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Credit card arbitrage is a strategy in which you borrow money with a 0% or low-interest credit card and then put that money into an investment that earns a higher rate of return. It can sound like a way to make easy money, but it does carry some risks. And it isn’t necessarily a good fit for average investors.

If you’ve heard of credit card arbitrage and wondered if it’s something you should try, read on for a rundown of the risks and rewards.

What Is Credit Card Arbitrage?

With credit card arbitrage, or balance transfer arbitrage, you sign up for a credit card with a low or 0% annual percentage rate (APR). Then, you use that credit card account to put money into an investment that will earn more than the interest rate you’re paying on the credit card balance you’re carrying.

You follow one of the basic credit card rules of making at least the minimum credit card payment on time each month. When the card’s introductory rate expires, you take the money you need out of the investment, pay off the remaining balance on the card, and keep the difference as your profit.

Credit Card Arbitrage Strategies

What you decide to invest in using a credit card may depend on a few different factors. This includes how much you can borrow, the length of your introductory rate (which is often between 12 and 21 months), and your tolerance for risk.

Some possible investments for your credit card arbitrage strategy include a high-yield savings account, a certificate of deposit, and short-term bond ETFs.

High-Yield Savings Account

A high-yield savings account may be a good option for risk-averse investors attempting credit card arbitrage. You can’t lose the money because it’s protected at banks by the Federal Deposit Insurance Corporation (FDIC) and at credit unions by the National Credit Union Administration (NCUA). However, you may have to keep a minimum balance to avoid a monthly service fee.

An alternative to attempting credit arbitrage using a high-yield savings account might be to save using an online-only financial institution. Online banks tend to offer more competitive rates than brick-and-mortar banks.

Certificate of Deposit

Another investment with limited risk is a short-term (six months to a year) or no-penalty certificate of deposit, or CD. A CD may offer a higher interest rate than a savings account, and it also will be insured by the FDIC.

The benefit of a no-penalty CD over a short-term CD is that if you find a higher return elsewhere, you can withdraw your money and move it without paying a fee. Otherwise, you’ll face an early withdrawal penalty if you try to take your money out of a CD before the term is over.

Recommended: How to Avoid Interest on a Credit Card

Short-Term Bond ETFs

A bond exchange-traded fund (ETF) that holds short-term bonds may be another low-risk option to consider. Bond ETFs are traded on the stock market, so they’re more liquid than other types of bonds and bond funds. And funds that have a shorter term are less exposed to changing interest rates.

Still, if you’re unfamiliar with bond ETFs, you may want to take some time to research the pros and cons of this investment — including the risk and potential for loss and how to reduce trading costs.

Pros and Cons of Credit Card Arbitrage

As mentioned, there are definite downsides to credit card arbitrage. However, there’s the potential for gains, too. Here’s a quick rundown of the pros and cons of credit arbitrage:

The upside to using credit card arbitrage is the potential to make some extra money with very little effort. If you’ve worked hard to earn and maintain a credit score that qualifies you for a credit card with a 0% or low-interest rate, you can use that card to fund an investment and, if all goes well, quickly pocket a profit.

If you choose a credit card that offers credit card rewards, such as cash back or points, that could be an added benefit. Further, by always making at least the minimum payments on the credit card and repaying the balance on time, you might help build your credit score. (Although if you qualify for a low-interest card, you probably already have good credit.)

Unfortunately, there are also plenty of downsides to credit card arbitrage — starting with finding an investment that works well with the strategy. Though in recent months the Federal Reserve has been bumping up its benchmark interest rate, it may take a while before those increases lead to noticeably higher yields on savings accounts and CDs.

Depending on how much you decide to borrow and how long your introductory period lasts, the small amount you might earn from your investment may not be worth the effort or risk of using your credit card.

And there are risks involved with credit arbitrage. For starters, you can expect to feel some effects if you make a late payment on your card. You might have to pay a late fee or, worse, the credit card company could cancel your promotional interest rate and immediately begin charging a substantially higher interest rate on the account. That could take a significant bite from your profits.

