Many experts recommend having an emergency savings fund. The money is intended to cover bills or living expenses due to a job loss, medical issue, or unexpected repairs. But finding money to put aside on a regular basis can be challenging. The 52-week Savings Challenge will get you there in the simplest way possible.
Learn how this savings challenge works and who will benefit the most from it.
What Is the 52-Week Money Challenge?
The 52-week Savings Challenge is a straightforward way to set aside a little money every week. The plan can help you save more than you might expect over the course of a year. The goal is to have a healthy emergency fund that you can dip into to cover unexpected expenses — like car repairs or a trip to the doctor — without blowing your monthly budget.
Although some people like to start these types of challenges on Jan. 1, you can start today, or the first week of next month, or anytime you like. The result will be the same.
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How Much You’ll Save After Completing the Challenge
Follow our basic guidelines, and you’ll save $1,378 in a year’s time. If you deposit the money in a high-interest savings account, interest will accumulate, increasing the amount you’ve saved.
How the 52-Week Money Challenge Works
The challenge’s structure is simple. In week one, put $1 in savings. Week two, $2. Week three, $3, and so forth for 52 weeks in a row. You can tuck the money into an envelope or put it in a piggy bank — but only if you won’t be tempted to withdraw cash before the challenge ends.
Temptation and interest are two good reasons to deposit the money into a bank account. Once a week, you could transfer the money from a checking account to a savings account that you designated for this challenge.
52-Week Savings Schedule
Week Number
Weekly Deposit
Total Saved
1
$1
$1
2
$2
$3
3
$3
$6
4
$4
$10
5
$5
$15
6
$6
$21
7
$7
$28
8
$8
$36
9
$9
$45
10
$10
$55
11
$11
$66
12
$12
$78
13
$13
$91
14
$14
$105
15
$15
$120
16
$16
$136
17
$17
$153
18
$18
$171
19
$19
$190
20
$20
$210
21
$21
$231
22
$22
$253
23
$23
$276
24
$24
$300
25
$25
$325
26
$26
$351
27
$27
$378
28
$28
$406
29
$29
$435
30
$30
$465
31
$31
$496
32
$32
$528
33
$33
$561
34
$34
$595
35
$35
$630
36
$36
$666
37
$37
$703
38
$38
$741
39
$39
$780
40
$40
$820
41
$41
$861
42
$42
$903
43
$43
$946
44
$44
$990
45
$45
$1,035
46
$46
$1,081
47
$47
$1,128
48
$48
$1,176
49
$49
$1,225
50
$50
$1,275
51
$51
$1,326
52
$52
$1,378
Enhancing the Challenge
Perhaps you’re looking ahead to Christmas or another time of year when you know that money will be especially tight. You can decide to pay ahead so that, if needed, you can skip saving during the weeks in December. That’s the beauty of this challenge: You can customize it to meet your needs.
When December rolls around, if you don’t have extra cash, no worries. You’ve already made those deposits (which are earning interest). If you can keep depositing money throughout December, do so, and you’ll reap even more benefits at the end of 52 weeks.
Here’s another possibility. As you start to save money in this way, you might find that you can save even more. If so, up the ante, perhaps by doubling the amount you’ll deposit each week, so that you can save money fast.
Pros and Cons of the 52-Week Money Challenge
First, the benefits:
• You’ll be saving money at a time when so many people live paycheck to paycheck. That, all by itself, is a good thing.
• You can gain confidence in your ability to budget, and to “pay yourself first.” For extra help, use a budget planner app to make planning easy.
• As the dollars add up, use the momentum to continue the challenge for a second (third, fourth…) year.
• Let this challenge motivate you to focus more on your financial goals — and improve your financial situation in new ways. Maybe you want to save money on food or pay off student loans, for example.
• You can participate in this challenge with friends and family members, which can motivate you to keep going.
• As your savings muscles get stronger, you can create a plan to save for other goals: a new car, for example, or a trip with your family.
Next, the challenges:
• If the money is too easy to access, it can be tempting to use the funds before the year is up. To prevent this from happening, it may help to put the money in a bank account where you don’t have a debit card.
• Because the deposit amounts are relatively small, it can be easy to forget to make your deposit or lose track of which week you’re on. Set reminders in your calendar, or use a buddy system where you and a friend remind each other.
• If you start this challenge at the beginning of the year, the biggest deposits will be scheduled for the holiday season when you may have more expenses. In that case, start with $52 on Jan. 1, when the challenge is fresh and new, and then deposit a dollar less each week. This has the added benefit of getting more money into the account more quickly, which gives you more motivation early on. Plus, you’ll benefit from more interest more quickly.
• If you find that you can’t make the deposit during one week, don’t get too down about it. This is a marathon, not a sprint. You can catch up.
Who the 52-Week Money Challenge Is Best For
First, if you’re enthusiastic about the idea, then it’s definitely for you. This idea can be adjusted for all ages, too. If, for example, you have young children and want to teach them good saving habits, start them with cents instead of dollars.
If you’d like to turn the savings process into a game, then this challenge is tailor made. You can, for example, write each of the dollar amounts, $1-$52 on a large piece of paper and then cut them out — one dollar amount per square.
