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If someone needs to make or receive a payment via check, both cashier’s checks and certified checks can offer a more secure option than a personal check. That said, there’s an important difference between a certified check and a cashier’s check. With the former, the payer backs the check; with the latter, the bank guarantees it.

What Is a Cashier’s Check?

A cashier’s check is a specific type of check that has a guarantee from a bank or credit union that if the check doesn’t go through, the financial institution will make the payment. This situation can arise if there aren’t sufficient funds in the payer’s account for the check to process. Because of this, cashier’s checks are considered to be the safest form of payment. This type of check is often required when making a major purchase like buying a car or putting a downpayment on a home.

How Do Cashier’s Checks Work?

The way that a cashier’s check works is that the payer requests a cashier’s check at the financial institution where they have their bank account. They then pay the bank the amount they want to provide to the payee and the bank will cut a check using their own funds.

The bank will list the payee on the check to ensure that the check is used by the person the payer intended it to go to. Cashier’s checks usually clear faster than personal checks issued from someone’s checkbook.

In many cases, the payer needs to be a member of a bank or credit union to request a cashier’s check be generated. A fee is typically involved as well. It can cost approximately $8 to $15 to obtain a cashier’s check, though some banks may waive the fee for certain customers.

What Is a Certified Check?

A certified check is a different type of check that works more like a personal check. With a certified check, the money comes straight from the payer’s checking account. But first the bank verifies to make sure that the payer has sufficient funds in their account to cover the amount. If for some reason the check bounces, the account holder is held responsible (unlike with a cashier’s check where the bank is the one on the hook if the check bounces). Because of this, certified checks tend to be more secure than personal checks.

Recommended: How Much Money Do I Need to Open a Checking Account?

How Do Certified Checks Work?

To certify a check, the bank verifies that the account associated with the check has sufficient funds to make the payment. They will also verify the payer’s identity and will add an official bank stamp or watermark to the check.

It’s possible to get a certified check at some banks, however, not all banks offer them. A certified check typically costs $15 to $20.

Which Check Is Safer?

While both certified checks and cashier’s checks are safer than a personal check from your checking account, cashier’s checks are a bit more secure. The reason: The bank that backs them won’t default on the payment. That being said, both types of checks are good options for someone paying a large amount of money. They can also be used when transferring or receiving money from a stranger.

Most likely, if a situation arises that requires one of these check types, it’s because the payee requested payment be made with a specific type of check. They’re probably seeking a higher level of certainty that the payment will go through.

Differences Between a Cashier’s Check and a Certified Check

Is a cashier’s check the same as a certified check? Simply put, no. There are a few key differences when it comes to certified check vs. cashier check that it’s worth understanding.

Source of Funding

Ideally, with either type of check, the funds will come out of the payee’s bank account. However, if a cashier’s check is issued and then can’t be processed because of insufficient funds, the bank will need to fund the amount due. If the check was a certified check, the payer still needs to fund it through their bank account.

Check Signature

A cashier’s check can include bank employee signatures. With a certified check, however, the bank simply verifies the payer’s signature.

Payer of the Check

With both types of checks, the payer is the one paying the check. If, during processing, the check bounces, they will only be held responsible with a certified check. With a cashier’s check, the bank that backed the check will then be the one who is required to fund it.

Funds Availability

As briefly noted earlier, with both a cashier’s check and a certified check, the funds available come from the payer’s bank account. If the check bounces and it’s a cashier’s check, then the bank will need to provide the funding. If it was a certified check, the payer will be responsible for making funds available.

How It Works

With a cashier’s check, the payer requests a cashier’s check at the bank. Then, the payer gives the bank the amount the check will be for. The bank will then cut (or issue) a check using their own funds.

When it comes to certified checks, the bank verifies that the bank account associated with the check has sufficient funds to make the payment. It also verifies the payer’s identity and adds an official bank stamp or watermark to the check. If the check bounces, the payer is held responsible.

Guarantees

A cashier’s check is guaranteed by a financial institution, whereas a certified check is guaranteed by the individual making the payment.

Costs of Checks

A cashier’s check may involve a fee of up to $15; the cost for a certified check can run up to $20.

Safety of Checks

Cashier’s checks are guaranteed by a bank or credit union and are typically considered the safest form of payment. With a certified check, the bank simply certifies the money was available when the payer wrote the check and then verifies the payer’s signature.

Avoiding Scams and Fraud

To help avoid scams and other types of bank fraud when writing or receiving a check, here are some best practices to keep in mind.

•   Don’t ever send money back to someone who sent you a check unless you have cashed the check or deposited it and are sure it cleared.

•   If selling something to a stranger online, consider using an escrow or online payment service instead of a check.

•   Never accept a check that is worth more than it was supposed to be.

•   Don’t lose a check with personal banking information on it.

Alternatives to Cashier’s Checks and Certified Checks

If a cashier’s check or certified check doesn’t seem like the right fit for you, there are other ways you can send money to someone’s account.

Money Orders

When it comes to a certified check or cashier’s check vs. a money order, a money order functions much like a standard check. It can be bought at retail stores, supermarkets, financial institutions, and U.S. post offices. The payer pays for the money order upfront, so there’s no chance of overdrafting like there is with a check. No bank account is required. At the post office, fees are likely to be about $3 for a domestic money order of up to $1,000.

