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A credit card sign-up bonus, aka a credit card welcome bonus, can come in the form of cash back, discounts on purchases, or other rewards, such as airline miles that you can put toward travel. These bonuses are a way for card companies and branded partners — such as airlines and other merchants — to incentivize you to sign up for a new card.

Sign-up bonuses can be a great way to get extra value out of a credit card in its first year. Just beware that there may be strings attached. Here’s a closer look at how sign-up bonuses work, their pros and cons, and how to make the most of them.

How Do Sign-Up Bonuses Work?

Rewards are offered through a variety of credit cards, including co-branded cards and even prepaid credit cards. In order to receive your credit card sign-up bonus you must open a new account. Then, depending on the reward you’re being offered, you’ll usually have to meet one of three criteria:

•   First, and most simply, you may receive your bonus after your application is approved or after your first purchase.

•   If your new card is from a branded retailer, you may need to make a purchase with them before you can earn your sign-up bonus.

•   Finally, you may have to spend a certain amount of money over a set period to trigger the bonus. For example, you may have to spend $500 on purchase within the first three months of account opening.

Sign-up bonuses vary by card, as will the amount you’ll have to spend and the timeframe within which you have to do it. You may have to spend thousands of dollars in a short period of time to earn your bonus on some cards, while other cards may have no spending requirement.

Earning Sign-Up Bonuses

Spending requirements to earn a sign-up bonus on a credit card can be high, ranging into the thousands of dollars. The amount usually must be charged to your card within a set period of time, often the first three months after opening your account.

Make sure you can afford to meet these spending requirements before you decide on a particular card. Even if you technically can afford to meet the requirement, avoid the temptation to overspend on things you don’t need just to earn rewards.

Also, it may take a month or two for your bonus cash or points to appear in your account. If you’re planning to use them for something specific, say to buy a plane ticket to a friend’s wedding, be sure to take this timeframe into account.

Recommended: What is a Charge Card

Types of Credit Card Bonuses

There are different credit card rewards, depending on the card company and on branded partnerships. An airline is much more likely to offer points toward a flight, while a big box store is more likely to offer you an in-store discount. Here’s a look at some of the most common bonus types.

Cash Back and Bonus Points

Perhaps the two most common sign-up bonuses are getting cash back with a credit card or rewards points that you can use toward booking a hotel room or buying an airline ticket. For example, you might earn 50,000 points after spending $4,000, or you might receive a cash credit after you make your first purchase.

You may receive the bonus all at once, or there may be a tiered system in place with different eligibility requirements you’ll need to meet to earn the full reward.

Purchase Discounts

Another common sign-up bonus is a discount on a current or future purchase. For example, a retailer might offer you 20% off your next purchase when you sign up for their in-store credit card. These cards are often co-branded with a major credit card issuer, and they may be offered by brick-and-mortar stores or online retailers.

Your reward may come in the form of an immediate discount when you’re approved for the card. You could also receive a coupon or discount code. Or you might get a credit when you make your first purchase with the retailer.

Additional Spending Rewards

In addition to rewarding you for spending in the months shortly after opening your account, your credit card company may offer rewards for spending throughout the first year.

Waived Annual Fee

Rewards cards can be a little bit tricky with their various requirements, and there can be credit card costs involved. Often, rewards cards charge an annual fee that helps to offset the cost of the rewards they provide. As part of the sign-up bonus, some rewards cards will waive the card’s annual fee for the first year.

Pros and Cons of Sign-up Bonus Credit Cards

When determining whether or not you want to open a credit card with a sign-up bonus, it’s important to consider both the pros and cons:

Making the Most Out of Your Credit Card Bonus

Before choosing a credit card with a sign-up bonus, consider these ways that you can take advantage of credit card bonuses.

Recommended: How to Avoid Interest On a Credit Card

Pick the Most Suitable Card

Reward cards often offer flashy bonuses that are real attention-grabbers — but make sure the card you choose has a bonus you’ll actually use. For example, sign up for a card with an airline you fly often or a retailer you frequent. Or, make sure that you’ll receive cash back rewards on purchases that you already make or will need to make in the future. It doesn’t make sense to sign up for a card that gives you a bonus you won’t actually use.