Put the slips of paper in a hat or box, and select a square each week. That’s the amount you’ll save this week. If you need more advance notice of your savings target, pull the slips out of the container at the beginning of the challenge, one by one, and mark them on a calendar. The first slip drawn goes on week one, the second on week two and so forth.
Search for “52-week savings challenge printable,” and you’ll find plenty of other ways to keep track of and enjoy participating in the challenge.
The 52-Week Savings Challenge is a straightforward way of saving a relatively small amount of money each week to build up an emergency savings fund. In Week One, you save $1. Week Two, save $2. The most you’ll have to save in a week is $52, at the end of the challenge. Simple as it is, it’s also quite flexible and easy to customize in whatever way will work best for you.
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FAQ
Is the 52-week savings challenge worth it?
If you stick with the plan for a year, you’ll save $1,378 — plus interest if you deposit the funds into an interest-bearing account. This challenge can help you strengthen your savings skills and serve as a springboard for accomplishing other financial goals.
What is the $10,000 challenge?
This challenge is structured in the same way as the 52-week one. In week one, though, you’ll start with $125. Each week, you’ll add another $25 to the amount you save. The result: $10,000 plus any interest earned.
What is the no-spend challenge?
In this challenge, you’ll commit to spend money only on essentials, such as housing, gas, groceries, and utilities. You can set a timeframe for this challenge to build up your savings account. And you can customize the rules however you like — perhaps limiting the challenge to no-spend weekends.
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Salary negotiations can be one of the most stressful parts of the hiring process. You don’t want to offend your new employer but you don’t want to get shortchanged either. Making an appropriate counter offer requires a little skill and finesse to communicate your salary needs in a professional way.
That’s where knowing how to write a salary counter offer email comes in. A good counter offer email can help you build a stronger case for why you deserve a higher salary.
• When countering a salary offer via email, be professional and polite.
• Express gratitude for the offer and highlight your qualifications and value.
• Provide a specific counter offer with a reasonable salary range based on research and market value.
• Justify your counter offer by emphasizing your skills, experience, and contributions.
• Close the email by expressing enthusiasm for the opportunity and willingness to negotiate.
What Is a Counter Offer?
A counter offer is your response to the hiring company’s original salary offer. When you make a counter offer, you’re asking the company to reconsider its initial offer and bump the number. For example, if a company offers you a starting salary of $80,000, you might counter that with $85,000 or $90,000.
Making a counter offer is not uncommon, and some companies expect new hires to do a little bargaining for higher pay. There’s no guarantee that a counter offer will be accepted, but it’s still worth making one if you believe that you can get a better deal.
Writing a counter offer email can be a great way to communicate what you’re hoping to get. If you’re getting hired at your first job, you might not know how to write a counter offer salary email. The good news is that it’s not as complicated as you might think.
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When To Counter a Salary Offer
There are different reasons that a job candidate might decide to make a salary counter offer. Here are some of the most common scenarios when a counter offer can be appropriate:
• The company is offering a salary that’s below average for the industry.
• You believe that your skills and/or experience are sufficient to command a higher salary.
• The salary isn’t enough to meet your financial needs.
• You’ve received a higher offer from a competing company.
If you’re negotiating salary for your first job, it’s important to find out what is competitive pay for this type of job and for someone with your experience?
Entry level salaries are naturally lower than salaries for people with more experience or education. That doesn’t mean, however, that you should automatically accept a lower salary for an entry level position if similar companies are paying more.
Researching pay ranges for the type of job you’re accepting can help you determine the high and low figures for a salary negotiation. It may also be helpful to know what trades make the most money and how much people earn at different levels within that trade or sector.
There’s some groundwork that goes into negotiating higher pay, either as a new hire or an employee seeking a raise. Here are some of the most important things to consider when asking for more pay:
• Research average salaries across your industry for employees with skills or experience equivalent to yours
• Know what you bring to the table, and be prepared to back that up with examples
• Be confident in your approach
• Be realistic and understand what the company can reasonably afford to offer you
Making your request for a salary increase in writing is also important, as it gives you an opportunity to outline in detail your reasoning for a pay boost. That’s where knowing how to write counter offer salary email messages comes in handy.
Should You Negotiate Your Job Offer (Even If It’s Already Pretty Good?)
Negotiating salary or other benefits isn’t something you necessarily have to do. And it’s possible that you might feel a little awkward asking your new employer for more money right off the bat. But it may still be worth negotiating certain aspects of your pay or benefits if you think there’s some wiggle room.
For example, you might be willing to accept a lower offer in exchange for stock if you think the company’s value is only going to rise in the future. One of the advantages of buying company stock through your employer is that you may be able to get it at a discounted price.
Tuition repayment assistance is something else that may be worth negotiating if you’re starting your career with student loans in tow. Employers are increasingly offering help with student loan debt and tuition to attract and retain talented employees. That type of benefit may be well worth negotiating if your company is open to the idea.
A signing bonus can also help balance out a lower salary. If the bonus is particularly lucrative, that might be a tempting reason to skip salary negotiations. Of course, you’ll want to brush up on the basics of how to ask for a signing bonus before you start negotiating.