P2P Payments

P2P payment services like Cash App, PayPal, and Venmo make it easy to send cash for smaller purchases instantaneously. These may be ideal for daily life (for instance, when you owe friends money for dinner). This isn’t the right choice, though, when managing a large payment such as a downpayment on a home.

Money Transfer Services

Money transfer services are a convenient form of electronic payment that involve sending money from one bank to another via the Automated Clearing House (ACH). Among the transactions that work this way are e-checks and direct deposit.

The Takeaway

The main difference between a certified check vs. cashier check is who guarantees the check. In the case of a cashier’s check, the bank guarantees it, but with a certified check the consumer writing the check guarantees it. Cashier’s checks are typically thought to be the safest option and they may also be more readily available (certified checks are only offered by some banks). Both types of checks are important financial tools when you need a more trustworthy form of payment than a standard check.

Having a bank account that can provide you with the tools and services you need, like a certified or cashier’s check or an array of digital features such as mobile deposit and bill pay, is important. When choosing a bank, make sure to find out all the offerings they have, as well as what their account fees are and any minimum balance required. That way, you can make the most informed decision.

FAQ

Do certified checks clear immediately?

When you deposit a certified check, it doesn’t clear immediately. It typically takes one to two business days.

Can you get scammed with a certified check?

Both certified checks and cashier’s checks are safer than a personal check. Of course, there is still a small chance that fraud may occur. Checks can be faked. It’s wise to always be careful when receiving or making payment via checks, especially for large sums of money.

Is it safe to accept a cashier’s check?

Yes, it is generally safe to accept a cashier’s check. A cashier’s check is much more reliable than a personal check; it is guaranteed by the bank or credit union issuing it.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

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.

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.

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

3.30% APY
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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

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

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

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

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A high-yield checking account is a secure place to deposit, store, and withdraw money, but with an enhanced interest rate vs. other similar accounts. Typically, money in a checking account doesn’t earn any interest — or maybe a nominal fraction of a percent.

With a high-yield checking account, there’s the potential to turn your regular deposit account into a passive income machine. While it’s unlikely to make you rich, a high-yield checking account can help pad your pockets with a few extra interest dollars, which can add up over time.

However, these accounts can come with certain conditions that may or may not make them the right choice for you. Here’s what you need to know.

How High-Yield Checking Accounts Work

High-yield checking accounts, as their name implies, are checking accounts that offer a high “yield,” or interest rate, on the balance held in the account.

Whereas the national average for an interest-bearing checking account is about 0.07% APY (annual percentage yield) per the FDIC, a high-yield account might offer 3% to 5% APY or even higher — which still might not make you a fortune, but is a significant upgrade and on a par with some savings accounts.

High-yield checking accounts make it possible to create a passive income stream, albeit a small one, just by holding money in your checking account (which you likely already do). A high-yield checking account can augment interest earnings from other financial products you may hold, such as a high-interest savings account or investments like high-yield bonds.

However, there can be account minimums to contend with or potential fees.

Does a High-Yield Checking Account Come With Fees?

Although some high-yield checking accounts come with monthly maintenance fees that could easily eclipse whatever interest you stand to earn, these fees can commonly be waived so long as you maintain a certain minimum monthly balance or meet other requirements. These may include making a certain number of debit card transactions or receiving a certain threshold in direct-deposit income each month.

These days, there are even some free high-yield checking accounts — usually offered through online banks — but the level of interest you’ll earn may depend on your ability to meet the same kind of transaction minimums we just mentioned. (If you don’t meet the requirements, you might not earn any interest at all.)

So, in short, while you might not have to pay for your high-yield checking account, you’ll likely need to perform the basic minimum monthly transaction requirements in order to glean the full benefits of the account.

Top 3 Pros of a High-Yield Checking Account

High-yield checking accounts can be very beneficial — here’s how.

1. More Earnings

These accounts offer an opportunity for interest earnings simply by holding a checking account. In some cases, the interest rate may rival that of certain kinds of savings accounts.

2. Motivation to Keep More in Your Account

These high-yield checking accounts can incentivize account holders to keep a higher minimum balance due to interest-earning requirements — which can help you generate a cash cushion.

3. Availability

These accounts are becoming increasingly available, especially thanks to the proliferation of online-only banks. You likely don’t need to invest much time and energy in research when looking for one.

Cons of a High-Yield Checking Account

On the other side of the coin (pun totally intended), high-yield checking accounts can have their drawbacks.

Transaction Requirements

These high-yield accounts may come with transaction requirements to secure interest earnings. If the account holder doesn’t meet them, little or no interest will be earned. These obligations might suit your money style, or they might prove to be a major hassle.

Modest Interest (If We’re Honest)

Many interest-bearing accounts generate just a fraction of a percentage in interest. Even the highest-yield checking accounts currently only offer about 5.00% APY. Yes, every little bit helps but this certainly isn’t enough money to retire on.

Additional Fees

In some cases, high-yield checking accounts may come with fees. Waiving them may require holding a significant minimum monthly balance — which can be challenging for individuals and families living paycheck to paycheck.