You also may want to consider applying for cards with a high spending requirement in the first three months when you’re planning to make a series of big purchases anyway. That way, you won’t be buying anything that you don’t need already, and you’ll be rewarded for the purchases you were going to make. For example, maybe your car is scheduled for major maintenance or repairs, or perhaps you’re planning a wedding and will put some of the costs on your credit card.

It’s always worth considering how signing up for a new card will affect your credit. Applying for a new card will trigger what’s known as a “hard inquiry,” which can bring down your credit score temporarily. The damage to your credit may not be worth it, especially if you’re unlikely to use the bonus, you won’t really need the credit card later, or you’re planning to seek out other loans in the near future.

Look for Special Offers

From time to time, credit cards may offer special sign-up bonuses that are much bigger than usual. Keep an eye out for these, and make sure that you hit the application deadlines. These are usually limited-time offers, so be sure the offer is still valid before you sign up.

Ensure You’re Eligible for the Bonus

In some cases, you may not be eligible to sign up for a credit card and receive its bonus. For example, if you’ve had a specific card and canceled it in the past, you likely won’t be able to sign up for that card again and receive the bonus.

Before you apply, make sure you read the terms and conditions to understand your eligibility and to see if there’s any reason you might not receive your bonus if you sign up. Also, know that if you’ve recently opened several new credit cards, you may be declined automatically for a new bonus card.

Make Sure You Can Pay Down Your Debt

Before signing up for a bonus card, it’s crucial that you understand your ability to pay your bills on time. Bonus rewards cards often carry extremely high interest rates, meaning that any balance you carry from month to month can end up costing you a lot of money, quickly outweighing the rewards you earned initially.

Consider, too, that carrying a high credit card balance can have a negative impact on your credit score. Ideally, you should keep your credit card utilization ratio — calculated by dividing your total credit card balance by your total loan limit — below 30%. If you can, aim to keep your ratio at 10% to give you the best shot at maintaining a high credit score.

You’ll also want to be sure that if you pick up a rewards card, you’ll still be able to make on-time payments on all of your other obligations, as this is another crucial component of a healthy credit score.

Recommended: When Are Credit Card Payments Due

Redeeming Your Bonus Reward Points

Depending on your card, you may have a variety of options to redeem your rewards. For example, if you sign up for a card with a co-branded retailer, you may receive a coupon or rebate for a purchase at the store. Meanwhile, airline or hotel points may need to be redeemed by booking flights on certain airlines or rooms at certain hotel chains.
Cash back rewards could be received as a credit card refund by having your rewards applied to your credit card balance, transferred to a bank account, mailed to you as a check, or converted into rewards points.

Check your card’s terms and conditions to find out rules for redeeming your points so you can start to put them to use.

The Takeaway

Sign-up bonuses can offer credit card users a lot of value. However, it’s important that you do your research before jumping on an offer. Make sure the bonus is actually something you’ll use and that you have the means to meet eligibility requirements without damaging your overall financial health and credit score. Read all terms and conditions carefully before you sign up.

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

When do you get a credit card sign-up bonus?

When you sign up for a bonus rewards card, you’ll receive your bonus when you meet the card’s eligibility requirements. This could mean simply making a purchase, or you may need to spend a certain amount over a set period of time. The card could also require you to spend money with a particular merchant.

Are sign-up bonuses taxable on credit cards?

The bonus rewards that you receive are not taxable. They’re considered a rebate as opposed to taxable income. That simplifies things come tax time, when you will not have to claim your bonus as income.

Can you open multiple cards to get more sign-up bonuses?

Technically, you can open multiple cards to receive more signing bonuses, but there are limitations. You won’t be able to open the same card multiple times, though you may be able to open a number of different cards. However, you eventually may get automatically declined if a card company sees that you’ve opened several recent accounts. Opening several accounts also may not be a good idea, as hard inquiries when you apply for credit have a negative impact on your credit score.