Your credit score also could suffer — even if you make timely payments. Just opening a new line of credit may temporarily lower your score. And if you borrow all or a large portion of your available credit, it could affect your credit card utilization ratio, which also can negatively affect your credit score.

You also can expect your credit score to go down if you do end up making a late payment (or payments). Payment history is the No. 1 factor in determining your FICO Score®.

Considering Credit Card Arbitrage? What to Know

There’s an old saying in investing: Don’t risk more than you can afford to lose. Or, as your mom might put it: Just because you can doesn’t mean you should.

Credit arbitrage may look like an easy and “free” way to make some extra money, but it’s a strategy that’s probably best left to investment professionals. If you do decide to attempt it, here are a few things you can do in advance to protect yourself:

•   Have a backup plan. What would happen if you suddenly lost your job or had unexpected expenses from an illness or accident? Unless you have a healthy emergency fund or your investment can be easily liquidated, you could quickly run into financial trouble.

•   Make sure you understand the terms of your credit card agreement. How long does the introductory period last? (The longer the better.) What happens if you miss a payment? What’s the rate when the promotional period expires?

•   Know yourself. This strategy requires using a credit card responsibly. If you aren’t clear on how credit cards work or think you’ll be tempted to use your card for a spending spree instead of investing, you may want to think twice before moving forward.

•   Don’t forget about fees. Run the numbers to be sure your investment will still pay off after you cover fees and other costs.

Recommended: 10 Credit Card Rules You Should Know

Other Ways to Save and Make Money Using Your Credit Card

If the concept of credit card arbitrage is new to you, it may be because there are other popular ways to use a credit card to save and make money. Here are some other options to consider.

Earning Cash Back

With a cash-back rewards card, cardholders can get back a percentage of the money they spent on purchases during a billing cycle. That percentage varies from one card to the next — and there also may be different ways you can receive your cash rewards. You may be able to apply the cash directly to your balance, put it toward gift cards or charitable giving, or have the money deposited directly into your checking account.

Getting cash-back rewards can be an especially effective strategy if you use your card for frequent and/or major purchases and pay down your balance every month.

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

Earning Rewards Points

Some card issuers offer a rewards program based on credit card points. Cardholders may be able to put their points toward multiple purposes, including travel (flights, hotels, car rentals), statement credits, cash back, and more. The value of points may vary depending on the specific credit card as well as how you opt to redeem earned points.

Investing Your Rewards

You also may be able to invest with credit card rewards. For instance, if you earned cash-back rewards from your credit card spending, you could redeem your rewards as a direct deposit or check. Then, you could use that money to invest with credit card rewards basically — either in a literal investment, such as stocks or index funds, or even in yourself, through additional job training or classes.

Shopping Online to Earn Bonus Rewards

Some credit cards offer bonus rewards for shopping online or through an app. Card issuers may have different rules for their rewards (think goods instead of services or certain brands only,) so it’s a good idea to check out a rewards program’s requirements before signing up.

Using a Balance Transfer Card to Pay Down Debt

Another possibility is to use a no-interest balance transfer credit card to pay down debt. Once you move your balance from a high-interest card to the new card, you’ll have several months to pay down your debt without accruing any additional interest.

Just as with credit card arbitrage, it’s important to be sure you make your monthly payments on time, though, or you could see a big jump in your card’s interest rate. Also keep in mind that a balance transfer fee will apply, so be sure to factor that into the equation.

Using a 0% APR Card

Planning to take a dream trip or make a major purchase? A no-interest credit card could allow you to finance your big spend without accruing interest. You’ll just want to make sure you can pay off the balance within the promotional period, and make your payments on time.

The Takeaway

You may have heard credit card arbitrage, or balance transfer arbitrage, touted as an easy way to make some extra cash. But the process, which involves using a no- or low-interest credit card to finance an investment that earns a higher rate of return, isn’t as simple as it may seem. It can require careful planning, financial savvy, and some research to find the right investment for this strategy. And even if all goes well, the payoff may not be worth the time and effort to use credit cards in this way.