Here, you can review the pros and cons again in table format:

Recommended: What Is a Certificate of Deposit (CD)?

Is a High-Interest Checking Account Worth It?

Whether or not a high-interest checking account is worth it will probably depend on a couple of key factors.

•   First of all, how high is the interest rate? If it’s just a fraction of a percentage above the norm, it may not be worth it. But if it’s a multiple of the standard rate, it might be a good way for your money to make money.

•   Next, what fees or minimum requirements are involved? If your money would make $10 more in interest per year in a high-yield account but you need to tie up funds that could be working harder elsewhere, then it’s probably not a money-wise move.

Factors to Look For in a High-Yield Checking Account

If you’re shopping for a high-yield checking account, consider these factors:

Interest Rate

Of course, you will likely want to shop around and see what are the highest rates available for a checking account. Currently, the highest rates are 5.00% or slightly higher.

Minimum Balance

With this kind of checking account, you may be required to make a specific size of deposit to open the account. You may also need to keep a certain balance in order to earn the high interest rate or to avoid fees. If that’s the case, make sure you can meet that number.

Fees

In addition, when opening a checking account, be sure you understand what fees might be charged. These can include maintenance, overdraft, ATM, and foreign transaction fees, among others. You’ll probably want to avoid being charged fees so that they don’t eat away at the interest you are earning. Online banks may be more likely to waive such fees.

How to Qualify for High-Yield Checking Accounts

In order to qualify for a high-yield checking account — and actually get the benefits — you’ll need to be able to fulfill whatever that account specifies as far as transaction requirements or minimum opening deposits.

In addition, if your banking history is marked by overdrafts and other negative factors, this may be reported by ChexSystems, which is kind of like a credit score bureau but for banking. If you have many negative factors (unpaid fees, say, or many overdrafts), you may not be able to qualify for a high-yield checking account — or other types of deposit accounts, either. (If your ChexSystems report contains errors, you can always dispute false information with ChexSystems online.)

How to Open a High-Yield Checking Account

Now that you know what it is, you may wonder how to open a high-yield checking account. The process is similar to opening any other type of account. You’ll be asked to provide:

•   Basic personal information, such as your name and address

•   Proof of address (such as a utility bill)

•   Government-issued photo ID

•   Your Social Security number or other taxpayer identification number

In addition, your chosen bank may also require a certain minimum opening deposit, which you’ll need to provide to activate the account. The bank will offer specific details as far as what documentation is required and how to deliver it.

High-Yield Checking Accounts vs High-Yield Savings Accounts

If you are comparing high-interest checking and high-yield savings accounts, you will likely want to consider the following points:

•   A high-interest checking account does generate money on your deposit, but it may come with minimum transaction or balance requirements. These could be difficult for some people to meet.

•   A high-interest savings account can offer good earning power, but the number of transactions you are allowed could be limited. Although Regulation D, which limits savings accounts to six transactions a month, was largely suspended since the pandemic, some financial institutions may still apply this rule and charge fees if you conduct more transfers.

Depending on your needs, one of these may be a better option than the other. Also, it is likely to be easier to find a solid interest rate with a high-yield savings account than with the checking variety. In other words, many high-interest checking accounts don’t offer all that much earning power.

Opening a Checking and Savings Account With SoFi

A high-yield checking account is a great way to augment whatever passive income you might earn from savings accounts, investments, and other holdings. Some interest is better than none, after all — every little bit of interest earned counts.

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

FAQ

Is a high-yield checking account worth it?

This all depends on whether or not you can meet any minimum monthly transaction requirements. If you can fairly easily do so, a high-yield checking account is an easy way to earn passive income just by keeping an active bank account. But if you can’t, you might not earn any interest at all — or even pay additional fees for the account.

What is the difference between a high-yield checking and savings account?

A high-yield checking account is designed to be the hub of your financial life and typically doesn’t have any limits on the number of transactions you may make; savings accounts may restrict this. However, this kind of checking account likely pays less interest than a high-yield savings account, which may do a better job of helping you generate passive income.

Can you withdraw money from a high-yield savings account?

Yes, you can withdraw money from a high-yield savings account. However, there may be restrictions on how many transactions you can make per month. Going over that number could result in fees or the account being converted to a checking account.

What bank has the highest checking interest rate?

Currently, some of the banks offering the highest checking interest rates are Axos Bank, Presidential Bank, Heritage Bank, and Quontic Bank.

Can you ever lose your money with a high-yield savings account?

A high-yield savings account is typically a very safe place to keep your money, especially if it’s FDIC- or NCUA-insured. The risk of losing money is extremely low.

Photo credit: iStock/MicroStockHub

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

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

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

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

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

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

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If someone has a lot of money, you might say they’re rich or even wealthy. But there’s actually a difference between wealthy and rich, both in terms of how much money you’re talking about and how someone uses their financial resources.

A rich person can have a lot of money or earn a high income, but their money may only go so far if their lifestyle is extravagant or they take on significant debt. They may live in the moment or spend freely. A wealthy person, by contrast, is generally more focused on securing their long-term financial picture.