Should You Negotiate Your Salary Through Email or a Phone Call?
If you’re interested in attempting to wrangle a higher salary from your employer, choose your approach carefully. Asking for a salary increase over the phone has its pros and cons. Your employer might feel like they’ve been put on the spot. Or you might be so nervous that you stumble over your words and don’t communicate your request clearly.
Putting your request in writing can take the pressure off both sides. It may be easier for you to explain why you feel you deserve a higher salary in writing and you can take your time with writing your email. You can expand on how you believe you’ll be able to help the company and why making a bigger investment in your salary is justified. You can also use your email to compare the salary offer to industry averages in order to underscore your case.
An email also gives your employer a chance to review your arguments and make a decision without feeling rushed. And should they decide to counter your counter offer, they may prefer sending it back to you in email format so there’s a paper trail of all salary discussions.
Steps To Making a Salary Counter Offer
Countering an employer’s salary offer can be nerve-racking, so it’s wise to have a plan or strategy going in. We’ve put together a helpful checklist for what to do when entering salary negotiations.
Research Comparable Salaries
As mentioned, it’s important to know what the average pay is for the industry and type of job you’re accepting. You don’t want to make a counteroffer that’s too far outside the norm of what employees with your same skill set and level of experience are making, as that can cause the employer to balk.
Wage data from the Bureau of Labor Statistics is a good place to start your research. You can also check salaries on sites like Payscale.com or Salary.com to see what kind of entry-level pay competitive companies are offering.
Review the Benefits Package
Before negotiating salary, it’s helpful to look at everything an employer is offering. That might include things like subsidized health insurance, a solid retirement plan, paid time off, stock options, tuition assistance, or a remote work option. Weighing the value of those benefits against salary can help you decide if it’s worth negotiating your pay.
If you’re offered great benefits but a lower salary, getting a second job can help bridge the gap. You may already have experience with making money on the side if you’ve ever held any jobs that pay for college, like babysitting, dog-walking, or doing gig work.
Know Your Value
A little self-awareness goes a long way. When you’re applying for your first job, you may not have a lot of professional experience under your belt yet. Instead, you can focus more on your college accomplishments, skills, personality traits, and other qualities that make you an attractive candidate for the job.
Take Time To Craft Your Counter Offer
The next step is the most important, because you need to make sure you’re wording your counter offer salary email carefully to convey what you want in a respectful way. You’ll want to start your email with a polite introduction and state your request briefly at the beginning. Then go into more detail explaining why you believe your counter offer is appropriate, and close the letter politely. It’s also important to verify to whom you should send the email to ensure it gets to the right place.
Negotiate With Your Employer
Once your employer receives your salary counter offer email, they’ll review it and then respond. The immediate response may be no, at which point you’ll have to decide if you want to continue attempting to negotiate. If the employer is willing to negotiate, you can then begin salary discussions to see if you can reach an agreement that suits you both. Being willing to compromise here is important, as coming on too strongly could cause the employer to rescind your offer and hire someone else.
Make Your Final Decisions
Once you’ve completed salary negotiations, your employer may give you a little more time to make up your mind. At this point, you’ll have to decide whether to accept their final salary offer or move on to another job. (By the way, hold onto the offer email — it can serve as proof of income for student loans and apartment applications.)
You may want to review your finances before deciding if the salary is acceptable. Using a free budget app can help you get a better sense of what kind of income you need to cover your spending.
If you decide to decline, you’ll want to do so politely. Burning bridges is a bad idea, in case you later apply for a position with the same company.
If you’ve never attempted to write a counter offer before, you may not know what your letter should include. To make things easier, here are guides for how to write a counter offer email for salary in different situations.
Requesting Additional Compensation (Sample Email)
Dear [Hiring Manager],
Thank you for extending an offer at [company name] for the position of [title]. This is a very exciting opportunity, and I’m confident that I’ll be able to make a positive contribution to the team.
I am hoping there is room to negotiate the base salary for the role. According to my research, the industry average for this position is [salary range] for someone with experience and skills comparable to mine. I believe that a salary closer to [$$$] would be more appropriate, given my background and the requirements the role entails.
Please advise as to whether you’re open to discussing this at your earliest convenience.
Thank you and I look forward to your response.
Sincerely,
[Your name]
Responding to a Lowball Offer (Sample Email)
Dear [Hiring Manager],
Thank you for extending an offer at [company name] for the position of [titel]. This is a very exciting opportunity, and I’m confident that I’ll be able to make a positive contribution to the team.
I am hoping there is room to negotiate the base salary for the role, as it seems to be lower than the average salary typically offered for this type of position. According to my research, the industry average for this position is [salary range] for someone with experience and skills comparable to mine. I believe that a salary closer to [$$$] would be more appropriate, given my background and the requirements the role entails.
Please advise as to whether you’re open to discussing this at your earliest convenience.
Thank you and I look forward to your response.
Sincerely,
[Your name]
Leveraging a Competitor Offer (Sample Email)
Dear [Hiring Manager],
Thank you for extending an offer at [company name] for the position of [title]. This is a very exciting opportunity, and I’m confident that I’ll be able to make a positive contribution to the team.