Photo credit: iStock/nuchao

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.

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

SOCC-Q224-1908519-V1

It’s never a good feeling to look at your credit card statement and wonder, “What is this charge on my credit card?” When it comes to fraudulent credit card charges, your bank has often got your back. They have methods for spotting activity that isn’t normal, and they’ll usually alert you when a charge seems suspicious.

That said, your bank might not catch everything, and there may be a charge that’s valid but the amount is incorrect. So it’s important that you, too, keep an eye on your credit card statement to catch these errors and report anything that’s amiss immediately.

Here’s what to watch out for and tips for handling a dispute.

What Are Fraudulent Credit Card Charges?

Credit card fraud can happen if someone steals your card or the information on your card, or hacks into your account. Someone could do so by stealing your physical card, skimming your card information at a credit card terminal, through phishing scams via text or email, or by stealing your mail. Fraudsters then use the information they’ve stolen to make unauthorized purchases on your credit card.

Most cards offer zero liability on fraudulent charges, meaning you won’t be responsible for covering charges you didn’t authorize. This is an important feature of how credit cards work. However, it’s important that you catch fraudulent charges early so you can report them quickly and minimize your liability.

Recommended: Tips for Using a Credit Card Responsibly

Detecting Unauthorized Credit Card Charges Early

The key to spotting unauthorized charges on your credit card is remaining vigilant and always checking your credit card statement each month. When you receive your statement, follow these steps:

•   Review statements immediately. Avoid letting a few months of credit card statements accumulate before checking them. Whether you look them over online or via hard copy, do so ASAP so you can catch errors and head off fraud as quickly as possible. Going through your statements regularly will also offer a clearer understanding of how credit card payments work.

•   Check every purchase. Fraudsters know that small unauthorized credit card charges are less likely to get flagged. Go down the list of purchases you’ve made on your card over the last month and make sure you recognize the merchant and can match the sale with an item or service you bought.

•   Keep receipts. Hang on to receipts from credit card purchases so you can match them up to the items in your statement. This can also help if you’re unsure of how to identify a credit card transaction.

Fraudulent Credit Card Charges vs Billing Errors

Fraudulent charges are a result of theft. However, sometimes you may be charged for something that was due to a billing error. For example, perhaps you were charged twice for an item, or you were charged for goods or services that you never received.

Other billing errors could include:

•   Unauthorized charges, for which federal law limits your liability to $50

•   Charges that list the wrong date or amount

•   Errors in math

•   Charges for goods or services that you didn’t accept or weren’t delivered as agreed

•   Failure to post payments or credits, such as after you’ve returned an item.

You can correct these errors using procedures laid out by the Fair Credit Billing Act (FCBA). If a charge is found to be made in error, your credit card company will carry out a credit card chargeback, reversing the charges.

Reporting Unauthorized Credit Card Charges

Procedures for reporting fraud and billing errors are slightly different.

If you suspect fraud, you’ll take the following steps:

•   Contact your card issuer immediately. Tell them you suspect that you’ve been a victim of fraud. Your issuer can then investigate the charge.

•   Ask for your accounts to be suspended or closed, and ask to be issued a new card. Change passwords and personal identification numbers (PINs) on your accounts.

•   File an identity theft report with the Federal Trade Commission (FTC). You can do so at Identitytheft.gov .

•   Contact the three credit reporting bureaus, Equifax^®, Experian^®, and TransUnion^®. Confirm your identity with them and check your credit reports for any other fraudulent activities. Consider having a fraud alert connected to your accounts.

If you’re disputing a billing error, first call your credit card company and alert them to the error. The credit card company will investigate. If they find there was an error, your account will be corrected, and you will not pay credit card purchase interest charges on the amount for which you were billed.