Is it better to be rich vs. wealthy? Here’s a closer look. Understanding the difference between them can help you to shape your personal financial plan.

What Does “Rich” Mean?

If you ask friends, family members, or coworkers whether they’d like to be rich, quite a few of them might say yes. After all, if everyone was satisfied with their financial situation, then get-rich-quick schemes wouldn’t exist. But what is the difference between rich and wealthy, and does it matter?

If you look up “rich” in a dictionary, the most common definition centers on what a person has. Someone who’s rich has a lot of possessions and material wealth. So a rich celebrity or social media influencer, for example, might own multiple homes, cars, or jewelry that’s worth millions. They may spend their time jet-setting around the world or partying with other rich people.

That’s what it means to be rich in a financial sense, but someone could also be rich in other ways. For example, someone who has an extensive personal network may be said to be rich in friends. And someone who’s well-educated or well-traveled may be described as being rich in knowledge or experience.

Recommended: What Is the Average Pay in the United States Per Year? 

What Does “Wealthy” Mean?

When discussing what it means to be wealthy vs. rich, it’s easy to assume they’re similar. Both rich people and wealthy people may maintain a lifestyle that’s posh and out of reach for the average person. The distinction between wealthy and rich, however, is that wealth is more sustainable and lasting than simple riches.

There are different ways to measure wealth. The Census Bureau, for instance, uses net worth to estimate the wealth of American households. Net worth is the difference between your assets (what you own) and your liabilities (what you owe). Someone who is wealthy may prioritize accumulating assets that produce income or appreciate in value over time, while limiting their exposure to debt.

Wealthy people may enjoy much higher incomes than everyday people, and, importantly, they may spend less than they earn. Some wealthy people are born into money; others build their fortunes through a combination of career, entrepreneurship, and careful investment.

When talking about wealth, some make the distinction between new money vs. old money. New money is earned while old money is passed down from generation to generation. In the U.S., many of the wealthiest individuals are well-known business owners or investors, like Jeff Bezos, Bill Gates, and Mark Zuckerberg to name a few. Some of these billionaires were born into wealthy families while others were not.

Recommended: Is $160,000 a Good Salary for a Single Person in 2024? 

Key Differences Between Rich and Wealthy

When comparing rich vs. wealthy people, the way they approach money matters. Rich people may see money as a means to buy things and maintain a certain lifestyle. Wealthy people, on the other hand, may view money as a means of creating more money, either through investments or business ventures.

Here’s a closer look at the difference between wealthy and rich.

Amount of Money

There’s no set dollar amount at which someone goes from being rich to wealthy. Instead, it’s largely about perception. For example, you might feel rich if you normally keep $500 in your bank account and you decide to use a tax refund to bump that up to $5,000. Meanwhile, someone who wins $100 million in the lottery after working a minimum-wage job for years might think of themselves as rich rather than wealthy.

Generally, the higher your net worth, the closer you get to the wealthy vs. rich divide. Someone who has $10 million in assets and no debt, for example, may be in a better position to invest and fund philanthropic efforts than someone who’s making $200,000 a year but has a negative net worth because of debt. The person with the $10 million in assets is wealthy, while the other person’s earning power could put them in the “rich” bucket, though their debt actually erases that upon a closer look.

Investments

People who are rich may put spending and funding their lifestyle ahead of investing. So even though they might pull in a six- or even seven-figure income each year, a lot of that money goes right back out of their bank accounts. They might have some retirement savings if they’re participating in, say, their 401(k) at work, but investing may get pushed to the back burner.

Wealth investing can look very different. Wealthy people tend to invest their money so they can grow it and turn it into more money. They may have money in real estate, the stock market, and other investments that provide them with passive income or aids in building additional wealth for themselves and future generations.

How They Live Their Lives

Money can be a tool for improving your quality of life, but what that life looks like can be very different if you’re rich vs. wealthy. A rich person might think nothing of dropping $10,000 on a shopping trip or last-minute travel. They tend to live in the moment and may not consider how spending that money today might affect them tomorrow.

A wealthy person may still enjoy the finer things, but their approach might be more balanced. For example, billionaire Warren Buffett is one of the wealthiest people in the U.S., but he notably lived in a relatively modest home that he purchased in 1958 for over seven decades. Other wealthy millionaires and billionaires may similarly adopt a frugal mindset or focus on giving away large amounts of their wealth to good causes.

Hobbies

Certain hobbies and pastimes are the domain of the rich or wealthy, simply because of how much they cost. Yachting, big game hunting, and polo are just a few examples of activities that are associated with wealthier people who can afford the associated costs.

Rich people may also indulge in those kinds of pastimes but on a smaller scale than those who are wealthy. Instead of buying their own private yacht or plane, for example, they might lease one when they want to plan a getaway. Or instead of going to their private island for the summer, they may splurge on a couple of weeks’ vacation in Bora Bora or St. Kitts.

Expenses

Rich and wealthy people can have very different expenses, depending on their lifestyle. A rich person may have a mortgage payment, car payments, private school tuition payments for their kids, and all the regular day-to-day living expenses like utilities and food. They may also have credit card bills or student loans to pay each month.