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 there risks involved in credit card arbitrage?

Yes. Even if your investment seems super safe and like it won’t lose money, if you don’t make your monthly payments on time or if you can’t pay off the balance before the promotional period is up, you could find yourself in a financial bind.

Is credit card arbitrage legal?

Yes. But just because you can do it doesn’t mean you should. There are other more proven ways to save and invest using a credit card.

How much can you make with credit card arbitrage?

The amount you can make using credit card arbitrage depends on several factors. This includes how much you choose to borrow and invest, your card’s interest rate, how much your investment pays, the length of your card’s promotional period, and the fees you might incur when investing.

Photo credit: iStock/Prostock-Studio

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.

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.

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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In most cases, people make one credit card payment per month, often on the day it is due, but with the 15/3 credit card payment method, you make two payments each statement period. This is a strategy to help lower your credit utilization ratio — the percentage of your total available credit that you’re using at any one time and a big factor in determining your credit score.

Typically, with the 15/3 credit card method, you pay half of your credit card statement balance 15 days before the due date, and then make another payment three days before the due date on your statement. Learn more about this technique here.

What Is the 15/3 Credit Card Payment Method?

With the 15/3 rule for credit cards, instead of making one payment each month on or near the credit card payment due date, you make two payments every month. You make the first payment about 15 days before your statement date (about halfway through the statement cycle), and the second payment three days before your credit card statement is actually due.

How Does the 15/3 Credit Card Payment Work?

The way credit cards work in most cases is that you make purchases throughout the month. At the end of your statement period (usually about a month), the credit card company sends you a statement with all of your charges and your total statement balance. In an ideal situation, you’d then send a check or electronic payment to your credit card company, paying off the total amount due.

As an example, say you have a credit card with a $5,000 credit limit, and you regularly make about $3,000 in purchases each month. In a typical situation, you might make an electronic payment for $3,000 to the credit card company at the end of the statement period. But just before your payment clears, you’d have a 60% utilization ratio ($3,000 divided by $5,000), which is quite high.

If you use the 15 and 3 credit card payment method, you would make one payment (for around $1,500) 15 days before your statement is due. Then, three days before your due date, you would make an additional payment to pay off the remaining $1,500 in purchases. Making credit card payments bimonthly means that your credit utilization ratio never goes over 30%, which is the percentage generally recommended.

Recommended: What Is the Average Credit Card Limit?

Why the 15/3 Credit Card Payment Method Works

When you’re using a credit card, your credit utilization ratio is constantly fluctuating as you make additional charges and/or payments to your account. The way that the 15/3 credit card payment trick works is by making one additional payment each month. That additional payment can help lower your credit utilization ratio throughout the month, which can be beneficial to your credit score.

Recommended: What Is a Charge Card?

Reduced Credit Card Utilization Through the 15/3 Method

Even if you regularly pay your credit card balance in full each and every month, you may still be carrying a balance throughout the month as you make charges. Because your credit utilization is calculated throughout the month, if you rack up a large balance from purchases you make, your credit score may be affected — even if you pay off your credit card bill in full at the end of the month.

When Does the 15/3 Credit Card Payment Method Work?

While there’s no harm in making two payments each month, most people who are already paying their credit card balances in full each month aren’t unlikely to see a significant benefit. One scenario where the 15/3 credit card method might make sense, however, is if you have a relatively low credit limit relative to your overall monthly spending. If you regularly approach or hit your credit limit in the middle of the month, making a payment in the middle of the month can have a relatively big impact on your credit utilization ratio and thus your credit score.

Another possible reason to pay on a bimonthly basis instead of only once a month is if you have outstanding credit card debt that you’re working to pay down. If you make only the credit card minimum payment, you’ll end up paying a large amount of interest before you pay off your balance. By paying every two weeks instead, you end up making additional payments, which can help lower the total amount of interest that you have to pay before your balance is completely paid off.

Recommended: When Are Credit Card Payments Due?