In addition, send your credit card company written notification of an error. Use FBCA procedures to dispute the credit card charges, including the following steps:

•   Contact the creditor at the address they provide for billing inquiries. This address may be different from the one to which you send payments. Include your name, address, and account number, as well as a description of the billing error you’ve spotted. You may be able to proceed online or by phone as well as through the mail. The FTC provides a sample letter that you can use as part of the process.

•   Include copies of receipts and other supporting documents.

•   Be sure to mail your letter within 60 days of the first bill you received that contained the error.

•   Send the letter by certified mail and ask for a receipt so you can be sure your creditor received it.

•   Keep a copy of the dispute letter.

How to Read Your Credit Card Statement

It’s important to get familiar with how to read your credit card statement. The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) requires that each of your credit card statements includes certain pieces of information.

•   First, there should be a section that includes your account information. This is where you’ll find your name, account number, and the date of the billing cycle.

•   Next, the account summary is an overview of transaction information on your card. This section will include the payment due date, any payments or credits that have been applied to the account, any fees that have been charged to you, and the total amount of your account balance.

•   Following this summary is a detailed account of the purchases you’ve made over the billing period. Each line item will include the vendor name, the date the purchase was made, the category (such as “groceries”), and the amount that was charged to your card. Go through this section carefully as you look for fraudulent charges or charges in error. This is how to find who charged your credit card.

•   Your statement will include other sections that detail payment information, interest or credit card finance charges, rewards, and account fine print.

Credit Card Security and Fraud Protection

When you apply for a credit card, carefully look at the security measures the card issuer has in place. Credit cards, such as the credit card offered by SoFi, can have a variety of measures to keep your information safe and protected from fraud.

Fraud protection limits your responsibility and liability for fraudulent charges. Many banks offer $0 liability. The FCBA limits liability to $50 for card-present fraudulent charges, and $0 if the card is not present, such as for online charges made with stolen credit card information.

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

The Takeaway

Fraudulent charges or billing errors can be an unfortunate part of having a credit card. Your bank may catch them, but it’s also important to be proactive and keep an eye out for fraud and errors on your credit card statement. Bringing them to the attention of your credit card company will help you get the issue sorted faster and head off potential future fraud.

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

How do I file a fraudulent charge claim with my credit card company?

If you spot a fraudulent charge on your credit card statement, call your card company immediately and ask them to investigate. They can guide you through the process of disputing the charge.

How do I find out where a charge came from?

You can see where a charge was made in the detailed purchase information provided on your credit card statement.

How do I look up a charge from my credit card statement?

If you’re unsure about a charge on your credit card statement, call your credit card company, which may be able to do a credit card charge lookup by the merchant.

Photo credit: iStock/Pekic

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOCC-Q224-1908497-V1

A lifeline checking account is a basic bank account that features minimal fees and other cost-cutting elements, making it more accessible to first-time bank-account holders and those at lower income levels. These accounts can be, as the name indicates, a lifeline for those who are seeking firmer financial footing.

For example, a lifeline checking account may have no monthly maintenance fees, minimum balance requirements, or minimum opening-deposit requirements. Or they may have very low fees and requirements However, there are sometimes trade-offs to these sorts of accounts.

What Is a Lifeline Account?

A lifeline checking account is a bank account designed specifically for underbanked and low-income customers that often features no account fees. These accounts typically also offer additional consumer protections such as free overdraft coverage.

Having access to a bank account is an important step toward financial wellness. Without one, safely saving significant amounts of money and paying bills can become much more difficult. Recognizing this, some jurisdictions have laws in place requiring banks to offer low-cost accounts to consumers. For example, New York passed a law in 1994 requiring banks in the state to offer lifeline checking accounts to any customers who might want them.

Furthermore, the increase in digital-first and online banks has increased the public’s access to low-cost banking products. Online banks don’t have the same kind of costly overhead as banks that operate brick-and-mortar branches. For that reason, they’re typically more easily able to offer accounts with minimal fees, which may result in more affordable, accessible banking for more customers.

Recommended: How to Avoid Monthly Account Fees

How Do Lifeline Accounts Work?