Wealthy people may not have debt-related expenses, such as a mortgage or car payment, since they might own those assets outright. If they use credit cards, those bills might get paid in full each month rather than accruing interest.

Ultra wealthy people may have unique expenses that the rich don’t, such as maintenance for one or more vacation homes, insurance for a private jet or yacht, and staff payroll if they employ housekeepers, landscapers, and other individuals to work in their home. They may also pay out expenses to financial advisors or investment advisors for wealth management services.

Streams of Income

A rich person may rely on their paychecks from working a regular job as their main source of income. They might also earn money from side hustles or businesses they own, but generally, they’re working for a living in some way. If they don’t keep up their pace at work, they could lose that status of being rich.

An oft-cited IRS study suggests that the average millionaire has seven different streams. They may have a job, but a large part of their income may come from different types of investments or business ventures. Wealthy people can also generate income from pensions or annuities. It this way, they are less beholden to what you might call the daily grind.

Recommended: Aiming to Become a Millionaire? These Steps Could Help 

Budgeting and Financial Planning

Rich people might make a six-figure or even seven-figure income or more, but they may not save or invest much of that income. (Think about those actors and singers you may have read about who have frittered away their fortunes on luxury real estate, travel, fashion, food, and wine.) They might have a budget, but not always stick to it. Perhaps they’re spending more than they make as they attempt to cover their lifestyle. Some rich people may not be very forward-thinking in terms of planning for retirement or other long-term goals.

Wealthy people may not have to live by a strict budget either if their assets substantially outpace their spending. But they may take financial planning more seriously and be proactive about things like investing and retirement planning. They may also focus on estate planning and the best ways to pass on as much of their wealth as possible while minimizing taxes for their heirs.

Is It Plausible to Become Wealthy?

Can a regular person become wealthy? The answer is that it depends on where you’re starting, where you want to go, and your strategy for getting there. Building wealth in your 30s, for example, could be easier if you have a solid income, no debt, and you’re committed to living well below your means. The odds of starting a billion-dollar company and becoming wealthy overnight are, on the other hand, much slimmer.

Having a clear plan and getting an early start are two of the keys to building wealth. The longer you have to save and invest money, the more room that money has to grow through the power of compounding interest. It’s also important to choose investments wisely to maximize their growth potential. Understanding your individual time horizon for investing and your risk tolerance can help you to decide which investment types to include in your portfolio.

Talking to a financial advisor can help you get some clarity on what you might need to do to begin building sustainable wealth. An advisor can review your situation, offer advice, or suggest tactics for creating a realistic budget, paying down debt, saving, and investing for the long-term.

Banking With SoFi

Whether you consider yourself rich, wealthy, or neither of the above, where you keep your money matters. Finding a bank that offers you a competitive rate on your savings and charges few, or no fees can help you make the most of the money you have.

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

FAQ

Is a millionaire wealthy?

Whether a millionaire is wealthy or not depends on their financial situation and lifestyle. Being a millionaire means having assets worth at least one million dollars, but true wealth involves more than just a high net worth. It also includes financial stability, freedom from debt, and the ability to sustain one’s lifestyle without relying heavily on active income. A millionaire can be wealthy if their assets provide long-term financial security and passive income.

Is six-figures rich?

Someone with a six-figure income might consider themselves to be rich if they’re able to enjoy an upgraded lifestyle. For example, traveling frequently or buying luxury items are often associated with people who are rich. However, if that person lives in an expensive city and is supporting a family, they might not feel rich at all, despite their income. In other words, it depends on personal circumstances.

Is it better to be rich or wealthy?

Being rich vs. wealthy isn’t necessarily a matter of one being better than another. It all comes down to what you do with your money. If you think of yourself as rich, can live the lifestyle you want, and are avoiding debt while investing wisely, then you may be both rich and wealthy. And remember that being wealthier might ensure that you’re financially secure, but it doesn’t guarantee greater happiness.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

SOBNK-Q324-070

Discretionary income is defined as the cash you have available to spend after your necessary payments are covered. Those necessities are typically made up of basic living expenses, such as housing, utilities, food, healthcare, insurance costs, as well as minimum payments on debt.

So what does discretionary income equal in daily life? It’s the post-tax money you can put toward things like eating out, entertainment, travel, clothing, electronics, and gym memberships. You might think of discretionary income as paying for the wants in life vs. the needs.

Read on for a closer look at the meaning of discretionary income, including examples, how to calculate discretionary income, plus tips on how to make the most of your discretionary income.

What Is Discretionary Income?

Discretionary income is defined as the amount of post-tax income that is left over after you have paid for all your essential expenses. Essential expenses include your mortgage or rent, utilities, car payments, as well as food, healthcare, and occasionally clothing (if it is needed, not just wanted). To phrase it another way, no, a Netflix subscription or your AM latte isn’t a “necessity.”

Also worth noting (warning, buzzkill ahead): Discretionary income isn’t just to be spent on cool stuff and fun experiences. It’s also important to put at least some of this money towards savings and making extra payments on any debt. This can help you build wealth and financial security over time.