I am hoping there is room to negotiate the base salary for the role, as I’m currently considering an offer from another company. They’re offering a base salary of [$$$] along with a competitive benefits package that includes [list any benefits your recipient’s company does not offer].
I’m very interested in accepting the offer to work at [company name] if you’d be able to [match or increase] the base salary. Please advise as to whether you’re open to discussing this at your earliest convenience.
Thank you and I look forward to your response.
Sincerely,
[Your name]
Accepting the Offer (Sample Email)
Dear [Hiring Manager],
I’m pleased to accept the offer for the position of [position name] with [company name] that was extended on [date]. I’m looking forward to working with the team, and I appreciate the opportunity to negotiate a compensation and benefits package that is agreeable to all parties involved.
Per our negotiations, I understand that my starting salary will be [$$$] and that my benefits package will include [list of benefits]. I look forward to beginning work on [date].
Many thanks,
[Your name]
Rejecting the Offer (Sample Email)
Dear [Hiring Manager],
Thank you for extending an offering of employment at [company name]. I’ve enjoyed getting to know you throughout the hiring process, and I appreciate your willingness to consider my request for salary negotiation.
At this time, I must respectfully decline the position. I thank you again for the opportunity to discuss the job, and I regret that we were unable to reach a compromise suitable to all parties involved.
I do hope that you’ll find a suitable candidate for the position.
Kind regards,
[Your name]
The Takeaway
It’s natural to want to be paid what you’re worth, and negotiating your salary may be necessary to get what you want when accepting a job offer. You’ll want to research competitive salaries for your industry and type of job, and also consider the full benefits package. In email communications with your potential employer, it’s important to always be polite, professional, concise, and confident.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
See exactly how your money comes and goes at a glance.
FAQ
How do you politely negotiate salary via email?
Politely negotiating salary via email comes down to using respectful language and clearly explaining your needs and expectations. You want to state your case clearly and simply, then allow your employer time to form a response.
How do you politely counter a salary offer?
Countering a salary offer politely means making your case for better pay firmly but respectfully. You want to ensure that you’re directing your counter offer to the right person and explaining your reasoning behind for asking for higher pay.
How do you negotiate salary after receiving a job offer?
Once you receive a job offer, you can review the terms and draft a short email to ask if the employer is willing to consider salary negotiations. You then have to wait for their response to see if they’re open to negotiating. If they are, you can make your salary counter offer.
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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
By Timothy Moore |
money |
Comments Off on What Is Neobanking and How Does It Work?
Neobanks are online-only financial technology (“fintech”) companies that offer traditional banking services in a digital-first format. Though they are called neobanks, these fintechs are not actually banks. They are able to provide online banking services only by partnering with an established bank. Read on for a closer look at how neobanks work, how they make money, and the pros and cons of using a neobank vs. a traditional or online bank.
What Is a Neobank?
A neobank, also sometimes referred to as a “challenger bank,” is a fintech that offers traditional banking services through a digital platform, usually online and via a mobile app. Neobanks typically do not operate physical locations or branches, meaning they’re a digital-only experience. This lack of physical branches means their overhead is lower — which may allow them to offer higher annual percentage yields (APYs) on bank accounts and charge low (or no) banking fees.
The big caveat with neobanks: They aren’t banks at all. Instead, they offer access to banking services and products that are overseen by true, federally regulated and insured banking institutions.
Because of their digital-first strategy, neobanks are able to keep costs low and pass those savings on to consumers. Often, neobanks target their services at those who are frustrated with the traditional banking experience — those who may not qualify for a traditional credit card or loan, or who have been burned by a mountain of fees on past checking accounts.
Tech-savvy users are often drawn to the advanced apps and platforms of neobanks in the same way they’ve been drawn to other digital disruptors, like Uber and Lyft in the rideshare space and Airbnb and VRBO in the lodging space.
Here’s an important distinction to note when thinking about what a neobank is: Just because a bank operates online doesn’t mean it’s a neobank. There are many online banks that are licensed banks and directly offer FDIC insurance on deposit accounts. They typically provide an easy-to-use digital app and a full suite of banking services, and should not be considered neobanks.
But as we’ve pointed out, neobanks are not actually banks. So what does that mean?
• While you can access traditional banking features like checking accounts and high-yield savings accounts through a neobank’s online platform and mobile app, the neobank typically partners with larger traditional banks to offer those services.
• Notably, neobanks do not typically offer a full suite of services, such as loans and investments, that full-fledged banks do.
• Neobanks exist in a regulatory gray area. Many offer FDIC insurance through their partner banks, but the neobanks themselves do not answer to a primary regulator. The Consumer Financial Protection Bureau (CFPB), however, recently announced that it will enact stricter supervision of nonbank fintechs going forward. And in recent years, the CFPB and state regulators have investigated certain neobanks for isolated events.
That said, a neobank must typically comply with its partner bank’s own standards and practices, dictated by federal and state regulation. Thus, indirectly, neobanks may face some regulation.
Pro Tip: While many neobanks offer consumers FDIC insurance through the banks with which they partner, it’s always a good idea to read the fine print before opening a deposit account to make sure it offers insurance. While bank failures are rare, that insurance can provide real peace of mind.