Lifeline checking accounts work a lot like any checking account does. You open the account, deposit money into it, and then use those funds to pay bills and make day-to-day purchases. You can do so by using bank transfers, a debit card, or cash you withdraw from the bank or an ATM.

There is a main difference between lifeline and other accounts. Many typical checking accounts assess monthly maintenance fees or require a certain minimum balance to be maintained. These requirements may be waived in a lifeline account (or, if they’re still in place, the dollar amounts will be low).

Of course, bank accounts with higher fee structures do sometimes come with additional benefits that may make the fees worthwhile to certain customers. For example, with a lifeline checking account, you may not be able to use paper checks — or head into a physical bank to interact with a live teller. Still, for those whose choices are limited by financial circumstances, lifeline checking accounts can be… well, a lifeline. They’re also useful for anybody who’s hoping to minimize the amount they spend on banking.

Examples of Lifeline Checking Accounts

Lifeline checking accounts, or low-cost accounts that serve as lifeline checking accounts, are offered by many different financial institutions, including big box banks, regional credit unions, and online banks.

For example, as of early June 2024, BankFinancial offered a Lifeline Checking account that features overdraft protection services, free in-network ATM transactions, and a $0 minimum daily balance requirement. It charged a $5 monthly service charge — which is still pretty minimal in the world of brick-and-mortar banks. Wells Fargo’s lowest-cost checking account also assessed a $5 monthly service fee, though this cost is waived for account-holders between ages 13 and 24. The minimum opening deposit was $25, and there was no required minimum balance.

Pros and Cons of a Lifeline Checking Account

Like any other financial product there are both pros and cons to keep in mind when you’re considering a lifeline checking account.

Pros:

•   Low costs make these accounts more accessible to a wide range of consumers

•   Lifeline checking accounts can help any money-savvy account holder save more of their money

Cons:

•   Lifeline checking accounts may come without features considered “basic” by many, such as paper checks

•   Many lifeline accounts are offered by online banks, which don’t give account holders the option to bank in person

Being able to pay lower fees and keep more of your cash is a tremendous help to those who are just starting their banking lives and trying to manage their money or individuals who are earning a lower income. Lifeline accounts can play an important role when a person has limited cash.

But only you can determine what kind of banking products are right for you. To help you decide, here’s how the benefits and downsides of lifeline accounts stack up side by side.

How Can I Qualify for a Lifeline Checking Account?

If you’re ready to open a low or no fee bank account, here’s some good news: In general, qualifying for a lifeline checking account is pretty easy. You’ll just need to provide your proof of residence and other identifying and demographic information, and provide whatever minimum opening deposit is required, if there is one.

That said, some banks will look into your banking background before allowing you to open an account. For instance, they may use ChexSystems, which is a reporting agency that consolidates information about consumers’ banking behaviors. It’s kind of like a credit report, but for your interactions with banks. A poor ChexSystems record can make it impossible to qualify even for some low-cost accounts. However, there are still second-chance checking accounts out there that can provide the banking products you need while your ChexSystem record improves.

What Can I Do If I Cannot Find a Lifeline Account?

Fortunately, with the proliferation of online banking, lifeline-like checking accounts are pretty much everywhere — it’s simple to search for them online. It’s always a good idea to verify the validity of any online bank accounts you find, however, and to ensure that the accounts are FDIC-insured. That means you don’t have to worry about losing your hard-earned money if the bank goes out of business or loses revenue.

The Takeaway

Lifeline checking accounts are low-cost accounts that make it possible for people with lower incomes or those who are new account seekers to get the checking capabilities they need. These accounts often feature no or low fees and minimal beginning balances. The downside is that they may skip some banking basics, like paper checks. Fortunately, in our increasingly online world, this isn’t a deal-breaker. It may well be a trade-off that’s worthwhile to secure the convenience of a checking account.

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

Are there benefits for lifeline checking accounts?

Along with their low fees, some lifeline checking accounts do come with extra benefits such as free overdraft protection or ATM fee waivers.

