103,351 to $197,300 $206,701 to $394,600
32% $197,301 to $250,525 $394,601 to $501,050
35% $250,526 to $626,350 $501,051 to $751,600
37% $626,351 or higher $751,601 or higher

Long-Term Capital Gains Tax Rates for Tax Year 2025

Long-term capital gains taxes for an individual are simpler and lower than for married couples. These rates fall into three brackets: 0%, 15%, and 20%.

The following table shows the long-term capital-gains tax rates for the 2025 tax year by income and status, according to the IRS.

Capital Gains Tax Rate

Income — Single

Married, Filing Jointly

Married, Filing Separately

Head of Household

0% Up to $48,350 Up to $96,700 Up to $48,350 Up to $64,750
15% $48,351 to $533,400 $96,701 to $600,050 $48,351 to $300,000 $64,751 – $566,700
20% Over $533,400 Over $600,050 Over $300,000 Over $566,700

A higher 28% is applied to long-term capital gains from transactions involving art, antiques, stamps, wine, and precious metals.

Additionally, individuals with modified adjusted gross incomes (MAGIs) over $200,000 and couples filing jointly with MAGIs over $250,000 — who have net investment income, may have to pay the Net Investment Income Tax (NIIT), which is 3.8% on the lesser of the net investment income or the excess over the MAGI limits.

Tips For Lowering Capital Gains Taxes

Hanging onto an investment for more than a year can lower your capital gains taxes significantly.

Capital gains taxes also don’t apply to so-called “tax-advantaged accounts” like 401(k) plans, IRAs, or 529 college savings accounts. So selling investments within these accounts won’t generate capital gains taxes.

Instead, traditional 401(k)s and IRAs are taxed when you take distributions, while qualified distributions for Roth IRAs and 529 plans are tax-free.

Single homeowners also get a break on the first $250,000 they make from the sale of their primary residence, which they need to have lived in for at least two of the past five years. The limit is $500,000 for a married couple filing jointly.

Recommended: Benefits of Using a 529 College Savings Plan

Tax Loss Harvesting

Tax-loss harvesting is another way to save money on capital gains. Tax-loss harvesting is the strategy of selling some investments at a loss to offset the taxable profits from another investment.

Using short-term losses to offset short-term gains is a way to take advantage of tax-loss harvesting — because, as discussed above, short-term gains are taxed at higher rates. IRS rules also dictate that short-term or long-term losses must be used to offset gains of the same type, unless the losses exceed the gains from the same type.

Investors can also apply losses from investments of as much as $3,000 to offset income. And because tax losses don’t expire, if only a portion of losses was used to offset income in one year, the investor can “save” those losses to offset taxes in another year.

Recommended: Is Automated Tax-Loss Harvesting a Good Idea?

How U.S. Capital Gains Taxes Compare

Generally, capital gains tax rates affect the wealthiest taxpayers, who typically make a bigger chunk of their income from profitable investments.

Here’s a closer look at how capital gains taxes compare with other taxes, including those in other countries.

Compared to Other Taxes

The maximum long-term capital gains taxes rate of 20% is lower than the highest marginal rate of 37%.

Proponents of the lower long-term capital gains tax rate say the discrepancy exists to encourage investments. It may also prompt investors to sell their profitable investments more frequently, rather than hanging on to them.

Comparison to Capital Gains Taxes In Other Countries

In 2023, the Tax Foundation listed the capital gains taxes of the 27 different European Organization for Economic Cooperation and Development (OECD) countries. The U.S.’ maximum rate of 20% is roughly midway on the spectrum of comparable capital gains taxes.

In comparison, Denmark had the highest top capital gains tax at a rate of 42%. Norway was second-highest at 37.84%. Finland and France were third on the list, both at 34%. In addition, the following European countries all levied higher capital gains taxes than the U.S. (listed in order from highest to lowest): Ireland, the Netherlands, Sweden, Portugal, Austria, Germany, Italy, Spain, and Iceland.

Compared With Historical Capital Gains Tax Rates

Because short-term capital gains tax rates are the same as those for wages and salaries, they adjust when ordinary income tax rates change. As for long-term capital gains tax, Americans today are paying rates that are relatively low historically. Today’s maximum long-term capital gains tax rate of 20% started in 2013.

For comparison, the high point for long-term capital gains tax was in the 1970s, when the maximum rate was at 35%.

Going back in time, in the 1920s the maximum rate was around 12%. From the early 1940s to the late 1960s, the rate was around 25%. Maximum rates were also pretty high, at around 28%, in the late 1980s and 1990s. Then, between 2004 and 2012, they dropped to 15%.


💡 Quick Tip: Did you know that investment losses aren’t necessarily bad news? Some losses can be used to offset gains, potentially reducing how much tax you owe. Learn more about investment taxes.