Pros and Cons of Using the 15/3 Credit Card Payment Method

While there are certainly upsides to taking advantage of the 15/3 credit card payment method, there are possible downsides to consider as well:

Recommended: How to Avoid Interest on a Credit Card

Using the 15/3 Credit Card Payment Method: What to Know

Should you use the 15/3 credit card payment method? Like most financial advice, it depends on your specific financial situation.

In most cases, the 15/3 rule for credit cards won’t provide a ton of benefit and may not be worth the extra organizational and logistical headache. However, it may make sense if you’re paying off existing debt, have a low overall credit limit, or need to build or maintain your credit score up for a specific period of time (like when you’re applying for a mortgage).

The Takeaway

The 15/3 credit card payment rule is a strategy that involves making two payments each month to your credit card company. You make one payment 15 days before your statement is due and another payment three days before the due date. By doing this, you can lower your overall credit utilization ratio, which can raise your credit score.

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

What is the 15/3 rule in credit?

Most people usually make one payment each month, when their statement is due. With the 15/3 credit card rule, you instead make two payments. The first payment comes 15 days before the statement’s due date, and you make the second payment three days before your credit card due date.

How do you do the 15/3 payment?

When you do the 15/3 credit card payment hack, you simply make an additional payment to your credit card issuer each month. Instead of only paying at the end of the statement, you make one payment about halfway through your statement (15 days before it’s due) and a second payment right before the due date (three days before it’s due).

Does the 15/3 payment method work?

The 15/3 method may be used to help build a credit score. In most cases, you won’t see a ton of impact from using it. Your credit utilization ratio is only one factor that makes up your credit score, and making multiple payments each month is unlikely to make a big difference. One scenario where it might have an impact is if you have a relatively low overall credit limit compared to the amount of purchases you make each month.

Does it hurt credit to make multiple payments a month?

While most people won’t see a major benefit from using the 15/3 payment method to make multiple payments a month, it won’t hurt either. There isn’t a downside to making multiple payments other than making sure you have the money in your bank account for the payment and can handle the logistics of organizing multiple payments.

Photo credit: iStock/Vladimir Sukhachev

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: 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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The term amortization is usually used to refer to the process in which debt is paid off on a set schedule, with fixed payments each month. An amortization schedule can show you the amount of your payment that goes toward the principal and interest each month. Because credit cards are considered revolving loans, amortization is not often used with credit cards.

However, a credit card amortization schedule can be helpful if you’re trying to pay down your balance. Understanding credit card amortization can help you decide how big your payments should be each month, as well as what the impact of additional credit card payments would be.

What Is Amortization?

Amortization is the process where debt is paid down on a set schedule, usually with fixed monthly payments. One common example is a 30-year mortgage — each month, you make a mortgage payment for the same amount.

Every time you make the mortgage payment, part of your payment is an interest payment, and part of the payment goes toward paying down your mortgage principal. Each month, as the principal balance goes down, more and more of your monthly payment goes toward the principal, until the mortgage is completely paid off.

Recommended: When Are Credit Card Payments Due

What Is Credit Card Amortization?

Because credit cards are considered revolving debt — meaning you can continually borrow and repay your debt — they don’t have amortization in the same way that a mortgage or car loan does. However, one area where a credit card amortization schedule may apply is if you’re trying to pay down a credit card balance.

In this instance, understanding the amortization schedule for your credit card can help you decide how making additional payments to your credit card issuer will impact your overall balance.

Recommended: How to Avoid Interest On a Credit Card

How Does Credit Card Amortization Work?

One of the credit card rules is that the higher your balance is, the more interest you’ll owe each month.

To be more specific, by only making the credit card minimum payment, it could take you many years to pay off your debt. If you’ve decided to rein in your credit card spending and pay down your balance, you can use a credit card amortization schedule to determine how long it will take.

Looking at credit card amortization will allow you to see how much less you’ll owe with each subsequent payment — assuming you’re no longer actively using your credit card. This schedule will take into account your current balance, your card’s annual percentage rate (APR), and how much you can afford to pay off each month. Then, you can determine how many months it will take until your balance is paid off in full.