Can I open a checking account with no money?

Yes! Although it’s not true of all lifeline checking accounts, some come with a $0 opening deposit minimum, which means you can start the account even if you don’t have any cash on hand right now.

Which banks are best for low income?

Whether your income is low or high, looking for a minimal fee structure is the best way to save money — in banking and beyond. Typically, online banks may offer lower fees and higher interest rates than bricks-and-mortar financial institutions.

Photo credit: iStock/gorodenkoff

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.

SOBK-Q224-1902600-V1

A deposit and a withdrawal are both common banking transactions, but the way they function is completely different. A deposit is money put into a bank account and held there until you need it. A withdrawal is money taken out of your account.

But that’s not the full story about deposits vs. withdrawals. You have many choices when it comes to getting money into your account and taking it out. Knowing the different methods is important and could even help you manage your finances.

What Is a Deposit?

In banking, a deposit generally means you put your money into a bank account. Deposits add to your funds in the account, and you can use that money to pay your bills, put it toward something like a vacation, or you can keep it there where it may grow over time.

How a Deposit Works

A deposit involves adding cash or check(s) to your bank account. You can do this in person at a bricks-and-mortar branch of your bank, at an ATM in your bank’s network or, in the case of checks, by using a bank’s mobile app.

You can also receive a deposit by electronic transfer from one bank account to another account. For example, if you are paid by direct deposit, the money moves from your employer directly into your account. Or you could receive a government benefit such as Social Security this way. In addition, you might receive funds from someone else, like a friend, via a mobile payment service like Venmo, and you could then move the money into your checking or savings account.

Both bricks-and-mortar and online banks typically offer different kinds of deposit accounts. You could consider a high-yield checking or savings account at a traditional or online bank, or, if you don’t need to access the money often, you may want to look into a money market account or a certificate of deposit (CD).

Types of Deposits

There are a number of methods you can use to put money into your bank account. Here are some of the ways to make a deposit:

•   Cash deposit at one of your bank’s ATMs or branches

•   Check deposit at one of your bank’s ATMs or branches

•   Check deposit electronically via your bank’s mobile phone app

•   Payroll direct deposit

•   Electronic funds transfer from a linked savings or checking account or via mobile payment services.

What Is a Withdrawal?

A withdrawal is when you take money out of your account. You can do that several ways, including using your debit card at an ATM, requesting the money in person from a bank teller, writing a check, scheduling an electronic bill payment, having the money transferred via a payment app, or wiring the money to someone.

Some of these methods of withdrawing funds can involve fees. If you use an out-of-network ATM, for instance, you can get hit with a charge. And wiring money may come with a fee. Check with your bank to find out.

How a Withdrawal Works

The difference between a withdrawal and deposit is that withdrawals take money out of your bank account. You might withdraw cash from your bank account to put in your niece’s birthday card, write a check (or authorize an electronic payment) to pay the electric bill, or use a mobile payment service to pay a friend back.

Any funds removed count as a withdrawal. Depending on your bank’s checking account terms, you may have limited or unlimited withdrawals. Often, there are savings account withdrawal limits. In the past, the number was typically six per month, though these restrictions have typically been eased in recent years.

Types of Withdrawals

Just like there are different types of deposits there are also different methods of withdrawing funds. Here’s how to withdraw funds from your bank account when you need them.

•   Cash withdrawal at ATM with a bank or prepaid debit card (though there will likely be ATM limits to the amount you may withdraw)

•   Cash withdrawal in person at one of your bank’s branches

•   Checks written from your account

•   Cardless withdrawals of cash using phone app at ATMs in your bank network

•   Bank-issued cashier’s check in person or online

•   Cashing a certificate of deposit (CD) at bank (if this is done before the maturity date, you may owe an early withdrawal fee)

•   Funds transfer from a brokerage account

•   Electronic funds transfer from a linked savings or checking account or via mobile payment P2P services

•   Electronic bill pay (recurring or not)

Similarities and Differences Between Deposits and Withdrawals

Deposits and withdrawals are two of the most common banking terms and transactions. Here are the differences and similarities you should know.