The Takeaway

Capital gains taxes are the levies you pay from making money on investments. The IRS updates the tax rates every year to adjust for inflation.

It’s important for investors to know that capital gains tax rates can differ significantly based on whether they’ve held an investment for less than a year or more than a year. An investor’s income level also determines how much they pay in capital gains taxes.

An accountant or financial advisor can suggest ways to lower your capital gains taxes as well as help you set financial goals.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


Invest with as little as $5 with a SoFi Active Investing account.


SoFi Invest®

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

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

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

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What Is Time in Force? Definition and Examples

What Is Time in Force? Definition and Examples

Time in force (TIF) is a stock investing term referring to the length for which a trading order is good. Although casual or buy-and-hold investors may not use time-in-force stock limits, they’re an important tool for active traders.

Understanding different time-in-force options may help you close out positions more efficiently.

Key Points

•   “Time in force” is a stock investing term that defines how long a trading order remains active before expiring.

•   Different types of TIF orders include day order, on-open order (OOO), market on close order (MOC), and good ’til canceled order (GTC).

•   Understanding these orders helps active traders manage trade executions and avoid unintended trades.

•   Casual or long-term investors typically do not use TIF orders.

What Does Time in Force Mean?

Time in force is a directive, set by a trader, that defines how long a trade will remain open (or “in force”) before expiring. Options traders and other active traders can set an appropriate end date for their trades to help prevent unintended executions.

Without an end date, an order could be filled at an unfavorable time or price, particularly in markets that move fast. This is especially true for investors employing day-trading strategies and taking advantage of volatile market conditions with rapidly changing prices.

Basics of Time in Force

Before you place a time-in-force stock order, you’ll want to make sure that you understand exactly how they work. As with options trading terminology, it’s important to understand the language used to describe time-in-force orders.

Recommended: A Guide to Trading Options

Types of Time in Force Orders

Time in force is not a specific kind of stock market order. Instead, the phrase refers to the collection of order types that set how long a trade order is valid — or “in force” — in order to pursue potential investment opportunities. If you are considering a buy-to-open (purchasing a new position) or buy-to-close order (closing an existing position), you can also specify the time in force for either of them.

There are several kinds of time-in-force orders, although not every broker or dealer supports them.

1. Day Order

Of the different time-in-force orders used in options trading and other types of trading, day orders are the most common. With a day order, your trade remains open until the end of the trading day. This may happen if the order’s pricing conditions were not met (such as the price on a limit order). If your order has not been executed at the close of the day’s markets, it will expire.

With many brokers, including online brokerage firms, day orders represent the default option. Thus, this is the time in force order with which most people are likely familiar.

2. On-Open Order

Depending on the types of order that your broker or dealer offers, there can be two different types of options for trades executed at market open: MOO and LOO.

A MOO is an order filled when the market opens, at the prevailing opening price. With a LOO order, you can set a limit price for the highest price you’ll pay or the lowest price at which you’ll sell. If the market opens within the constraints of your limit order, it will be executed. Otherwise, your broker will cancel the LOO order.

3. Market on Close Order

A market-on-close (MOC) order requests the sale or purchase of a security at the final closing price of the trading day. These orders may help you avoid intraday trading volatility or simplify trade execution without having to closely monitor the market for fluctuations.

If your brokerage offers MOCs, they may have a cutoff time by which you need to enter in any MOC orders.

Recommended: Buy to Open vs. Buy to Close

4. What Is Good ‘Til Canceled (GTC)?

As its name suggests, a good-til-canceled (GTC) order is a type of time-in-force order that remains in force until you proactively cancel the order or it is filled. Depending on the type of trading or options trading strategy you’re employing, a GTC order may be worth considering if you’re waiting for the underlying stock price to move. Many brokerages will restrict the number of days a GTC order can remain open, often to 90 days.

The maximum potential gain for these orders is the difference between the limit price and the original purchase price, so long as the stock moves in your favor and the trade executes. If the stock fails to reach your target and continues to decline, you may face missed opportunities for smaller gains or risk holding a depreciating asset, leading to unrealized losses.

5. What Is Fill or Kill (FOK)?

FOK orders ensure that trades are executed in full and immediately. If that cannot happen, the order is canceled completely. This helps traders avoid partial fills, which may result in executing orders at differing prices, or with additional transaction fees.

Examples of Time in Force

You currently own shares of a stock that announced earnings last night, and you’re considering liquidating (or selling) your position. You’re not sure how the market will react to the earnings news, so you place a LOO order for more than you paid per share. If the stock opens at this number or higher, your trade will execute. If not, your broker will cancel it.