While each neobank is unique and likely to have its own varied revenue streams, these challenger banks commonly make money through merchant fees from debit and credit card purchases. Such fees are also called “interchange fees.” Consumers don’t pay these fees; instead, businesses bear the burden.
Neobanks that offer credit cards and/or loans also make money on interest they charge borrowers.
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Pros and Cons of Neobanks
Neobanks may make sense for some consumers, but they’re not for everybody. Before opening an account, it’s a good idea to weigh the pros and cons:
Pros
Cons
Lower fees
Less regulated (not chartered with state or federal regulators)
Higher interest rates on deposit accounts
May not offer FDIC insurance
May offer credit card without credit check
May not offer a full suite of banking services (mortgages, auto loans, etc.)
In the last decade-plus, the fintech market has been teeming with myriad newcomers. Here are some examples of popular neobanks, whose names you may recognize:
So how do neobanks compare to traditional banks? The table below breaks down common differences, but remember: Each bank (or neobank) is different and offers varying levels of services, rates, and fees. These are broad generalizations and may not apply to every financial institution.
Neobanks
Traditional banks
Fees
May offer lower and fewer fees
May charge higher and more fees
Interest on deposits
May have higher interest rates on deposit accounts
May have lower interest rates on deposit accounts
Offerings
Typically offer checking and savings accounts; may offer a credit card
Typically offer multiple checking and savings accounts, as well as credit cards, personal loans, home loans, auto loans, and mortgages; may offer investment and retirement accounts
Mobile app/online banking
Typically have high-rated mobile app and online banking platforms
May lag in app and online quality compared to neobanks
Physical location
Typically do not have physical locations
Typically have physical locations
Insurance
May offer FDIC insurance through a larger bank
Typically carry FDIC insurance (or NCUA insurance for credit unions)
Regulation
May not be regulated
Typically chartered and regulated
What About Online Banks?
The previous table does not capture all the nuances of online banks. The differences between online banking and neobanking were briefly noted above. However, it’s worth taking a closer look at how online banks compare to traditional brick-and-mortar ones. While they may offer the same breadth of products, online banks typically offer better rates and lower fees than traditional banks. Online banks also usually offer leading-edge mobile apps as well as FDIC insurance.
Online banks can afford to pay those higher interest rates and charge lower fees because, unlike traditional banks, they don’t have to pay for physical locations and on-premises staff. They can then pass some of those savings on to their customers.
Wondering if an online bank is right for you? Do your research on the pros and cons of online banking before making your decision.
The Takeaway
Neobanks may be appealing to tech-savvy consumers who want high interest rates on their savings accounts, low fees, and easy-to-use apps. Traditional banks, however, may offer more stability and are formally regulated. The convenience of in-person banking and the full suite of banking services offered by traditional brick-and-mortar banks can also be appealing.
In some ways, online banks offer the best of both worlds — they are licensed as banks and have FDIC insurance directly, but also typically offer higher-than-average APYs, lower (or no) fees, and state-of-the-art banking platforms and apps.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.
FAQ
What’s the difference between a traditional bank and a neobank?
Traditional banks usually offer in-person branches, are licensed as banks, and offer FDIC insurance directly. They typically offer a full suite of banking services, including loans. Many neobanks are more narrowly limited to checking and savings accounts delivered digitally only. However, they often offer more competitive interest rates and lower fees.
Are neobanks regulated like regular banks?
Neobanks do not face the same regulation as regular banks simply because they are not charted as banks with federal and state regulators. Instead, neobanks often partner with chartered banks. That said, the Consumer Financial Protection Bureau has announced that it will increasingly supervise and regulate the activity of neobanks.
Is your money FDIC-insured with a neobank?
Some neobanks offer their banking services through chartered financial institutions. Through those institutions, the neobanks may be able to offer FDIC insurance for their accounts and services, but some don’t. It’s therefore a good idea to read the fine print of a neobank before opening an account so you know where you stand.
*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.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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.
There are many factors that make it hard to save money today, from the high price of groceries to the high interest rates on credit cards. Inflation. If you’re feeling a pinch, you’re not alone. It’s difficult to afford daily expenses and to save for financial goals, like having an emergency fund.
When it comes to covering a $400 unexpected expense, 37% of adults said they would have to borrow, sell something or not be able to cover the expense, according to a 2023 survey from the Federal Reserve. And emergencies can be more expensive than that $400 figure.
Beyond emergency funds, saving for other goals, like the down payment on a house or one’s retirement, are also feeling as if they are hard to achieve. These are worthwhile goals that build wealth. But how do you begin saving when everything is so expensive?
Read on to learn 14 reasons why you’re likely having trouble saving money, plus tips for how to start stashing away more cash.
Key Points
• High inflation and rising costs for essentials groceries make saving more challenging.
• Many adults struggle to cover unexpected expenses without resorting to credit.
• Debt, especially from high-interest credit cards, significantly hinders the ability to save.
• Lack of budgeting contributes to poor financial management and savings shortfalls.
• Social pressures and lifestyle inflation can lead to increased spending, further impeding savings efforts.
Challenges of Saving Money in Today’s Economy
Here are some of the most common reasons why you may find it hard to save money.