How Deposits and Withdrawals Are Similar

Here’s what these two kinds of banking transactions have in common.

•   Both can be done in person at ATMs or branches in your bank’s network (except for check withdrawals, which can only be completed in person or online).

•   Both can involve electronic funds transfer from a linked bricks-and-mortar, an online savings or checking account, or via mobile payment services.

How Deposits and Withdrawals Are Different

These are some of the key ways in which deposits and withdrawals are different.

•   A withdrawal leaves you with less money in the bank while a deposit puts more money in your bank account.

•   A withdrawal will immediately be reflected in your account balance, while a deposit may take longer to show up, until the funds clear.

•   Cash deposits generally have to be made at your bank or bank’s branded ATM network locations, while cash withdrawals can be made at any ATM. (But beware, if the ATM is out of your bank’s network, you could be charged an ATM fee by both the ATM owner as well as your bank.)

•   Check deposits often have to be made at your bank or bank’s branded ATM network locations, or via a bank’s mobile phone app. (Banks that allow you to make deposits at out-of-network ATMs may charge you a fee, plus there may be an ATM fee as well.)

•   Check withdrawals via cashier’s checks, on the other hand, are likely only available in person at one of the branches of your bank. Alternatively, you could request such a withdrawal online from your brick-and-mortar or online bank or credit union.

The Takeaway

While a deposit adds funds to your bank account and boosts your balance, a withdrawal takes money away, subtracting an amount from the funds you have on balance. There are many ways to conduct each of these transactions. You can do your banking in person or use an array of digital tools to send or receive money. And if you’re looking to set up a bank account, there are many different kinds of accounts to choose from.

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 a cash withdrawal?

A cash withdrawal involves taking money out of a bank account in the form of cash. This can be done at an ATM or a physical location of your bank.

What is a cash deposit?

A cash deposit is money that you add to your bank account. It could come via an electronic transfer, an ATM deposit, or currency that you hand off to a bank teller.

What is the difference between a deposit and a withdrawal?

The difference between a deposit and a withdrawal is that a deposit adds funds to your bank account while a deposit removes money from the account.

Photo credit: iStock/Eva-Katalin

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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The annual percentage rate (APR) of your credit card has a big impact on how much it costs you to carry a credit card balance. In some cases — if you have a variable interest rate or are late making payments, for example — your APR can change, causing your credit card interest rate to increase or decrease.

Understanding when and how these changes might occur can help you choose the right credit card and control how much you spend on interest. Here’s a look at what can impact your credit card’s APR.

What Is Credit Card APR?

A credit card’s APR, or annual percentage rate, is the interest rate you’ll pay on the money you borrow, stated as an annual rate. Your credit card APR will tell you how much a credit card costs you in terms of interest on the balance you carry. However, it won’t tell you anything about other fees and other credit card charges you may incur.

Credit cards will typically have a separate APR for credit card purchase interest charges, balance transfers, and cash advances. The APR you receive when you open a credit card will depend on a benchmark interest rate as well as factors like your creditworthiness, as determined by your credit score.

However, the definition of APR will vary depending on what type of loan product you’re talking about. In contrast to credit cards, the APR on other types of loans is determined by interest rates, the length of the loan, and lender fees.

Recommended: What Is a Charge Card

What Can Cause Your Credit Card’s APR to Increase?

There are a number of reasons that credit card APR can increase. Your credit card company can increase your APR on new transactions as long as they give you 45 days’ notice. The company is not allowed to increase your APR during the first year after your account is opened.

Further, there are only certain cases in which your card company can raise rate on existing balances, including when:

•   An introductory rate expires

•   You have a variable rate card (most credit cards have a variable rate) and the benchmark interest rate rises

•   You’re 60 days late making your minimum payment

•   You have completed or don’t comply with the terms of a workout agreement, which has renegotiated the terms of your agreement for a period of time

No matter how the increase occurs, it’s important to realize that your credit card payments increase when your interest rate increases.