7 Examples of Discretionary Income and Expenses

Discretionary expenses are the things people buy with their discretionary income. Here are some examples:

Entertainment and Eating Out

This category includes such expenses as dining out, getting drinks, splurge-y takeout food (pizza delivery, we’re looking at you!), and fancy coffees. In terms of entertainment, the following is typically considered discretionary: Concert, play, and movie tickets, as well as museum admission, books, magazines, streaming services, and similar costs.

Recommended: How to Save on Streaming Services

Vacations and Travel

Taking a vacation, whether you go to the other side of the planet or an hour’s drive away, is not a necessity, despite how you may feel about it.

Luxury Items

These expenses could be anything from a pricey sports car to designer clothes to jewelry to wine. While clothing and a car may be necessities in life, when you pay extra for top-notch prestige brands, you enter the realm of discretionary expenses.

Memberships and Hobbies

Yes, joining a gym or taking up a musical instrument are admirable pursuits. But they are not essential. For this reason, things like yoga or Pilates classes, crafting supplies, and similar expenses are considered discretionary.

Personal Care

A basic haircut or bottle of shampoo may not be discretionary, but pricey blowouts, manicures, massages, skincare items, and the like are.

Upgrading Items

If your current phone is functional but you still decide to buy the latest one, that’s a discretionary expense. The same holds true for being bored with your couch and getting a new one or remodeling your bathroom just because.

Gifts

Of course you want to show you care for your loved ones. But buying presents for others isn’t something you absolutely have to do, so this should be earmarked as a discretionary expense.

How Is Discretionary Income Used?

In addition to making the types of purchases listed above, discretionary income can also be used to save for future purchases and getting ahead on long-term financial goals.

Common Uses of Discretionary Income

Here’s a more detailed look at some of the different ways you can use discretionary income:

•   “Fun” spending: Many people use discretionary income to purchase goods or experiences that they can enjoy right away.

•   Saving for short-term goals: Another common use of discretionary income is to put it in a high-yield savings account earmarked for goals like taking a vacation or making a down payment on your dream house.

•   Paying down debt: While minimum payments on debts are generally considered necessary expenses, making extra payments is a common — and potentially smart — way to use discretionary funds.

•   Investing: Another way many people use discretionary income is to invest it in the market for long-term goals like retirement or a child’s future college education.

•   Charitable donations: Doing good with your discretionary dollars is another common and positive way to spend discretionary income.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure mobile banking app.

How to Calculate Discretionary Income

The formula for calculating discretionary income is:

Discretionary Income = Gross Income − Taxes − Essential Expenses

Start by assessing your average monthly take-home income (gross income − taxes). You can do this by scanning the last several months of financial statements. Or if your only source of income is your paycheck, you can simply look at your paystubs.

Next, you’ll need to tally up your essential expenses. These may include:

•   Rent/mortgage payment

•   Utilities

•   Internet/phone bills

•   Groceries

•   Minimum debt payments (credit cards, student loans or car loans)

•   Insurance premiums

•   Medical expenses

•   Transportation costs

Once you know how much you’re spending on essentials, you can subtract that number from your monthly take-home income. The result is your monthly discretionary income.

Factors That Affect Discretionary Income Calculation

A number of things can influence the amount of discretionary income you have to spend, such as:

•   Income level: Higher earnings generally increase discretionary income, provided you don’t increase your living expenses as your income goes up.

•   Living costs: Living in an area with a high cost of living raises essential costs and, in turn, lowers discretionary income.

•   Debt level: Needing to make monthly payments on loans, credit cards, and other financial obligations reduces funds available for discretionary spending.

•   Tax rates: Higher income and/or property taxes lowers your take-home pay, resulting in less discretionary income.

•   Inflation: Rising prices for goods and services increases essential expenses, which shrinks discretionary income.

What Is a Good Amount of Discretionary Income?

Generally, a good amount of discretionary income means you have enough funds after covering your essential expenses to be able to save, invest, and still enjoy the pleasures of life. The 50/30/20 budgeting formula offers one way to allocate your income. It suggests using 50% of your take-home pay on needs, 30% on wants (discretionary purchases), and 20% on goals (saving and paying more than the minimum on debts).

For example, if your monthly take-home income is $5,000, $2,500 would be siphoned off for necessities, $1,500 would be allotted for wants, and $1,000 would go toward goals like saving and investing.

Managing Your Discretionary Income for Financial Success

Making the most of your discretionary income involves thoughtful planning and smart money management. Here are some strategies to consider:

•   Track your spending: “It’s the last thing that many people want to do on their precious weekends, but tracking spending is essential. There is real truth to the saying ‘What gets measured gets improved,’” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. You may find some easy places to cut back, freeing up more money for saving.

•   Slash necessary expenses: Consider ways you might be able to reduce the cost of essentials, such as switching to a more affordable insurance, cell phone, or internet provider; meal-planning to cut food spending; or moving to a less expensive location.

•   Set financial goals: Having specific goals — like purchasing a home, funding a child’s future education, or retiring early — can help you stay focused and use your discretionary income wisely.

•   Grow your income: To boost discretionary income, you might ask for a raise at work or look into side jobs, freelance work, or ways to earn passive income.

•   Avoid lifestyle creep: As your income rises, try to resist the temptation to increase spending. Consider funnelling the extra funds into savings or investments to build wealth and strengthen your financial future.