1. Not Focusing on Paying Down Debt
Having debt is one of the reasons many people have difficulty saving money. The urge to pay it off vs. save is strong. That’s especially true if you’re carrying revolving debt, like debt from credit cards. Interest rates on these types of accounts can change, which may mean that you’re owing even more money in interest than you may have thought. Right now, the range of interest rates on credit cards is around 13% to 27%.
American household debt hit a record high of $17.69 trillion in early 2024, according to the Federal Reserve. This debt includes student loan debt, credit card debt, mortgage debt, and personal loan debt. Some of this debt can be low-interest, like many mortgages, which also help a person build equity.
The kind of debt that typically prevents a person from saving is high-interest credit card debt. Paying that down by consolidating debt with a low- or no-interest card or by taking out a lower-interest personal loan can be good solutions.
2. Budgeting is a Non-Factor
Budgeting can sound intimidating, but assigning a dollar to all aspects of your cash flow can ensure that you don’t lose track of money. Recently, the average household earned $74,580 before taxes, according to U.S. Census data. Of that money, necessary expenditures — housing, food, health insurance — ate up the majority of the money, leaving little in free cash flow.
This “free cash flow” isn’t free, of course. It’s money to be put toward paying down debt, building an emergency fund, as well as paying for extras, like vacations and nights out. Knowing exactly how much you have and tracking your spending can help you put some money into savings. Try one of the popular budgets, like the envelope system or the 50/30/20 rule (which has you put 50% of after-tax money toward needs, 30% toward wants, and 20% toward saving), to take control of your cash.
3. Trying to Impress Friends With Money
Maybe friends invite you to a pricier-than-expected restaurant and you go along, only to split the painfully expensive check. That’s an example of FOMO (Fear of Missing Out) spending, which is an update on “Keeping up with the Joneses). Or perhaps you get a bonus and blow it on a status wristwatch to feel as if you fit in with your big-spender pals.
If you feel like you’re always spending money with friends, consider ways to potentially minimize that outflow of cash. Hikes, potlucks, and checking out local events can all be ways to cut down on these costs. They are relatively easy ways to save money. Or you might go back to that budget you created (see #1) and make sure you stick to it when it comes to splurge-y spending.
4. Not Earning Enough Money
It’s important that the money you earn be able to cover all your expenses. And sometimes, when your expenses increase unexpectedly, your paycheck doesn’t stretch as far as you need. Making and sticking to a budget can help you understand how much you’re spending each month, and can clue you into increases.
For example, say your rent renews 10% above what you were paying last year or your auto insurance increases. That money needs to come from somewhere. You might consider the benefits of a side hustle. Maybe you can sell the jewelry you make on Etsy, get a weekend job at a nearby cafe, or drive a ride-share from time to time.
5. Not Having an Emergency Fund
Saving for emergencies is important for many reasons, one of which is to have an emergency fund. An emergency fund is what it sounds like: Cash that can cover an emergency, which can be anything from a blown tire to a trip to the vet to covering expenses if you were unexpectedly let go from your job. Having an emergency fund relatively liquid and easy to access in a high-yield savings account (rather than in investments) means you can tap into it relatively quickly if you were to need it.
Most financial experts advise having three to six months’ worth of basic living expenses in an emergency fund. Set up regular transfers from your checking account to fund that; even $25 a week or a month is a start. Consider putting a windfall, like a tax refund, there as well.
Earn up to 4.00% APY with a high-yield savings account from SoFi.
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6. Shopping Too Much
Shopping too much doesn’t mean always filling your online cart or always having packages at the doorstep. It could just mean that you’re not being strategic about how much you’re paying. For example, buying groceries every day at a nearby gourmet grocery could be much more expensive over time than doing a weekly or bi-weekly shopping trip to a warehouse club.
Making lists, tracking items over time, and making sure you get the best price by using coupons and cash back offers are all ways that can help you save money and even have fun while doing so.
7. Inflation in Housing, Education and More
Sky-high housing prices. Rising tuition costs. And interest rates that are increasing. Inflation can make everything more expensive. This can make it challenging to figure out how much to save, especially if you’re saving for a house or putting aside money for tuition. Inflation can also make smaller things, like grocery runs, more expensive too. Overall, rising prices can make it feel difficult to save money, let alone keep your checking account where you want it to be.
Take a deep breath and remind yourself of the cyclical nature of the economy. America has had recessions, a Great Depression, and plenty of inflation before. Persevere and be money motivated: Do your best to control spending and save, if possible, 10% of your take-home earnings towards your future goals.
8. Paying for Items We Don’t Use
How much stuff do you own? Probably way more than you regularly use. And it’s not only physical stuff. Unused digital subscriptions and wasted food…all of it adds up to spending money on things we don’t need.
One quick way to get that money back: Go through your last month of bank account payments and note any money you spent on subscriptions. Chances are, there are at least one or two you either don’t use or use so rarely you can let them go without missing them. For instance, check out how many streaming channels you are paying for. It could save you hundreds of dollars a year if you lose one or two.
9. Saving Money is Not Our Priority
If you wait until the end of the month to put aside whatever you have left, chances are there’s no money left. That’s why prioritizing saving is so important. Learning to save can be a skill, and employing smart strategies can help you make sure that you keep that skill strong.