Prime Rate Rises

Your credit card will have either a fixed or variable credit card interest rate. If you have a credit card with a variable rate, that rate is largely based on a benchmark interest rate. The benchmark that many credit card companies use is what’s known as the prime rate. And when the prime rate rises, your APR will rise, too.

The prime rate could rise due to a change in the federal funds rate, which is the Federal Reserve’s recommendation for what banks should be charging when they make overnight loans to help each other meet federal reserve requirements.

One rule of thumb states that the prime rate is equal to the federal funds rate plus three.

Late Payments

Your credit card interest rate may also increase if you’re 60 or more days behind on paying your credit card minimum. This is what’s known as a penalty APR. Not only may this rate apply to your overdue balance, it may also raise interest payments on future purchases.

End of Introductory APR Offer

Some cards offer 0% APR on purchases or balance transfers for an introductory period. During that time, you won’t pay any interest on balances that you carry from month to month. However, once the introductory period is over, your APR will jump to the regular purchase interest rate, which will apply to any remaining balance on your account.

High Credit Card Balance

If you carry a growing credit card balance from month to month, or you’ve hit your credit limit and are unable to make payments, your card company may decide to raise your APR on new transactions.

Failure to Meet the Terms of a Workout Agreement

If you had trouble paying off your credit card debt in the past, you may have renegotiated the terms of your agreement, which is known as a workout agreement. When you successfully complete it, your card company may return your APR to what it was prior to the arrangement, which may have temporarily reduced your interest rate. On the other hand, if you fail to comply with the agreement, your card company may also decide to raise rates.

Recent Cash Advance

As mentioned above, credit card companies often typically set different APRs for purchases, balance transfers, and cash advances. If you’ve recently taken out a cash advance, you may have triggered the cash advance APR. This APR might be higher than the APR offered to you for regular credit card charges.

Recommended: What Is the Average Credit Card Limit?

What Can Cause Your APR to Decrease?

There aren’t as many triggers that will send your credit card APR lower, but here’s a couple to be aware of.

Prime Rate Falls

Once again, changes in the prime rate have a big impact on your APR. If the prime rate falls, your rate may also go down if you have a variable rate (as most credit cards do).

Negotiating for a Lower Rate

If you’d rather not sit around waiting for the prime rate to go down (or if it’s on an upward trajectory), one of the best ways to lower your credit card APR is by simply asking. Negotiating for lower rates and fees is one of the important credit card rules to know. (You can also negotiate on other things, such as credit card spending limits.)

You can improve your odds in this negotiation by arming yourself with some key information. First, get familiar with your credit score and make sure that it’s as high as possible. You may build your score by paying down debts and making sure to correct any errors on your credit report.

Also make sure to highlight your history with the company. Credit cards want to hold on to long-standing customers with a good history of paying their bills on time.

If your credit card company rejects your first attempt at negotiation, don’t be afraid to ask again or to speak to a manager who may have more power to make decisions about your account.

The Takeaway

Your APR can have a huge impact on how much it will cost you to carry credit card debt. As you choose a credit card, it’s important to shop around for the card that offers as low as possible an interest rate.

Still, your APR may rise at some point — especially if the prime rate increases or a low introductory offer expires. However, that doesn’t mean you’re stuck with the new rate. You can always try to negotiate with your card company to see if they can lower your rate.

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

How can I lower my APR on my credit card?

You can try to lower the APR on your credit card by negotiating with your lender. Increase your odds of success by ensuring you have a history of paying your bills on time and a strong credit score.

How does the prime rate affect my credit card APR?

If you have a variable APR, when the prime rate rises, so too will your APR. When the prime rate falls, your APR falls as well.

Can the APR on a credit card change?

Yes, the APR on a credit card can change for a variety of reasons. This can include a shift in the prime rate, the expiration of a low introductory offer, or being 60 days late on paying your credit card minimum.

Photo credit: iStock/tolgart

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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