If the stock’s shares have been rising all day, but you anticipate that it may open at a lower price, you might use a MOC order to try to sell at the end-of-day price.

The maximum potential gain from a market-on-close order depends on how much the stock’s closing price exceeds your original purchase price. For instance, if you bought shares of a stock that closes at an increase in price, your maximum potential gain would be the difference in the price per share (before fees and taxes).

The maximum potential loss can occur if the market moves against your position. In the case of a long position, your loss would be the difference between the original price paid and the lower closing price if the price drops below your purchase price. For a short position, your loss would be the difference between the sale price and the higher closing price, if the closing price rises above the price at which you sold. This loss could be unlimited.

If you prefer to sell the stock when it hits a specific price in the future, you might choose to set a good-til-canceled order as part of your strategy. With a GTC order, you can specify a limit price, ensuring that your trade will only execute if the stock reaches or exceeds that price. Although GTC orders remain active until they are executed or canceled, most brokers set a maximum duration (around 90 days) before an order will expire if it isn’t filled.

This strategy may help investors take advantage of favorable price movements while maintaining flexibility. However, it also carries the risk of missing your target price due to market volatility or unexpected conditions.

Time in Force Day Order vs On-Close Order

Day orders and an on-close order are similar, but they have some important differences. A day order is one that is good for the entire trading day, up to and including close. If you’re placing an order in the middle of the trading day and do not need it to execute at a specific time, this is the type of order you’d use.

Alternatively, an on-close order (either market on close or limit on close) is only good at the close of the trading day. The intent of an on-close order is to execute at the final trading price of the day. If you place an on-close order in the middle of the trading day, it will not execute until the end of the trading day, regardless of its intraday price.

Using Time in Force Orders

How you use the different time-in-force orders will depend on how you buy and sell stocks or execute your options trading strategy. Most buy-and-hold investors won’t use time-in-force orders at all, but if you’re using a more complex strategy, such as buying to cover, you may want to have more control over how and at what price your order is executed.

The Takeaway

Time-in-force orders can be a part of day traders’ execution of specific strategies. It determines how long a trade will remain open before being canceled. It is uncommon for long-term investors to use time-in-force orders.

Investors who are ready to try their hand at options trading despite the risks involved, might consider checking out SoFi’s options trading platform offered through SoFi Securities, LLC. The platform’s user-friendly design allows investors to buy put and call options through the mobile app or web platform, and get important metrics like breakeven percentage, maximum profit/loss, and more with the click of a button.

Plus, SoFi offers educational resources — including a step-by-step in-app guide — to help you learn more about options trading. Trading options involves high-risk strategies, and should be undertaken by experienced investors. Currently, investors can not sell options on SoFi Active Invest®.

Explore SoFi’s user-friendly options trading platform.

FAQ

What happens if my order isn’t executed before it expires?

If your order expires without being executed, it means that the price conditions you set were not met during your chosen specified time period. You will need to place a new order if you still want to trade.

How do I decide which Time-in-Force option to use?

Your choice depends on your trading strategy. For instance:

•   Day orders are for keeping your trade active during the current trading day.

•   GTC orders allow you to execute trades that happen at a specific price level, and orders can stay open for days or weeks.

•   MOC orders are designed for executing trades at the end-of-day closing price.

Are Time-in-Force orders only for active traders?

Active traders frequently use time-in-force orders to manage trades in dynamic markets. While less frequent, these orders can also play a role in long-term investors’ strategies, particularly if they want more control over trade execution timing and price conditions.

Can I change the Time-in-Force setting after placing an order?

No. Once you’ve submitted an order, the time-in-force setting cannot be modified. If you want to adjust the duration, you’ll need to cancel the original order and create a new one with the updated time-in-force option.


Photo credit: iStock/Tatomm

SoFi Invest®

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

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

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.
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.

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What Is a Manufactured Home? Features, Pros & Cons

What Is a Manufactured Home? Explaining the Pros & Cons

You may have grown up calling manufactured homes mobile homes, and the two terms are sometimes still used interchangeably, but these dwellings have evolved.

They’re more customizable and arguably fancier than previous iterations. Still, it’s a good idea to look beyond the sticker price.

Characteristics of a Manufactured Home

First, to clarify a popular point of confusion, modular and manufactured homes are different types of houses.

Both are built partially or entirely in a factory, but modular homes — aka kit homes — must adhere to the same codes that site-built homes do.

Manufactured homes are intended to be permanent dwelling units. Starting in 1976, they began to be built to a code developed by the Department of Housing and Urban Development (HUD) and moved past the name “mobile homes” and the notion of trailers placed atop blocks.

The manufactured home, built on a permanent chassis, is tested to ensure that it can be transported properly before being attached to a foundation, or the underlying chassis may be “skirted” by blocks or siding.