Factors That Affect Credit Card Amortization

One of the biggest factors that affects a credit card amortization schedule is the interest rate on your credit card. The higher your credit card interest rate, the more of each monthly payment that will go toward interest. That will mean your amortization schedule will last longer.

Another factor to consider is the consequences of credit card late payments. If you delay credit card payments and incur late fees, that will increase your overall balance. That will also increase your amortization schedule and extend the length of time it will take to pay down your total credit card balance.

Guide to Calculating Credit Card Amortization Period

Since credit cards are considered revolving debt, it can make it difficult to calculate a credit card amortization period. If you continue to use your credit card for new purchases, you won’t be able to calculate an amortization period because your total balance will change each month.

One way you can calculate a credit card amortization period is if you decide to stop making any purchases on your card. If you have a $5,000 balance on your credit card, you can use any online amortization calculator and input the credit card payment amount you want to make each month. The resulting amortization schedule will show how long it will take to completely pay off your credit card, assuming you make payments by your credit card payment due date.

Debt Consolidation and Credit Card Amortization: What to Know

If you’re looking to lower your credit card debt, one option is credit card debt forgiveness. But because this isn’t always easy to get, another is to consolidate your debt by taking out a personal loan.

Unlike revolving loans which are what a credit card is, a personal loan is a type of fixed loan that has an amortization schedule. Following that amortization schedule lets you know when you’ll completely satisfy your debt obligation.

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

The Takeaway

An amortization schedule shows how much of each loan payment goes toward interest and how much goes to principal. Because credit cards are considered revolving debt, they don’t have amortization schedules in the same way that fixed loans do. Still, you can use a credit card amortization schedule as a tool if you’re trying to eliminate your credit card balance.

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

What does credit card amortization payment mean?

If you’re looking to pay down or eliminate your debt, one strategy is to stop making any new purchases with your card. That way, you can concentrate on lowering your total payment. If you only make the credit card minimum payment each month, it could take years before you pay off your balance. Following a credit card amortization schedule can help pay off your debt sooner.

How can I calculate my credit card amortization period?

A credit card amortization period mostly makes sense if you stop making any new purchases on the card. If you’re still regularly using your credit card, your total balance will change with each purchase and payment. On the other hand, if you aren’t regularly using your card for new purchases, you can calculate your credit card amortization period using your total balance, interest rate, and monthly payment amount.

What is a credit card amortization term?

An amortization term is how long it takes to completely pay off a loan. If you’re making regular payments on the credit card payment due date each month, you’ll gradually lower your total credit card balance. A credit card amortization term can make sense if you are no longer actively using your card and focusing on eliminating your debt. You can use your total balance, interest rate, and the amount you’re paying each month to figure out how long it will take to eliminate your balance.

Photo credit: iStock/AmnajKhetsamtip

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Figuring out how to live on one income, either by design or circumstance, can seem daunting. And it may put a lot of financial pressure on that one wage earner.

That said, plenty of American households live on a single income. According to the latest government statistics, only one spouse was employed in around a third of families with children and nearly one quarter of married couples without children. There’s strength in those numbers, proving that it can be done.

If you are learning how to live off one income, read on for 12 smart strategies that will help you make the most of your money and live well, including:

•   Making a realistic budget

•   Reducing food expenses but still eating well

•   Downsizing your home

•   Earning extra income

•   Focusing on what you have

Is It Possible to Live on One Income (After Living on Two?)

It’s certainly possible to live on one income, even after being accustomed to two. Maybe you or your spouse is now a stay-at-home parent or caring for an elderly relative, or one of you lost your job. Whatever the reason, going from a dual income to a single income household will likely take some careful planning and adjustments. For example, you may need to sit down and go through all of your household expenses, then make some adjustments — perhaps even consider downsizing your lifestyle. Adaptability and a proactive approach are key to successfully making this transition.