For example, you can automatically transfer money from your paycheck into savings, so you don’t see it sitting there and aren’t tempted to spend it. Budgeting apps can also be helpful to curb spending so you have more money to save.
10. Cost of Living is Rising
We’ve touched on inflation hitting the large things we’re saving for, and the small things we buy every day. Inflation is notable across so many spending categories: The World Economic Forum found that food prices increased worldwide by nearly 10% from January to April 2022 — the largest 12-month rise since 1982. This past year, they rose just 1%, but rising less swiftly of course is very different from seeing costs move lower.
There are various ways to manage this. One way to get a quick cash infusion is to sell things you have but no longer need or use. This might be gently used clothing, a laptop that’s sitting unused, or that mountain bike that is gathering dust. You can try a garage sale, Nextdoor, Craigslist, or local Facebook groups, or (if it’s something small) eBay or Etsy.
11. Spending Too Money On Social Activities
All too often, hanging out comes with a price tag. After dinner, or a show, or drinks you’ve depleted your bank account. Setting up a budget for socializing can help you spend money wisely. You might check out the restaurant in your neighborhood you’ve been dying to try when they have a reasonably priced prix fixe menu; that way, you’d still have space to save. Thinking of cheap activities and researching free things going on in your community (music, fairs, and more) can help you go out without the steep price tag.
12. Lifestyle Creep
If you’re not familiar with the expression, lifestyle creep is when increased income leads to increased spending. As your pay goes up, you may feel justified in moving up to a rental home with more amenities. You may be more likely to go to more expensive hotels when traveling and join pricey gyms. Lifestyle creep can make it tough to pay down debt, boost savings, and build wealth.
Upgrading your leisure habits when you make more money isn’t a bad thing — but it can be something to be conscious of, especially if you feel like you aren’t saving enough. This may be a good moment to pick and choose your perks. If you are moving to a more expensive apartment, say, maybe you skip that quick vacation you were thinking of taking. Or you could come up with fun ways to save money, like monthly challenges. For instance, don’t buy any fancy lattes for a month and put the money in savings. You may be surprised by how much you save.
13. Not Thinking Ahead
One big reason it’s so hard to save money is that we are so rooted in the present. It’s a real challenge to imagine our toddler needing college tuition money or ourselves being old enough to retire. It can be easier just to put those thoughts to one side for a while.
But when that happens, the opportunity for compound interest is lost. For instance, if Person A were to save $1,000 a month from age 25 to 65, accruing 6% interest, they would have more than $2+ million in the bank at age 65. If Person B saved the same $1,000 a month from age 35 onward until they turned 65, they would have about $1,000,000, or half as much!
By budgeting, planning ahead, and saving, you can have financial discipline and enjoy these kinds of results. It’s important to remind yourself to take care of tomorrow as well as today.
14. Spending Money is Easy
Whether you’re out and about or scrolling through your phone, opportunities to spend money are everywhere. You see a delicious poke bowl while running errands, or you’re looking at your friend’s baby on Instagram, and there are those vitamins everyone is talking about. Ka-ching.
It’s definitely a challenge to grow your money mindset and be able to ignore all of these temptations and focus on longer-term financial goals. Namely, saving for “out of sight, out of mind” future needs. Here’s where your budget can once again be helpful. By having a small stash of cash for fun, on-the-fly expenditures, you can treat yourself (something we all need now and then) without blowing your budget. You will likely be a more mindful and careful consumer if you know, say, that you have $25 this week for a reward.
The Takeaway
Yes, it can be hard to save money due to rising costs, high interest rates, FOMO, lifestyle creep, and other forces. But if you focus on saving money, you’ll find more and more ways to maximize the money you do have. One of the ways to do so is to look for a banking partner with low (or no) fees and high interest rates.
Take a look at what SoFi offers.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.
FAQ
What are the challenges of saving money?
An increased cost of living, lack of a budget, and other factors can make it hard to save. Add in temptations to spend, social pressure, and the fact that a purchase can momentarily lift your spirits, and you have plenty of reasons why saving can be challenging. The good news: A few behavioral tweaks (such as finding a budget you can really follow) can help you save money and make the most of every dollar.
Do millionaires struggle to save money?
Yes. Studies and surveys have found that even high earners live paycheck to paycheck. Fortunately, there are always ways to save, regardless of the size of your bank account. The same rules of budgeting, setting up automatic transfers into savings, and being a smart consumer can help anyone.
How do you stay motivated when it’s so hard to save money?
Motivation varies. Some people find it motivating to see their credit card balance go down, other people like to see their retirement account balance grow, and still others like to mix it up and give themselves a different saving challenge each month. The trick is finding a strategy that works for you.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
*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.
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.
Sometimes, no matter how careful you are with your bank account, you may want to cancel an online payment. Fortunately, it’s often possible to do so. Even if you previously sent out a recurring automatic payment, you can typically hit the brakes on an upcoming transaction.
Many of us have learned to rely on ACH payments, which can be used for a business’s payroll, tax payments, bill payments, account transfers, and more. You may well pay many of your monthly bills — from your utilities to your streaming service subscriptions — in this way. As a result, it’s a good idea to understand how ACH works and how to stop or reverse a payment when necessary.