The home may be movable, depending on its age and condition, but few are moved. Moving a manufactured home, if it is new enough to be moved, can cost $15,000.

Pros and Cons of a Manufactured Home

Before buying a manufactured home, the housing choice of about 20 million Americans, take a look at the following advantages and disadvantages to help you in your decision-making.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.


Pros

•   Cost effective: According to the Manufactured Housing Institute, manufactured homes cost around 10% to 35% less than comparable site-built homes, excluding the price of land.

•   High quality: Manufactured homes must adhere to the HUD code, which applies to the home’s design, construction, durability, transportability, strength, and energy efficiency. Factories also need to adhere to standards and must inspect each step during construction.

•   Few delays: Because manufactured homes are built indoors in a controlled environment, the weather won’t interfere with the timeline to construct the home.

•   Home warranties: Most manufactured homes have some form of warranty to guarantee the quality of the home, usually for one to five years. The seller has its own warranties for transporting and installing the home.

•   Customizable: Most manufactured home makers allow homebuyers to customize some aspects of the home, such as certain finishes, porches, vaulted ceilings, and fireplaces.
Energy efficient: The HUD code ensures that manufactured homes have a high degree of energy efficiency.

•   Financing: The financing options include loans even if the buyer will not own the land the home will rest on.

Cons

•   Questionable appreciation: Manufactured homes may not appreciate at the same rate as other types of homes and may even depreciate. The resale value depends on the location, and the age and condition of the home.

•   Limited customization: You can customize some parts of a manufactured home, but you may not have the options you want, depending on the builder.

•   Price increases: The average sales price of a manufactured home increased nearly 50% during the pandemic, driven by the demand for affordable housing.

•   Lot rent: Most residents own their homes but rent the land. Those who lease lots face uncertain increases in monthly costs. Park rents have been doubling and tripling.
Financing options may carry higher rates. Whether the home is considered real property or personal property makes a big difference.

A manufactured home built on or after June 15, 1976, and considered real property might qualify for a conventional or government-backed loan. To be considered real property, the home must be at least 400 square feet, permanently attached to a foundation, and on land that you own or plan to buy. The loans usually carry slightly higher interest rates than mortgages for traditional homes.

Financing options for manufactured homes classified as personal property include chattel loans, which come with a higher interest rate and a shorter term than most traditional mortgages. (A chattel mortgage also may be used for tiny house financing.)

FHA Title I loans and personal loans are other options for manufactured homes classified as personal property. Rates for unsecured personal loans will be higher than rates for secured loans like mortgages or chattel loans.

Finding a Manufactured Home

Most manufactured homes are sold through retailers instead of the builders. It’s also possible to purchase manufactured homes through real estate agents and online manufactured home marketplaces.

Think of buying a new manufactured home like going to a store where you can view model homes. You’ll be able to see your options, such as the number of bedrooms, layout, and customizable features. Depending on the retailer, you may even be able to apply for financing and arrange for delivery all in the same day.

Before signing on the dotted line, make sure you read the fine print, such as what warranties come with the home. You may be able to purchase both the land and home through a manufactured home community.

Who Should Get a Manufactured Home?

A manufactured home may be a good fit for a retiree or a first-time homebuyer who is looking for a more cost-effective housing solution than a condo or single-family home — especially if they own the land underneath them.

It also may be suited for those who want a new construction home and to be able to customize parts of the structure.

The Takeaway

A manufactured home may be a good choice for some buyers, and others may want to try to buy a condo, townhouse, or single-family home.

If you’re in the latter group or buying investment property, SoFi can help you get started by providing a rate quote with no obligation.

3 Tips

1.    Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow home loan mortgages with as little as 3% down for qualifying first-time homebuyers.

2.    Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

3.    When building a house or buying a non-traditional home (such as a houseboat), you likely won’t be able to get a mortgage. One financing option to consider is a personal loan, which can be faster and easier to secure than a construction loan.

FAQ

What are the advantages of manufactured homes?

The main advantages of manufactured homes are the relative cost and the building standards they must meet.

Is a manufactured home considered real property?

A manufactured home is considered real property if you own both the land and the home and the structure is permanently attached to a foundation.

Can I get a loan to buy a manufactured house?

Yes, though the type usually depends on whether the home is considered real or personal property. Classification as personal property is almost certain to preclude conventional financing. A borrower need not own the land for an FHA Title I loan from an approved lender. The loan may be used to buy a manufactured home, a lot on which to place the home, or a manufactured home and lot in combination. There are maximum loan amounts and terms.

Are manufactured homes safe?

Manufactured homes built after mid-1976 abide by HUD standards, and most come with warranties.

Photo credit: iStock/clubfoto

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.


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.


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.

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