Discretionary vs Disposable Income

The terms “discretionary income” and “disposable income” are often used interchangeably but they are not the same thing.

Key Differences

While discretionary and disposable income both refer to income left over after certain financial obligations are met, they differ in scope.

•   Disposable income refers to the money you have left from your earnings after taxes are taken out but before any other deductions are removed. It’s the total amount you have available to spend, which is typically a much higher number than your discretionary income.

•   Discretionary income is a subset of disposable income — it’s the amount of money left after your taxes and all necessary expenses are paid. You use it for “extras” like entertainment, savings, and investments.

It’s important to note that the government and courts may have slightly different definitions of these terms. In bankruptcy cases, for example “disposable income” is the amount that remains after subtracting allowed bankruptcy expenses from your monthly gross income.

If you have student loans, the federal government uses a discretionary spending formula to set your repayment amount under income-driven repayment plans. For many plans, they define “discretionary income” as the difference between your annual income and 150% of the poverty guideline for your family size and state.

Get Ready to Bank Better with SoFi

Once you know how much discretionary income you have, it’s a good idea to set some of it aside in a savings account that pays an above-average interest rate.

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

FAQ

What is the meaning of discretionary income?

Discretionary income is defined as the amount of money you have left after covering essential expenses like taxes, rent or mortgage, utilities, and groceries. It represents the portion of your income that can be used for nonessential spending, such as entertainment, dining out, and vacations.

What is an example of discretionary income?

Discretionary income is the money left after paying for essentials like rent, groceries, and utilities. So, for example, if you earn $4,000 a month after taxes, spend $2,500 on necessities, and have $1,500 left, that’s your discretionary income. You could use that $1,500 for dining out, entertainment, and/or saving for a vacation. How you spend this money reflects your financial priorities and lifestyle choices.

What is the difference between discretionary and disposable income?

Disposable income is the money left after paying taxes and is used to cover both essential and nonessential expenses. Discretionary income, on the other hand, is the portion of disposable income left after covering necessities, like housing, food, and utilities. You can use this money for entertainment, shopping, or saving.

How does discretionary income impact financial planning?

Discretionary income is the money you have left after covering all of your essential expenses. It plays a key role in financial planning because it determines how much you can save, invest, and spend on nonessentials each month. Higher discretionary income gives you more flexibility in your budget, allowing you to save for emergencies and other goals, invest for future growth, and enjoy life’s pleasures.

Can discretionary income be invested?

Yes, discretionary income can be invested to grow your wealth over time. After covering essential expenses, you can allocate discretionary income to stocks, bonds, mutual funds, or retirement accounts. Investing part of your discretionary income can help you build financial security, generate passive income, and achieve long-term goals like sending a child to college or retiring comfortably.

Photo credit: iStock/Gearstd

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

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

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

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

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

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

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

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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 Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q125-081

A foreign currency bank account, also known as a multicurrency account, can facilitate transactions made in foreign currencies; that is, not in U.S. dollars. This can be a significant benefit for businesses. They may use multicurrency (or foreign currency) bank accounts for international transactions as well as to support operations overseas. This can offer a major convenience because of the flexibility with different currencies.

But these multicurrency accounts aren’t just for businesses. Some individuals may also want to fund a bank account with foreign currency in certain situations. Read on for a closer look at what a foreign currency account is, how to open a multicurrency account, and the pros and cons of this type of bank account.

What Is a Multicurrency Account?

A multicurrency account is a type of bank account that’s designed to hold money denominated in foreign currencies. It may also be referred to as a foreign currency account or borderless account. It is a simpler way to deal with regular deposits of foreign currencies.

The types of currencies accepted for deposit or used for withdrawals can be determined by the bank. Some of the currencies your bank may process include:

•   Australian dollars (AUD)

•   Canadian dollars (CAD)

•   Euros (EUR)

•   Great Britain pound sterling (GBP)

•   Japanese yen (JPY).

As mentioned, foreign currency accounts can be opened for business or personal reasons. Businesses that operate globally may require these accounts in order to send payments to vendors or receive payments from international clients.

You might open a foreign currency account for yourself, as an individual, in a few different circumstances. Perhaps you live or are working abroad. Or maybe you regularly make payments overseas or need to send money to friends and family internationally.

How Does a Multicurrency Account Work?

With a multicurrency account, you are able to deposit, hold, and send money in different currencies, just as the name implies. Depending on the financial institution, you may be able to earn interest on deposits, as well.

In addition, these accounts may allow you to convert funds back and forth into foreign currencies as needed without paying the usual fees associated with these operations.

A multicurrency bank account that’s set up as a savings account might follow typical savings account rules. For example, the bank may limit you to six withdrawals from the account per month (though these regulations have been loosened since the COVID-19 pandemic; check with your financial institution). If that limit applies and you exceed it, the bank may impose an excess withdrawal fee. Keep in mind that any fees assessed for a foreign currency account may be processed in U.S. dollars.

Multicurrency accounts at Federal Deposit Insurance Corporation (FDIC) member banks enjoy FDIC protection, up to the established limit. The FDIC insures banking customers up to $250,000 per depositor, per financial institution, per ownership category. This may well reassure you about the safety of your funds.