12 Tips for Living on a Single Income

How to make it on one income? Consider starting with a newly streamlined (but livable) budget and moving on to other changes one by one.

1. Making a Budget

First step, reality check. To successfully live off one income, you’ll want to document your household’s take-home pay. It’s also a good idea to take stock of the kinds of income you could count among your assets, such as money you might earn from a side hustle or dividends from any stocks you might own.

Then, tally all expenses that are musts, such as:

•   Mortgage or rent

•   Groceries (even that annual Costo membership fee)

•   Health insurance costs

•   Transportation, such as car payments, gas, insurance, and repairs

•   Utilities

•   Child care

•   Work-related expenses (commuting, clothing, etc.)

Discretionary income is what is left after your “fixed” or “necessary expenses” are covered. This would be money to use on a weekend brunch with friends, taking the kids to the theme park, or other moderate splurges. But you don’t necessarily want to spend all of that money; you also want to allocate some towards paying down debt and saving towards other financial goals, such as an emergency fund or retirement. For savings you may need in the next few months or years, consider opening a high-yield savings account, then setting up an automatic recurring transfer from checking into this account on the same day each month.

To streamline the budget-making process, you may want to use an online tool (many banks provide them) or try an app that helps with this process. If you’re raising kids on your own with one paycheck, it can be especially important to learn how to budget as a single parent.

2. Freezing Extra Food

This can save a lot of money and consolidate your food prep time, too. Consider taking a few hours a week to cook foods that freeze and reheat well, such as lasagna, chili, soup, or pot pie. You might also bake and stash muffins and bread for weekday or game-day breakfasts. The homemade food you prepare is likely to be more wholesome (no preservatives) and less expensive than store-bought.

To make freezing a breeze, make sure you have some containers and foil wrap on hand; then use masking tape or stickers to mark and date contents and reheating instructions.

3. Transitioning to One Car

Becoming a one-car household is not only better for your budget (gas, insurance, new tires, car repairs) but it helps the planet, too. Perhaps your partner can take public transportation to work and leave the car home for grocery runs, doctor appointments, and shuttling kids.

If one of you has to drive to work and thereby leaves the other without wheels, drill down on clear communication and scheduling. For instance, you need the car back by 6 p.m. to make a meeting. Otherwise, you might take public transportation or call the occasional Uber to get places. Carpools can also work for kids’ activities and work commutes.

If you’re a newly single parent balancing car costs along with everything else, you’ll want to create a reasonable post divorce budget to guide you. Transportation is often vital but can often be obtained at a reasonable price.

4. Monitoring Utilities and Electricity

Saving money on utilities is increasingly easy with tools like smart thermostats. A good rule of thumb is to lower your thermostat when the family is out (say, during school hours) and at night when everyone is under blankets in winter. In summer, consider keeping the house warmer if you’re at work; no need to cool an empty house.

It’s also wise to keep up with maintenance appointments for your home’s heating and cooling systems; just like a car, it needs tune-ups to run best. Teach the whole family to switch off lights and T.V. when they leave a room. Target “phantom” energy use, which is the energy appliances (especially electronics) use when “sleeping” but still plugged in. These dollars add up.

5. Downsizing Your Home

If you’re living on one income and housing costs are eating up a big chunk of your budget (which is common in today’s housing market), you might want to consider moving to a smaller house, apartment, or condo. You’ll be on trend with the tiny-house movement and the shift toward minimalist living.

When you shrink your footprint, you generally save money on property taxes, utilities, electricity, and lawn and snow care. In most cases (depending on location), the smaller the space, the lower the bills. All of this can feel freeing.

Another way to downsize (though not literally) can be to move to a home with fewer amenities or one that’s in a neighborhood a bit farther away from downtown. You may be able to get the same square footage for less.

Recommended: What’s Net Worth vs. Income?

6. Doing Meal Planning and Buying Groceries on Sale

Even on a budget, you can eat well — even better than grabbing unhealthy, overpriced takeout. Consider planning meals around what’s in your pantry and what’s on sale each week. It can be fun to explore the budget-priced recipes online; plenty of sites have “meals under $10” and similar categories to help provide inspiration.