What Are ACH Payments?
ACH payments are a method of money transfer between banks made through the ACH or Automated Clearing House network. NACHA (the National Automated Clearing House Association) governs these transactions, which can be an alternative to other payment options, like credit cards.
With ACH, the funds come directly from a bank account. This makes payments seamless and convenient; no paper checks or postage stamps required. ACH payments are also available to both consumers and businesses alike as long as they have a U.S. bank account.
One downside of ACH transfers, though, is that they can take longer than options like a wire transfer. When you compare a wire transfer vs. an ACH payment, wired funds can transfer within a day. In terms of how long an ACH payment takes, it may be several days. However, ACH has the upper hand in terms of cost: They are generally less expensive than other payment processing methods and often free.
ACH payments can break down into two categories: ACH credit and ACH debit.
An ACH credit is like a virtual check. The payer tells the ACH network to transfer their account funds to the payee’s account. In contrast, ACH debit (the more popular version of ACH transfer) involves a recipient pulling funds from the payer’s account. (For instance, this kind of payment occurs when you authorize your car loan to be automatically debited on a certain day of each month.) Merchants often prefer this kind of automatic debiting as it reduces the possibility of late or failed payments.
Can ACH Payments Be Canceled or Returned?
So, let’s say you just moved and forgot to cancel your gym membership at your old location. You realize that a payment is about to be sent out. Or maybe you set up a one-time payment to a vendor but notice (oops!) that you typo’d the amount? Now what? Can you stop or reverse an ACH payment from a checking account?
Typically, yes. This is partially possible due to the time frame of ACH transfers. ACH transfers can take multiple days to settle, and, as a result, you have more time to stop or reverse your transaction.
Rules vary by bank, but you may be able to cancel an ACH transfer over the phone, or you may need to fill out a stop payment form online or at a branch. Either way, time is of the essence. If the payment has already cleared, you’ll need to request a reversal, which is a more complicated process.
Let’s look at reversing an ACH payment in a little more detail. Occasionally, an ACH transfer may involve a mistake. It’s easy to type in the wrong dollar amount or otherwise err when it comes to making payments without cash in hand. If you act quickly, you may be able to stop the payment by contacting your bank. But if the payment has already cleared your bank account, you’ll need to request a reversal.
The process for how to reverse an ACT payment will vary by bank, but here’s a look at what’s typically involved.
ACH Reversal Requirements
NACHA, the organization that oversees ACH payments, has specific qualifications that determine if an entry is erroneous. If these details are satisfied, you are then allowed to reverse your payment without an issue. To qualify, an entry must meet one of the following conditions:
• Be a duplicate of a previously initiated entry
• Transferred on the wrong date
• Include a mistake in the sender or recipient’s account number
• Transferred the incorrect amount
These scenarios cover many of the situations that would lead you to cancel or reverse a payment.
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How to Stop an ACH Payment
If you want to stop a transaction, it’s actually to your benefit that ACH payments take several days to settle. This means you have some time to halt an ACH transaction if you need to. However, every bank operates differently and may have its own rules on how to stop an ACH payment. For example, you may find that your bank can cancel an ACH payment online or over the phone. But other institutions may need you to submit a physical form canceling the transaction. Check with the institution that holds your account to find out how to proceed.
You can also cancel your recurring ACH debit payments. You need to do this within three business days before the funds are due. Typically, the process involves contacting the entity expecting your payment and letting them know that you are revoking access to your bank account. Next, you’ll need to contact your own bank to let them know you are no longer allowing automated payments to this payee. You may be able to do this over the phone or you may need to fill out and submit a stop ACH payment form.
A quick look at the other side of the coin: Let’s say you are receiving funds by direct deposit (perhaps your paycheck or government payments), and realize you need to update your details. If you have changed bank accounts — maybe you found a high-yield online savings account you can’t resist — you’ll need to let the entity that is paying you know your new info. For benefits like Social Security payments, you may be able to do this online. To update your direct deposit information with your employer, contact your company’s HR department to find out what the process is.
The Takeaway
The ACH network is a valuable payment processor that consumers and businesses in the U.S. rely on. However, situations can arise that may trigger you to want to stop or reverse a payment, such as if you had entered details incorrectly. Fortunately, it’s possible to stop ACH payments from your checking account or reverse an ACH payment. You can then notify the others impacted and get your banking transactions back on the right track again.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.
FAQ
How long will it take to reverse an ACH payment?
It generally takes two business days to reverse an ACH payment. However, some cases can take longer if the transaction is disputed.
Can you amend an ACH transfer?
Yes, you can typically amend or cancel an ACH transfer by contacting your bank. If the transaction hasn’t been initiated yet, you may be able to stop it from happening. If the transfer has already cleared, you’ll need to work with your bank to reverse the ACH transaction.
How do I stop ACH payments on my checking account?
If you want to stop an ACH payment, you’ll need to contact your bank at least three days before the ACH transfer’s date. This may involve an ACH payment stop request submitted in writing. A small fee may be involved in halting the payment.
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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