One thing to note is that foreign currency bank accounts aren’t used for forex trading. If you’re interested in trading foreign currency as an investment, you’d need to open a separate brokerage account for that. There are a number of online brokerages that offer the option to trade forex alongside other investments, such as stocks and exchange-traded funds (ETFs).

Typical Requirements to Apply for a Foreign Currency Bank Account

If you’re interested in opening a foreign currency account, it’s important to know what documents you’ll need. That way, you can gather the necessary materials and speed through the application process. The specifics can vary from bank to bank but generally, you must:

•   Be of minimum age to open an account, typically 18 or 19

•   Have a valid, government-issued form of identification

•   Provide identifying information, including your name, address, date of birth and Social Security number

•   Meet minimum deposit requirements

•   Provide proof of income and employment

The requirements to open a foreign currency account aren’t that different from those for a foreigner opening an account in the U.S. Whether you can apply for a foreign currency bank account online or not will depend on the bank. Some financial institutions allow you to complete the application online, while others require you to open an account over the phone or in-person at a branch. Check with yours to learn the exact protocol.

You may also need to already have at least one other account open with the bank before you can apply for a multicurrency account. If the bank imposes this requirement, you may also need to maintain a specific minimum balance in that account to qualify.

Pros of Foreign Currency Account

If you’re curious about multicurrency accounts, it may well be because you are tangled in some red tape as you try to bank in, say, both U.S. dollars and euros. A foreign currency bank account can help meet certain money management needs, like toggling back and forth between two kinds of currency.

Here, the pros of multicurrency accounts.

•   When you deposit funds into your account, you can hold it as multiple currencies, including leftover foreign currency from travel, in one place. You don’t have to exchange foreign currency before you can use it.

•   You typically avoid foreign transaction fees you might otherwise incur.

•   Being able to switch among different currencies could allow you to leverage the most favorable exchange rates.

•   You may be able to earn interest on your balances.

•   If the institution where your account is has FDIC insurance, you are covered up to $250,000 per depositor, per insured bank, for each account ownership category, in the rare event of a bank failure.

•   Multicurrency bank accounts can be used for personal or business purposes.

•   Sending payments or money in foreign currencies can be more convenient.

A foreign currency account could also come in handy if you travel. You can use a linked debit card to make purchases or withdraw cash in each country you visit, without having to get traveler’s checks from your bank.

Cons of Foreign Currency Account

While a multicurrency bank account might be appropriate in some situations, there are a few drawbacks to consider. Specifically:

•   Your financial institution might charge you account and minimum balance fees the same as you might pay for any other bank account.

•   Interest rates and annual percentage yields (APYs) may be low.

•   Initial deposit requirements or minimum balance requirements may be on the higher end.

•   Changing currency rates can affect the value of the money in your account.

Another drawback of foreign currency accounts is that not all banks offer them. And some banks may only offer these accounts for businesses, not individuals.

Multicurrency Account Fees

Foreign currency accounts can have fees, just as any other type of bank account may. Depending on the bank, some of the fees you might pay include:

•   Monthly maintenance fees

•   Excess withdrawal fees (for savings accounts)

•   Overdraft or non-sufficient funds (NSF) fees

•   Foreign transaction fees

•   Currency conversion fees

When comparing multicurrency bank accounts, take time to review the details thoroughly. It’s important to understand which currencies you can hold, which fees you might pay, and whether you’re required to maintain a minimum balance in the account.

Once you’ve scoped those details out, see if the benefits of this kind of account will outweigh the fees. It could wind up being a good way to simplify your banking life if your financial life requires frequent foreign transactions.

The Takeaway

Foreign currency accounts can simplify money management if you regularly send or receive money in currencies other than U.S. dollars. Opening one of these multicurrency bank accounts is not that different from opening any other type of account. It can be a major convenience if your daily life involves receiving and/or sending funds overseas — and a good way to take control of your international financial life.

FAQ

What is the purpose of a multicurrency account?

A multicurrency or foreign currency bank account allows you to receive, hold, and send funds in more than one currency. This can be convenient for businesses and individuals who frequently make international transactions and would like to have an account that recognizes multiple currencies.

What types of banks offer multicurrency accounts?

Many but not all banks offer multicurrency accounts. Some of the U.S. banks that offer foreign currency accounts at press time include Citi and HSBC. Some financial technology companies like Wise and Revolut offer digital multicurrency accounts. For businesses, Wells Fargo and PNC offer foreign currency accounts. You can contact your current bank to find out if multicurrency accounts are available.

How does a multicurrency account work?

A multicurrency bank account allows you to deposit, keep, and send funds in more than one currency. You can decide if you keep the funds in different currencies or convert them. This kind of account can help you conduct international transactions without necessarily paying all the usual fees involved.

About the author

Rebecca Lake

Rebecca Lake has been a finance writer for nearly a decade, specializing in personal finance, investing, and small business. She is a contributor at Forbes Advisor, SmartAsset, Investopedia, The Balance, MyBankTracker, MoneyRates and CreditCards.com. Read full bio.

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

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

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

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

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

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/.
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.

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