You might enjoy scheduling meals by day of the week (Meatless Monday, Taco Tuesday, and Sunday Roast Chicken are a few examples), and shop based on what’s in season and on sale. Summer tomatoes (maybe from your garden) yield gazpacho or homemade spaghetti sauce. Winter vegetables like carrots are perfect for roasting and or adding to soups.

Recommended: 23 Tips to Help Save Money on Groceries

7. Paying Off High-Interest Debt

High-interest debt, the kind you accumulate on credit cards, can have steep annual percentage rates (APRs). The currently average APR on credit cards is 27.62%. If you carry a balance, that means everything you buy with plastic is costing you significantly more than what the receipt says because you take on that hefty APR.

If you’re dogged by this kind of debt, you’ll want to work whittling it down. You might also consider consolidating your debt with a lower-interest personal loan or making the switch to a balance transfer card that offers no or low interest for a period of time.

Recommended: How Does APR on Credit Cards Work?

8. Getting a Roommate

Sharing housing expenses by renting out a spare room can immediately free up funds in your budget. This option actually comes with more than one advantage. Many people get a budget boost by sharing the costs of rent, laundry detergent, coffee, utilities, and the cable bill. And you may also like having an additional member of the household with whom you can chat and bond.

9. Using Credit Cards Responsibly

The old rule still holds: Don’t use credit, generally not even for gas or food, unless you can pay off the balance every month. If not, you will incur interest that will build and build.

Before making a big, unplanned purchase, you might try the wait-and-see method, which means walking away for anywhere from 48 hours to 30 days (it’s your choice), and then seeing if, after some time has elapsed, you still feel you have to have it. In many cases, the desire has faded.

Still having trouble with debt? Consider working with a non-profit like the National Foundation for Credit Counseling (NFCC ).

10. Earning Extra Income

Another angle on being a single-income household is to see how you might bring in more money. It’s not just side hustles (moonlighting as a writer or web designer, for instance) or cleaning offices at night after your full-time job at school.

Consider new ideas for how to create your own passive income, from rental properties to advertising on your car.

Recommended: Ways to Create Residual Income

11. Finding a Travel Buddy

When budgeting for single-income life, you don’t have to give up vacations indefinitely. Instead, find ways to save money on travel. Whether you’re visiting the West Coast or the Mediterranean, sharing a hotel room or Airbnb with a friend can bring big savings.

A travel buddy can also chip in for the rental car, gas, tolls, park entrance fees, and taxi/Uber costs. Or you could consider camping with a friend or family member; that’s another great way to enjoy an inexpensive getaway.

12. Focusing on What You Have

As you trim expenses and get into your groove as a one-paycheck household, don’t lose sight of the gifts you have, riches that can supersede a second income. That includes more family time, good health, companionship, a roof over your head, heat, food in the freezer, a car that runs. Remember, wealth comes in many forms.

One last tip: If luxury-focused social media accounts are making you feel as if you’re missing out on the good life, unfollow them! Most are unrealistic representations that fail to reflect real life.

The Takeaway

Learning how to live on one income after having two may take practice and require some smart budgeting hacks, but it can often be done without major deprivation. By experimenting with a variety of strategies, you’ll find the ones that work best for you, financially and personally. You’ll also likely feel a surge of pride when you hit on the right combination of moves that lessen any money stress and enhance your financial well-being.

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

How do you budget for a single income?

To budget for a single income, start with the take-home earnings you will live on and subtract essential expenses, such as a roof over your head, food, debt, and health insurance. Then look at wrangling your negotiable costs, such as owning one car vs. two or how much you budget for meals, to make ends meet. An online budgeting tool or consumer finance app can help.

How many families live off of one income?

According to the latest government statistics, only one spouse is employed in 33% of families with children and 23.5% of married couples without children.

What is the average income for a single person in the U.S.?

The average U.S. annual salary in Q4 of 2023 was $59,384, according to government data.

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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.

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